A recent US decision has dealt a blow to two English and Isle of Man gambling companies. One of the companies, American Sports Limited which is owned by Gary Bowman, had advertised its sports gambling business on the internet, and attracted the vast majority of its business from American and Canadian punters who were placing bets on North American sports such as basketball and professional football. American gamblers wishing to place such a bet had to set up an account by wiring funds to an account in New Jersey, which was controlled by a New Jersey-based company. They then had to call England using an international toll-free telephone number to confirm their deposits of funds and place their bets. The New Jersey company kept American Sports Limited up to date about the balance of each gambler’s account, and also forwarded the money to one of Mr Bowman’s companies outside of the US.

American Sports Limited argued that American gamblers were actually placing their bets in England where the bets were accepted and where gambling is legal. However the US court found that it did have jurisdiction to apply U.S gambling law to the case, and decided that the New Jersey company had violated New Jersey law by promoting gambling. It also held that the FBI’s seizure of the contents of two accounts in New Jersey had therefore been legal.

The case is a timely reminder to companies engaging in e-commerce in multiple jurisdictions that they need to consider the possibility that they will be required to comply with the laws in each of those jurisdictions and not just the laws of the country in which the company is physically located.

© Herbert Smith 2002

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