US Goes After Online Casino

In early April, U.S. marshals seized $3.2 million from Discovery Communications, the television and media company, in an aggressive effort to crack down on a new target, Internet gambling.

The money initially belonged to Tropical Paradise, a Costa Rica-based Internet gambling operation, which in October paid Discovery for television spots to advertise an online poker room, ParadisePoker.com. According to court documents, the government seized the money and told Discovery, which is based in Silver Spring, Md., that it could be party to an illegal activity by broadcasting such advertisements.

Federal prosecutors contend that online gambling sites are illegal, but the offshore casinos fall outside their jurisdiction. So for nearly a year, the government has been trying to curb the sites' activities by investigating and pressuring American companies that provide services to offshore gambling sites on the theory that they are "aiding and abetting" the operations.

Until now, the effort has largely involved seeking information from American companies, including major broadcasters, Web portals and industry consultants. The seizure of money significantly escalates the government's attack.

The move has raised strong criticism from First Amendment experts, media industry executives and people involved with offshore casinos.

"This is not drug money or terrorist money," said Rodney A. Smolla, dean of the University of Richmond School of Law. "The fact it is being treated as such shows a crusader's zeal against offshore gambling."

The possible message being sent, legal experts said, is that any American company that does business with an offshore casino -- including software makers and consultants -- could be in danger of having proceeds from that business seized.

"This is a strategy of intimidating anybody who is in the chain of commerce," said Lawrence Walters, a lawyer who works with offshore Internet casinos, as well as software companies that do business with the casinos.