CROSS-BORDER JURISDICTION
where, if a licensee were sued for providing services legal in Malta in a country other than Malta, a judgement issued by the courts in the jurisdiction declaring such activity illegal would not be enforced in Malta. Cross-border recognition of judgments, long-arm statutes, and civil forfeiture provisions presume that the interests of the states on both sides of the equation are aligned. However, when one state acts unilaterally to preserve its own interests, and those interests differ from the greater international community, the currently available remedies become inadequate. The USDOJ recognizes this issue within its guidance to prosecutors stating: “Moreover, when it is known or can be ascertained in advance that a particular foreign government either cannot or will not recognize, enforce, or otherwise make beneficial use of a forfeiture order obtained in this country, it would clearly be a waste of U.S. prosecutorial and judicial resources to pursue the forfeiture action.” 23 Thus, when reciprocity and comity are no longer offered, the federal government sees further action as a waste of resources. Malta appears to have sought a method to make its licensees judgment proof so long as they are performing activities legal under Maltese law, regardless of the state of the law in the impacted location. If enforcement agencies across the world view pursuing these matters to be a waste of resources, similar to the USDOJ’s position, Malta may have succeeded. Additionally, in the background of the interplay between civil and criminal judgments looms the international obligations of the greater nation. A matter from the early years of cross- border internet wagering demonstrates the difficulties in regulating online gaming. In 2003, the nation of Antigua and Barbuda (“Antigua”) took action against the U.S. before the World Trade Organization (“WTO”) 24 in response to measures
applied by central, regional and local authorities in the US which affect the cross-border supply of gambling and betting services, namely the federal Wire Act, Travel Act, and Illegal Gambling Business Act. 25 Antigua claimed that the measures at issue may be inconsistent with the US obligations under the General Agreement on Trade in Services (“GATS”). The ultimate holding, after appeals, found in favor of Antigua that in some cases, the U.S. regulatory measures were arbitrary and unjustifiable discrimination. 26 As a result, Antigua essentially won the right to US$21 million from the United States. 27 Thus, it appears that even in instances where international governing bodies recognize that measures are designed to protect public morals and maintain public order within a jurisdiction, such measures can still be violative of certain treaty obligations and carry risk of economic harm. Additionally, while some operators may be shielded by their domestic laws, third-party companies that do business with many customers across multiple jurisdictions may not have the same protections. For example, if a technology or other support company does business in the U.S., the company and its officers could potentially be charged with illegal gambling violations if it licenses its products to, or does business with, an entity involved in illegal gambling. Under 18 U.S.C. § 1955, it is a crime to conduct an illegal gambling business, defined as a business that violates state law, involves five or more persons, and has been in continuous operation for more than 30 days or has gross revenue of US$2,000 in a single day. 28 A person or entity can be conducting an illegal gambling business if they perform any necessary function in the gambling operation, other than that of a mere bettor. Id. Furthermore, such companies could also face potential charges as an aider and abettor, which requires proof that the defendant willingly associated with a venture and participated in it as something they wished to bring about. Therefore, an associating entity could face significant legal risks and potential liability as a
23 https://www.justice.gov/archives/jm/criminal-resource-manual-280-forfeiture-assets-located-foreign-countries. Last accessed Aug. 25, 2024. 24 The full title of the matter is DS285: United States — Measures Affecting the Cross-Border Supply of Gambling and Betting Services. The short title is US-Gambling. See https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds285_e.htm. 25 The provisions of Louisiana, Massachusetts, South Dakota, and Utah were also raised as issues 26 https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds285_e.htm, finding, inter alia, that the U.S. gambling regulations treat domestic and foreign entities differently. 27 The holding and later arbitration allowed Antigua to suspend obligations under the TRIPS Agreement at a level not exceeding US$21 million annually 28 United States v. Miller , 22 F.3d 1075; United States v. Lovett, 662 Fed. Appx. 838
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IMGL MAGAZINE | DECEMBER 2024
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