INTERNET LAW - The Israeli Police Orders Gambling Websites to Shut Down

IBLS Contributor Odia Kagan, Partner, Shavit Bar-On Gal-On Tzin Nov Yagur Law Offices – Tel Aviv, Israel, okagan@sbilaw.com
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The Israeli police has issued letters to gambling websites with an Israeli presence, informing them that their operation in the field of online gambling, including backgammon games, is a criminal offense and ordering them to cease their operations. Concurrently, the police has issued letters to credit card companies like Visa and Mastercard, and informed them that it deems their cooperation with companies dealing in online gambling, and the provision of clearing services for the collection of payments by credit cards - criminal offenses.

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On December 15, 2006, the Israeli police, issued letters to gambling websites with an Israeli presence, informing them that their operation in the field of online gambling, including backgammon games, is a criminal offense and ordering them to cease their operations. Concurrently, the police issued letters to credit card companies like Visa and Mastercard, and informed them that it deems their cooperation with companies dealing in online gambling, and the provision of clearing services for the collection of payments by credit cards - criminal offenses.

 Gambling is regulated in Israel by the Israeli Penal Law 5737 - 1977. Presently there is no specific law pertaining to online gambling. The Penal Law prohibits gambling, playing games of chance or maintaining a place in which such activities are carried out as well as advertising such activities. Exceptions are only such that are specifically permitted by law as in the case of Mifal Hapayis (the national lottery agency) and the Israeli Commission for Sports Gambling (governmental agency) which conduct the Israel Lottery as well as soccer betting. Recently, bills were submitted to the Knesset regarding the prohibition of online gambling and of the provision of clearing services for gambling websites.

 The credit card companies stated that they would comply with the law and several websites have been blocking access to players located in Israel.

 Another event signaling the move toward stronger enforcement in this field was displayed when, Michael Carlton, Chairman of gambling website Victor Chandler, who arrived in Israel to participate in a Parliamentary discussion of anti-gambling laws, was held for questioning by the Israeli police and later released.

 The Penal Law prohibits games in which a person may win money or another non-monetary benefit based on the outcome of a game, where the outcome is more dependent on chance than on understanding or capability/skill. The direction of the police declaration particularly at backgammon raised another question of whether the game is more of chance (in which case it would be prohibited by the law) or of skill.

 Jurisdiction - Servers offshore

 The main question raised by this issue is one of jurisdiction. Though accessible by Israeli web users, generally, the sites and their servers are located and operate from various jurisdictions outside Israel where gambling websites are legal. The Penal Law provisions, however, were designed to prohibit "offline gambling" which occurs in Israel.

 The question of jurisdiction has not been conclusively resolved by the Israeli courts. To date, cases brought before the court pertained mostly to the operation of gambling actions in Internet cafes where gambling software, operated from a local server were used which  resembled foreign gambling websites in appearance and deceived Internet café patrons into thinking they were surfing foreign websites.  Therefore these operations, clearly conducted in Israel, were punished under the Penal Law.

 Thus the question remains with regard to online gambling sites. Is the place of commission of this offense determined by the location of the website server, by the nationality of the people gambling through the website, or perhaps by the place where the user clicks the mouse?  It is up to the courts, or the Knesset, to decide.

 Ms. Kagan specializes in Internet and IT law. Her articles on these subjects are published regularly in professional publications of the American Bar Association and the New York State Bar Association as well as in national Israeli websites. Ms. Kagan authored the Israeli Chapter in the book "Cybercrime and Security" published worldwide by Oceana Publications, a division of Oxford University Press. A graduate of the Law Faculty of Tel Aviv University, Ms. Kagan is a member of the Israel and New York Bars, is qualified as a Solicitor in England & Wales and is also admitted as legal practitioner in New South Wales, Australia.

  

The Author's Name: Odia Kagan

The Author's Law Firm: Shavit Bar-On Gal-On Tzin Nov Yagur, Law Offices

City: Tel Aviv

Country: Israel

Phone: + 972-3-791-2800

Fax: + 972-3-791-2801

Email: okagan@sbilaw.com    

Web Site: www.sbilaw.com

IBLS Contributor Odia Kagan, Partner, Shavit Bar-On Gal-On Tzin Nov Yagur Law Offices – Tel Aviv, Israel, okagan@sbilaw.com

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