The online gambling industry is one of the flourishing industries on the internet currently, rolling billions of dollars annually. The combination of gambling and the internet, being a virtual arena, places new challenges for the law. In view of the legislator’s silence regarding these gambling sites, the Israeli courts tend to respond to online gambling through stringent interpretation of the current law. In this article, we will present the existing legal situation, in light of which the players of this arena should adjust themselves, alongside a few words that express our stand in relation to the stringent interpretation of the courts in Israel of the legal provisions and their implications on the field of online gambling.
Background
The online gambling industry penetrated the lives of millions of online users and became one of the more prominent industries on the internet rolling billions of dollars annually.
In the field of poker games alone, statistics indicate an increase of thousands of percents in number of poker players on the internet during the recent two years.
The global success of online gambling did not overlook the State of Israel. Alongside the meteoric rise in popularity of the gambling sites, we are more and more exposed to cases where enforcement authorities, jointly with the Israeli courts, are acting to block and to stop the gambling sites’ operators, claiming that online gambling are illegal.
The courts do not take risks
The activity on the internet in general and the online gambling sites in particular raises many questions in the field of jurisdiction and local and international applicability of the law, which requires the Israeli legal system to consider the unique aspects of activity in the internet stemming, inter alia, from the absence of territorial borders.
A clear example are the internet sites which are managed and their servers are also located in a state where online gambling is legal, but their activity is directed to users in many states across the world, including states where gambling is forbidden. What legal system should be applied on the managers of such sites? The existing law regarding ordinary gambling or is there a need for legislation modification?
In the Penal Law, the Israeli legislator chose in principal to forbid gambling as well as their publication within Israel for various economic and social reasons.
There is no dispute that the Penal law was legislated prior to the internet era and it was not altered or amended as a result thereof, and in the absence of specific reference by the legislator to online gambling, the issue is whether it is possible (or appropriate) to apply the provisions of the Penal Law on online gambling.
There are two main legal approaches to examine the issue: the conservative approach vis-à-vis the liberal approach.
The conservative approach proposes to apply the existing law, except for executing minor adjustments, also in relation to technological innovations to which the law does not specifically refer, such as: the internet, mobile telephones, etc., most of which were invented pursuant to the legislation of such laws. This approach is based on purposeful interpretation of the law and to achieve its goals regardless to such or other technological innovations. Thus, the conservative approach proposes to apply the law as existing regarding ordinary gambling on online gambling (mutatis mutandis).
By contrast, the liberal approach is a dynamic approach according which the existing law does not provide sufficient response to the legal issues arising from technological innovations such as the internet in general and from online gambling in particular. Therefore, according to the liberal approach, legislative amendments should be performed and independent legal doctrines that could deal with the new issues which the legal system is compelled to face should be developed.
The “Victor Chandler” gambling site case
One of the cases that stirred up the legal system in Israel in the field of online gambling was the proceeding A (Rishon LeZion) 1106/07 Israeli Police v. Carlton Michael (hereinafter: the “Carlton Case”), where the applicability of the provisions of the Penal Law on online gambling is discussed. That case involved a foreign company that is registered and operating in Gibraltar which engaged in operating a gambling site on the internet inter alia under the name “Victor Chandler”. The company’s services, the center of its activity and business are located in Gibraltar, but a significant portion of advertising the Company’s business and its activity was referred directly to Israeli gamblers whom constituted a significant part of the gambling public in the site.
In the Carlton Case, the Court supported the conservative approach, and ruled accordingly that there is no obligation that any technological innovation will require specific legislation and/or alteration of existent legislation in order to enforce the prohibitions as set forth in the existing law. Thus, according the Hon. Judge Haiman, in most cases it is possible to apply the existent law on the new situation by providing decisive interpretation to the law. Therefore, according to his method, notwithstanding the fact that the provisions of the Penal Law originally refer to ordinary gambling, through decisive interpretations of the law the prohibitions should be also applied on gambling performed in the virtual space.
Hon. Judge Haiman further ruled, that in order to realize the intention of the legislator to prevent the gambling phenomenon and its encouragement amongst the residents of Israel, a foreign company should not be allowed to hide under the cloak by situating its servers abroad and by that to legalize their operation.
Notwithstanding, in other areas, the Israeli court has ruled on more than one accession that it is not appropriate to apply the provisions of the existent law on technological innovations, such as the internet, where the law does not explicitly relates to it[1] and in such cases the courts preferred to impose the task on the legislator to perform the required amendments.
Hence, if the court required the legislator’s specific reference in order to impose prohibitions on the internet as well, for example in relation to the Election Law and limitation of the right of expression and attorney client privilege, should we not have similar expectations from the imposition of criminal liability where the protected value is not less important vis-à-vis the right of expression – human dignity.
In conclusion
Although many opinions and rulings exist that defer from each other in imparting the provisions of existent law on technological innovations, and especially on situations derived from the internet and use thereof, apparently in most ruling that refers to online gambling, the courts indeed take the conservative stance according to it is possible and appropriate to apply the existent law on online gambling as well, and by doing so avoiding from a loophole in the law until the legislator will intervene (perhaps in the interest of a certain social justice). In our opinion, the outcome is problematic, especially in light of the fact that we are dealing with criminal law, which can results in deprivation of a person’s freedom.
Generally, in all that pertains to the field of gambling, apparently the legal system takes a united front and prefers to conserve the existent situation and avoids receiving decisions that may have wide and far fetching implications. Thus, latterly, a court in Israel ruled on a parallel issue from the field of gambling that poker is a forbidden game, a controversial ruling in light of the nature and character of the poker field[2]. We shall consider this issue in detail in a separate article in the near future.
[1] Thus for example in AC 10/01, Shas Party v. Knesset Member Ofir Pines, the Hon. Judge Heshin ruled that it is not appropriate to make an analogy between the prohibitions existent in law regarding holding propaganda through the radio and television and use of the internet. A similar ruling was adjudicated in judgment (TA) 93341/06 The State of Israel v. Heinz Israel Ltd., where the court ruled that although the law should be examined by fundamental test and not the linguistic test, documents exchanged between an attorney and its client through e-mail are not sheltered under attorney client privilege whereas the Evidence Ordinance does not specifically refer to use of the internet.
[2] PC (TA) 3814/07 The State of Israel v. Halfon Amos.