Legal issues with a sports gambling startup


3

I am working on a startup that deals with sports gambling. Real money is not wagered on the site but can be involved outside of the site, similar to an office pool. My startup is at the point where it could be launched very soon, but I don't know the legal ramifications. Could I face fines? Be thrown in jail? I don't have the budget to ask a lawyer and U.S. gambling laws vary from state to state.

I have also thought of moving the site off-shore as many real gambling sites do, but I don't know the first thing about how to go about this.

Legal

asked Nov 6 '10 at 21:51
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Dornz
16 points
  • You need to talk to an attorney in your jurisdiction. – Jeff Epstein 8 years ago

3 Answers


4

It is really hard to find attorneys that practice this type of law. I would suggest googling first amendment attorneys because they are the ones who usually deal with escorts, gambling, and everything controversial. Lawrence G Walters has a great reputation in this area.

What you will learn soon is that there is no way, and no legitimate attorney that will give you a green light to run such a project. You will notice that most operators of such sites incorporate in more privacy friendly jurisdictions such as Panama. This still brings with it complications of being probed for money laundering. The US government does not like these private juridictions and will treat you as a criminal, if they ever find out you are attached to such a project. Their concern would be you are in Panama due to tax evasion.

Further, thanks to the Bush administration, US citizens cannot take advantage of offshore gambling sites. Many still do, and risk getting into trouble.

My advise, build it in Panama, keep it in Panama, never connect it to the USA. Never bring the cash to the USA. Keep it all in the Panamanian corporation. Makes it rough if you cannot enjoy your money, but that's the safest way I would approach this.

answered Nov 7 '10 at 07:54
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Frank
2,079 points

0

I actually just got through typing out a fairly lengthy answer to another question about gambling and the legalities, however here are two resources which should be very helpful.

Regardless, aside from a 1st amendment attorney, you might want to look into retaining an Entertainment lawyer or even a firm. One of my contacts who owns a web hosting company actually has had a entertainment attorney on retainer just because he allows adult hosting on his servers (but he does very strict checks), but I'm sure gambling also is covered under that field.

Here are the links I've used with lots of success:

This provides a wealth of links to official government and reputable codes/laws/etc. (which is why I'm providing a Wikipedia link: http://en.wikipedia.org/wiki/Online_gambling )

In addition, this ruling is something which was brought to my attention by a contact of mine who does angel investing -- as while I thought it was just for online poker and such, it also extended to numerous other entities:

http://en.wikipedia.org/wiki/U._S._v._Scheinberg_et_al._(10_Cr._336 )

answered Aug 20 '11 at 10:32
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Theonlylos
397 points

0

It is legal to build the software in the United States, but no US citizen is allowed to run the software without appropriate licenses even if it resides in a data center in another country. You could however sell the software to someone in another country and setup a licensing agreement based on revenues generated.

Many gambling sites run in data centers in Antiqua and Trinidad...

answered Nov 21 '10 at 05:59
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Mc Govern Theory
99 points

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