Casino City, Inc. V U.S. Department of Justice Campus Access to Internet Gambling and the First Amendment

CASE DESCRIPTION The primary subject matter of this case is the concept of "standing" which mandates that, under Article III of the United States Constitution, each litigant is permitted to pursue his or her cause of action only if it presents a genuine "case or controversy," in the absence of which the federal district courts lack jurisdiction to adjudicate. This case also explores United States statutes declaring internet gambling to be illegal, and examines whether First Amendment protection of commercial speech precludes government restrictions on advertisements promoting internet gambling. Finally this case reviews the rapid growth of the online gambling industry, the swiftly increasing participation of university students in online gambling, the ethical implications of marketing efforts designed to entice university students to engage in internet gambling, and the Federal income tax consequences of gambling online. This case would be appropriate for use in business law/legal environment of business, internet marketing, or e-Business courses with a difficulty level of two or three depending on the course. CASE SYNOPSIS Michael A. Corfman, the founder and CEO of Casino City, Inc., a Louisiana corporation that operates gaming websites that disseminate information about gambling, initiated a lawsuit against the United States Department of Justice (DOJ) seeking declaratory judgment that prosecution by the Department of Justice for accepting advertisements for internet gambling operations on CasinoCity.com violated its First Amendment right to engage in commercial speech.. Casino City's website attracts individuals seeking gambling information, and gambling establishments throughout the world advertise on Casino City's website, providing Casino City with substantial advertising revenues. Casino City claims that the Department of Justice threatened to prosecute broadcasters who accept advertisements for online gambling for aiding and abetting illegal activities, and issued subpoenas to media outlets, internet portals, public relations companies and technology companies to obtain information about advertisements purchased by online casinos and bookmaking companies. Casino City also alleges that these threats of prosecution infringe upon Casino City's right to engage in commercial speech contrary to the First Amendment. This case analyzes (1) the requirement in Article III of the United States Constitution mandating that Federal courts can entertain only those causes of action that present a genuine "case or controversy," (2) the protection accorded to commercial speech under the First Amendment, (3) the legality of internet gambling, (4) the rapidly increasing participation in online gambling by university students, and (5) the ethical implications of marketing efforts designed to entice university students to engage in internet gambling. Careful discussion of the case should enable the students to better understand (1) the concept of "standing" and "ripeness" which prohibit courts from exercising jurisdiction in hypothetical claims prematurely presented for court resolution; (2) the legal and ethical implications of the vastly expanding business of online gambling; (3) the application of First Amendment protection of commercial speech to internet gambling advertisements; (4) the rising participation of university students in online gambling and dangers posed by those activities through the increasing incidence of pathological gambling; (5) the effectiveness of marketing strategies which promote online gambling; and (6) the Federal income tax consequences of gambling activities. CASINO CITY v UNITED STATES DEPARTMENT OF JUSTICE The Rise of Online Gambling The internet gambling industry is both significant and flourishing. The first online casino was started in August 1995, and today there are more than 2,300 websites offering bingo, casino games, lotteries, and sports betting (THE PHILADELPHIA INQUIRER, March 18, 2005, at C1; Clark, May 23, 2005, at 50). …