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Jay Cohen: Next Stop, The Supreme Court

Spend enough time betting online and you’re bound to hear the name Jay Cohen. Cohen is the only person in the U.S. ever convicted of running an Internet sportsbook. But he isn’t sitting in a jail cell these days, and he’s doing everything possible to keep it that way.

Cohen and his partners launched World Sports Exchange (www.wsex.com) in 1997 with an online wagering license from the government of Antigua, where they operated the business, modelling their venture after New York’s off-track betting services.

As far as Cohen and most other people were concerned, everything about World Sports Exchange was legit. Cohen even paid U.S. income tax on the money he made in Antigua just to be sure he stayed on the right side of the law.

Unfortunately, the U.S. government didn’t see it that way and in 1998 charged Cohen with violating federal conspiracy laws and the Wire Act, which prohibits the use of telephone lines for placing sports bets across state lines or from foreign countries.

Cohen was convicted on all counts in February 2000 after the court shot down his key defense argument – that the business had been set up in good faith – saying that that was “basically irrelevant.” It also refused to allow the jury to consider a section of the Wire Act that would have acquitted Cohen. It was difficult for the jury to do much other than find Cohen guilty, and in the end he was fined $5,000 and sentenced to 21 months in federal prison.

Cohen appealed his conviction, but in July 2001 the Second Circuit Court of Appeals upheld the original verdict. During the appeal, the court made several questionable rulings and re-interpreted the Wire Act in the government’s favor. Jay Cohen was denied justice a second time, forcing him to turn to the only remaining avenue of appeal: the U.S. Supreme Court.

It’s hard to believe that the case got this far in the first place, but it has. According to Melinda Sarafa, one of Cohen’s attorneys, it has because this was the first prosecution of its kind. There were very few legal precedents for the courts to work with, and Cohen’s innocence has been a tough sell from the start.

“It has been a real challenge for us as Jay Cohen’s lawyers to educate the court about how [the Wire Act] should be interpreted in this context,” said Sarafa. The lawyers haven’t had much luck so far, but that could all change shortly.

Cohen’s defense team filed a writ of certiorari, which is a petition to the Supreme Court asking it to hear the case, in February 2002. Since that time, the court has ordered the Solicitor General’s office to file a response to the writ. That doesn’t necessarily mean the Supreme Court will hear the case, but it does mean the justices are thinking about it and that’s good news.

This case could have substantial implications for the off-track betting and online wagering industries if it makes it before the Supreme Court. If the court decides that Cohen’s operation was illegal, it would then stand to reason that all off-track betting is illegal as well. Conversely, if the Wire Act convictions are overturned, the online gambling industry gets a rather large stamp of approval.

So where does all of this leave Cohen? Waiting, basically. He has been on bail since his initial conviction, and will remain free until the Supreme Court either denies the writ or upholds his conviction. Either way, it could be months or even years before a decision is handed down.

The odds against Cohen seem to be changing if recent events are any indication, and Sarafa is optimistic about his chances for a Supreme Court appearance. She’s also optimistic about the outcome of the case. “Ultimately, Jay Cohen will be vindicated.”
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