This is old news and Drakos was not your average affiliate.
To catch Drakos red handed, an undercover police officer set up an online casinos account at the site of Drakos, and in January 2004 they met in person to discuss the affiliate program of Drakos. The online casinos affiliate program was a system where one bettor gets money for attracting and recruiting other betters. On the spot, the undercover agent gave Drakos the money for the affiliate program and the online casinos affiliate program was set up on the spot.
Meeting with US citizens in person to take their money for gambling online is definitely over the line. I would never even consider that sort of relationship. I agree with greek that how you position your site is important. From day one, we decided that we needed to take the approach of informing rather than persuading. If you read through our site, it is all informational, we don’t try to pursuade people one way or another, just a presentation of facts for them to make their own playing decision.
Since this is becoming a more prevalant topic, with the Drakos case and the gambling prohibition bills floating around, you should be taking steps to make sure you are operating your affiliate site in a responsible manner (especially in the potential eyes of the law), For one, you should have terms and conditions on your site, we specifically state:
You are responsible for determining if it is legal for you to play any particular games or place any particular wager.
Other things that would be good, especially if you ever had to answer to the authorities, is to have a privacy policy, a link to gamblers anonymous and a site that doesn’t allow children (through your own internet content rating, which I think can be handled through meta tags, need to research that one myself).
The point is, if you are a responsible affiliate, you are much less likely to ever be in trouble. After all, online gambling is NOT illegal for all US citizens, that is why there are gambling prohibition bills in front of Congress. If it were a Federal offense, then they wouldn’t need a bill. However, some states do specifically ban their residents from gambling online. The good news for affiliates is that we have no way of knowing where in the world our gamblers come from since the affiliate programs don’t report that information (and I don’t want them too for this very reason).