The Rishon Le Zion Magistrate's Court ruled, in a precedential decision, that the operation of a foreign gambling website which is used by Israeli users is a criminal offence under Israeli law, even though the website's servers are located in Gibraltar.

A while ago Mr. Michael Carlton, the CEO of "Victor Chandler", a successful company that operates online gambling websites, was held in custody by the Israeli police. While the police agreed to release him, the parties asked the court to decide in the question whether Mr. Carlton's activities constitute a criminal offence in Israel.

Justice Abraham Heiman was very decisive in his answer to the question put before him: in today's global village, it is impossible to avoid the local law by placing your servers in a "legal shelter' in Gibraltar, where gambling is allowed. Section 225 of the Israeli Criminal Act prohibits on operating gambling activities. Operating a gambling website in Hebrew, aimed at Israeli users, where Israeli users gamble and pay through Israeli credit cards, is a criminal offence since at least part of the criminal activity takes place in Israel. Thus, it shall be regarded as a "local offence" as defined in the Criminal Act. Also, advertising the gambling website is a clear cut criminal offence in accordance with section 227 of the Criminal Act.
This is a precedential decision in which, for the first time, an Israeli court was faced with the question of the legality of the operation of foreign gambling website in Israel. If the unequivocal decision of the court is adopted in higher instances, this will mean the end of online gambling in Israel.
Following is a link to the court's decision (in Hebrew)
http://info1.court.gov.il/Prod03/ManamHTML3.nsf/E09CC4BE777847DC4225727300041CE2/$FILE/412F232D6C929CA142257272003DDC20.html?OpenElement