A three-judge panel disagreed with many of the arguments made by the Interactive Media Entertainment and Gaming Association (iMEGA) on Tuesday as to why the Unlawful Internet Gambling Enforcement Act (UIGEA) should be deemed unconstitutional. In the process, however, internet gambling may now be a states’ rights issue.
The Third Circuit Court of Appeals passed down the historic ruling on Tuesday morning, which included the following text that should be of interest to online poker players: “It bears repeating that the Act itself does not make any gambling activity illegal. Whether the transaction… constitutes unlawful internet gambling turns on how the law of the state from which the bettor initiates the bet would treat that bet, i.e., if it is illegal under that state’s law, it constitutes ‘unlawful internet gambling.’” In essence, internet gambling apparently may be treated the same as brick-and-mortar gambling, which is governed at the state level. As it currently stands, six states have laws on the books outlawing internet gambling to various degrees.
The judges also indicated that the legality of internet gambling also depends on where the company accepting the wager is located: “The Act prohibits a gambling business from knowingly accepting certain financial instruments from an individual who places a bet over the internet if such gambling is illegal at the location in which the business is located or from which the individual initiates the bet.”
The panel, while seemingly clarifying the 2006 law, rejected iMEGA’s claims that the UIGEA was “void for vagueness” and violated First Amendment rights. On the latter point, the court explained that “acceptance of a financial transfer” is not a First Amendment right.
Despite the UIGEA not being overturned as a result of Tuesday’s actions, iMEGA Chairman Joe Brennan told Poker News Daily, “The judges went to pains to clarify that the law did not make internet gambling itself illegal. The UIGEA made no act illegal other than the payment processors taking money. The UIGEA defers to state laws to make the determination.” As long as the bettor and the internet gambling outfit are both located in jurisdictions where the activity is not outlawed, the UIGEA is not violated.
Brennan told Poker News Daily that he had not determined whether iMEGA would appeal the Third Circuit’s decision. It is also unclear whether the U.S. Government would appeal. Still also at issue is the Wire Act of 1961, which some would argue makes online poker and other forms of internet gambling illegal in the United States at the federal level. Brennan explained, “The Wire Act only affects businesses. Is the Wire Act still a problem? Yes, but it doesn’t make it illegal.” A feature by the CBS news program “60 Minutes,” for example, labeled online poker illegal multiple times, even though organizations like the Poker Players Alliance (PPA) contend that the 1961 law does not apply to internet poker.
The three-judge panel also rejected iMEGA’s claims that the UIGEA violated privacy rights and the Tenth Amendment. The latter asserts, “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” The Third Circuit instead claimed that as a third party, iMEGA lacked standing to argue the point.
What effect Tuesday’s decision will have on the internet gambling industry in the United States remains to be seen. Congress returns from session after Labor Day, when the PPA plans to push Barney Frank’s (D-MA) HR 2266, which delays financial services industry compliance with the regulations of the UIGEA by one year to December 1st, 2010. The measure has 35 co-sponsors and was introduced in early May.
iMEGA plans to release additional analysis on its UIGEA challenge later today. Stay tuned to Poker News Daily for the latest poker legislation headlines.
It sounds to me like the judges got this about right… which doesn’t say much for iMEGA’s litigation strategy.
It sounds to me just like the old days when we couldnt do anything without asking for permission. Like the days of the slaves. Come on people get into the future the future is gambling and being able to spend our money how we see fit to do so. We earned the money why should the government be able to tell us how we are going to spend it.