Twenty-four hours ago, the Interactive Media Entertainment and Gaming Association (iMEGA) came up short in its bid to overturn the Unlawful Internet Gambling Enforcement Act (UIGEA). In the process, internet gambling may now become an industry governed by state law.
The Third Circuit Court of Appeals emphasized that the legality of internet gambling transactions may ultimately depend on where the bettor and operator are located. If the industry is permitted in both jurisdictions, then online poker players may be able to return to the felts in droves. The opinion, which was penned by Judge Dolores Sloviter, read in part, “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’ under the Act.”
In a press release distributed by iMEGA following Tuesday’s historic ruling, Chairman Joe Brennan noted, “The court made it clear – gambling on the internet is unlawful where state law says so. But there are only a half-dozen states which have laws against Internet gambling, leaving 44 states where it is potentially lawful. It’s not perfect, but it’s a good start.” Internet gambling law varies by state based on the type of transaction, number of times the consumer is raked, and game type, among other factors. Several states allow online lottery transactions and wagering on horse racing, while others like Utah and Hawaii ban all forms of commercial gambling.
What happens next is anyone’s guess. States may soon find it prudent to clarify laws and statutes related to internet gambling. In the meantime, a push by the Poker Players Alliance (PPA) on Capitol Hill for legalized and regulated online poker may come to fruition through future passage of a bill by Congressman Barney Frank (D-MA). PPA Executive Director John Pappas told Poker News Daily, “While I am disappointed that iMEGA’s full arguments did not prevail, it was encouraging to see the courts reaffirm that the UIGEA does not make playing internet poker illegal. The PPA and our legal team have long argued that the UIGEA should not force banks to block poker transactions in a vast majority of states. This decision might very well help as banks make those determinations on what to block; simply follow state law.”
On handing over the determination of whether internet gambling is permissible to the states, Brennan commented in the same press release, “States have always held the power to regulate gambling in this country, not the Federal government. The court’s ruling seems to say ‘back to the future’ when it comes to regulating internet gambling, so we will turn our attention to the states to make the case that this industry can be properly regulated and produce badly needed tax revenue.” Land-based gambling is already governed at the state level, with Nevada, New Jersey, and Mississippi leading the way. A bevy of riverboat casinos have also sprung up in states like Illinois, Indiana, and Missouri.
Brennan told Poker News Daily that the organization has not yet decided whether it will appeal the three-judge panel’s decision. The magistrates dismissed iMEGA’s claims that the UIGEA violated the First Amendment, Tenth Amendment, privacy rights, and treaty obligations over the course of its 10-page ruling. In the end, the cloudy law, which was passed during the waning moments of the 2006 Congressional session, was not declared unconstitutional, as iMEGA had hoped. However, the court’s ruling may have ultimately led to the same endgame, clarification of the legality of internet gambling and online poker in the United States.
Stay tuned to Poker News Daily for the latest reaction to iMEGA’s UIGEA challenge.
