The story of the week in the internet gambling industry has been the constitutional challenge to the Unlawful Internet Gambling Enforcement Act (UIGEA) brought on by the Interactive Media Entertainment and Gaming Association (iMEGA). Internet gambling law expert I. Nelson Rose comments on the ruling, which was passed down by the Third Circuit Court of Appeals.
The Third Circuit tossed out iMEGA’s arguments that the UIGEA violated the First and Tenth Amendments of the United States Constitution as well as privacy rights and international treaties. However, the judicial body asserted, “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 unlawful under that state’s law, it constitutes ‘unlawful internet gambling’ under the Act.” The bet must also be legal in the jurisdiction in which the internet gambling operator is located.
Rose was perplexed by the Third Circuit’s ruling, which seemed to, in part, shed light on the UIGEA’s meaning. He told Poker News Daily, “This decision was written by judges who appear to know absolutely nothing about gaming law.” Rose reiterated that only two states, Hawaii and Utah, ban commercial gambling. The 10-page court ruling cites Oregon as a state in which it may be problematic to conduct internet gambling. However, Rose noted, “It is bizarre to use Oregon as an example. Oregon has more forms of legal gambling than Nevada.”
Deferring to the states, therefore, may not be a straightforward endeavor. Rose explained, “I practiced law in Hawaii for over three years and I can tell you that neither these nor any other existing Hawaiian statutes clearly make all forms of internet gambling illegal. The Oregon statute cited merely makes it a crime to transfer money for ‘unlawful gambling using the internet,’ which brings us back to the question of whether any other existing law covers internet gambling.” The U.S. Department of Justice, for example, may assert that online poker is illegal under the Wire Act, although organizations like the Poker Players Alliance (PPA) would deny such an interpretation.
If internet gambling’s legality varies on a state-by-state basis, then a long road may be in store for financial services outfits like Visa and MasterCard. Rose forecasted, “The reality is that some forms of internet gambling are expressly legal, such as pari-mutuel bets on horseracing in most states. In every other case, it would take a detailed analysis by a competent gaming lawyer to know whether the state’s anti-gambling laws might apply.” A handful of states allow permit lottery purchases, further complicating the matter. For example, TwinSpires.com, a site that offers online wagering on horse racing, is owned by the same publicly traded parent company as Churchill Downs in Kentucky.
A press release issued by iMEGA shortly after the Third Circuit’s decision noted that some forms of internet gambling were “potentially lawful” in 44 states. The organization added, “There are only a half-dozen states which have laws against internet gambling.” The Poker Voters of America (PVA) is leading the charge for licensed and regulated intrastate online poker in California. The PVA is also pushing for intrastate wagering in Florida. California offers a bevy of card rooms sprinkled within its borders, including the Commerce Casino and Bicycle Casino, which host World Poker Tour events.
iMEGA may appeal the Third Circuit’s decision in an effort to overturn the UIGEA, which was its primary goal. However, no decision has yet been made. The U.S. Department of Justice can also appeal the ruling.
Stay tuned to Poker News Daily for the latest on the iMEGA UIGEA challenge. A wealth of information on U.S. internet gambling statutes can be found at Rose’s website, GamblingAndTheLaw.com.