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Court Of Appeals Upholds UIGEA

By: Adam Richards, Thursday September 3rd 2009
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The landmark case between iMEGA and the Department of Justice over the legality of UIGEA was heard by the US 3rd Circuit Court of Appeals in Philadelphia July this year. From the questions asked by the three judge bench it was evident that the decision would go against iMEGA. The judges have now released their order and have unanimously rejected the arguments of iMEGA in a 3-0 ruling.

The two main planks on which the arguments of iMEGA arrested were that the provisions of UIGEA were vague and that the law intruded on individual privacy rights. The court held that the requirement in the UIGEA that made it mandatory for financial services providers stop handling payments related to illegal online gambling operations was not vague. In this context the court applied the "reasonable man" test and concluded that the law could be understood by a person of normal intelligence.

In order to support its argument of violation of privacy iMEGA had cited two cases involving private sexual conduct. Judge Dolores Sloviter turned down those arguments outright. She explained that there could be no comparison between sexual conduct between consenting adults in the privacy of their homes and online gambling. She said, "Gambling, even in the home, simply does not involve any individual interests of the same constitutional magnitude. Accordingly, such conduct is not protected by any right to privacy under the constitution."

However the judgment was not a total loss to the online gambling industry. The judges made it abundantly clear that the UIGEA was not applicable across the country. They said that the UIGEA did not make online gambling illegal. The legality or otherwise of online gambling could be determined only by the laws of the state in which the bettor was located. If a particular state allowed online gambling then there was no provision in the UIGEA to ban it. Judge Dolores Sloviter wrote, "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" under the Act."

Joe Brennan Jr., the chairman of iMEGA, saw this as a silver lining. He said, "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." In the short run iMEGA would be reviewing the ruling and examining whether it is worthwhile appealing against the judgment. However the more important focus would be turning attention to individual states. The idea would be to ensure that online gambling is not merely legal in those states because it is not illegal. The idea would be to encourage states to legalize and regulate online gambling and simultaneously generate the much needed tax revenue.

Buffalo State business law professor Joe Kelly, who had been following the case, opined that challenging an act of Congress will always be an uphill task. According to him iMEGA put up the best arguments possible, but there was little hope of success to start with.

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Comment by: Kevin Jones On: September 04, 2009
I really feel bad for all American's out there. It's a tragedy that things are the way they are. Hopefully the change that is on the way will lead to some benefit in the near future for everyone who is barred from playing at casinos powered by those who pulled out of the industry such as Microgaming, Playtech, etc... Would be nice to see these players come back into the industry!
Comment by: Fred Lutton On: September 03, 2009
The UIGEA is a breach of trust that American's have in their faith for their Government. I think it's a load of crap and should have been repelled already. Unfortunately things are taking longer then expected for Barney Frank to be heard. I think that they were supposed to put the bill up for vote this month but it's been pushed back for some reason. Hopefully there will be a positive outcome to all this!
Comment by: Hero On: September 03, 2009
Yeah it's at least a small victory when you think about it. Those who live in states where online gambling is not illegal will still be able to take advantage of non-US regulated offshore gaming for probably some time. I'm sure that Mr. Franks bills will eventually be voted on in the Senate so it's just really a matter of time.
Comment by: Kenny Curron On: September 03, 2009
Well the fact that the UIGEA was upheld does no one any good really but at the same time the ruling that came out that it's only applicable in states where online gambling is deemed illegal is a great thing I would say!

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