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It's Bad News For iMEGA In The UIGEA Appeals Case

By: Joe Valentino, Thursday July 9th 2009
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The much awaited hearing in the case of iMEGA versus the Department of Justice (DoJ) finally took place on July 7 in the 3rd U.S. Circuit Court of Appeals in Philadelphia. While the judgment has not been officially delivered, each of the judges in the three member panel appeared to disagree with the arguments put forward by iMEGA.

iMEGA had a two pronged attack. Professor Stephen A. Saltzburg of the Law department of George Washington University took up the void for vagueness argument. He said that the UIGEA is "so vague that reasonable people would have to guess" its meaning. Saltzburg gave the argument of a player from Delaware who could visit an online casino located in Costa Rica, where gambling is legal. Saltzburg argued that by virtue of the Internet the transaction was conducted in Costa Rica. Judge Jordan did not find anything vague in the UIGEA in this context. He said that the player was physically in Delaware and therefore Delaware law applies. If Delaware law holds Internet gambling as illegal then the wire transfer of funds to Costa Rica becomes illegal under the UIGEA. Judge Sloviter added, "It may be difficult to prove where the bet was placed, but that doesn't make the law unconstitutionally vague."

Two other points made by Saltzburg were also rejected by the judges. One point was that it was not clear whether Delaware or any state of the USA could regulate international commerce. Judge Jordan interjected that as long as the conduct was taking place in Delaware it did not matter where else in the world the transaction was taking place. The other point was that the UIGEA failed to define Internet gambling as illegal but left the definition to state laws. Judge Jordan said that even if state laws are not clear it does not imply that the UIGEA is vague.

Attorney Eric M. Bernstein of Warren, N.J. argued that the UIGEA violates First Amendment and privacy rights of gamblers. He too met with stiff resistances from the judges. Judge Ambro asked, "Are you asserting that you have a privacy right that trumps the police powers of the state?" Judge Sloviter asked if gambling is "constitutionally protected intimate contact." The judges also questioned a trade association's standing to assert the rights of its members' customers. The lower court had granted standing to iMEGA to represent the online gambling operators who were its members. But according to the judges this did not include the representation of the clients who played at the gambling web sites and whose First Amendment and privacy rights were being allegedly violated.

After this the Justice Department attorney Nicholas J. Bagley had an easy time. In fact he used only half the time allotted to him and said that if the judges had no more questions he was through. This was the strongest indicator that the judgment will go against iMEGA and the online gambling industry.

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