iMEGA On UIGEA: Open Letter to i-Gaming Industry

On March 6, 2008, the United States District Court for the District of New Jersey handed down its opinion in the lawsuit brought by our Association – iMEGA v. Gonzales, et al.  The ruling by the Honorable Mary L. Cooper contains a great deal of good and yet some bad aspects for iMEGA – and for the rights, the people and the medium we are defending.

First and foremost, the Court established, with crystal clarity, the standing (and associational standing) of iMEGA to challenge this law in court. This is no small thing. Judge Cooper herself spent 15 pages of her 29-page decision establishing iMEGA’s standing, in the process knocking down the US government’s primary challenge to our suit. iMEGA flat-out beat the government on that point.

Many legal commentators—both supporters and naysayers—from the beginning viewed the question of iMEGA’s standing as an insurmountable barrier to moving forward. Well, we’ve crossed over that barrier, and now the government has to contend with iMEGA as fully and unquestionably empowered by the Court to assert our rights in the courts of the United States. The fact that the Federal courts have now recognized iMEGA as the champion of Internet Gambling industry cannot be overstated.

However, at the same time, Judge Cooper essentially failed to rule on the groundbreaking questions we presented, namely, that those fundamental rights we all enjoy – of privacy, speech, expression, and conduct – should not be lessened in any way when we are using the Internet.

With her dismissal, Judge Cooper simply affirmed that Congress had the right to pass the law in a constitutional manner - a point iMEGA never challenged.  As a result, the Court is in essence standing aside and reserving these issues to be decided by a “higher authority,” the United States Court of Appeals for the Third Circuit and, potentially, the United States Supreme Court.

However, Judge Cooper’s opinion not only acknowledged the failings of the Unlawful Internet Gambling Enforcement Act (UIGEA) but, in Footnote 12 on Page 27 of her decision, stated categorically that the “criminal penalties” provided for under the UIGEA do not apply to “financial businesses,” such as “financial transaction providers” (i.e. banks, credit card companies an payment processors)—which are subject only to “regulatory enforcement.”

Given that UIGEA’s authors and supporters made it perfectly clear from the start that their driving purpose was to “starve” internet gambling by criminally punishing the financial institutions that provide services to it, the Court’s decision will have a monumental impact across the board, in the courts and in various legislative branches.

The next step for iMEGA is to take this battle to the Third Circuit Court of Appeals in Philadelphia, an appellate court that has been traditionally protective of the fundamental rights of speech and expression. One need only look to that Court’s striking down (multiple times) of the Child Online Protection Act (COPA) – another well intentioned but over-reaching Federal law – for an example of how favorable that Court can be to iMEGA’s challenge.

A positive result for iMEGA in the Third Circuit, affirming our “digital civil rights”, would represent a truly landmark victory with historic consequences.

In light of political pressures, we expect the Justice Department to bring all of its vast resources to this fight.  Indeed, it may be the government that first files an appeal with the Third Circuit, to overturn the standing granted to iMEGA and to put UIGEA’s criminal penalties for financial institutions back in place.

There are other fights iMEGA has been a part of, most notably its opposition to the proposed UIGEA regulations.  With the possible exception of the American Banking Association, no one has more precisely and effectively portrayed how faulty the proposed UIGEA regulations are, in the hope of preventing them from being promulgated or weakened to such an extent that they become meaningless.

While we were disappointed that Judge Cooper dismissed our lawsuit, this case is far from over. We always knew that this would be the first round in a serious fight, as most important legal battles are. Many legal challenges that lost their first round make up many of the rights Americans now take for granted:

Brown v. Board of Education (”Separate but Equal” school systems) - Originally lost in U.S. District Court for the District of Kansas

Miranda v. Arizona (Illegal Interrogations) - Originally lost in the Arizona Supreme Court

Gideon v. Wainwright (Right to Counsel) - Originally lost in the Florida Supreme Court and Fourteenth Judicial Circuit of Florida

Tinker v. Des Moines (Freedom of Speech) - Originally lost in U.S. District Court and the Eighth Circuit Court of Appeals

We can’t imagine how our rights would have been preserved had those challenges quit in the first round. At issue here are fundamental questions that, ultimately, have to be decided by the higher courts, and iMEGA has been recognized by the Court as the champion to fight this battle.

We value your support as we move forward.