UIGEA Upheld by US 3rd Circuit, but States Determine i-Gaming Legal Status
Sept. 1, 2009 - The US 3rd Circuit Court of Appeals upheld the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, rejecting arguments that the law was vague and intruded on individual privacy rights. The law was challenged by the Washington, DC-based trade association Interactive Media Entertainment & Gaming Association (iMEGA), on the behalf of the Internet gambling industry.
In their decision, the judges clarified that the legality of Internet gambling transactions depended on state law where the bettor was located, and the laws where the betting operator was located. The court emphasized that UIGEA did not establish a blanket Federal ban on Internet gambling.
“It bears repeating that the Act itself does not make any gambling activity illegal,” wrote Judge Dolores Sloviter. “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., iMEGA’s chairman, said that while the association’s members were disappointed that the court did not overturn the law, they felt there was a silver lining to the court’s ruling.
“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.”
Brennan also noted that, in deferring to state law, the court’s decision is consistent with traditional gambling law in the US. “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.”
Brennan also said iMEGA’s legal team would review the ruling and make recommendations on a possible appeal.