Appeal Court Rules Internet Gambling A State Matter

The IMEGA’s attempt to overturn the Unlawful Internet Gambling Enforcement Act (UIGEA) got a mixed response from the Third Circuit Court of Appeals which decided that whether an internet gambling transaction was legal depended on where the bettor and operator were based.i.e “if it is illegal under that state’s law, it constitutes ‘unlawful internet gambling’ under the Act.”
The UIGEA was designed to prevent internet gambling by forcing financial companies to stop processing any gambling transactions, excluding horse racing. The Interactive Media Entertainment and Gaming Association (IMEGA) had lodged a challenge to the Act claiming it was unclear and unconstitutional.
The appeal court in Philadelphia insisted that the act was in fact clear as it was in line with many state laws and thus understandable to a reasonable man. The court further emphasised that only certain gambling transactions were outlawed and so financial companies were not required to exercise their own discretion when deciding which ones were illegal.
Following the judgement Joe Brennan, the iMEGA Chairman, 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.”
Brennan was particularly upbeat about the ruling and believed it now allowed states autonomy to expand internet gambling without contravening federal laws; a most notable example would be California that has been considering embracing internet gambling so as to reduce its $16 billion budget deficit. Further the appeal court’s decision could lend weight to Representative Barney Frank’s fight against the UIGEA as he could claim a law which applies to only six out of fifty states was without purpose.
Brennan summed the situation up by saying: “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.”