UIGEA Upheld by 3rd Circuit Court in iMEGA Appeal

After a two-year court battle, the Interactive Media Entertainment & Gaming Association (iMEGA) was dealt a blow on September 1 when the U.S. 3rd Circuit Court of Appeals rejected its arguments and upheld the premise of the Unlawful Internet Gambling Enforcement Act (UIGEA). Though the judges made clear that the UIGEA does not render online gambling illegal on a federal level, as state laws do prevail, the premise of the 2006 U.S. law stands and does not intrude on the privacy rights of individuals.

After the passage of the UIGEA in 2006, the not-for-profit iMEGA took a stand against the law in the U.S. District Court with a request for a restraining order on the UIGEA per its case against the Attorney General of the United States, Federal Trade Commission, and Federal Reserve System. Judge Mary L. Cooper granted iMEGA standing in the case but ultimately dismissed it due to the fact that the UIGEA was passed in a constitutional manner. Ultimately, she ruled that the case should be heard by the U.S. Court of Appeals. And nearly two years from its inception, iMEGA received a ruling on the case from the U.S. 3rd Circuit Court of Appeals.

The court rejected the first argument by iMEGA that the law was vague, stating, “The Act prohibits a gambling business from knowingly accepting certain financial instruments from an individual who places a bet over the internet if such gambling is illegal at the location in which the business is located or from which the individual initiates the bet. Thus, the Act clearly provides a person of ordinary intelligence with adequate notice of the conduct it prohibits.” While acknowledging that the UIGEA does not prohibit any gambling activity, the numerous examples of ambiguity in the law were dismissed.

The second argument was that the law violated privacy rights via the internet, despite the District Court’s rejection of this claim. The Appeals Court denied this argument as well, noting that the cases cited for precedent are “misplaced” in this case.

However, there were some clarifications made, the most important coming from Judge Dolores Sloviter. “It bears repeating that the Act itself does not make any gambling activity illegal,” she wrote. “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.” According to iMEGA’s response to the Appeals Court loss, this portion of the outcome is positive.

iMEGA Chairman Joe Brennan, Jr. stated, “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… We will turn out attention to the states to make the case that this industry can be properly regulated and produce badly needed tax revenue.”

With that, iMEGA is now in the process of consulting its legal team regarding a possible federal appeal.

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