Mixed News on iMEGA's Challenge to UIGEA's Online Poker Online Gambling Ban

A US federal judge this week dismissed the constitutional challenge to the Unlawful Internet Gambling Enforcement Act (UIGEA) brought by the Interactive Media Entertainment & Gaming Association (iMEGA), but gave the group legal standing and the right to challenge the law in an appellate court.

Lawyers for the industry group iMEGA argued that UIGEA was unconstitutional in a number of areas such as freedom of speech and invasion of privacy.

"You're looking at a law criminalizing an activity online that is legal off-line in 48 of the 50 states," said Joe Brennan Jr., the group's chairman. "If I have that right off-line in the real world, I should have that right online."

UIGEA, passed by Congress in Oct. 2006, made it illegal for financial institutions to handle transactions between online gambling firms and US residents (except for carve outs for lotteries, horse racing, fantasy sports and Indian Tribal gaming) in an attempt to stop online gambling in the USA.

WHY THE CASE WAS DISMISSED

The Department of Justice argued against iMEGA's constitutional arguments, saying that the Act has been properly passed in Congress, and that iMEGA members had not yet been affected because the regulations supporting the law had not yet been implemented, therefore the group had no standing to bring a challenge to court at this time.

The law was legally enacted and does not violate the Constitution, therefore U.S. District Judge Mary L. Cooper in Trenton determined that iMEGA had not shown sufficient cause for her to order enforcement of UIGEA to be blocked. The ruling was issued on Tuesday and publicized by the association on Thursday.

In dismissing the group's challenge to the law, the judge did not get involved in whether the law should have been passed, or its efficacy.

"The plaintiff's claims express a fundamental disagreement with Congress's judgment that Internet gambling should be controlled legislatively, and pose questions as to whether (the law) ... will be successful in accomplishing its desired ends," she wrote. "But it is not the court's role to pass on the wisdom of a congressional act or speculate as to its effectiveness."

BUT THERE IS GOOD NEWS AMONGST THE BAD

The positive news was that Judge Cooper gave iMEGA legal standing to challenge the constitutional elements of the UIGEA in an appeal court, which defeats the government's argument that the organization had no standing.

An appeal would also add more woes to government attempts to enact the UIGEA, in addition to the abundant criticism that the proposed UIGEA regulations are not specific enough- pointing out that still no one knows what is legal and what is not, and that banks are not equipped to do so.

iMEGA spokesmen said such an appeal would be launched at the Third Circuit Court of Appeals within the next two months. A US Justice spokesman said the department was reviewing the judgment and declined to comment further.

iMEGA claimed that the authority of the states had been upheld by the courts, which is an important element in anti-gambling laws.

"Granting iMEGA standing is a major victory any way you look at it," said Eric M. Bernstein, attorney for iMEGA. "Judge Cooper's ruling holds that, even with the passage of [the Federal law] UIGEA, online gambling is only illegal in states where a statute specifically says it is."

BANKS RULED EXEMPT FROM CRIMINAL PROSECUTION

The judgment also exempted criminal sanctions under UIGEA against the financial institutions that would be implementing it.

"iMEGA is very pleased that the Court recognized our standing and the weaknesses in UIGEA" said Joe Brennan Jr., the chairman of iMEGA.

"Judge Cooper found that banks, credit card companies and other payment system instruments are exempt from criminal sanctions under UIGEA, significantly undercutting UIGEA's enforcement mechanism. Her ruling echoes the growing consensus of opinion that UIGEA is a fundamentally flawed statute."

Edward Leyden, President of iMEGA, was quoted by gambling911 as saying that he was ecstatic over the decision to allow iMEGA standing in this matter and to move forward into an Appeals Court where the chances of having the UIGEA overturned increase dramatically.

"She (Honorary Judge Mary L. Cooper) has given us the voice to fight this battle as we move forward into a higher court," he explains. Until today, the concern was that iMEGA would not be granted standing to represent the i-Gaming industry and continue to the battles in court.

To view the entire court ruling click here.

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