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A Closer Look at the U.S. 3rd Circuit Court of Appeals Ruling


There has been some confusion as to what positives — if any — could be gleaned from the decision by the U.S. 3rd Circuit Court of Appeals two weeks ago to uphold the Unlawful Internet Gambling Enforcement Act.

On the surface, the ruling changes nothing. The UIGEA remains on course to take full effect on December 1. The claim by the Department of Justice that existing federal law makes Internet poker illegal remains a gray area. As long as this gray area exists, banks and credit card companies will attempt to block all deposits to poker sites without consideration of state laws.

That being said, some people might consider the legal challenge made by the Interactive Media Entertainment and Gaming Association a complete failure. This isn't the case.

A complete failure would have been the court's establishing some sort of precedent that would hurt poker's cause in the future. This didn't happen. The ruling did not make matters worse.

The ruling, however, did contain a few modestly encouraging passages.

Some uninformed members of the media and government have mistakenly identified the UIGEA as legislation that made online poker illegal. The ruling clarifies this as follows: "It bears repeating that the Act itself does not make any gambling activity illegal."

On the issue of states' laws, the court could have said such laws were irrelevant because online poker is unlawful at the federal level. Instead, the court pointed to the law of the state from which a bettor initiates a bet as determining whether a transaction is unlawful. This is not the victory iMEGA had hoped for because the ruling still points to the UIGEA as incorporating federal or state law. As long as the gray area exists in federal law, blocking will occur in states where there is no law against online gambling.

However, that the ruling spent so much time on state law while only once mentioning federal law could be seen as encouraging to the argument against the DOJ's claim that the 1961 Wire Act applies to poker — if poker's representatives could ever get the DOJ in court on that issue.

Joe Brennan Jr., iMEGA chairman, thinks the ruling reaffirmed the right of states to regulate gambling within their borders. While legislation has already been brought up in several states to create an intrastate system to regulate online poker, Brennan thinks he can bring key wording in the ruling to hesitant state legislators to show that they can reap the benefits of poker within their states without fearing repercussion from the UIGEA or federal government.

"This sets up our strategy going forward to operate in state legislations," Brennan said. "We will talk to states about the possibility of passing i-gaming acts. If the state is looking to get some revenue to make up for budgetary short falls, and most have them, i-gaming is a fairly sizable untapped market. State legislators I've talked to in the past have asked, 'If we go ahead and enact this in our state, is the government going to come in and say this is illegal?' I said no. This ruling enshrined that in bold letters, so now I can go back to those state legislators and say, 'See, even the courts agree it is the state's decision.'"

iMEGA's case against the UIGEA was always considered a long shot, as is any case when going against the DOJ. So coming away with any positive wording in the ruling, while no wording is damaging to poker's cause, can be construed to be a minor victory.

Tell your state congressmen you are in favor of online poker regulation by writing them a letter and signing up for an online poker account.

What do you think?

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