Action Imminent in UIGEA Court Challenge

16 April 2009
An American trade association is set to have its challenge against the controversial Unlawful Internet Gambling Enforcement Act considered at a federal appeals court in Philadelphia this summer.

The Interactive Media Entertainment and Gaming Association, or Imega, announced Thursday that by July 6, the United States Court of Appeals for the Third Circuit will determine whether the case will be decided on the merits, or whether oral arguments will commence.

"Either way, we'll probably be in Philadelphia on July 6 to have oral arguments or to read the decision made by the three-judge panel," Joseph Brennan Jr., the chairman of Imega, told IGamingNews Thursday.

Imega's legal challenge began nearly two years ago in Federal District Court in New Jersey. That court dismissed the case in March 2008, but a month later, Imega announced it would take its case to the appellate court.

Imega is arguing the UIGEA imposes criminal sanctions without clearly defining a crime.

Its argument is based on a concept in constitutional law called void for vagueness, which requires a law to be constructed in such a way as to prevent confusion, by individuals, on how that law applies to them.

By contrast, the United States Department of Justice, defendant in the case, is arguing the UIGEA is not sufficiently vague as to meet the standard for declaring it unconstitutional.

The UIGEA's rules, which were finalized last November amid strong criticism from the banking industry, do not take effect until December 2009.

The uniform complaint leveled against the UIGEA by politicians, lobbyists -- even federal government agencies -- is that the law fails to clearly define "unlawful Internet gambling."

And the lack of a clear definition has already been linked to a phenomenon called overblocking, which, for Internet gambling, means any gambling-related transaction -- be it legal or not -- gets blocked.

Between September and October 2008, the UIGEA was thought to have inspired Visa Inc. to block credit card transactions for online subscription products made available -- on a legal, intrastate basis -- by the New Hampshire and North Dakota lotteries.

Visa did not return phone calls when contacted by IGamingNews in November 2008.

In March, Imega requested to use the transaction denials in both states as evidence the UIGEA has engendered overblocking, though the appellate court has still to rule on that request.

"We're very happy the Court is moving forward on this, and we're confident the Court will consider the real-world effect of the law, regardless of the DOJ's opposition," Mr. Brennan said.

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