iMEGA: Poker's Ally Against The UIGEA
Poker will get its day in court. The US Third Circuit Court of Appeals has agreed to review the Interactive Media Entertainment and Gaming Association’s challenge of the Unlawful Internet Gambling Enforcement Act. Oral arguments could be presented in the Philadelphia court as early as this month depending on the readiness of the US Department of Justice, the lead defendant in the suit.
The UIGEA, which went into effect in January but will not be enforced under penalty until December, prohibits US fi nancial institutions from processing transactions to online gambling sites. iMEGA argues that the law should be void for vagueness and that the failure to defi ne “unlawful Internet gambling” will lead to over-blocking.
“It would have been very easy for the court to have dismissed this out of hand,” says Joe Brennan Jr., iMEGA chairman. “They took it up. We frankly cannot wait to get out there because we think we have a fantastic case. We really feel we have an incredibly strong hand to play. We know this thing cold, and we’re eager to see how the Justice Department is able to defend this one.”
Previous efforts to combat the intrusive legislation, led by the lobbying of the Poker Players Alliance, have focused mostly on Congress, where the UIGEA originated in 2006. iMEGA has taken the fi ght to the courts, where it already tallied a victory earlier this year by stopping Kentucky from seizing 141 gambling-related Internet domain names that included PokerStars.com and FullTiltPoker.com.
Brennan thinks there is a better chance to get the UIGEA overturned through the courts than in Congress, which overwhelmingly passed the bill with a unanimous vote in the Senate and only two detractors in the House of Representatives. Even if many Congressmen didn’t know what they were voting for at the time and are more educated today due to the work of the PPA and prominent support of Barney Frank (D-Mass.), Brennan doesn’t foresee enough representatives being brave enough to change course.
“The greatest sin in American politics is fl ip-fl opping,” Brennan says. “Congressman Frank has no problem with that because he will be the Congressman in his district until he decides he doesn’t want to be. No one can challenge that guy. But most of the others, especially the freshmen Congressmen up for re-election in two years, don’t want to face ads saying they voted to make gambling available to your children in their home. No one wants to face that ad.”
The court provided iMEGA with possible dates for the case in April, and iMEGA responded that its availability is open, according to Brennan. The case is only expected to take a few hours, with each side giving oral arguments and taking questions from the three-judge panel. Both sides already submitted briefs in the fall. The brief submitted by iMEGA can be viewed at imega.org.
Central to iMEGA’s argument is a law that was intended to restrict the access to minors of adult material on the Internet. The Child Online Protection Act of 1998 was twice struck down by the same Third Circuit Court of Appeals for being overly broad and intrusive. The court stated its preference of fi ltering over prohibition, a stance iMEGA hopes the court applies to the UIGEA.
“The UIGEA is incredibly ironic because its authors and supporters want to protect children and prevent fraud and prevent problem gambling,” Brennan says. “The US fi nancial institutions all have safeguards of identity verifi cation, age verifi cation, credit monitoring and real-time awareness of balances. So to remove those safeguards by prohibiting those companies from making the transactions ironically makes those groups they hoped to protect more vulnerable. If you have a law to protect people that ultimately makes them less safe, that’s a bad law.”
iMEGA’s argument of over-blocking got a boost in January when the New Hampshire Lottery Commission reported that it was losing revenue because credit card companies were stopping online ticket purchases despite state lotteries having a specifi c exemption in the UIGEA, a point lead counsel Eric Bernstein is sure to make in oral arguments.
Once oral arguments are complete, the judges will recess to consider the matter. A written decision will be forthcoming, though its timing is hard to predict. The judges could take anywhere from weeks to months to years to make their ruling.
While lobbying in Washington can only help a cause by getting a position known, iMEGA is taking a bit of a gamble by challenging the law in court. If the judges agree the UIGEA is unconstitutional, they can overturn it and immediately block the law from being enforced. It would then be up to the new Justice Department appointed by President Obama to decide if it wants to appeal.
However, a negative ruling will strengthen the UIGEA by attaching something it doesn’t have now, written validation from the judicial system.
“What’s the alternative, to let a bad law go unchallenged?” Brennan says. “I don’t see the situation getting any worse. We already have an industry suffering because of the stigma attached to it by this law. There is no federal law making it illegal to gamble online. The government knew there was no way it could get a law passed to directly remove this right from Americans. It tried for six years and never had the support. So they went about it indirectly by saying go ahead and gamble online but you can’t have money. The banks weren’t expecting this. The iGaming lobby constituted at the time didn’t get the job done. You almost got to hand it to the guys who managed to get this law passed. It never had majority support so they back-doored it and attached it to a deal where no one in Congress in their right mind would vote against it. What I worry about is that no one will do anything and we’ll continue circling the airfi eld while more companies abandon the US market.”
