Appeals Court Upholds Online Gambling Ban

    September 2, 2009

The U.S. 3rd Circuit Court of Appeals in Philadelphia upheld the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, rejecting that the law was vague and violated individual privacy rights.

The law was challenged by the Washington, DC-based trade association Interactive Media Entertainment & Gaming Association (IMEGA), on behalf of the Internet gambling industry.

In their ruling, the judges clarified that the legality of Internet gambling transactions depended on state law where the bettor was located, and the laws where the betting operator was located. The court pointed out that UIGEA did not establish a blanket federal ban on Internet gambling.

"It bears repeating that the Act itself does not make any gambling activity illegal," wrote Judge Dolores Sloviter. "Whether the transactionconstitutes 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."

Joe Brennan Jr., IMEGA’s chairman
Joe Brennan Jr.
IMEGA’s chairman

Joe Brennan Jr., IMEGA’s chairman said that its members were disappointed that the court did not overturn the law, but the ruling did have some positive aspects.

"The court made it clear – gambling on the Internet is unlawful where state law says so," said Brennan. "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."

Brennan also said in deferring to state law, the courts decision is consistent with traditional gambling law in the U.S.

"States have always held the power to regulate gambling in this country, not the Federal government," said Brennan.

"The court’s ruling seems to say ‘back to the future’ when it comes to regulating Internet gambling, so we will turn our attention to the states to make the case that this industry can be properly regulated and produce badly needed tax revenue."