The long-awaited Appeals Court hearing challenging the constitutionality of the Unlawful Internet Gambling Enforcement Act (UIGEA) occurred on Tuesday. Lawyers from the United States Attorney General’s Office and Interactive Media Entertainment and Gaming Association (iMEGA) convened in the Third Circuit Court of Appeals in Philadelphia in order to argue their side. In the end, a variety of issues were discussed, including the location of a bet when a person gambles online. As you could imagine, it was a highly contentious topic and one that internet-based businesses will face for some time to come. PocketFives.com sat down with iMEGA Executive Director Joe Brennan to learn more.Judges Dolores Sloviter, Thomas Ambro, and Kent Jordan made up the three judge panel that heard iMEGA’s arguments on why the UIGEA should be “void for vagueness.” Brennan told PocketFives.com that the focus on the location of a bet was almost immediate: “For some reason, they were focused on the issue of where the bet is placed. They may decide that the bet is placed where the computer is located rather than where the server is located.” For example, when you play online poker on UltimateBet, is the bet placed from where your computer is, where the site’s servers are, or where your financial institution is located? It’s now up to the Third Circuit to decide.
Lawyers for iMEGA argued that the bet takes place overseas since a player’s account is located offshore. Brennan explained, “The balance of your account is located offshore. Funding an account isn’t an illegal act in itself. I think that this is something not only for internet gambling, but also for internet law: Where do transactions and interactions occur?” Eric Bernstein, who spoke on behalf of iMEGA at the District Court level one year ago, and Stephen Saltzburg handled the duties of counsel for iMEGA. Contrastingly, Nicholas Bagley and Jacqueline Coleman headed the legal team for the Attorney General’s Office.
Government attorneys were asked why they were challenging the legal standing of iMEGA when it was already preserved at the District Court level. According to Brennan, a previous ruling from the Third Circuit addressed whether third parties like iMEGA had a right to sue on behalf of members. However, the existence of this case was news to the Government. Bagley was quoted as saying, “I’m somewhat dumbfounded, but I’d be happy to entertain questions.” In the end, the three judge panel had no follow-up on the issue. iMEGA’s membership consists of both online poker sites and a handful of players.
The courtroom in the City of Brotherly Love was packed to the brim, as iMEGA was the second case on the docket behind one discussing whether a Yeshiva school could be built on the grounds of a synagogue. Despite the spectrum of cases being heard, Brennan noted that the magistrates were particularly well-versed on internet gambling. He told PocketFives.com, “They were really well-prepared. Judge Ambro singled out ub.com when asking about bets and noted that it was located in Costa Rica. He also asked about the sign-up process at the online poker site.” Ambro’s first question from the bench was about the status of Congressman Barney Frank’s (D-MA, pictured at left) bills calling for licensing and regulating the industry. Neither has been scheduled for mark-up in the House Financial Services Committee after being introduced on May 6th.Now, iMEGA and the rest of the industry will anxiously await the Third Circuit’s ruling on the constitutionality of the UIGEA. The average response time from the Appeals Court is three months and the organization does not expect a verdict in the next 30 days. When the case was heard at the District Court level, Judge Mary Cooper rendered a decision in five and half months. In the end, Judge Cooper granted iMEGA standing to sue, but disagreed with many of the organization’s key points. Brennan noted that he was remaining patient: “We’re going to wait for a decision. Once we hear it, we’ll decide if there’s anything else to do.”
iMEGA’s central argument focuses on whether the UIGEA should be “void for vagueness.” That is, does the law provide enough guidance to be accurately enforced? The organization has pointed out the difficulties of lottery patrons in New Hampshire and North Dakota who have tried to purchase legal tickets online only to be denied due to Visa and MasterCard over-blocking gambling transactions. These developments, along with the regulations of the UIGEA, were put into effect after iMEGA filed its brief to the Third Circuit in November. Whether they will be taken into account as part of the court’s final decision is not yet known.
Stay tuned to PocketFives.com for the latest from iMEGA’s UIGEA challenge.
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