iMEGA Suit Claiming Unconstitutionality of UIGEA Dismissed

I wake up this morning and, as I often do, I start the day reading through some of the previous day’s poker news.

Early in my journey I notice an article suggesting what appears to be good news with regard to the Unlawful Internet Gambling Enforcement Act of 2006. There was a 3rd Circuit District Court decision yesterday regarding the case brought by the Interactive Media Entertainment and Gaming Association versus the U.S. Attorney General. You remember that case -- the one in which iMEGA challenged the UIGEA as unconstitutional (for several reasons).

Sounds like the District Court decided to rule against iMEGA and uphold the UIGEA. But somehow its decision is being understood as positive for online poker. So says the article, which ends with the hopeful statement that the ruling represents “a small step in the right direction for the future of Internet gambling.”

But really, that article is not so much an article as just a brief summary of an article appearing on another website. As it happens, the website being referenced is one the journalistic credibility of which has long been questioned thanks to numerous examples of misreporting, citation of “gambling industry insiders” who are in fact the site’s own writers, and frequent examples of sensationalistic rumor mongering.

Nonetheless, I follow the link.

A closer look at the article that appears on the questionable site reveals it, too, doesn’t represent original content, but merely paraphrases an article appearing on the iMEGA website -- that is to say, an article focusing on iMEGA Chairman Joe Brennan’s interpretation of the ruling as having clarified that the states, not the federal government, have the priority to say what is and what is not unlawful internet gambling. Says Brennan, since “there are only a half-dozen states which have laws against Internet gambling, [that] leav[es] 44 states where it is potentially lawful.”

To their credit, all three of these articles additionally link to the actual ruling. Which is a good thing. Because if one takes the time to read the actual ruling -- it is just ten pages, after all -- one discovers that, well, there ain’t so much to be all that hopeful about here.

The District Court ruling summarily rejects all of iMEGA’s various claims of unconstitutionality, some of which, such as the claim the UIGEA somehow violates First Amendment rights, seem quite a stretch -- obvious attempts by the group to throw lots of arguments out there in the hopes that one sticks.

The ruling then rejects iMEGA’s appeal that the UIGEA should be rendered “void for vagueness.” “We reject Interactive’s vagueness claim,” say the ruling’s authors. “The Act clearly provides a person of ordinary intelligence with adequate notice of the conduct it prohibits.”

Indeed, in its defense of the UIGEA’s non-vagueness, the ruling points out what those of us who have read the UIGEA already know, namely, that the Act as it is written does not define “unlawful internet gambling” and instead defers to individual states’ laws regarding such. Nor do the regulations that were later finalized offer such a definition, again reiterating the states’ authority here.

So iMEGA’s suit has been dismissed. The UIGEA has not been voided as unconstitutional. In other words, nothing, really, has changed with regard to the UIGEA. It went into effect on January 19, 2009. Banks, payment processors, and other institutions still will be made to comply starting December 1, 2009. And, like it always did, the law defers to individual states to decide what is and what is not “unlawful internet gambling.”

It remains to be seen, of course, whether or not we see any legislation hurried through during the next three months that might alter the legal landscape. It also is not clear at the moment what exactly is going to happen come December, though I think it is safe to say that if nothing changes the chance of your encountering some sort of difficulty when attempting to deposit to your favorite online poker site will perhaps be greater after 12/1/09 than it is right now.

But I’m unconvinced there’s much that is encouraging about yesterday’s ruling. And a little puzzled by how news about it seems to be suggesting there is.