3rd Circuit Rejects Challenge to Internet Gambling Statute
September 1, 2009. The U.S. Court of Appeals (3rdCir) issued its opinion [10 pages in PDF] in Interactive Media Entertainment & Gaming Association v. US, a constitutional challenge to the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). The Court of Appeals affirmed the District Court's dismissal of the plaintiff's complaint.
UIGEA. The 109th Congress enacted the Unlawful Internet Gambling Enforcement Act (UIGEA) as one component of an unrelated port security bill. This bill was HR 4954 (109th), the "Port Security Improvement Act of 2006". It is now Public Law No. 109-347. Title VIII of this bill is the UIGEA. See, story titled "House and Senate Approve Port Security Bill With Tech Provisions" in TLJ Daily E-Mail Alert No. 1,461, October 4, 2006. The UIGEA is codified at 31 U.S.C. § 5361, et seq.
The UIGEA is an attempt to stop internet gambling by regulating the financial transactions that fund what already constitutes unlawful internet gambling. It provides that no one engaged in the "business of betting or wagering" may knowingly accept certain financial transactions, including checks, electronic fund transfers, and credit card debt, in connection with "unlawful Internet gambling".
The UIGEA required the Department of the Treasury (DOT) and the Federal Reserve Board (FRB) to write regulations that require each "designated payment system" to identify and block these restricted transactions through the establishment of policies and procedures. It required each "financial transaction provider" to comply with these DOT/FRB regulations.
See also, story titled "House Approves Unlawful Internet Gambling Enforcement Act" in TLJ Daily E-Mail Alert No. 1,408, July 11, 2006, and story titled "House Financial Services Committee Approves Internet Gambling Bill" in TLJ Daily E-Mail Alert No. 1,330, March 16, 2006.
District Court. The Interactive Media Entertainment & Gaming Association, Inc. (IMEGA) represents businesses that provide gaming services, including internet gambling.
It filed a complaint in the U.S. District Court (DNJ) against the Attorney General of the U.S., the FRB and the Federal Trade Commission (FTC) alleging the the UIGEA violates the First Amendment (association, speech, and void for vagueness), violates the privacy rights of gamblers to gamble in their homes, violates the 10th Amendment, and violates the treaty obligations of the U.S., and seeking declaratory and injunctive relief.
The District Court dismissed the complaint. This appeal followed.
Court of Appeals. The Court of Appeals affirmed.
On appeal, the IMEGA argued that the statute is void for vagueness, and focused on the UIGEA's phrase "unlawful Internet gambling".
The Court rejected this argument. It wrote that the UIGEA "prohibits a gambling business from knowingly accepting certain financial instruments from an individual who places a bet over the Internet if such gambling is illegal at the location in which the business is located or from which the individual initiates the bet." It concluded that "Thus, the Act clearly provides a person of ordinary intelligence with adequate notice of the conduct that it prohibits."
The Court continued that the facts that the UIGEA incorporates other federal or state laws related to gambling, and that state laws vary considerably, do not render the prohibition void for vagueness. Nor does the gambling businesses' inability to ascertain the location of gamblers make the statute defective.
The IMEGA also asserted on appeal that the UIGEA violates the privacy rights of individual gamblers. The District Court rejected this argument on the grounds that the IMEGA does not have standing to assert this claim.
The Court of Appeals wrote that "We share the District Court’s doubts regarding Interactive's standing to assert these claims, particularly because Interactive does not itself have any relationship with individual gamblers, but rather seeks to assert third-party standing based on its members' relationships with such gamblers. However, as noted above, the limitations on third-party standing are prudential requirements developed by the courts, not jurisdictional requirements imposed by Article III of the constitution. Accordingly, we need not decide whether Interactive has standing because, even assuming that it does, we agree with the District Court that Interactive's claim clearly fails on the merits."
It elaborated that "Gambling, even in the home, ... is not protected by any right to privacy under the constitution".
This case is Interactive Media Entertainment & Gaming Association, Inc. v. Attorney General of the U.S., et al., U.S. Court of Appeals for the 3rd Circuit, App. Ct. No. 08-1981, an appeal from the U.S. District Court for the District of New Jersey, D.C. No. 3-07-cv-02625, Judge Mary Cooper presiding. Judge Sloviter wrote the opinion of the Court of Appeals, in which Judges Ambro and Jordan joined.