The 3rd Circuit decision on our UIGEA challenge came back this morning. They upheld the law, but as indicated by questions during oral arguments, they seem to be saying - "if the state where the bet is placed says internet gambling is illegal, then processing that payment is illegal"...meaning that it is not illegal if the state doesn't have a law saying internet gambling is illegal.

Also, they clarified that the Act does not make internet gambling illegal.

Important passage:

"To the extent that Interactive's hypothetical raises a vagueness problem, it is not with the Act, but with underlying state law. It bears repeating that the Act itself does not make any gambling activity illegal. Whether the the transaction... constitutes 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." p6., iMEGA v. Holder, US 3rd Circuit decision

Also key:

The Act prohibits a gambling business from knowlingly accepting certain financial instruments...if such gambling is illegal where the business is located or from which the individual initiates the bet (note: the state where the bettor is), p6., iMEGA v. Holder, US 3rd Circuit decision


So, we lose, but in a way, we have some measure of a victory here. Arguably six (6) states make it illegal to engage in internet gambling. Forty-four (44) do not. UIGEA does not make internet gambling or processing transactions for internet gambling illegal in those forty-four states.

Here's the decision: http://www.imega.org/wp-content/uplo...r_decision.pdf

We'll have analysis and a statement later today.

Joe@iMEGA

I'm not a lawyer, but from the sounds of it this is about the best we could have hoped for. I know this has been posted elsewhere, but what are those six states again?

I know its been talked about before but I don't know which or where.

Can someone give a breakdown of these arguable six states, and also some states of the other 44 where its most likely gambling is/will be legal online.

Gambling-law-US lists seven states that have an express prohibition against Internet gambling: Illinois, Indiana, Montana, Nevada, Oregon, South Dakota, and Washington. I don't know how current Chuck Humphrey's analysis is.

-- Russ Fox

Well the PDF specifically mentions Hawaii and Oregon as two examples.

They also assert that gambling in the home is not a constitutionally protected right.

I have not yet read the decision. However, I'll admit I'm confused. Does this mean that banks in a state that does not expressly prohibit online gambling do not have to follow the UIGEA? If so, then this is great for online poker. OTOH, does this mean that some party has to sue in each state to establish whether the UIGEA applies in that state. Also, how clearly must the state law prohibit online gambling for the UIGEA to apply in that state?

Maybe I'll know more after I read the decision, but from the G911 summary, I doubt it. I'll post more thoughts after I read the decision.

Also, in those states that do have some vague question about the legality of online gambling(Not only Poker :-) ) is it the State's job to administer the law, or is the Federal government going to take it upon themselves to enforce the state law?? Does this decision now mean that the case against the Canadian payment processor is dead?? What does this mean for Sports Betting??

I don't see how this changes anything or helps us. We already knew that the UIGEA applies only to Internet gambling that is unlawful under state or federal law. The financial institutions still will overblock and they still won't go into the business of determining what laws do or do not apply and where. I don't see this as any sort of win for us. If we could sue financial institutions for blocking transactions that shouldn't be, this decision would help us. But the UIGEA gives them protection from such suits.

I doubt it. Note that the decision talks about where the bet is initiated, not where the money transaction is initiated:

Banks won't be able to predict where the depositor is going to bet from, so they have to block every transaction.

The exact text that seems most relevant to your question is listed below. The issue of banks are not addressed here, but it does address the issue of companys knowingly accepting a wager ("certain financial instruments ") from a state where online gambling is illegal. From my reading I would assume that the location of the bank is not at issue, the location of the wager as well as the location of the business accepting the wager determines the legality.

From my reading the problem still remains for the banking industry which must now either determine the legality of each individual wager placed using a financial instruments initiated by the bank, or the bank can instead chose to block all transactions as a measure to assure compliance.

My thanks goes out to Joe and all at iMEGA for sharing the results with 2+2'ers first.

Joe - can you please comment on the statement above, your insight on how this in some ways removes the teeth of the UEGIA in 44 states would be very helpful.

This is the way I read the ruling but it also raises an interesting ?. If the bills are passed that are currently in congress and some states opt-out Then the banks will be faced with them same problem. The banks will have no-way of knowing the place the wager or bet was made only the location the bank is in or maybe the residence of the person trying to cash the check. I wonder even if legislation is passed unless the UIGEA overturned then the banks may still over block transactions if they have no-way to tell the location the bet is made in.

Additionally, does the ruling call into question any of the DOJ's actions so far??

Of course not. There would have been absolutely no reason for them to do so in this case.