Hi all,

Twoplustwo have been kind enough to provide a forum for iMEGA, so that we can continue to directly answer questions you have about our trade association, the issues we're involved in, and how our interests intersect with the interests of the 2+2 community.

Oddly enough, it would be a nice thing if there was not much to talk about. It would be great if a respect for our rights, common sense and a desire to provide true consumer protection dictated how government at the state and Federal level engaged with the i-gaming industry. But for the most part, that's not the case:

1. UIGEA - the Federal government doesn't actually try to outlaw gambling online - they correctly surmise that even non-gamblers wouldn't support that level of intrusion into Americans' online lives. So they just make it illegal for US banks, credit cards and processors from doing business with the sites. But they even muck that up, because Congress can't (actually, won't) even define what constitutes "illegal online gambling".

2. The Wire Act - because this law is so old and so vague, it has become a catch-all justification for the Justice Department to go after i-gaming. And since not many people got in their way, it's been a good strategy for DoJ. But even Congressional foes of i-gaming see the potential fatal flaws. On the day UIGEA was signed on the White House lawn, Rep. Bob Goodlatte (R-VA) - one of the law's authors - told the Washington Post that his first priority after the 2006 mid-term elections was to amend the Wire Act with specific anti-internet gaming language. Were it not for the beating the GOP took at the polls and the loss of their majority in both houses, things could be much worse.

3. The Illegal Gambling Business Act - another antique that's seeing a bit of a revival, at least with the US Attorney for the Southern District of New York.

4. The Commonwealth of Kentucky and Gov. Steve Beshear (D) - Who would believe that class action attorneys working on contingency for the KY governor could assume powers invested in the attorney-general and state police to bring a forfeiture based on a criminal statute, and get a seizure order signed in secret for 141 i-gaming domain names?

And none of the owners were notified, charged, or convicted?

And the governor's attorney asked us for $1 billion to settle out?

And by the way, the governor ran on bringing more gambling to KY, but that doesn't stop him from calling me the head of an illegal internet gambling association and our members something close to predators stalking the young people of KY.

We beat him in the Kentucky Court of Appeals, and we cannot wait to beat him again in the state supreme court.

5. Minnesota - I will say that this one was caught early, and though it was a nuisance, the people in the Minnesota attorney-general's office and the state Department of Public Safety were actually very reasonable in settling this. You had PPA making calls and sending mail, legislation being proposed in the state house, and iMEGA suing them in court. That's a pretty good effort all around...probably a result of all this practice we're all getting.

6. New York - Minnesota wasn't even in the books before New York happened. But perhaps, by going after player payouts, the DoJ overextended themselves this time. Why did this happen? Nobody knows, because the US attorney had the court seal the records. No small coincidence this happened during the WSOP, I'm sure.

WHAT'S NEXT?

Whatever it is, I'm sure it will be sooner instead of later.

For iMEGA, first up is oral arguments in the US 3rd Circuit Court of Appeals, in our challenge to UIGEA.

We're asking the court to overturn the law, because it should be "void for vagueness", which is leading to "over blocking" of legal, exempted transactions.

Because Congress declined to enunciate exactly what constituted "illegal Internet gambling", the parties charged with enforcing it - banks, credit cards, processors - have to figure out for each trans action they receive whether or not it is legal. And they have to do due diligence up front on the companies to ensure that they don't offer "illegal Internet gambling".

So, since no one knows what "illegal Internet gambling" is exactly, companies are forced to block anything that MIGHT fit the description. Like horse racing and state lotteries, which, despite being given specific exemptions by UIGEA, are being blocked anyway.

You might think information like that would be valuable to the US 3rd Circuit Court of Appeals, who are considering the law. But the DoJ opposes any mention of it to the court, probably because it takes our previously academic argument about vagueness and over blocking and provides a concrete example of real-world effect. That undermines the DoJ's entire defense, so of course they don't want the court to consider it.

The court hasn't said one way or the other if they will consider this information, but you can imagine the problem they might have if they didn't.

There's more (there's always more). But you can't boil the ocean, and this is the best thing we can do for all involved right now: get UIGEA overturned, so that Congress (led by Rep. Frank) can go back and do things right, by licensing and regulating i-gaming.

Joe@iMEGA