U.S. Government Responds to iMEGA Appeal on UIGEA

November 3, 2008 (InfoPowa News) — The extensive coverage and interest in the attempt by Kentucky to seize international domains has tended to push another important legal battle out of the limelight recently, but it was back this week with a vengeance — we're talking about the fight to overturn the Unlawful Internet Gambling Enforcement Act (UIGEA) being waged against the U.S. government by the feisty Interactive Media Entertainment and Gaming Association.
 
Having been granted legal standing by a lower court, on September 29th iMEGA's high powered legal team filed an appeal with the Third Circuit Court against an earlier negative ruling by Judge Mary Cooper in its attempt to have the UIGEA declared unconstitutional. This gave the U.S. government a deadline by which to respond, and once this was met iMEGA would have a further 15 days to argue against the government's response.
 
Ultimately, these arguments will be studied by a panel of judges who will decide on the way forward or reach a definitive decision.
 
This week the government response was filed, and will almost certainly become the subject of wide comment in the industry.
 
Most notably, the government refutes iMEGA's claim that the UIGEA is vague, opining that it is "perfectly clear: It prohibits the knowing acceptance of financial instruments in connection with gambling when the bet in question is illegal in the place it was made or received." 
 
In making this assertion, the Department of Justice has apparently ignored the widespread criticism of the lack of precision in the Act and particularly in the lack of a useful definition of what constitutes "illegal online gambling transactions." These criticisms have come not only from the online gambling industry, but also from major U.S. financial institutions and organizations, politicians, and even federal government officials charged with drafting supporting regulations for the UIGEA.
 
Another government claim resurrects the already-defeated argument that iMEGA lacks legal standing to challenge the UIGEA. The DoJ continues to insist that iMEGA lacks standing to charge that the UIGEA violates privacy rights of individuals. It resorts to legal technicalities in claiming that standing should be denied because iMEGA "failed to advance this argument to the district court, either in its motion for injunctive relief or in its opposition to the government’s motion to dismiss." 
 
iMEGA chairman Joe Brennan finds it "hard to believe the government is making that claim", pointing out that Judge Mary Cooper herself preserved due process concerns in her decision.
 
Brennan commented further in a press release following the government's filing, "We're very confident, after reviewing the government's brief, that we are on track for having this law overturned. We're looking forward to the opportunity, once this fatally flawed law has been dealt with, to work toward a reasonable, common sense approach by our country to Internet gaming, one that above all affirms our rights and their place in the online world."
 
iMEGA's initiative in the courts is mirrored in political moves, notably those by Congressman Barney Frank (D-MA), Chairman of the House Financial Services Committee. His Payments System Protection Act (HR 6870) and an accompanying amendment is currently active and requires that a list of activities be developed, including what is and is not legal under the law to make the UIGEA's enforcement by the financial services industry understandable and practical in implementation.
 
There are also important questions of inequity in U.S. laws that permit extensive online gambling in the horseracing industry yet ban it elsewhere.