iMEGA Versus UIGEA Online Casino Gambling Case

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The Unlawful Internet Gambling and Enforcement Act (UIGEA) came into effect in October 2006. Interactive Media Entertainment and Gaming Association Inc. (iMEGA) is an association that protects the interests of the online gaming industry. In 2007 iMEGA filed a motion seeking injunction against the implementation of the UIGEA in the US District Court of New Jersey. The motion came up for hearing before Judge Mary L. Cooper in March 2008.

In the first instance the United States Department of Justice (DoJ) challenged the validity of iMEGA representing the online gaming industry. However, Judge Cooper accepted that iMEGA had legal standing in the issue. This not only allowed this case to proceed further but also allowed iMEGA to represent the online gaming industry in other cases. The DoJ then tried to stop the case on the grounds of "ripeness", which means that since all the regulations required under the UIGEA had not been implemented therefore challenging it was premature. However Judge Cooper did not allow this.

Then iMEGA was called to explain why it wanted an injunction against the UIGEA. iMEGA argued that the UIGEA violated the 1st Amendment right to free speech. Judge Cooper ruled that the financial transactions that the UIGEA sought to ban could not be equated with free speech. She stated that iMEGA and its members were not being prevented from expressing their opinion about the UIGEA. Therefore she did not accept this argument. iMEGA then argued that as a result of the UIGEA the United States would be violating the WTO agreements it had entered into. Judge Cooper ruled that this issue was not one that a private organization could decide. It was for the Government to take a call. iMEGA's final argument was that the UIGEA was a bad and ineffective law and that the Government's objectives would be better served by legalizing and regulating online gambling. Judge Cooper ruled that it was not in the court's purview to comment "on the wisdom of a Congressional act or speculate as to its effectiveness." Judge Cooper dismissed the motion but allowed iMEGA to appeal against the decision if it so desired.

Accordingly iMEGA filed an appeal in the United States 3rd Circuit Court of Appeals. The case was heard by a three judge panel in September 2009. iMEGA put forward two arguments. One was that the UIGEA was vague in law and the other was that it violated the privacy of the individual. The court ruled that online gambling operators would be able to determine if their operations were illegal or not based on the existing gambling laws read in conjunction with the UIGEA and therefore the UIGEA was not vague. The court also ruled that commercial financial transactions do not fall in the purview of the right to privacy. Therefore iMEGA's appeal was struck down.

However the court offered a silver lining to iMEGA and the online gambling industry. It categorically stated that the UIGEA did not make online gambling illegal. It merely sought to act against illegal online gambling. Whether online gambling would be illegal or not depended on the laws of the state from which the online gambling operator functioned. Joe Brennan Jr., the chairman of iMEGA, took this part of the judgment to be a positive. He said, " there are only a half-dozen states which have laws against Internet gambling, leaving 44 states where it is potentially lawful. It's not perfect, but it's a good start." The action will now presumably move to the individual states.

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