Appeals Court Rejects Challenge to UIGEA

In a unanimous ruling announced on September 1, the U.S. Court of Appeals for the Third Circuit rejected two constitutional challenges to the Unlawful Internet Gaming Enforcement Act of 2006 (UIGEA). The lawsuit, brought by the Interactive Media Entertainment and Gaming Association (iMEGA), attacked UIGEA's requirement that financial institutions refuse to process financial transactions that involve "unlawful Internet gambling." That key phrase, according to the opinion by Judge Dolores Sloviter, is not unconstitutionally vague. By banning transactions related to betting that is illegal either where the bet is placed or where it is received, she wrote, "the Act clearly provides a person of ordinary intelligence with adequate notice of the conduct it prohibits."

The appellate court summarily denied iMEGA's claim that UIGEA unconstitutionally intrudes on the privacy rights of individuals who wish to gamble over the Internet from their homes. Unlike privacy cases that involve intimate sexual activity, Judge Sloviter held, "Gambling, even in the home, simply does not involve individual interests of the same constitutional magnitude." Interactive Media Entertainment and Gaming Association v. Attorney General, No. 08-1981 (3d Cir., Sept. 1, 2009).

Under regulations released last year by the Treasury Department to implement UIGEA, financial institutions must begin to comply with the statute's requirements on December 1, 2009. In the regulations, the Treasury Department refused to accept responsibility for identifying those Internet gambling sites with whom transactions are illegal, but imposed that responsibility on financial institutions. The banking industry, in particular, has complained that this is an unrealistic burden.