iMEGA files response brief in UIGEA appeal

Justice scales

Last week, iMEGA filed its reply brief with the U.S. Court of Appeals, 3rd Circuit, in the matter of iMEGA v. Keisler, et al., its lawsuit against the United States Attorney General, the Federal Trade Commission and the Federal Reserve System that seeks to have the UIGEA overturned.

The brief responds to the arguments raised in the government's opposition brief filed last month.

At the heart of the case is iMEGA's challenge to the constitutionality of the UIGEA, which prohibits U.S. financial institutions from processing transactions between certain online gambling sites and U.S. players, without clarifying what transactions are prohibited or which sites engage in such prohibited activity.

"This is a very simple argument on which we ask the Court to overturn this law," said Joe Brennan Jr., iMEGA chairman and CEO.

"UIGEA should be 'void for vagueness', in that Congress has not defined what an 'unlawful Internet gambling transaction' is, as they are required. Congress cannot delegate that necessary determination as to what is 'lawful' or 'unlawful' to US banks and credit card companies."

The appellate court filing comes one day after the Department of the Treasury and the Federal Reserve System released their final rule on enforcement of UIGEA, which failed to define the key phrase "unlawful Internet gambling," instead leaving it to the financial institutions to determine if a transaction falls within that category.

Said Brennan, "The Treasury and Federal Reserve have essentially made our 'vagueness' argument [to the Third Circuit] for us with these regulations."

Arguments in the reply brief

The 22-page reply brief responds to the procedural and substantive arguments raised by the government in its opposition brief.

That brief challenged iMEGA's ability to raise the "void for vagueness" argument on appeal, alleging that it had not been raised before the lower court and thus could not be raised at the appeal court level.

In its reply to this point, iMEGA responded that the government ignored the fact that this issue was addressed and ruled on by the lower court judge, thereby making it an appealable issue.

The government's next claim, that the language of the UIGEA is not vague but rather "crystal clear," was also disputed in iMEGA's reply brief, which provided numerous examples from the Act of terminology that is undefined, unclear and open to multiple interpretations.

According to iMEGA, the UIGEA fails to clarify such issues as where an affected bet is made, which jurisdiction's laws are to be considered in determining whether the gambling was illegal and how various conflicting state laws are to be construed in enforcing the Act.

The government had also argued that iMEGA lacked standing to raise privacy claims on behalf of individual Internet gamblers. In its reply, iMEGA argues that since its members may be prosecuted under UIGEA for permitting individuals to gamble on their Web sites, there exists a "close relationship" between the members and the individual gamblers sufficient to establish standing.

The reply then attacked the government's argument that the UIGEA does not violate player's right to privacy, arguing that there is a right to privacy for personal, private activities conducted over the Internet and that includes the act of gambling.

PPA considers its own lawsuit

Another recent development in the fight against the UIGEA is word that the Poker Players Alliance (PPA) is considering filing a class action lawsuit against the government over the UIGEA. PPA sent out an e-mail message to some of its members which discussed this possibility. The e-mail said, in part:

"Right now, the Poker Players Alliance (PPA) is preparing for a potential lawsuit against the UIGEA because its vagueness will likely force banks and other payment processors to over-block lawful Internet poker transactions. Thusly, the PPA is looking for a few good men and women to stand with us in a potential lawsuit. As a paid PPA member, your support has been crucial to our successes. The PPA is prepared to underwrite the complete cost of potential litigation[;] we just need members like you to be part of our action."

The e-mail then asked for members who would be interested in being named plaintiffs in such a lawsuit, "free of cost and without danger of prosecution," to contact the PPA.

The next step in the iMEGA lawsuit

Now that the papers have all been filed, the next step will be for a three-judge panel to be selected by the court to review the briefs and decide whether, and if so, when, there will be oral arguments in the case.

As it awaits consideration of its appeal, iMEGA is confident that it will ultimately prevail.

"After reviewing the final regulations, we're extremely confident the court will look at this law and agree that UIGEA should be 'void for vagueness," said Brennan. "Regulators and Congress have refused to even define what 'unlawful Internet gambling' is, and if you cannot even answer that basic question, how exactly are banks supposed to do it?"

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