GPWA Times Magazine - Issue 4 - April 2008

Webmaster News | GPWA TIMES U.S. District Court Judge Mary Cooper sent two very clear mes- sages to the online gaming in- dustry last month: 1. The courts are not going to overturn the Unlawful Internet Gambling Enforcement Act (UI- GEA) because the law is either ineffective or unwise. 2. The Interactive Media Enter- tainment and Gaming Asso- ciation (iMEGA) case has very little chance of overturning the UIGEA. The only glimmer of hope Coo- per gave iMEGAwas she granted it“standing”on certain issues. “Granting iMEGA standing is a major victory any way you look at it,” said iMEGA at- torney Eric Bernstein after the ruling came out. Buffalo State business law profes- sor Joe Kelly agrees, say- ing, “Standing was a major victory, especially with the federal government winning on every other account.” By granting standing, the court says iMEGA can claim injury by the UIGEA and has the right to appeal Cooper’s ruling on the First Amendment issues raised in the case, Kelly explained. “But it’s very much an uphill battle,”Kelly added. The reason is that Cooper dis- missed the iMEGA’s First Amend- ment claims on the merits, and the rest of iMEGA’s arguments on both standing and the mer- its. “(The) UIGEA does not have any adverse impact, much less a significant one, on the ability of the plaintiff and its members to express their views on Internet gambling,” Cooper said in her ruling. Cooper also rejected the argu- ment that gambling was a form of free speech. “The plaintiff has not identified, and the Court does not discern, any ‘communicative element’ in- herent in the only conduct crim- inalized by UIGEA — the taking of another’s money,”she wrote. The commercial speech aspects of iMEGA’s case were similarly dismissed by Cooper. “The plaintiff’s commercial speech claim also is without merit,” Cooper wrote. “The ac- ceptance of a financial transfer is not speech.” “As the UIGEA does not impact expression, it does not come within the purview of the First Amendment,”Cooper added. Cooper also ruled that iMEGA did not have standing to pursue claims that the UIGEA violated privacy rights. But even if it did, Cooper wrote, iMEGA would still lose, saying the laws iMEGA cited as precedents do not lend support to the idea that “non- speech related activities occur- ring over the Internet somehow intrudes on the right of privacy.” iMEGA’s WTO claims also fall short as “a matter of law,” Coo- per says, because private enti- ties can not challenge laws on the basis that they violate Uru- guay Round Agreements. That right, by law, falls under the sole province of the government. In dismissing iMEGA’s claim that the UIGEA abrogated the rights of individual states to regu- late online gaming, Cooper ruled “the regulation of interstate financial trans- fers -- an economic ac- tivitynecessarilyimpact- ing interstate commerce -- would be a proper ex- ercise of Congress’s inter- state commerce powers” and“Congress had a rational basis for concluding that the acceptance of Internet financial transfers for gambling purposes substantially affects interstate commerce.” That means it was within Con- gress’powers to pass the UIGEA. And because Congress was within their rights to pass the law, challenging it as a law that doesn’t work isn’t going to fly in the court systems. “The plaintiff’s claims express a fundamental disagreement with Congress’s judgment that Internet gambling should be controlled legislatively,and pose questions as to whether UIGEA, given its exceptions and conjec- tural enforcement problems,will be successful in accomplishing its desired ends,” Cooper said in the conclusion to her ruling.“But it is not the Court’s role to pass on the wisdom of a Congres- sional act or speculate as to its effectiveness. The Court has determined that the chal- lenged statute was lawfully enacted and does not imper- missibly intrude on the Constitu- tion’s guarantees.” Perhaps the most in- triguing part of Coo- per’s ruling came in a footnote, where she notes “UIGEA exempts purely financial entities from criminal liability...Fi- nancial businesses would only be subject to regula- tory enforcement.” In essence, that means the Treasury Department and the Federal Reserve will be setting the punishment for non-com- pliance. —Vin Narayanan . . . . . . . . . . . . . . . . . News analysis: Judge’s ruling stacks odds against iMEGA "Playing videogames for money is not a new concept and has been going on in living rooms and dorms for years. WorldGaming.com is simply facilitating that idea online." —William Levy, president & co-founder of World Gaming, after his company announced it would create an online destination for console gamers from around the world to challenge one another for real money. "If the federal agencies themselves cannot agree on the law, what hope is there that banks can resolve these confounding legal issues?" — The American Bankers Association regarding the UIGEA’s exceptions for Indian gaming, state gaming and horse racing. (Washington Post) "Hillary has lots of experience but I don't think she is ready to lead our nation. Imagine her trying to talk to the leaders of the Islamic world?" — Poker legend Doyle Brunson as he explained why he would be backing Barrack Obama for U.S.President.(The Grand Rapids Press) "Men like to show their masculinity. Gambling is a way of demonstrating masculinity with some sort of game of skill, so they believe they have some sort of control." — Researcher Heather Chalmers from Brock University in Canada regarding a study she conducted that concluded women gamble to be sociable, but men gamble to win.