Ban on Internet gambling stays

By Calvin Palmer

Offshore betting operators today had their attempt to overturn a federal ban on Internet gambling rejected by a U.S. appeals court.

The 3rd U.S. Circuit Court of Appeals in Philadelphia rejected arguments from Interactive Media Entertainment & Gaming Association in New Jersey, which had filed the lawsuit hoping to legalize online betting in that state.

Congress passed the Unlawful Internet Gambling Enforcement Act in 2006 to ban online gambling that would be illegal in the state where the individual or gambling business conducts the transaction. The law does not target the bet itself but criminalizes bank or credit card transactions linked to the bet.

The group of mostly offshore betting operators considered the law as being unconstitutionally vague, with lawyers questioning how the location of an online bet would be determined if the gambler is in Delaware, for instance, and the operation is in Costa Rica.

The court also rejected arguments that the law invades a gambler’s right to privacy in the home.

The Justice Department, which successfully defended the law, had no immediate comment, a spokesman said.

While the association is considering an appeal, Chairman Joe Brennan Jr said he saw a potential victory in the ruling because most states have not expressly addressed the legality of online betting.

“The Justice Department has been insisting there is a blanket ban on Internet gambling in the U.S., but the panel said state law is the determinant,” Brennan said. “If you go by that reasoning, if it’s not illegal in that state, then it would not be a violation of federal law to process a transaction from a player there.”

The group also is involved in a New Jersey lawsuit challenging the constitutionality of a 1992 federal ban on most sports betting. The association says sports betting could bring $100 million or more in tax revenues to state coffers on an existing, albeit underground, market estimated at $10 billion annually in the state.

Brennan noted that New Jersey Gov Jon Corzine wants to intervene in the case in support of sports betting, and the chairman said other states are showing interest.

“There’s a lot of interest in it just because of the times and the straits the states find themselves in,” Brennan said.

[Based on a report by the Associated Press.]

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