U.S. Appeals Court Upholds Ban on Internet Gambling

PHILADELPHIA — In an important decision on Internet commerce by a U.S. appeals court, the federal Unlawful Internet Gambling Enforcement Act of 2006 has been ruled constitutional.

The 3rd U.S. Circuit Court of Appeals on Tuesday rejected an appeal by the Interactive Media Entertainment and Gaming Association (IMEGA), which found that the law "clearly provides a person of ordinary intelligence with adequate notice of the conduct that it prohibits."

IMEGA, a New Jersey-based nonprofit, had sued the Federal Trade Commission, the Federal Reserve System and the U.S. Attorney General, claiming the law banning online gambling is vague and violates an individual's privacy rights. It also said the act is contrary to U.S. treaty obligations.

The act bans credit-card companies or other institutions from processing payments for online betting.

The 3rd Circuit kicked aside IMEGA's privacy arguments, finding that gambling is not protected by the Constitution.

The court said that in its effort to locate a constitutional privacy right to engage in Internet gambling from one’s home, IMEGA primarily focused on two precedential cases for the privacy issue, including Lawrence vs. Texas, which involved state laws that barred certain forms of sexual conduct between consenting adults in the privacy of the home.

“As the U.S. Supreme Court explained in Lawrence, such laws ‘touch upon the most private human conduct — sexual behavior — and in the most private of places, the home,’” the court said. “Gambling, even in the home, simply does not involve any individual interests of the same constitutional magnitude. Accordingly, such conduct is not protected by any right to privacy under the Constitution.”

Gary Kaufman, an attorney with the Los Angeles-based Kaufman Law Group, told XBIZ that advocates of Internet gambling should shift their efforts to swaying public policy.

“With the current Supreme Court makeup, and with Congress now controlled by liberal democrats, this means that proponents of Internet gambling should focus their efforts on lobbying Congress to repeal the federal ban, rather than attempting to fight it out in the courts, he said. “I predict much more success on these types of issues by way of legislation.”

In May, Rep. Barney Frank proposed legislation to legalize and regulate Internet gambling. That piece of legislation is pending in committee.

The case is Interactive Media Entertainment and Gaming Association vs. U.S., 08-1981.