Threat Level Privacy, Crime and Security Online Appeals Court Upholds Online Gambling Ban


A move to scuttle legislation outlawing online gambling suffered a major setback when a federal appeals court set aside constitutional and other legal challenges to the Unlawful Internet Gambling Enforcement Act of 2006.

A three-judge panel of the 3rd U.S. Circuit Court of Appeals brushed aside assertions that the act (.pdf) breached the privacy rights of gamblers to be free of government regulation in their own homes. The court also set aside a challenge that the law was too vague.

“Here you have the government targeting something solely because it was on the internet. Every right and civil liberty in the offline world should convey in the online world,” said Joe Brennan Jr., chairman of a trade group of gamblers, affiliated marketers and offshore online casinos that brought the case.

According to the 2006 act, Congress adopted the regulation forbidding financial institutions from transacting in gaming revenues because “traditional law enforcement mechanisms are often inadequate for enforcing gambling prohibitions or regulations on the internet, especially where gambling crosses state or national borders.”

The decision comes as Congress is considering softening the ban in order to tax gambling proceeds, which could generate billions in federal gambling receipts annually.

The lawsuit decided Tuesday was brought by the Interactive Media Entertainment and Gaming Association. The group, Brennan said, is considering its legal options, including going to the Supreme Court or asking the Philadelphia-based appeals court to reconsider.

Brennan pointed out that some form of non-virtual gambling — such as lotteries, casinos, horse and dog racing — is allowed in all states but Hawaii and Utah.

The group, in its privacy argument, cited Lawrence v. Texas, a 2003 Supreme Court decision reversing a state law outlawing homosexual sex.

“As the 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 appellate court responded. (.pdf) “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.”

Despite the act barring banks from transacting in online gaming wagers and proceeds, the Poker’s Player Alliance estimates as many as 10 million Americans wager about $6 billion online annually. Many overseas internet gambling sites have blocked access to the United States, while others have not.

John Pappas, the alliance’s executive director, views online gambling no different than Wall Street derivative trading – a lawful method to bet for or against commodity prices and mortgage foreclosures, for example – all on the internet.

“The idea that one area is now unlawful but the other activity is permissible and acceptable seems a bit inconsistent, especially when you consider the activity in the financial markets can have significant impact worldwide or nationwide,” Pappas said.

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