Online Gambling Payments Legal in Most States, US Court Finds

An appeals court's ruling against claims that the UIGEA is unconstitutional shot down a series of arguments against the law, but opened a new avenue by finding the law only acts in areas with existing online gambling bans.

The US Third Circuit Court of Appeals has been a rough place for gambling proponenents lately, and today was no different as the panel of judges rejected iMEGA's charges that the UIGEA should be struck for vagueness. But, despite the fact that the court rejected arguments at every step by iMEGA lawyers, the wording of the ruling may give online gambling patrons a ray of hope.

In asserting the legality of the UIGEA, the court noted that the requirement of payment processors to refuse claims involving illegal gambling is not in the least vague. But the court's reasoning may startle anti-gaming factions and perk up disappointed casino gaming fans, because the judges found no vagueness in that the UIGEA does not itself make any gambling illegal.

Rather, the decision verifies that the UIGEA, like the Illegal Gambling Act, only stands to reinforce existing gaming laws. Thus, there being no existing federal law against online gambling, the UIGEA only applies to gambling by patrons within states that have statutes against online wagering.

The court used the common legal method of applying the "reasonable man" test, to assert the law coulkd be understood by a person of normal intelligence. Then it specifiucally applied the UIGEA to existing state law, affirming its interpretation as the UIGEA only acting where gambling has been declared illegal by other law.

"Thus, if a person in Hawaii places a bet over the Internet, a gambling business that knowingly accepts a financial instrument in connection with that bet would unambiguously be acting in violation of the Act," said the court. "Similarly, a gambling business located in Oregon would violate the Act if it knowingly accepted a financial instrument in connection with Internet gambling prohibited by that state's law."

This would mean that, other than sports betting which is federally prohibited, online gambling is legal and transactions are permitted in those states without laws against Internet betting.

"There are essentially 44 states where online gambling is now legal based on this decision," Joe Brennan, Jr, head of iMEGA, told Gambling911.