Interactive Media v. Attorney General of the United States: Third Circuit Upholds Online Gambling Ban

Interactive Media Entertainment and Gaming Association Inc. v. Attorney General of the United States, No. 08-1981 (3d Cir. Sept. 1, 2009)

Opinion (Hosted by wired.com)

On September 1, 2009, the U.S. Court of Appeals for the Third Circuit affirmed the United States District Court for the District of New Jersey decision, which upheld the Unlawful Internet Gambling Enforcement Act of 2006.

Wired.com provides an overview of the case. The Wall Street Journal features an analysis of the decision and its potential effects on online gambling. Additional analysis can be found on ZDnet and Law.com.

The appellate court held that the Act, which bans credit card companies or other institutions from processing payments for unlawful online betting, was not impermissibly vague and did not violate an individual's privacy rights, the two primary arguments raised by Interactive.

With regard to Interactive's vagueness argument, the court stated that the law "clearly provides a person of ordinary intelligence with adequate notice of the conduct that it prohibits." The court also noted that "the Act itself does not make any gambling activity illegal." Rather, the underlying state law governing gambling determines whether a particular bet is illegal. Accordingly, any vagueness problem is not with the Act, but with the state law governing the application of the Act.

Additionally, the court noted that Interactive's privacy argument cited Lawrence v. Texas, 539 U.S. 558 (2003), and Reliable Consultants, Inc. v. Earle, 517 F.3d 738 (5th Cir. 2008), both of which prohibited forms of sexual conduct between consenting adults in the privacy of their homes. The court found that gambling "simply does not involve any individual interests of the same constitutional magnitude," so Interactive's reliance on Lawrence and Earle was misplaced.

The Act and this decision upholding it are undoubtedly blows to Internet gambling sites, which will not be able to receive payment via credit cards.  Nevertheless, many gambling sites already are able to collect payments through other methods.  Additionally, the Wall Street Journal reports that Joe Brennan Jr., chairman of Interactive Media, is hopeful that "language in the decision appearing to place the issue under state jurisdiction" could be "a silver lining," as it opens the door for state regulation of online gambling.