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Emily D. Swoboda
 

Insights: Long Odds for Overturning US State and Federal Legislation

27 July 2007

Two challenges to U.S. I-gaming prohibition have been filed this summer, one at the federal level and one at the state.

The Interactive Media Entertainment & Gaming Association (iMEGA) in June filed suit against the United States seeking judgment restraining the United States from enforcing the U.S. Unlawful Internet Gambling Enforcement Act (UIGEA). iMEGA claims the UIGEA infringes upon basic constitutional rights and sets a "dangerous" precedent for e-commerce by "criminalizing the transmission of money if the end result is illegal in some unspecified place."

In addition, Renton, Wash.-based attorney Lee Rousso this month filed a lawsuit in King County Superior Court against the state of Washington, alleging that Senate Bill 6613, enacted in March 2006, violates the Commerce Clause in the United States Constitution.

While these are notable efforts by citizens wishing to assert their rights, we wanted to know if these lawsuits stood a chance.

So, IGN asked the experts:

Do court challenges to prohibition in the United States hold any water?

Martin Owens: To overturn the UIGEA in court would be an uphill battle. I wouldn't bet on the success of the actual cases, though they will be quite useful in focusing attention on the absurdity of the Bush Administration's efforts against I-gaming.

Acts of Congress enjoy a great deal of benefit of the doubt in court, as they mostly should. It would take something really egregious, something really, really out of line, to result in the law being overturned. The UIGEA is merely stupid, backward-looking and irrational, so it will most likely stay on the books for the immediate future, even though the regulations to actually enforce the damn thing may never be written.

I would say the real wake-up call will come when the World Trade Organization (WTO) starts considering the claims put in by Antigua, the European Union, China, Japan, India and other countries, arising from the United States unilaterally changing the terms of its treaty participation in the Marrakesh Agreement to avoid complying with the WTO ruling on Internet horse bets. If these sanctions are granted, they could well cost the U.S. economy tens of billions of dollars.

To have markets closed to U.S. goods and services, and U.S. intellectual property rights disregarded, will get lawmakers' attention in a way that no mere legal argument ever could.

As Groucho Marx once remarked, "It's not the money that's important--it's the amount".

Martin Owens is an attorney who specializes in the problems of operating gambling businesses online. Services emphasize strategic planning and preventive action in such areas as legal compliance and proper corporate structuring, as well as contracts, intellectual property protection, technology transfer, domain names, and the assorted other ramifications of operating online. Feel free to address questions and comments to mowens@trade-attorney.com.

Joseph Kelly: I wish them well, but it's awfully difficult to overcome a statute at a federal level or a state law unless you've suffered a concrete injury.

Betcha.com, in the state of Washington, might have a better chance for this reason. Betcha was actually closed down. Betcha has suffered an injury-in-fact and I believe they have filed or are in the process of filing a lawsuit.

Betcha could say: 'What we're doing is not gambling.' Assuming they lose on that, even if it is gambling, they could argue that they should not be prosecuted because this particular statute of the state of Washington violates the Dormant Commerce Clause of the United States Constitution.

In other words, use all the arguments that [Rousso] is using as far as poker is concerned, and incorporate them into a complaint, which is perfectly legitimate in American legal procedures.

I've read the complaints. They're very well-drafted, but it's an uphill fight because it's not easy to attack the validity of state or federal laws.

Joseph Kelly, Ph.D., J.D., is a professor of business law at SUNY College Buffalo. He is licensed to practice law in Nevada, Illinois and Wisconsin.

Insights: Long Odds for Overturning US State and Federal Legislation is republished from iGamingNews.com.
Emily D. Swoboda
Emily D. Swoboda