Legal Analysis of the UIGEA

[Kurn]

Real quick Cliff Notes version from memory.

1. The UIGEA only addresses money transfers that violate already existing federal and state laws.

2. The commerce clause has repeatedly been used to defeat any attempt by States to regulate e-commerce. It stands to reason that the same constitutional argument can be used to defeat State laws regulating online gambling which is international. (short explanation: The idea is that interstate and international commerce cannot be restricted by state laws, only by federal laws).

3. Thus, the UIGEA cannot be used as enforcement of State anti-gambling laws, and to go further, constitutionally, no State can survive a challenge to laws making it illegal to gamble online if the site is not located in that same state.

4. Therefore, the UIGEA can only be used to enforce federal online gambling laws.

5. Although the DOJ claims the Wire Act forbids internet gambling, the 5th circuit disagreed, thus there is case law that refutes the Wire Act with regards to everything except Sports betting. This is a direct result of getting the UIGEA incorporated into the SAFE Port bill. To do so, UIGEA sponsors had to remove language amending the Wire Act to encompass all online wagers.

To use a phrase in their summary, the authors feel that the UIGEA is nothing more than "a shot across the bow" of the online gaming industry and not a serious challenge at all. The seem to think that Party Gaming, et. al., overreacted and made a serious blunder in bailing from the US market (my interpretation). I'm not sure I agree 100% with this assessment, since the publicly traded gaming firms need to worry about public perception of their viability even more than they have to worry about John Law.