While a 3rd Circuit Court has upheld the Unlawful Internet Gaming Enforcement Act (UIGEA) as law, the Court has effectively now placed the burden on states making this decision somewhat of a win for online gambling.

"There are essentially 44 states where online gambling is now legal based on this decision," said Joe Brennan, Jr, head of iMEGA.org, the Internet trade organization which filed the suit. 

To the extent that Interactive's hypothetical raises a vagueness problem, it is not with the Act, but with underlying state law. It bears repeating that the Act itself does not make any gambling activity illegal. Whether the the transaction... constitutes unlawful Internet gambling turns on how the law of the state from which the bettor initiates the bet would treat that bet, i.e. if it is illegal under that state's law, it constitutes "unlawful internet gambling" under the act." p6., iMEGA v. Holder, US 3rd Circuit decision.

"The 3rd Circuit decision on our UIGEA challenge came back this morning. They upheld the law, but as indicated by questions during oral arguments, they seem to be saying - ‘if the state where the bet is placed says internet gambling is illegal, then processing that payment is illegal"...meaning that it is not illegal if the state doesn't have a law saying internet gambling is illegal.'"  

The Court makes clear that the UIGEA does not make any gambling activity illegal and, instead, refers back to the state.  While Washington State is the only jurisdiction within the U.S. that expressly prohibits its residents from placing bets over the Internet, five other states have incorporated laws that do not permit for gambling across state lines, which can loosely be interpreted as betting via the Internet with operations that exist in locales such as Costa Rica and Antigua. 

The Act prohibits a gambling business from knowlingly accepting certain financial instruments...if such gambling is illegal where the business is located or from which the individual initiates the bet (note: the state where the bettor is), p6., iMEGA v. Holder, US 3rd Circuit decision

"So, we lose, but in a way, we have some measure of a victory here. Arguably six (6) states make it illegal to engage in internet gambling," Brennan, Jr. said.  "Forty-four (44) do not. UIGEA does not make internet gambling or processing transactions for internet gambling illegal in those forty-four states." 

This story is still developing.. Click here for the PDF Court Decision file