US Government May Not Appeal Ruling in UIGEA Online Gambling Decision

A decision by a US Supreme Court Judge to remove criminal liability of banks for failing to stop transactions related to online gambling is not likely to be appealed by the Government, experts believe.

A Judge last week ruled that banks, credit card company and cash processors cannot be held criminally liable as previously stipulated by the Unlawful Internet Gambling Enforcement Act.  An independent trade organization, iMEGA.org, challenged the "policy enforcement" aspect of the UIGEA.

The law was originally drafted to prosecute banking institutions and credit card firms.

But the banking sector is in complete disarray these days thanks mostly to a housing market crisis and many believe the US Government will back off in terms of an appeal that would be based exclusively on grounds that banks should be held criminally liable for something the industry insists they have no control over.

The banking sector insisted all along that "compliance was virtually impossible".

An 11-page letter drafted by the American Banking Association (ABA) and submitted to the US Treasury in December illustrates this point.

In that letter, it is stated that, among other things, "ABA believes that the proposal, in large part due to the nature of the statute itself, will fail to create a practical process for intercepting prohibited conduct that maintains an efficiently functioning payments system," and goes on to express the fear that "....UIGEA will in the end catch more banks in a compliance trap and do greater damage to the competitiveness of the American payments system, than it will stop gambling enterprises from profiting on illegal wagering."

As iMEGA has insisted all along, such an "unfunded mandate" was viewed as "deputizing" the banking institutions as a means of "policing online gambling" minus the weapons needed in doing so.

The document asserts: "In other words, in the view of the drafters of the legislation, all the sophistication of the FBI, Secret Service, and other police computerized detection systems and investigative expertise devoted to fighting terrorism and financial crime are inadequate to the task of apprehending the unlawful gambling business or confiscating its revenues. ABA believes that punting this obligation to the participants in the U.S. payment system is an unprecedented delegation of governmental responsibility with no prospect of practical success in exchange for all the burden it imposes."

The US Government, when asked to comment on the decision last week, responded that they would not be doing so.

Many in the online gambling community viewed the ruling a "loss by iMEGA" since the judge essentially threw out the matter, claiming they (iMEGA) had no grounds to be challenging the UIGEA on the basis of "privacy infringement". 

iMEGA claims they won a bigger battle, however, by having the "criminalization" element removed.  They were also granted "standing" by the Superior Court Judge.  Hence, the matter was dismissed "without prejudice", clearing the way for appeal.  iMEGA has vowed to appeal the decision within the next two months. 

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Christopher Costigan, Gambling911.com Publisher CCostigan@CostiganMedia.com

Originally published March 10, 2008 10:51 am EST