Off Shore Gaming Association

Mainstream media seems to have gotten into the Internet gambling arena with reports abounding about the ‘victory’ for Barney Frank, et al. in Wednesday’s advancement of H.R. 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. There has been extensive press on the passage of this bill out of the House Financial Services Committee with headlines that blare “Online Gambling Could Become Legal” and “House Panel Passes Measure to Legalize Some Internet Gambling”.

Whoa there! This bill is far from passing anything except for a committee vote. Though this is a serious step in the right direction towards legalizing and regulating online gambling, this small victory is like a win in April for a MLB team. There are still many games to be played and many battles to be won for H.R. 2267. There will be many hurdles and many more hearings before H.R. 2267 becomes anything more than ‘Barney Frank’s gambling bill’.

The biggest thing that shows the road ahead is long and winding was from the vote on Wednesday was when Frank mentioned, when questioned, that he would like to position his bill alongside a bill that outlines what taxes and revenues his Internet gambling bill may generate. Frank, the chairman of the House Financial Services Committee, said that he would not be moving H.R. 2267 forward unless it is “married to a revenue bill”! Frank is referring to Rep. Jim McDermott’s Interenet gambling ‘Internet gambling tax’ bill, H.R. 2268. However, while Frank’s billl has significant support with 70 co-sponsors, McDermott’s revenue-generating legislation has only 5 co-sponsors and has not seen any movement since it was introuced alongside Frank’s bill last year.

Most likely H.R. 2268 will head down the same path as H.R. 2267 with a series of hearings, followed by a vote. But, this will not happen until after the Congressional recess, which lasts until Labor Day. By September candidates up for re-election will be busy trying to keep their jobs and will most likely have little time or enthusiasm for any forms of gambling. The really unfortunate news is that if nothing is done with this bill before the end of 2010, Internet gambling will be shelved and a new Congress will have to take up the issue all over again – from square one.

But the biggest problem I see with Barney Frank’s bill moving forward is that even if the bill does get a full House vote and passes, it will then have to go to the Senate, where Sen. Menendez from New Jersey has his own ideas on Internet gambling. He introduced S.1597, the Internet Poker and Game of Skill Regulation, Consumer Protection, and Enforcement Act of 2009, in August of ’09 and his bill has fallen flat, with no co-sponsors and no movement. It figures that Frank’s bill and Menedez’ bill would have to find some common ground before the Senate would vote. The chances of all of this happening in the last 4 months of 2010 are an extreme long shot, not even worthy of a $1 wager.

Still, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act, introduced by Frank back in May of 2009 has made significant headway towards becoming law. The fact that seven Republicans saw the light and said ‘aye’ with bipartisan spirit, is a fantastic step. That the bill passed through committee overwhelmingly with a 41-22 Yes vote is outstanding. After getting shot down in a tie vote around this time last year, the two-thirds margin shows that lobbyists and common sense and maybe a bit of greed for government coffers are beginning to take hold.

We will keep our eyes and ears to the ground on this piece of legislation but I doubt that we will see much from H.R. 2267 again this year. However, I am very confident that Barney Frank will introduce similar legislation in 2011. Hopefully, Franks 2011 version of the ‘Internet gambling bill’ will include the amendments added this week. Such a bill would get immediate bi-partisan support and whiz through the phases of bureaucracy that took H.R 2267 fifteen months to navigate. One thing is for sure, the issue of Internet gambling is here to stay. For 2010? The recent press and attention that Internet gambling is getting could not have come at a better time. After all, football season is right around the corner.

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In the United States, big issues sometimes polarize the people and their lawmakers. Slavery was perhaps the biggest debate with no center and caused a civil war. One of the most recent issues where there is no middle ground is abortion. But to see what transpired in the most recent House hearings on Internet gambling and several previous hearings, one would think that lawmakers are deciding another life and death issue. Apparently, when it comes to gambling on the Internet, there is no midpoint, some lawmakers are all in favor and other continue to think this form of gambling is like smoking crack.

Wednesday’s hearing on Barney Frank’s bill, H.R. 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act, started a little late and Chairman Frank rushed through opening statements to get to witnesses. However, there was enough time for Alabama Representative Spencer Bachus (R) to ask “why we would open gambling up to every Blackberry . . . and Ipad.” He added, “How does raking in cash from Internet gambling addicts differ from taking a cut from the heroin sold to drug addicts?”

Now that is some polarizing rhetoric.

Testimony included arguments from both sides of the table. Poker pro Annie Duke, propped up by the Poker Players Alliance, was excellent this time (she had testified in 2008). She must have read my previous BLOG entry because this time around she stressed consumer protection. Players “want to play on sites licensed in the United States, which will provide even greater consumer protections for the player,“ Duke testified. She added “The UIGEA does not keep a single child off an internet gaming site, nor does it provide any protections for problem gamblers or mechanisms to prevent fraud and abuse – it only regulates the banks, not those who operate the games. It is quite candidly a law that appears to be more about burying government’s head in the sand than it is about government providing its citizenry with sensible public policy. H.R. 2267 corrects this untenable posture and puts us in the greatest position to protect consumers and vulnerable populations.” Well said and about time!

Mr. Ed Williams spoke on behalf of the Credit Union National Association and was very eye-opening on what the banks are being forced to do to comply with the UIGEA. “We have handful of transactions that come through and we block all of them because we don’t know which are legal or illegal. He was simply stating that in order to comply that most financial institutions will choose to block all transactions that even appear to be Internet gambling related.

The Honorable Lynn Malerba, Tribal Chairwoman, Mohegan Tribe of Connecticut spoke in favor of H.R. 2267. She mentioned that the Mohegan Tribe had joined forces with other Indian tribes around the country to work with Barney Frank so that “all tribes” can get the benefits of Internet gambling. Unfortunately, she was also the target of Calfornia Rep. Joe Bacca (D). He lambasted her implying that currently the Tribal Nations in the U.S. pay no taxes on the money their casinos generate. She said that is not true and added that the Mohegan Sun pays 25% or its revenue to the state and if possible, she she would prefer the 2% tax in H.R.2267. Bacca claimed that eventually Indian tribes would lose their sovereignty! However, Malerba retorted that she is not fearful of either losing jobs or losing their sovereignty.

Michael K. Fagan, Law Enforcement/Anti-Terrorism Consultant, who was a former prosecutor in St. Louis, railed the entire concept of Internet gambling. He believes that Internet operators will engage in predatory behavior. He wanted to know how the online operator could tell if the player was high or drunk. He took a few softballs from Rep. Bachus and attempted to hit them out of the park citing child behavior that those playing MMOG games would now lose real money instead of virtual points, that identities would be stolen and that most likely it would be the end of civilization as we know it.

One of the big argument that opponents of Internet gambling use time and again in these hearings (Wednesday’s was no different) is that the current prohibition protects our children. I think that Rep. Frank said it best when he said that ‘ the poor children here are being used by people who don’t like gambling.”

Perhaps the best part of the hearing was when Rep. Bachus pulled out a giant picture, so big he had trouble holding it up, showing the headquarters for the Safe and Secure Internet Gambling Initiative. It was a picture of a UPS store in Washington, D.C. Rep Frank hit the gavel, making him put it away quickly. Hilarious.

But there is nothing funny about this debate. The sides are so diametrically opposed that there appears to be no middle ground; no compromise in sight. The bill is scheduled for markup (changes) on July 27. Unfortunately, it does not appear that Rep. Frank and others will ever be able to include enough alterations to H.R. 2267 to ever get the other side to see the light.

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On Wednesday the U.S. House Ways and Means Committee held a hearing on Senator Jim McDermott’s (D., Wash.), latest revision of an online gambling tax bill introduced in 2009, H.R.2268. For over a year this bill has sat around while Internet gambling grows and state and federal coffers dwindle. The hearing engaged much of the same rhetoric that we have heard since the passage of the UIGEA in 2006, but this discussion was more spirited than many Federal hearings, perhaps, because this one was focused on the money.

And Big Money is what was being discussed. How ‘bout $42 billion over ten years! That is the figure that was thrown out early by Rep. Barney Frank (D-MA), who had to leave almost immediately after his testimony to take care of slightly more important national issues, like legislation designed to boost bank lending to small businesses. 40-plus billion is a huge number and is predicated on McDermott’s complex tax scheme involving operators paying a 2 percent tax on customer deposits, a one-quarter percent tax on wagers and the tax generated from gamblers who would now pay on their winnings in the form of a 1099 at the end of the year from their favorite online casino.

A good deal time was spent exploring the deposit tax. Several senators could not fathom that there would be a tax when making a deposit. They likened this as to a tax when a consumer ‘walks into Sears to buy a refrigerator with $1000 in their pocket’ and is taxed, whether a purchase is made or not. This line of archaic thinking came from multiple sources at the hearing. Finally towards the end of the hearing McDermott brought some sense to the argument noting that gamblers are not the ‘type of people’ to leave their money in the account. “That money to be deposited will be gambled”, said McDermott.

Even though this was supposed to be a hearing on the tax bill, it quickly turned into the usual point-counterpoint on the rewards/evils of online gambling. Opinions were all over the place with some legislators hitting on points that seemed to have nothing to do with the taxation of Internet gambling. Job creation, problem gambling, and the who, what and when of regulation were discussed. Advocates made legitimate arguments while opponents brought up much of the tired commentary that led to the current prohibitions.

Once again Rep. Bob Goodlatte (R-VA), architect of the 2006 Unlawful Internet Gaming Enforcement Act (UIGEA), brought up the suicide of a constituent. Though these stories are sad, the constant reminder of them brings to mind Tipper Gore saying that heavy metal music and Ozzy Osbourne prompted kids to kill themselves and others in the 80s. Rep. Wally Herger (R-Calif.) wanted to know at the outset why there was “even a hearing being held” when 317 legislators voted for the UIGEA. He did not reveal that the UIGEA was attached in the 11th hour to a homeland security bill that was pretty much a slam-dunk for passage.

Clearly Herger is obviously an opponent, as is Goodlatte, who spent a good deal of time being grilled by regulation advocates including, Rep. Charles B. Rangel (D-NY) and Rep. Earl Blumenauer (D-OR). However, Goodlatte takes a unique approach when being questioned. When asked, he punts and allows State’s rights to play defense for him. The questioning of Goodlatte went something like this. Q: Bingo. Goodlatte: States rights. Q: Poker. G: State rights. I think if it were up to Bob Goodlatte, we would have no Federal Laws, the states should be able to regulate every aspect of life.

There are clearly lines being drawn between supporters of Internet gambling and those that think the current prohibition is the best way for the country to go. Rep. Blumenauer commented that after the UIGEA legislation “people are still playing” and Rep. Linda T. Sanchez (D-CA) said that we are doing nothing more than “taxing what is already going on offshore”. Rep. Shelley Berkely (D-NV) added in that she supports legislation and regulation, but cannot give the OK to this tax bill. I guess Las Vegas thinks they pay enough taxes already. There was talk of limiting funding to political campaigns via gambling proceeds and whether the IRS will need more people and what about the Tribal Nations and their gambling? Clearly this is going to take some time . . .

Here are a couple of my favorite quotes from the two and half hour hearing.

Danny Davis, (D-IL) (neutral): “I think freedom of choice is a real concept.”
Sanchez, (D-CA) (for): “Today we are talking about a revenue stream.”
Earl Pomeroy, (D-ND) (against): “We can’t gamble our way back to a balanced budget.”

These three quotes are a microcosm of the realization that Federal legislation for Internet gambling is still a long way away from any type of resolution. The two sides are so far apart they cannot even get together on the most important aspect of legalization and regulation, at least as far as the government is concerned – how to collect the money. As long as legislators like Bob Goodlatte keep bringing up letters from States Attorney Generals and the sports leagues and the FBI and is allowed to put them into the record (again and again) then the road is long and uphill for legalization in the U.S. In the meantime, U.S. gamblers keep playing, offshore companies continue to benefit and the American consumer is the one who loses.

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The latest round of hearings initiated by Barney Frank regarding his continued effort to repeal the UIGEA and legalize and regulate internet gambling were certainly not at the top of any legislators ‘to do’ lists yesterday. The lightly attended and I mean lightly attended, hearing basically pitted Frank against gambling’s latest arch enemy, Representative Spencer Bachus from Alabama. The hearing lasted about 90 minutes and towards the end Frank noted several times that they had to finish so that they could vote. I guess he looked around the empty seats and realized that there were not enough present. Frank ended the hearing by letting us all know that this debate will continue into next year. And probably the year after that and the year after that……

Frank started the proceeding and spun his usual stance on personal freedoms. “The notion that this Congress should tell millions of adult Americans that we know better than they, what they should do with their own money, on their own time, on their own computers seems to me to be a very grave error and I hope that this whole legislation is repealed.”

Bachus, on the other hand, not only hammered his usual rhetoric about children becoming gambling addicts. He fabricated the statement, “in the next 5 years we will create a generation of 10s of millions who from their youth will be addicted to Internet gambling and therefore lifelong problem gamblers”. Bachus also stated emphatically that he would “do everything I can to make sure this never happens.” He also added that online gambling is “particularly predatory and an abusive intrusion into American homes.” Wow, I guess that anyone could simply turn off the computer to stop the intrusion.

Luckily, in Frank’s rebuttal, he stated that there was no basis for the millions of addicts that Bachus claimed and added that, “I don’t think this is simply about protecting young people . . . there are some people who do not want gambling.” He added that the notion that you end the legal ability for Americans do to anything because some people will abuse it is a ‘recipe for the destruction of individual freedom.”

So, after the only two representatives who seem to really care about the issue were done (or present), the testimony started. In the interests of space and so as not to rehash the entire hearing, I will break the testimony down into three groups, those for or against the legislation and those who were simply testifying to provide information. If you would like to view the hearing in its entirety, click here.

FOR the repeal of the UIGEA AND legalization:
Mr. Samuel A. Vallandingham testifying on behalf of community bankers noted that the financial payment systems were not designed for trapping and prohibiting unlawful internet gambling transactions. Obviously, the banking community does not want this burden so it was no surprise that he and his group support H.R.2266, to repeal the UIGEA. But, apparently the small bankers of America also support H.R. 2267 because once clear legalization and regulation occur, then the banks won’t have to figure out what illegal gambling is.

Mr. Mike Brodsky, representing YouBet, the online race book based here in the U.S. came out in favor of both bills as well with a convincing argument. He referred to the current stat of Internet gambling as a ‘Wild West affair” that is “out-of-control’. But, he came out with one off the best statements of the morning. “Enacting H.R.2267 is the most effective way of achieving the stated goals of some of the bills harshest critics.” During the Q & A period after the testimony was completed he helped Mr. Frank make a point that the different branches of government see Internet gambling differently, specifically that the DOJ calls all Internet gambling illegal. Brodsky answered this question by stating that 88% of all pari-mutuel wagers placed in the U.S. are placed across state lines!

Ms. Parry Aftab runs WiredSafety, a volunteer non-profit internet protection organization. She was the most compelling speaker of the day and said that Internet gambling is a consumer protection problem. She stated that though she does not “advocate gambling anywhere . . . We need to do something because what we have right now is not enough”. “The only way to protect consumers from online gambling risks is by legalizing it. If we don’t legalize it - we can’t regulate it.”

Those who were non-committal and/or were just providing information:
Professor Malcolm K. Sparrow who ran a study, funded by the Poker Players Allliance and Harrahs, for the Wired Safety group, focused on managing risks. He noted three ‘unregulated’ jurisdictions – Antigua, which does actually regulate their operators, the Kahnawake Indians in Montreal and, of all places, Grenada, which currently has no Internet gambling operators. Though Sparrow does not show the greatest grasp on the industry, he did provide some solid insights. He stated that in the current U.S. scheme the America incurs all of the social costs while exercising no jurisdiction and offering consumers no protections. He said that he would expect that in a regulated environment most consumers would move from offshore operations to licensed ones.

Mr. Keith S. Whyte, the executive director of the National Council on Problem Gambling stated that internet gambling in the U.S., Canada AND the UK is the LOWEST form of problem gambling. He also said that his group did not see any decrease in help line calls after UIGEA was enacted.

Mr. Jim Dowling, a former special agent with the IRS who now works with casinos and financial institutions came the closest to putting everyone to sleep. The only worthwhile thing that he added was that any blacklist of offshore operators would be out-of-date as soon as it was published. He wanted to keep dulling us to death but Frank cut him off before anyone started snoring

The only full opponent of these two bills was The Honorable Robert Martin, Tribal Chairman of the Morongo Band of Mission Indians in California. He wondered why Congress would want to protect foreign illegal operators - legalize offshore gaming at the expense of local jobs. He felt that Internet gambling would put the Tribe at a competitive disadvantage to Internet operators. I guess he also thought that selling Manhattan for a bunch of beads was good business, as it would be obvious to the casual observer that an Internet presence will only enhance any land-based gambling operation. Martin was reading from a prepared statement and appeared like he was looking for his foamy red nose and big floppy shoes whenever he was asked a question by the legislators.

The final phase of these hearings is always a question and answer session with the panel of witness. This is always an entertaining segment, especially with Bachus asking the questions. And, he did not stop mystifying. He spent the bulk of his ammo trying to discredit the proponents of the bill with questions like this one to the executive director of the National Council on Problem Gambling. “Harrah’s is one of your main contributors, right.” A befuddled Whyte replied looking more like this :>O. He stated that Harrah’s is one of the councils sponsors and contribute $5000 annually.

However, a new player did emerge during this phases of the hearing. Peter T. King, the ranking member of the Committee on Homeland Security made a statement during the Q & A. His powerful words included, “All prohibitions are well intended - sometimes they work, sometimes they don’t. Usually they don’t. In this case I don’t believe it is - we are losing revenue and we’re not achieving the social purpose that was intended. I strongly support this legislation.”

And so do we. This hearing was the first one out of all of them I have endured where I came away feeling positive. The scale is tipping and may be getting heavy in favor of legalization. But unfortunately, we will all have to wait until 2010 for the next round and the potential for any real change here in the U.S.

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Barney Frank has managed to find time amongst the financial meltdown, health care and the global war on terror to arrange for a full hearing of the House Financial Services Comittee on his two ‘gambling bills’ - H.R. 2266, Reasonable Prudence in Regulation Act, and H.R. 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act. This hearing most likely will not produce any great changes, but it is a good sign. A sign that perhaps Washington is realizing that they can’t stop Internet gambling, so, maybe a legal, regulatory stance would be better than the prohibitionist tact that has prevailed via our legislators in recent years.

“The government should not interfere with people’s liberty unless there is a good reason,” Frank said. “This is, I believe, the single biggest example of an intrusion into the principle that people should be free to do things on the Internet. It’s clearly the case that gambling is an activity that can be done offline but not online.”

H.R. 2266 is almost a moot point by now. On Black Friday the government delayed the implementation of the UIGEA for 6 months. Mr. Frank’s bill is looking to delay it for a year. 6 months, a year, either works in the favor of everyone involved. However, by delaying the implementation of the regulations for basically all of 2010 it would give Frank’s other bill a chance to gain some ground. H.R. 2266 has a total of 54 sponsors who hopefully will attend the hearings.

Hr. 2267 is the big one. And it has more support with 63 co-sponsors. This is the bill to actually legalize betting on the Internet here in the U.S. Well, at least for poker and potentially casino games and other forms of gambling, but not sports betting. That is hurdle that no one is willing to tackle . . . yet.

The bill states that “Internet gambling in the United States should be controlled by a strict Federal licensing and regulatory framework to protect underage and otherwise vulnerable individuals, to ensure the games are fair, to address the concerns of law enforcement, and to enforce any limitations on the activity established by the States and Indian tribes.” Opponents argue that legalized online gambling is a danger to our youth and this bill includes safeguards to prevent underage or compulsive gambling and other illegal activity, to protect consumers who gamble online. To further emphasize this point, the name of the bill, unlike former versions by Frank and Robert Wexler, now includes ‘Consumer Protection’ in its name.

The most significant thing that these hearings give the Internet gambling community, operators and U.S. players alike, is hope. Hope that someday, in our lifetime, placing a wager from the confines of you own home will be 100% legal and regulated in the States. The last time Barney Frank brought a similar anti-UIGEA bill before the Finance subcommittee there was a tie vote to move it out of committee. And in the U.S. Government, a push is a loss. A single vote in favor of what was then H.R.5767 would have accelerated this process and hope would have been alive for the past 13 months. We urge all readers to contact their Representatives. You can find your reps here. Please take action today!

Taking action is the most important thing that a concerned online player can do to support online gambling in the US. The OSGA can’t do this alone. A successful hearing on Thursday will hopefully lead to a Committee vote in support of these bills.

You can view the proceedings live starting at 10AM on December 3 via the house.gov website. View the debate directly here.

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The choice was to go to the Michael Jackson Tribute or to attend the proceedings for iMEGA vs the US Attorney General on the legality of the Unlawful Internet Gaming Enforcement Act (UIGEA).

We should’ve gone to see the King of Pop off…

The Third U.S. Circuit Court of Appeals must be a difficult place to bring a case. Either Judges Dolores Korman Sloviter, a Carter appointee; Judge Thomas L. Ambro, a Clinton appointee; and Judge Kent A. Jordan, a George W. Bush appointee, are really that tough, or maybe they were just having a bad day.

iMEGA, as the appellant, was able to give their argument first. They were attempting prove that the UIGEA should be stricken down because it is vague. Stephen Saltzburg, spoke first and immediately took the time to ensure that three junior lawyers who came along for the ride had their names read into the record. The court was not pleased as Judge Sloviter announced that “We have associates here too. Should we announce them?”

Almost immediately, Judge Ambro, seated on the left, facing the gallery, asked to be reminded of the status of H.R. 2267, the current bill from Congressman Barney Frank. The counsel answered the question by offering his own opinion that H.R. 2267 may not even be addressed this session, due to other more urgent issues in front of the current Congress. Obviously, the judge knows what current laws are in the U.S. This question made it clear that he was setting the tone – this would be an uphill battle for iMEGA.

When Mr. Saltzburg was finally allowed to present iMEGA’s argument, he said that ‘vagueness’ in a law is when “reasonable people have to guess” if what they are doing is illegal. Judge Jordan, who was seated on the right, responded by stating that in order for a statute to be void for vagueness, it would have to be vague in ALL circumstances. Salzburg went on to say that the statue says ‘Unlawful Internet Gaming’ without actually stating what it is. In noting that the UIGEA does not supercede any state law, Judge Jordan said that maybe the iMEGA may have a beef “with the states, not with this statute (UIGEA)”.

I was starting to feel a little ill by now, watching iMEGA’s lawyer toss softballs to three judges holding a 36 ounce Louisville sluggers and watching them slap the ball into the outfield.

Saltzburg apparently felt it too and switched tactics, remarking that “a U.S. citizen could go to Costa Rica and place bets there, why could he not place wagers over the internet with the same company from his home?” He basically blew the dust off of the old argument that if the money is deposited in Costa Rica, and the clerk in Costa Rica is actually the one placing the bet, then the U.S. citizen is not really the one placing the wager. In the age of the Internet, the argument would be that the player’s computer is hooked up to a game in Costa Rica, thus the gambling is taking place in Costa Rica. Is a bet placed from where your computer is or where the site’s servers are?

This is an oldie but a goodie. In fact, it was one of the very first arguments I ever heard for why this is all ‘legal’. A sportsbook owner spun this same tale back in 1999. “This is why gambling off shore is legal, ’cause the bets are placed using money in a foreign account, on foreign soil by a representative from that country”. The reasoning being that gamblers in the U.S. are not placing bets, Costa Ricans are! Or, that you are not placing the bet in the computer on your house, but the computer in Costa Rica!

Again, the court refused to even head down this path, though they spent a good deal of time on the subject of where the bet is placed. Apparently, all three judges do not have any type of ‘virtual’ life. They argued again and again with Saltzburg that if you are “physically sitting in Delaware, then the bet is coming from Delaware”. Or put another way by Judge Jordan, ” . . .if you live in state X and state X has a law against gambling on the Internet . . . when you place a bet from state X, you are breaking the law.”

Game, Set, Match. NEXT!

Eric Bernstein then continued the fight for iMEGA and likewise got nowhere with the three judge panel. He said that iMEGA was not only bringing this motion in front of the court for its Members, but for customers of those members as well. The judges questioned whether he had the right to do that and Judge Sloviter rhetorically asked if the gamblers that iMEGA represents were there in court. Though I wanted to jump out of my seat, this court was clearly in no mood for any type of shenanigans. There was plenty of agreement from the judges that it was a bit of a stretch for the prosecution to assume that the customers of their Members would bring such a suit.

The judges also brought up a previous argument from iMEGA where they had said that this law was in violation of personal privacy, that someone has the right to do what they want on their computer in their own home. However, Judge Jordan did not give Bernstein much chance to answer, instead interjecting. “Do you say that you have the right to make a bet, in your own home, when it is in violation of the law?”

NEXT!

The defense was allowed to present its case, and clearly Nicholas J. Bagley, knew that his side was rolling downhill with these judges. So he said VERY little. He did mention previous cases that had been brought before lower courts, including the Utah case from 2007. He leaned on state law and was “somewhat dumbfounded” when asked if iMEGA could bring a suit as a third party for gamblers. With almost nothing from the three judge panel, Bagely sat back down. He was done so quickly, the ink had barely dried on his name in my ‘defense notes’ page, when it was time to flip to a clean page for the iMEGA rebuttal.

Surely iMEGA would fire a last salvo. Certainly, there was a silver bullet still in their gun. Regrettably, no. Instead, Mr. Saltzburgh wanted to say that gamblers couldn’t bring a suit on their own; after all they could suffer prosecution or become ensnared with civil claims. At this point Judge Ambro seemed like he had enough. “So you are saying that if I go and play at Ultimate Bet from my house” . . . I am not gambling here in the U.S.? Judge Jordan added “What’s vague about placing a bet from within your state?”

The Judges will eventually render a decision. It will take anywhere from one to three months. If they rule in favor of the U.S. attorney, iMEGA informed us that they will move up that judicial appeal tree or ask for another hearing in front of the full panel of 3rd Circuit Court justices.

The hearing, which lasted less than 30 minutes, was painful exercise in futility for our side. The iMEGA lawyers were hammered by the judges and their arguments fell on deaf ears. The judges were quite tough, but in all fairness, were equally tough in all of the cases that we sat through. This was a perfect chance to change current law and void the UIGEA. Unfortunately, it may have been a blown opportunity.

The case presented hinged on the vagueness of illegal Internet gambling yet left out several important aspects of what is easily seen as vague applications of the UIGEA. How can it be legal to bet horses or lotteries over the Internet when the Department of Justice themselves have said that ALL Internet gambling is illegal Internet gambling (House Judiciary Committee Hearing on Online Gambling, 2007)? When lotteries in Massachusetts and North Dakota have credit card sales blocked under the UIGEA, and these are supposedly ‘legal’ Internet gambling transactions, doesn’t that prove that this law is vague as to what is illegal and legal? How is a U.S. citizen supposed to know if they are breaking the UIGEA when their state may or may not explicitly prohibit Internet gambling?

After watching these proceedings first-hand it is clear that iMEGA or any group may find it easier to climb Mt. Everest that to have any court in the land void the UIGEA. This hearing was scheduled in Philadelphia, a ‘gaming friendly’ jurisdiction, and was heard by three judges, a majority of whom were democratic appointees. Still, even these favorable aspects were rendered moot. The court‘s immediate referral to Barney Frank’s latest bill makes it evident that for change to occur, it will have to come from the legislative branch of the U.S. government, not the judicial system.

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