Third Circuit Deals Gambling Syndicate Dead Man’s Hand

Image by Anarkyman

Image by Anarkyman

September 9, 2009

The Third Circuit Court of Appeals upheld New Jersey District Court Judge Mary Cooper’s decision of all legal issues against IMEGA, a gambling trade association that had argued that the Unlawful Internet Gambling Enforcement Act of 2006, 31 U.S.C. § 5361 et seq. was unconstitutional.

The law makes it illegal for companies “engaged in the business of betting or wagering” to accept checks, credit cards, or other forms of payment  “to place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise made.”  IMEGA, referred to in the opinion as “Interactive,” argued (1) that the Act was void for vagueness, (2) that it violated the right to privacy by preventing gambling in the privacy of the home, and (3) that it violated the First Amendment right to free speech.

The Third Circuit found all three arguments had no merit.  The court decided: (1) The Act was sufficiently clear for any person “of ordinary intelligence” to understand it; (2) gambling is not protected from governmental impingement in the same way as is the right to have sex in the home; and, (3) the Act did not impinge on speech in any way.

We reject Interactive’s vagueness claim. The Act prohibits a gambling business from knowingly accepting certain financial instruments from an individual who places a bet over the Internet if such gambling is illegal at the location in which the business is located or from which the individual initiates the bet. 31 U.S.C.  5362(10)(A), 5363. Thus, the Act clearly provides a person of ordinary intelligence with adequate notice of the conduct that it prohibits.

It bears repeating that the Act itself does not make any gambling activity illegal. Whether the transaction in Interactives hypothetical 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 states law, it constitutes unlawful Internet gambling under the Act.

In sum, we must reject Interactives facial challenge to the Act. Simply put, a gambling business cannot knowingly accept the enumerated financial instruments in connection with a bet that is illegal under any Federal or State law applicable in the jurisdiction in which the bet is initiated or received. Thus, the Act provide[s] a person of ordinary intelligence fair notice of what is prohibited. Williams, 128 S. Ct. at 1845.4A

Next, Interactive contends that the District Court erred in rejecting its claim that the Act violated a constitutional right of individuals to engage in gambling-related activity in the privacy of their homes. As noted above, the District Court held that Interactive lacked standing to assert the rights of third-party gamblers, and alternatively, that the claim failed on the merits.

We share the District Courts doubts regarding Interactives standing to assert these claims, particularly because Interactive does not itself have any relationship with individual gamblers, but rather seeks to assert third-party standing based on its members relationships with such gamblers. However, … we need not decide whether Interactive has standing because, even assuming that it does, we agree with the District Court that Interactives claim clearly fails on the merits.

Interactives reliance on those cases is misplaced. Both Lawrence and Earle involved state laws that barred certain forms of sexual conduct between consenting adults in the privacy of the home. Lawrence, 539 U.S. at 567; Earle, 517 F.3d at 744. As the Supreme Court explained in Lawrence, such laws touch[] upon the most private human conduct, sexual behavior, and in the most private of places, the home. 539 U.S. at 567. Gambling, even in the home, simply does not involve any individual interests of the same constitutional magnitude.  Accordingly, such conduct is not protected by any right to privacy under the constitution.

In its effort to locate a constitutional privacy right to engage in Internet gambling from ones home, Interactive looks primarily to Lawrence v. Texas, 539 U.S. 558 (2003), and Reliable Consultants, Inc. v. Earle, 517 F.3d 738 (5th Cir. 2008).

Before the District Court, 8 Interactive primarily pursued a claim that the Act violated the First Amendment. Although Interactive stated at oral argument that it had not abandoned that claim, it only tangentially mentions this argument in its papers to this court. In any event, the Act only criminalizes the knowing acceptance of certain financial instruments in connection with unlawful gambling. Simply put, such conduct lacks any communicative element sufficient to bring it within the ambit of the First Amendment. United States v. OBrien, 391 U.S. 367, 376 (1968).

The opinion is available at the link below.

Interactive Media Entertainment and Gaming Association, Inc. v. United States