Jeff Haney reports that the legal fight over a law that virtually outlaws Internet gambling in the U.S. isn’t over

By Jeff Haney (contact)

Wednesday, April 2, 2008 | 2 a.m.

The lobbying group iMEGA (Interactive Media Entertainment & Gaming Association) is proceeding with full force in its fight against the federal law that has shackled the growth of Internet poker and other forms of online gambling in the United States.

The group filed notice Tuesday in the 3rd U.S. Circuit Court of Appeals that it will challenge the recent dismissal of its lawsuit opposing the Unlawful Internet Gambling Enforcement Act of 2006.

The challenge follows a decision last month in U.S. District Court in New Jersey that was mostly favorable to the federal government. The ruling affirmed Congress’ right to pass the law — which severely restricts financial transactions linked to Internet gambling — in a constitutional manner and rejected the claim that gambling is a form of free speech.

The ruling, however, also established iMEGA’s “standing” — law lingo meaning the legal right to initiate a lawsuit.

Jay Lakin, co-owner and vice president of Poker Source Online, who is following the case closely, was encouraged by that part of the ruling and saw it as a small victory for those involved in the Internet poker scene.

“This is certainly a big step for iMEGA,” Lakin said. “Judge (Mary) Cooper’s ruling that the organization has standing means the case will go on. Hopefully her decision and the trial’s visibility will result in the Internet gambling issue gaining steam.”

Poker Source Online, a community of Internet poker players, was founded in 2004 in Virginia and is now based in Costa Rica. It has more than 100,000 registered members, including many from Las Vegas, according to Lakin.

Lakin also touched on a couple of other developments regarding Internet gambling, including a hearing Tuesday in Washington before the Subcommittee on Domestic and International Monetary Policy, Trade and Technology. Rep. Barney Frank, D-Mass., was expected to argue for his cause of legalizing online gambling at the hearing.

Frank, who has called the UIGEA “one of the stupidest things I ever saw,” favors the legalization of online gambling and regulation by the Treasury Department. He has proposed a bill, the Internet Gambling Regulation and Enforcement Act, that would topple the current law.

“This will be the second major congressional hearing about Internet gambling,” Lakin said. “Congressman Frank’s bill would call for licensed Internet gambling in the United States and would revolutionize the landscape as we know it.”

Meanwhile, in Europe, it was announced the European Commission will take up the cause of the Remote Gambling Association, a group that represents major gambling companies outside the United States, many of which are online-based and listed on foreign stock exchanges.

The Remote Gambling Association had argued the UIGEA unfairly harmed European gambling operators, effectively banning them from catering to U.S. customers.

“People around the world are affected by the fallout of the Unlawful Internet Gambling Enforcement Act,” Lakin said. “From Europe to Antigua, companies are feeling the heat after the UIGEA was rushed through Congress. I’m pleased that added pressure may come from the European Union.”

Although Lakin and his group are inherently biased in favor of Internet poker, it’s difficult to argue against their contention that the benefits and drawbacks of online gambling should be debated openly. By contrast, the UIGEA was signed by President Bush after it was shoved through Congress at the last minute in fall 2006, attached to a bill to improve security at U.S. ports.

As if to highlight the absurdity, some online poker players have taken to calling the law by its proper name, the SAFE Port Act.

“These events show the ugly truth of what happens when you ram through legislation without proper discussion,” Lakin said. “We’re fortunate to have several organizations and several congressmen leading the charge.”