The "UIGEA is unconstitutional" argument is a loser

[Skallagrim]

As my lunch hour is almost over, I decline to go researching for more cases. The porn cases previously cited already demonstrate the point you seem to miss: commerce that occurs interstate can ONLY be regulated by the Federal Government. You are completely wrong, as I recall from 1st year law school, to state that "it is fine for the Federal government to explicitly defer an issue to state regulation from a DCC perspective" if the issue is an issue of interstate commerce.

If you think I am wrong, cite one case please that supports the above quote.

Or, as a refresher course on the commerce clause, google "interstate wine sales" and you will find a recent case in which the US Supreme Court overturned state laws that required out of state wine shippers to obtain some sort of in-state license or similar thing.

[NickMPK]

[ QUOTE ]
As my lunch hour is almost over, I decline to go researching for more cases. The porn cases previously cited already demonstrate the point you seem to miss: commerce that occurs interstate can ONLY be regulated by the Federal Government. You are completely wrong, as I recall from 1st year law school, to state that "it is fine for the Federal government to explicitly defer an issue to state regulation from a DCC perspective" if the issue is an issue of interstate commerce.

If you think I am wrong, cite one case please that supports the above quote.

Or, as a refresher course on the commerce clause, google "interstate wine sales" and you will find a recent case in which the US Supreme Court overturned state laws that required out of state wine shippers to obtain some sort of in-state license or similar thing.

[/ QUOTE ]

Try this case:
Western & Southern Life Ins. v. State Board of California, 451 U.S. 648 (1981).

From the summary of holdings in that case:
The retaliatory tax does not violate the Commerce Clause. The McCarran-Ferguson Act, which leaves the regulation and taxation of insurance companies to the States, removes entirely any Commerce Clause restriction upon California's power to tax the insurance business. Neither the language nor the history of that Act suggests that it does not permit, as appellant argues, "anti-competitive state taxation that discriminates against out-of-state insurers."

Note the text of the McCarran-Ferguson statute at issues reads, "The business of insurance . . . shall be subject to the laws of the several States which relate to the regulation or taxation of such business."

If you are trying to come up with a case that supports your position, please try to find one that in some way or other involved federal legislation, or at least mentioned the federal legislation exception to the DCC.

[Skallagrim]

Sorry Nick, I should read your posts more closely while eating. You are saying that Congress could, if it choose, abrogate its responsibility under the commerce clause to the states by means of explcit legislation saying that is what they are doing. The case you cite definitely stands for that proposition.

But that is NOT what the UIGEA did. It does not state that interstate gambling commerce shall be a matter of state regulation (if it did that, then individual states could ban online horse betting, and that would make a lot of republican racehorse owners very mad, or ban fantasy sports betting, angering the NFL and baseball).

The UIGEA simply says that to determine what is illegal gambling under the act you look to pre-existing state and federal law. That is not a specific conferring of responsibility, its a fractured, 50-state definition where federal regulations (like the horseracing exception) still trump.

Could congress pass a law specifically saying online gambling is solely a state concern? Yes. But thats not what they did with the UIGEA cause it would have angered too many republican friendly lobbyists.

So to amend my previous post: Under the commerce clause the Feds could ban online poker alltogether, create an overarching regulatory scheme, or pass legislation explicitly saying online gambling is solely an individual state concern. They did none of this with the UIGEA.

My apologies for assuming you missed the point, and thank you for correcting me about whether congress can explicitly take something out of interstate commerce, but I hope you do see the difference between the UIGEA and the act at issue in the Western & Southern case.

[NickMPK]

I think you are parsing this too closely searching for a distinction that isn't there. Basically, the Court defers to Congress to decide what is a DCC violation and what isn't. There is no way they will strike down a federal law on DCC grounds.

It sounds like what you are saying is that all state gaming laws that could affect internet gambling are violations of the DCC, independent of the UIGEA. The UIGEA arguable constitutes congressional approval of these laws. But even if it didn't, the UIGEA didn't make them any more of a DCC violation, because the state is not enforcing the UIGEA.

So there are three scenarios:
1.) State gaming laws affecting internet gaming were never violations of the DCC.
2.) State gaming laws affecting internet gaming were violations of the DCC, but no longer are because the UIGEA brought them within the federal legislation exception.
3.) State gaming laws affecting internet gaming were and still are violations of the DCC.

In the case of 1 & 2, there is no constitutional case. In the case of 3: (a) the case has little to do with the UIGEA, and (b) why wasn't this case brought long ago?

[Skallagrim]

As I said, got to read your posts closely. Would the UIGEA be struck down under the DCC analysis? No - but it would be made mostly useless: where it says "look to state law," many state laws would be struck down under the DCC, so there is nothing left for the UIGEA to "enforce" with respect to those states.

Not all state gambling laws invoke the DCC - to violate the DCC doctrine, a state law must either impermissably burden interstate commerce or discriminate against commerce from out of state.


1) Laws that just make it a crime to play on the internet at all dont invoke the DCC at all - WA and La are the states with such laws.

2) But a lot of states have laws that say providing gambling services is unlawful unless it occurs at a place licensed BY THAT STATE. THESE ARE THE ONES THAT, IMHO, VIOLATE THE DCC WHEN APPLIED TO INTERNET GAMBLING. Nevada and New York are prime examples here.

A third category, which is most states, are laws that ban various forms of gambling under various conditions which were passed by states long before the internet existed. It is beyond the limits of this forum to go into each of these individual states' laws and see whether they "impermissably burden" interstate gaming commerce, though some probably clearly do (like California's weird rake rules) IF one accepts that they apply to the internet at all.

So, did the UIGEA give states the right to pass laws that allow only local, licensed companies to offer gaming?

Nowhere in the UIGEA does it say that. It does, interestingly, have a provision for intRAstate-ONLY gambling to be allowed by a state under certain circumstances - I think a Court would see that provision as an indication that Congress did not want to give up its right to control intERstate gambling. Also, the UIGEA is not an overall approval of state law by any means - in fact the horseracing, fantasy sports and lottery exceptions overrule many state's laws. The logical conclusion is therefore that Congress did not intend to send the power to regulate internet gaming back to the states.

One thing all the legal scholars agree on is that the UIGEA was one of the most poorly drafted bits of legislation ever ramrodded through congress. It contradicts itself often.

But my bottom line is that 1)the UIGEA was not a direct removal of the power to regulate interstate gambling to the states, and so 2) where the state anti-gambling law would otherwise violate the DCC, the UIGEA does not save it, and the UIGEA can therefore not be used to enforce it.

As a practical matter this means a site is not breaking the law when it provides internet gambling services to a customer in Nevada, but does break the law when it provides those same services to a customer in Washington because Nevada is tryng to (impermissably) regulate interstate commerce while Washington is merely exercising its police power with respect to activities of its own citizens. The devil, as usual, is in the details.

Skallagrim

PS - so it is your third category that we are talking about, and a) this is about the UIGEA because it means that the UIGEA does not make a site taking money from players from most states illegal, and b) this was never litigated before because until the internet there was no such thing as interstate gambling (other than interstate sports/race betting which, in fact, were covered by federal laws).