NJ Law Journal 8/27/07 -- Front Page Article on IMEGA Suit

[TruePoker CEO]

"Charles Humphrey Jr. of Colorado, claimed that the player registration fees, ranging from $9.95 to $499.95 per team, were essentially wagers or bets and sought to recover those amounts as gambling losses under the qui tam laws of states whose laws were supposedly violated."

"Cavanaugh found that where entry fees are unconditional and prizes are guaranteed, reasonable entry fees charged by the sponsor of a contest are not wagers or bets. He observed that spelling bees, track meets and beauty pageants would constitute gambling if all it took was the combination of an entry fee and a prize."

I'll see if I can get Chuck Humphries to share his view of the outcome of his lawsuit, which was dismissed but in losing may have opened the door for tournament poker online.

[TruePoker CEO]

"By statute, if a WTO ruling is inconsistent with a
congressional enactment, the latter is to be given effect."

That statute, if it exists, seems to have been missed by counsel in other cases. The only place it could appear would have been in the Act ratfying the GATS, which I doubt is how the Courts would interpret that. A citation would have been nice.

I'll see if I can dig up a copy of the motion as filed.

[Jay Cohen]

That's interesting since ratifying the treaty is post Wire Act. The UIGEA on its own makes no type of gambling illegal that wasn't illegal the day before.

[TruePoker CEO]

Structured properly, I do not see why tourneys should have an issue under this standard.

Now, can someone please get poker declared a skill game ???

[Skallagrim]

Id love to see the Humphrey case, because it cant just say what has been quoted here: a lottery also has an "entry fee and a prize" - so there must be more distinction. I suspect the element of "competition" as opposed to pure chance factored somewhere in the opinion, so yes, TruepokerCEO, the "poker is mostly skill" argument comes back into play.

That the government is saying it can violate the WTO agreement and no INDIVIDUAL can complain is not a surprise. The context in the Kaplan case is different and more compelling (the defendant being someone who thought his government had bargained for and obtained the right to do what he did). And Jay, what the government is saying is that the statute ratifying the WTO included language prohibiting private action, so the DOJ concludes that if congress passes a law violating the WTO then the new law controls because the WTO cannot be privately enforced.

The DOJ mishmosh on horseracing and the wire act is also old news, but at least they are consistent in being inconsistent.

The only thing the Imega suit had going for it, IMHO, was the argument that the UIGEA would harm the interests of members where playing was legal (because they would be barred along with the illegal players - in other words the UIGEA would stop California (legal) players from depositing money along with the illegal players from Washington) - but this is unripe without the actual regulations to challenge. Though they can still argue right now that this is an over burdensome restriction on internet trade (requiring every Internet site to know and enforce the laws of each of the 50 states).

But I always figured their 1st and 10th amendment arguments were going nowhere.

Skallagrim

[JPFisher55]

Thank you Jay. As I thought the DOJ's argument that iMEGA lacks standing is likely to succeed. Same for the ripeness issue. Which is why the DOJ has not prosecuted or threatened anyone under the UIGEA or issued regulations. Such action would give the iMEGA and a lot of other folks standing. The DOJ may be right about the 10th amendment standing argument too.
However, I disagree with their first amendment argument. If the UIGEA enforces illegal conduct that has first amendment protection then it might violate the first amendment. It is circular to state that because a statute only enforces illegal conduct that it has nothing to do with the first amendment.
The WTO argument ignores the Charming Betsy doctrine. I, also, wonder about a statute that gives other statutes priority over a treaty.
But I doubt that the court will get to these issues. As I feared the iMEGA litigation is premature.
Good thing that Carruthers/Kaplan have made similar arguments. I just hope that they do make a deal like Neteller et. al.

[TruePoker CEO]

Skall, DOJ probably wishes the exclusionary language in the Act which ratified the GATS had excluded the WTO as a "defense", but I do not read it that way.

Kaplan clearly HAS standing, he IS being prosecuted, and to my reading ... he CAN argue the WTO as a defense. (This is not to say he will prevail, but he has a motion won already allowing the argument to be made.

[Jay Cohen]

Not exactly. He hasn't won any motion yet.

The standing problem is that they are claiming only governments have standing, not individuals.

[MiltonFriedman]

... in at least SOME states. Only then do they get to argue 1st Amendment issues. This means POKER or ONLINE CASINO members, be they operators or affiliates or players.

Sports betting operators will NOT suffice. DOJ will likely win on the following point re conduct covered by the Wire Act:

"Numerous courts - often after little analysis
- have rejected such challenges to the Wire Act. See, e.g., Truchinski v. United States, 393 F.2d 627, 634 (8th Cir. 1968) ("the provisions of Section 1084 do not trespass on the first amendment guarantee of free speech"); United States v. Kelley, 254 F. Supp. 9, 14-15 (S.D.N.Y. 1966)
(same), rev’d in part on other grounds, 395 F.2d 727 (2d Cir. 1968); United States v. Borgese, 235 F. Supp. 286, 296 (S.D.N.Y. 1964) (upholding the Wire Act against a constitutional challenge because "[t]he First Amendment is not applicable where criminal conduct is involved"); United States v. Smith, 209 F. Supp. 907, 918 (E.D. Ill. 1962) (the Wire Act "do[es] not restrict freedom of speech; [it] merely prohibit[s] the use of interstate facilities to certain conduct which the Congress has declared to be illegal.").

They will win on Standing OR on 1st Amendment grounds, and will win NOW.

This sohuld not be news to them, I hope they have affidavits and witnesses lined up who are proper, law-abiding members/plaintiffs.

[Skallagrim]

[ QUOTE ]
Skall, DOJ probably wishes the exclusionary language in the Act which ratified the GATS had excluded the WTO as a "defense", but I do not read it that way.

Kaplan clearly HAS standing, he IS being prosecuted, and to my reading ... he CAN argue the WTO as a defense. (This is not to say he will prevail, but he has a motion won already allowing the argument to be made.

[/ QUOTE ]

Must be a Monday thing, I thought that was the point I was making: WTO is not going to help Imega, but Kaplan is quite different and has a chance precisely because he was in a foreign country doing something that a treaty between his government and ours says he can do. The old-fashioned believer in "justice" as opposed to "just us" says that has to be a defense to a criminal charge somehow.

Skallagrim