Internet gambling class action suit fails
By Paul
The case for Internet gambling was strengthened last week, when a federal appeals court in Louisiana upheld an earlier dismissal of a class-action lawsuit by people who lost money gambling in Internet casinos.

Pro-online gambling interests say the decision will help in the fight to legalize Internet gambling in the US, but the same people also fear that the decision could also trigger a backlash by anti-gambling forces intent on banning Web casinos in Congress.

A three-judge panel of the 5th US Circuit Court of Appeals in New Orleans upheld a district court's dismissal of a lawsuit by gamblers Larry Thompson and Lawrence Bradley, saying the gamblers failed to prove that Internet casinos and the credit card companies they used to process their wagers violated federal racketeering laws and the federal Wire Act.

Thirty-three virtually identical cases had been transferred to the Louisiana district court through multi-district litigation and the cases of Thompson and Bradley were selected as test cases and consolidated, the appeals court said.

The 1961 Wire Act was originally intended to outlaw illegal sports betting over interstate telephone lines. With anti-Internet gambling bills failing to pass in the in previous sessions of Congress, the Wire Act has been used as the primary legal instrument to address Internet casinos.

However, whether the Wire Act applies to Casino style gambling on the Internet is a contentious issue. Attorneys specializing in gambling law have said that the language and the spirit of the law applies to sports events, not card games and other casino-style gambling.

The federal government, however, is sticking to the position that the Wire Act applies to all online gambling. In August, the US Department of Justice sent a letter to Nevada's state Gaming Control Board to this effect.

Last Thursday however, the federal court of appeals in New Orleans disagreed with that interpretation.

'The district court concluded that the Wire Act concerns gambling on sporting events or contests and that the plaintiffs had failed to allege that they had engaged in Internet sports gambling,' the panel wrote. 'We agree with the district court's statutory interpretation, its reading of the relevant case law, its summary of the relevant legislative history, and its conclusion.'

The ruling may leave open the possibility of legalizing non-sports Internet betting, such as traditional casino-style games of chance, in states that approve it, supporters say.

'In 1961 I don't think legislative intent could have included the concept of playing casino-style games over phone lines,' said Keith Furlong, deputy director of the Interactive Gaming Council, a group that lobbies on behalf of Internet casinos and related businesses.

Still, it's unlikely that Internet gambling will be legalized in the near future, said Joseph Kelly, an attorney and professor of business law at SUNY College of Buffalo in New York.

The anti-gambling forces in Congress far outnumber pro-casino factions, he said.

Tony Cabot, a gaming attorney and Internet gambling law expert in Las Vegas, agrees.

The court decision could be used as fodder to fuel an all-out ban on Internet gambling, he said.

Similar decisions by higher courts could weaken the force of the Wire Act over time, however, he noted. 'Ultimately the laws are interpreted by the courts. As you get higher appellate courts making the determination of the Wire Act applying only to sports, it makes it more difficult for the Department of Justice to sustain its position.'

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