Interview with iMEGA President

04 October 2007

Recently we spoke with the President of iMEGA Ed Leyden and he has graciously taken the time from his insane week of battleing the US government to share his insights with us – Poker Affiliates. Please read his very insightful take on the current situation and continue to support their efforts. These guys are doing way more than the PPA, trust me.

Question: This is a two part question, what deficiencies does the US government acknowledge about the UIGEA at this current time? And also how seriously will the argument that the UIGEA ‘chills’ business due to placing unnecessary fear take this case?

ED LEYDEN/iMEGA:  As would be the case with almost any litigant involved in the early stages of a law suit concerning issues that is considers vital to its interests, the government is not now conceding that the statute in question (the UIGEA) is deficient in any way. The government does acknowledge in its filings, however, that iMEGA members (that is, market participants in the Internet industry, including gaming operators and affiliates) could “theoretically” be subject to prosecution. It is this genuine threat of prosecution that exerts the chilling effect on industry participants and, in turn, on the individual players who engage in otherwise constitutionally protected conduct with these companies and firms.  Furthermore, it would be no answer for the government to say, in essence, “we’re only going after the operators (or their U.S.-based affiliates) and not the players, so no one with any cognizable First Amendment rights is being harmed here.”   In other words, the government may recognize your right to say or do what you want, but it nevertheless reserves the power to punish the person to whom you say it—and to inconvenience and interfere with the totally-neutral third party (i.e., banks and credit card companies) intermediaries who help to convey the message for you.  In essence, in the government’s view, it now only takes “one to tango.”

A lot of gambling affiliates are worried they are in the danger of being arrested since they receive funds (commission) for referring players to online casinos. UIGEA Section 5363 details how the burden is placed mostly on the banking institutes accepting and/or facilitating funds to these casinos.

Question: Are affiliates at risk when they receive a commission check or wire transfer from an online gambling company?

ED LEYDEN/iMEGA: 31 USC §5362 (that is, UIGEA) expands the definition of punishable “betting” or “wagering” to include the act of providing instructions to someone else on how to convey the funds necessary to facilitate a betting or wagering transaction.  This represents a wholly new and distinct theory of criminal prosecution that is in addition to the “aiding and abetting” counts that the acceptance of payments from an operator could, under certain circumstances, already expose an affiliate. In short, an aggressive federal prosecutor could well choose to construe the technical instructions underlying a hyperlink to constitute the type of “instructions” addressed in §5362 and, thus, indict an affiliate with counts under that statutory provision, as well as on “aiding and abetting” counts with respect to the offshore operator. Fortunately, no such prosecutions have been initiated to date—under either theory–and we hope that one never is.

Question: We all know how nice it was for the legislators to carve out Horse Racing amendments in the new law. How influential were the land based horse racing companies and tracks when the new laws were put in place?

ED LEYDEN/iMEGA: The racing industry and pari-mutuel operators have long enjoyed special consideration in policy-making due, in large measure, to the genuine affection and sentimentality that  the public feels for thoroughbreds, in general (Seabiscuit, Secretariat, and Barbaro being perfect examples of this phenomenon), combined with the reality that those states where the racing industry is strongest have also seemed to elect very effective senators and congressmen who’ve risen to leadership positions (Kentucky being a prime example). The fact that many state governments also derive substantial streams of revenue from pari-mutuel racing—and have built “brick and mortar” slots parlors around such tracks—hasn’t hurt the industry in congress, either.

Question: Lastly, we have gotten the impression that only operators who are promoting 1) Online Sportsbooks or 2) Casinos and Poker rooms that accept US citizens as players are at risk. Is this statement true and how do you see affiliates moving on now that the new laws are in place?

ED LEYDEN/iMEGA: I think the answer, above, probably applies to this question, too, but we  would nevertheless agree that the operations mentioned are generally at far higher exposure to prosecution—all other things being equal—than are most affiliates. In fact, the act of referring a non-U.S. player to a non-U.S. site would seem to give rise to no American law enforcement issues at all. That is not to say, however, that affiliates are without any risk—for the reasons stated earlier. The most important thing that an affiliate or portal can and should do—without regard to the UIGEA—is to exercise thorough due diligence about the companies with which it does business. Furthermore, even without the threat of prosecution, affiliates and portals must remain aware of the very real reputational harm that can come from involvement with a “bad” site, i.e., one that doesn’t treat its visitors fairly and properly.

Click here to read the actually interview.