Interactive Media Entertainment v. Attorney General of the United States

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 08-1981
_____________
INTERACTIVE MEDIA ENTERTAINMENT
AND GAMING ASSOCIATION INC,
a not for profit corporation of the State of New Jersey,
Appellant
v.
ATTORNEY GENERAL OF THE UNITED STATES;
FEDERAL TRADE COMMISSION;
FEDERAL RESERVE SYSTEM
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 3-07-cv-02625)
District Judge: Honorable Mary L. Cooper
Argued July 7, 2009
Before: SLOVITER, AMBRO, and JORDAN Circuit Judges.
(Filed: September 1, 2009)
_____
Eric M. Bernstein (Argued)
Eric M. Bernstein & Associates
Warren, NJ 07069
Stephen A. Saltzburg (Argued)
George Washington University
Washington, DC 20052
Attorneys for Appellant

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Nicholas J. Bagley (Argued)
Jacqueline E. Coleman
United States Department of Justice
Washington, DC 20530
Attorneys for Appellee
_____
OPINION OF THE COURT
SLOVITER, Circuit Judge.
Congress enacted the Unlawful Internet Gambling
Enforcement Act of 2006, 31 U.S.C. § 5361 et seq. (the “Act”),
because “traditional law enforcement mechanisms are often
inadequate for enforcing gambling prohibitions or regulations on
the Internet, especially where such gambling crosses State or
national borders.” 31 U.S.C. § 5361(a)(4). Congress also found
that “Internet gambling is primarily funded through personal use
of payment system instruments, credit cards, and wire transfers.”
31 U.S.C. § 5361(a)(1).
Appellant Interactive Media Entertainment & Gaming
Association, Inc. (“Interactive”), is a New Jersey not-for-profit
corporation that collects and disseminates information related to
electronic and Internet-based gaming and whose members are
businesses that provide gaming services, including Internet
gambling, to individuals located throughout the United States
and the world. It raises a number of facial constitutional
challenges to the Act. The District Court dismissed Interactive’s
claims, some on standing grounds and others on the merits. It
appeals.
I.
The Act provides that “[n]o person engaged in the

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The phrase “‘business of betting or wagering’ does not1
include the activities of a financial transaction provider, or any
interactive computer service or telecommunications service.” 31
U.S.C. § 5362(2). Thus, the criminal prohibition contained in
§ 5363 of the Act applies only to gambling-related businesses, not
any financial intermediary or Internet-service provider whose
services are used in connection with an unlawful bet.
The Department of the Treasury and Board of Governors2
of the Federal Reserve have jointly adopted a final rule to
implement this statutory mandate. Prohibition on Funding of
Unlawful Internet Gambling, 73 Fed. Reg. 69382-01 (November
18, 2008). Those regulations are not at issue here.
3
business of betting or wagering may knowingly accept, in the1
connection with the participation of another person in unlawful
Internet gambling,” various forms of financial instruments (such
as credit cards, electronic fund transfers and checks). 31 U.S.C.
§ 5363. The Act defines “unlawful Internet gambling” as “to
place, receive, or otherwise knowingly transmit a bet or wager
by any means which involves the use, at least in part, of the
Internet where such bet or wager is unlawful under any
applicable Federal or State law in the State or Tribal lands in
which the bet or wager is initiated, received, or otherwise made.”
31 U.S.C. § 5362(10)(A).
Any person who violates § 5363 commits a crime
punishable by fine and/or up to five years imprisonment. 31
U.S.C. § 5366(a). Moreover, upon conviction of that criminal
offense, the defendant may be permanently enjoined from
engaging in the making of bets or wagers. 31 U.S.C. § 5366(b).
Finally, the Act also provides that federal and state authorities
may bring civil proceedings to enjoin any transaction prohibited
under the Act, 31 U.S.C. § 5365, and mandates that the Secretary
of the Treasury and the Board of Governors of the Federal
Reserve System enact regulations requiring certain financial
institutions “to identify and block or otherwise prevent or
prohibit” the transactions barred by § 5363.” 31 U.S.C. §
5364(b)(1).2

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Interactive filed a complaint alleging that the Act was
facially unconstitutional and contrary to the United States’ treaty
obligations. It sought to enjoin the enforcement of the Act as
well as the promulgation of regulations thereunder. After
Interactive moved for a preliminary injunction, the District Court
granted the Government’s cross-motion to dismiss the
complaint.
Interactive claimed the Act violated the First Amendment
and the Government argued that Interactive lacked standing.
The District Court rejected the Government’s standing defense
but, when it reached the merits, it rejected Interactive’s
expressive association claim because the Act “does not have any
adverse impact, much less a significant one, on the ability of the
plaintiff and its members to express their views on Internet
gambling.” App. at 21. Indeed, the District Court noted that the
conduct prohibited by the Act – the taking of another’s money in
connection with illegal gambling – does not involve any
“communicative element” and “essentially facilitates another’s
criminal act.” App. at 23.
Next, the District Court rejected Interactive’s commercial
speech claim because the Act “does not actually implicate First
Amendment interests” given that the “acceptance of a financial
transfer is not speech,” and even if it were, the Act only applies
where the transfer is related to illegal gambling. App. at 25.
The District Court also rejected Interactive’s overbreadth
and vagueness arguments. As to the First Amendment
overbreadth argument, the Court concluded that the Act “does
not implicate any form of protected expression, and thus there is
no overbreadth problem.” App. at 26. As to the due process
vagueness claim, the Court rejected that argument because the
Act’s prohibitions “are not ‘in terms so vague that persons of
ordinary intelligence must necessarily guess at its meaning and
differ as to its application.’” App. at 26 (quoting Am. Civil
Liberties Union v. Ashcroft, 322 F.3d 240, 268 (3d Cir. 2003)).
The District Court also rejected Interactive’s claim that
the Act violates the privacy rights of individual gamblers betting

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The District Court had jurisdiction pursuant to 28 U.S.C.3
§ 1331. We have jurisdiction under 28 U.S.C. § 1291. We review
de novo a district court’s grant of a motion to dismiss for failure to
state a claim. Sands v. McCormick, 502 F.3d 263, 267 (3d Cir.
2007).
The government contends that Interactive waived its4
vagueness argument because it did not raise the issue before the
District Court. Although Interactive did not include a separate
count in its complaint raising its vagueness claim, its complaint did
allege that the Act failed to give adequate notice of the conduct
criminalized–the gravamen of a vagueness challenge. Moreover,
the District Court deemed the issue to be before it and rejected
Interactive’s claim on the merits. The issue is properly before us.
5
online from their homes on the ground that Interactive lacked
standing to assert claims on behalf of such gamblers. In the
alternative, it rejected Interactive’s privacy claim on the merits
because the gamblers’ conduct did not implicate any substantive
due process rights.
The District Court also rejected Interactive’s claims that
the Act violates the United States’ treaty obligations on standing
grounds and, alternatively, on the merits. It rejected
Interactive’s claim that the Act violates the ex post facto clause
because the Act is purely prospective. Finally, it rejected
Interactive’s Tenth Amendment claim because, as a private
party, it lacked standing to pursue it.3
II.
Interactive raises two primary arguments on appeal. First,
it contends that the Act is void for vagueness because the
statutory phrase “unlawful Internet gambling” lacks an
“ascertainable and workable definition.” Appellant’s Br. at 25.4
The Supreme Court has explained that a statute is
unconstitutionally vague if it “fails to provide a person of
ordinary intelligence fair notice of what is prohibited, or is so
standardless that it authorizes or encourages seriously

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Relatedly, Interactive notes that some of its members5
operate gambling websites from outside the United States and
contends that the Act is ambiguous as to whether such members
could face criminal sanctions under the Act if they engaged in
financial transactions with a gambler who placed a bet from a state
that prohibited such gambling. However, the Act unambiguously
6
discriminatory enforcement.” United States v. Williams, 128 S.
Ct. 1830, 1845 (2008). Where, as here, a plaintiff raises a facial
challenge to a statute on vagueness grounds, the plaintiff “must
demonstrate that the law is impermissibly vague in all of its
applications.” Village of Hoffman Estates v. Flipside, Hoffman
Estates, Inc., 455 U.S. 489, 497 (1982) (emphasis added).
We reject Interactive’s vagueness claim. The Act
prohibits a gambling business from knowingly accepting certain
financial instruments from an individual who places a bet over
the Internet if such gambling is illegal at the location in which
the business is located or from which the individual initiates the
bet. 31 U.S.C. §§ 5362(10)(A), 5363. Thus, the Act clearly
provides a person of ordinary intelligence with adequate notice
of the conduct that it prohibits.
Further, the Act cannot be deemed impermissibly vague
in all its applications. For example, several states prohibit all
gambling activity (except non-commercial, social gambling not
at issue here) by persons within the state and/or specifically ban
Internet gambling. See, e.g., Haw. Rev. Stat. §§ 712-1220(4),
712-1223; Or. Rev. Stat. § 167.109. Thus, if a person in Hawaii
places a bet over the Internet, a gambling business that
knowingly accepts a financial instrument in connection with that
bet would unambiguously be acting in violation of the Act.
Similarly, a gambling business located in Oregon would violate
the Act if it knowingly accepted a financial instrument in
connection with Internet gambling prohibited by that state’s law.
It is true, as Interactive notes, that the Act does not itself
outlaw any gambling activity, but rather incorporates other
Federal or State law related to gambling. See 31 U.S.C. §5

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prohibits such transactions and we note that it “has long been
settled law that a country can regulate conduct occurring outside its
territory which causes harmful results within its territory.” Lake
Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 922
(D.C. Cir. 1984).
Interactive also contends the Act’s requirement that certain6
financial institutions create procedures to block transactions
prohibited by the Act encourages arbitrary and discriminatory
enforcement of the Act. However, these financial institutions are
only required to block transactions prohibited by § 5363, and as
discussed above, we conclude that § 5363 provides adequate notice
so as to avoid any vagueness problem. Moreover, we note that the
duty of financial institutions to block or restrict transactions barred
by the Act is not materially different from similar duties imposed
on financial institutions under other federal law. See H.R. Rep. No.
109-412, pt. 1, at 11 (2006).
7
5362(10). However, “a statute is not unconstitutionally vague
merely because it incorporates other provisions by reference; a
reasonable person of ordinary intelligence would consult the
incorporated provisions.” United States v. Iverson, 162 F.3d
1015, 1021 (9th Cir. 1998). Similarly, the fact that gambling
may be prohibited in some states but permitted in others does not
render the Act unconstitutionally vague. See United States v.
Tripp, 782 F.2d 38, 42 (6th Cir. 1986) (noting that a federal
criminal statute may “incorporate[] state law for purposes of
defining illegal conduct . . . even if the result is that conduct that
is lawful under the federal statute in one state is unlawful in
another”).
Interactive also contends that it will often be difficult to
determine the jurisdiction from which an individual gambler
initiates a bet over the Internet, and consequently, whether the
bet is unlawful. However, “[w]hat renders a statute vague is not
the possibility that it will sometimes be difficult to determine
whether the incriminating fact it establishes has been proved; but
rather the indeterminacy of precisely what that fact is.”6
Williams, 128 S. Ct. at 1846; see also Trojan Techs., Inc. v.
Pennsylvania, 916 F.2d 903, 915 (3d Cir. 1990) (“Inability to

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satisfy a clear but demanding standard is different from inability
in the first instance to determine what the standard is.”).
Interactive also raises a hypothetical in which a gambler
in a state that prohibits all gambling makes a bet over the
Internet with a gambling business in a foreign jurisdiction that
permits such activity. According to Interactive, if the law of the
foreign jurisdiction provides that the bet is deemed to be placed
and received in that jurisdiction, the Act becomes
unconstitutionally vague because it is impossible to know where
the bet was placed as a matter of law.
However, Interactive does not point to anything in the
language of the Act to suggest that Congress meant anything
other than the physical location of a bettor or gambling business
in the definition of “unlawful Internet gambling.” Further, to the
extent that Interactive’s hypothetical raises a vagueness problem,
it is not with the Act, but rather with the underlying state law. It
bears repeating that the Act itself does not make any gambling
activity illegal. Whether the transaction in Interactive’s
hypothetical constitutes unlawful Internet gambling turns on how
the law of the state from which the bettor initiates the bet would
treat that bet, i.e., if it is illegal under that state’s law, it
constitutes “unlawful Internet gambling” under the Act.
In sum, we must reject Interactive’s facial challenge to
the Act. Simply put, a gambling business cannot knowingly
accept the enumerated financial instruments in connection with a
bet that is illegal under any Federal or State law applicable in the
jurisdiction in which the bet is initiated or received. Thus, the
Act “provide[s] a person of ordinary intelligence fair notice of
what is prohibited.” Williams, 128 S. Ct. at 1845.
III.
Next, Interactive contends that the District Court erred in
rejecting its claim that the Act violated a constitutional right of
individuals to engage in gambling-related activity in the privacy
of their homes. As noted above, the District Court held that
Interactive lacked standing to assert the rights of third-party

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As the District Court correctly held, Interactive cannot7
assert standing for this claim based on principles of associational
standing because it does not allege that individual gamblers, as
opposed to gambling-related businesses, are among its members.
9
gamblers, and alternatively, that the claim failed on the merits.
“It is a well-established tenet of standing that a ‘litigant
must assert his or her own legal rights and interests, and cannot
rest a claim to relief on the legal rights or interests of third
parties.’” Pennsylvania Psychiatric Soc’y v. Green Spring
Health Servs., Inc., 280 F.3d 278, 288 (3d Cir. 2002) (quoting
Powers v. Ohio, 499 U.S. 400, 410 (1991)). However, this
“prohibition is not invariable and our jurisprudence recognizes
third-party standing under certain circumstances.” Id. Indeed,
the third-party standing doctrine is not rooted in the
constitutional requirements for standing. Instead, “courts have
imposed a set of prudential limitations on the exercise of federal
jurisdiction over third-party claims.” Id. at 287 (citing Bennett v.
Spear, 520 U.S. 154, 162 (1997)).
“To successfully assert third-party standing: (1) the
plaintiff must suffer injury; (2) the plaintiff and the third party
must have a ‘close relationship’; and (3) the third party must face
some obstacles that prevent it from pursuing its own claims.”
Nasir v. Morgan, 350 F.3d 366, 376 (3d Cir. 2003). The7
District Court concluded that Interactive could not satisfy either
the second or third prongs of this test. We share the District
Court’s doubts regarding Interactive’s standing to assert these
claims, particularly because Interactive does not itself have any
relationship with individual gamblers, but rather seeks to assert
third-party standing based on its members’ relationships with
such gamblers. However, as noted above, the limitations on
third-party standing are prudential requirements developed by
the courts, not jurisdictional requirements imposed by Article III
of the constitution. Accordingly, we need not decide whether
Interactive has standing because, even assuming that it does, we
agree with the District Court that Interactive’s claim clearly fails
on the merits.

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Before the District Court, Interactive primarily pursued a8
claim that the Act violated the First Amendment. Although
Interactive stated at oral argument that it had not abandoned that
claim, it only tangentially mentions this argument in its papers to
this court. In any event, the Act only criminalizes the knowing
acceptance of certain financial instruments in connection with
unlawful gambling. Simply put, such conduct lacks any
“communicative element” sufficient to bring it within the ambit of
the First Amendment. United States v. O’Brien, 391 U.S. 367, 376
(1968).
10
In its effort to locate a constitutional privacy right to
engage in Internet gambling from one’s home, Interactive looks
primarily to Lawrence v. Texas, 539 U.S. 558 (2003), and
Reliable Consultants, Inc. v. Earle, 517 F.3d 738 (5th Cir. 2008).
Interactive’s reliance on those cases is misplaced.
Both Lawrence and Earle involved state laws that barred
certain forms of sexual conduct between consenting adults in the
privacy of the home. Lawrence, 539 U.S. at 567; Earle, 517
F.3d at 744. As the Supreme Court explained in Lawrence, such
laws “touch[] upon the most private human conduct, sexual
behavior, and in the most private of places, the home.” 539 U.S.
at 567. Gambling, even in the home, simply does not involve
any individual interests of the same constitutional magnitude.
Accordingly, such conduct is not protected by any right to
privacy under the constitution. Cf. Am. Future Sys., Inc. v.8
Pennsylvania State Univ., 688 F.2d 907, 915-16 (3d Cir. 1982)
(“We are unwilling to extend the constitutional right of privacy
to commercial transactions completely unrelated to fundamental
personal rights . . . .”).
IV.
For the above-stated reasons, we will affirm the judgment
of the District Court.

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