• by Wendy Davis  @wendyndavis, September 3, 2009

A federal appellate court has upheld a 2006 law that prohibits banks and credit card companies from processing payments used for unlawful online gambling.

The Third Circuit Court of Appeals rejected a challenge to the law by the Interactive Media Entertainment & Gaming Association, which had argued that the Unlawful Internet Gambling Enforcement Act is unconstitutionally vague and infringes on people's right to privacy.

The gaming group argued that the law is too vague because there's no generally accepted definition of unlawful Internet gambling. Instead, the statute leaves it to state and federal governments to define illegal Web gambling.

Currently, only six states make it a crime for individuals to place bets online, according to Joe Brennan Jr., chairman of Interactive Media. The gaming group argued that banks have no way to know whether particular individuals reside in one of those six states, or in one of the other 44 states where it's not illegal to place an online bet. If the bettor falls within the jurisdiction of one of those other 44 states, banks would arguably be allowed to process his or her gambling payments.

But the court rejected that argument. "The fact that gambling may be prohibited in some states but permitted in others does not render the act unconstitutionally vague," the court wrote.

The gaming group also argued that the law violates people's right to gamble in the privacy of their homes. The court rejected that theory as well, holding that gambling "is not protected by any right to privacy under the constitution."

Brennan said that Interactive Media is still considering various options, including asking the court to reconsider its opinion, asking the entire Third Circuit to hear the matter, and asking the U.S. Supreme Court to accept the case.