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Thursday, October 12, 2006, 4:12 PM

SCOTUS Denies Cert In MSA Antitrust Case

On Tuesday, the Supreme Court declined to hear an appeal from the Second Circuit involving an antitrust challenge to various state statutes enacted pursuant to the Tobacco Master Settlement Agreement. Three small tobacco companies sued 30 states alleging that the statutes, which required them to place money in an escrow account to help cover potential future damages awards in tobacco-related lawsuits, violated antitrust laws as well as the Commerce Clause. The Second Circuit allowed the companies to pursue their antitrust claims. The states asked the Supreme Court to review the case to consider whether principles of due process and state sovereignty permitted a federal judge in New York to exercise jurisdiction over the state attorney general in another state. The Supreme Court, however, declined to hear the case. For more information, see this article.

Congress Passes Online Gambling Bill

On September 30, 2006, Congress enacted a bill that would restrict online gambling in the United States. The measure, a compromise between two earlier versions passed by the House and Senate, passed both chambers as part of a larger bill aimed at port security. The gambling provisions of the Safe Ports Act would prohibit banks and financial institutions from transmitting funds from U.S. residents to gambling web sites, which are located off shore. These gambling web sites were already considered illegal by the U.S. government, but it was hard to prevent the off shore sites from operating without going after the credit card companies and banks. That is what the new bill aims to do.

Three large British-based gambling web sites announced that they are withdrawing from the U.S. market if the bill is signed into law by President Bush (which is expected to happen). Others, however, think that the bill may not end all online gambling in the United States. The government may still have difficulty enforcing the provisions of the bill against third-party payment processing sites located off shore. Much will depend on what type of regulations and procedures the US Treasury and Federal Reserve enact, assuming the measure is signed by the President.

In an article in the San Francisco Chronicle, an owner of an online poker web site is quoted as saying: "This will not end the industry; it will just evolve with new sites stepping up to replace the old ones. New third-party payment processes will come up. It might involve non-US bank accounts or sending payment to someone in the UK. There will be hundreds of ways around it."

For more information, see this article.
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