Three D.C. area game shops have been raided and two people arrested for modifying game consoles to play pirated games.

From the article:

Authorities arrested two store employees on charges of conspiracy to commit copyright infringement and conspiracy to traffic in a device that circumvents technological protection measures, the ESA said.

This restriction comes from the DMCA, which prevents circumvention of technological measures to protect copyrighted works.

I actually have a modded PS2 just to play imported games, because PS2 games are tagged with a region code making it impossible to play games from other regions. DVD players use a similar scheme. Without the modded machine, I would have to buy a separate console to play Japanese games. Looks like I might have to do this. In my opinion, since region coding doesn't protect a copyrighted work per se, there is a basis for saying that region coding would not fall under this provision of the DMCA... It would still likely be a breach of the license agreement for purchase of the game, if they put it in there...