Internet Gambling Debated in Kentucky Supreme Court

 

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This week, the fate of 141 internet gambling domain names took center stage in the Kentucky Supreme Court following their seizure in September of 2008. An order from Judge Thomas Wingate upheld the actions, taken by the state’s Justice and Public Safety Cabinet, prompting the industry to seek the intervention of the Kentucky Court of Appeals. That court ruled by a two-to-one margin in January that the Commonwealth did not have jurisdiction to act, leading to last week’s hearing.

The case centers on whether domain names belonging to internet gaming sites like PokerStars and Bodog constitute “gambling devices” under Kentucky state law. The term usually refers to objects like roulette wheels and slot machines that you’d find in an underground casino. Kentucky attorney Eric Lycan told the court, “The domain names are registered through a registrar. When this action was filed, many attempted to take their domain names registered with registrars in the U.S. and transfer them to another overseas registrar.”

Lycan revealed that, if the 141 domain names were successfully forfeited, they would be put up for public auction, making PokerStars.com and other URLs inaccessible for online poker players around the world. Lycan explained that public auction would only occur “if they refuse to cease operations in Kentucky. It’s only those who continue to defy the Commonwealth that will be forfeited.” In his original decision one year ago, Wingate mandated that the sites stop taking customers from Kentucky by employing geo-targeting software.

On how the 141 domain names in risk constitute gambling devices, Lycan explained that the court must interpret the antiquated Commonwealth laws liberally: “It’s necessary to understand that the direction of the law and case law directs that we interpret the word ‘device’ broadly. It is a 30 year-old statute that is designed to stop unregulated gambling. I don’t agree that the internet makes it legal to break the law in Kentucky when you couldn’t do it here on the street corner.” Lycan was the lone representative of the Commonwealth to take to the stand during the 90 minute proceeding.

Representing Sportsbook.com, one of the targeted domains, was Bill Johnson, who explained, “My argument is that this case should not have even proceeded from the beginning.” He contended that the State should not have pursued a criminal offense of illegal gambling through a civil forfeiture hearing. Also taking to the stand was VicsBingo.com and Interactive Gaming Council (IGC) attorney John Tate, who commented that Wingate and company violated the 14th Amendment to the United States Constitution.

Also representing the industry was Interactive Media Entertainment and Gaming Association (iMEGA) attorney Jon Fleischaker, who presented the most spirited testimony of the four lawyers present. Fleischaker remarked, “The legislature has said that betting is legal. The actual act of gambling is legal. If there is a problem perceived by the legislature, they can make gambling on the internet illegal. Because they haven’t done it, the Commonwealth and the Secretary have come up with this scheme that is nowhere to be found in the law.”

The State argued that iMEGA and the IGC lacked standing to sue because they were not the actual owners of the domain names. Fleischaker fired back, “We have members who would have standing to sue because they’re the owners. The interests they seek to protect are germane to our purpose.” iMEGA is based in Washington, D.C.

Organizations that have filed briefs in the case include the Poker Players Alliance (PPA), the American Civil Liberties Union (ACLU), the Center for Democracy and Technology, the Electronic Frontier Foundation, the Internet Commerce Association, eBay, and Network Solutions. No indication has been given as to when the Kentucky Supreme Court will hand down a decision; estimates range from two to four months.

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