KENTUCKY DECISION FINALLY HANDED DOWN (Update)

17 October 2008

But there's little in it for the industry

 

After a day of computer glitches Judge Thomas Wingate finally handed down his decision late afternoon Thursday in a Kentucky court....but there was scant comfort for the online gambling industry in his findings, or for the lawyers representing interested parties in the case, in which the state of Kentucky sought to seize 141 international domain names (see previous InfoPowa reports).

Strong arguments presented by various bodies and companies impacted by the Kentucky action in seeking to have the case dismissed ranged from a lack of jurisdiction on the part of the state and debate on the definition of the phrase "gambling device" to the legal standing of those contesting the order and whether poker is a game of skill, luck or both.

Judge Wingate placed emphasis on the state's call for the owners of the domains to be identified, and refused to grant the motions by legal representatives to dismiss the Kentucky case because they had not specifically identified the owners of the domains in question, which included Players Only.com, Poker Host.com, SB Global.com, Sportsbook.com, Sports Interaction.com, My Sportsbook.com and Lines Maker.com.

The judge also specifically addressed the issue of Internet freedom in the conclusion to his judgement, saying:

“We note that Opposing Groups and Lawyers argue any judicial interference of the Internet will create havoc. The doomsday argument does not ruffle the Court. The Internet, with all its benefits and advantages to modern day commerce and life, is still not above the law, whether on an international or municipal level.”

In short, Judge Wingate's controversial findings dismissed virtually all the arguments against the state of Kentucky's initiative and ruled that the owners of the websites - other than those sites which are used only for advertising or information and not gambling - start blocking access to Kentucky residents. The Judge gave the companies and individuals concerned 30 days to implement such a block, failing which a forfeiture hearing will take place at 10.30am on November 17 in which the domains could be confiscated.

Those companies that institute the block will not be further pursued and may retain control of their domains.

The ruling raises serious practical considerations regarding the introduction of effective geo-blocking and the actual mechanics of taking control of domains situated outside of the state, and the ruling will inevitably be the subject of appeals on various grounds..

Lawyers for the sites which are affected, which include industry giants like Full Tilt Poker, Poker Stars, Bodog, Golden Palace, Absolute Poker and Ultimate Bet, Cake Poker, Doyle’s Room and River Belle – have been told that the sites must "reasonably establish to the satisfaction of the Kentucky's Justice and Safety Cabinet or this Court that such geographical blocks are operational" as a precondition for being relieved from the effects of the seizure order and from any further proceedings in the civil forfeiture action, Judge Wingate wrote in his 43-page ruling.

The state's Justice and Public Safety Cabinet said it was still studying the judge's findings and its responsibilities thereunder. "We're still going through the ruling," said Jennifer Brislin, communications director for the state department. "If all these sites block access they'll be free from forfeiture. Otherwise, there will be a forfeiture hearing."

"I don't know what the procedure for [geo-blocking] verification will be yet," Brislin added.

The November 17 hearings are likely to be equally contentious as legal representatives argue their cases further and perhaps seek leave to appeal. One argument which the judge has already indicated he is willing to entertain concerns the use of the domains for purposes other than gambling per se.

Golden Palace lawyers argued that the firm's domains targeted in the Kentucky action were purely for advertising and information and did not facilitate actual gambling, and the judge appeared to broadly agree that these domains could be deleted from the seizure list on November 17 if representations were made.

Perhaps the most contentious issue is the judges ruling that Kentucky has jurisdiction in the case despite the out-of-state nature of all the domains involved.

Professor Joseph Kelly, a respected legal academic with extensive knowledge of US gambling law opined that state courts will usually try to establish their jurisdiction, but that affected gambling websites have options. These include compliance with the court's ruling, further argument in the forfeiture hearing, appealing Judge Wingate's findings and taking the state of Kentucky to a federal court citing interstate commerce objections.

The Poker Players Alliance, which submitted a brief as a friend of the court, immediately criticised the judge's decision. Executive director John Pappas said: "Clearly, we believe the judge in this case got it wrong.

"First of all, we strongly disagree with Judge Wingate's ruling that poker is not a game of skill. As demonstrated in the amicus brief we filed, skill plays an essential role in being a successful poker player. Additionally, we believe that by confirming Governor Beshear's actions, the court has set a dangerous precedent for censorship of the Internet. Today's ruling is a big step backward for both personal rights and Internet freedom.

"We are confident that the Kentucky Appellate Court will review the facts and overturn today's order."

Rich Muny, Kentucky State Director of the Alliance opined that many of the plaintiffs who had submitted briefs in the case would appeal the decision.

The personal freedom group Bluegrass Institute's Public Policy and Communications Director Jim Waters expressed outrage following the decision, and accused Kentucky's governor of hypocrisy, pointing to his support for other extensive Internet and land gambling activities within the state.

Joe Brennan Jr., chairman of iMEGA which had presented strong arguments against the domain seizure, also expressed disappointment with Judge Wingate's ruling.

“This decision must not be allowed to stand, because of the threat it poses to the Internet as a whole,” he said. “Judge Wingate has ignored the clear laws of his own state in coming to a decision that essentially green-lights any jurisdiction - in the US and abroad - to ignore our rights and abuse their power to do away with competition or speech or content with which they oppose, regardless of the law. This is a dark day for Internet freedom.” He added that the iMEGA legal team will prepare a challenge to the ruling, taking it before state and if necessary federal courts.

Online Casino News courtesy of InfoPowa