Kentucky Appeals Court Hears Internet Gambling Domain Seizure Case

Three Court of Appeals judges met December 12 in Louisville, Kentucky to hear oral arguments to overturn a lower court ruling upholding the U.S. state of Kentucky's right to seize 141 online poker and Internet gambling domain names, including several of the largest online poker sites: PokerStars, FullTiltPoker and BodogLife, as well as many others. The appeals court ruling has yet to be made public, but participants say they expect a fairly speedy ruling.

Kentucky Gov. Stephen Beshear and Michael J. Brown, the state's Secretary of Justice and Public Safety, are seeking the seizure of the 141 online gambling domain names in an effort to protect Kentucky's own gambling industry from competition by online gambling sites (click here for related article). Franklin County Circuit Court Judge Thomas Wingate ruled in October to uphold the seizure order, but the Appeals court granted a stay to enforce the ruling until they could hear arguments from the appellants (click here for related article).

Attorneys for the state and the web sites estimated that about 13,000 people in Kentucky use the online gambling sites.

Appeals were filed by the Interactive Media Entertainment and Gaming Association (iMEGA) and Interactive Gaming Council (IGC), an international online gambling trade group based in Vancouver, British Columbia, Canada. The appeals court decided to combine iMEGA's petition with a narrower petition filed by the IGC.

Both groups asserted that the lower court lacked jurisdiction to order the domain seizures. iMEGA contends that the lower court misapplied Kentucky's specific "gambling devices" law in order to provide a rationale for permitting the seizures. iMEGA also argues that Kentucky's actions violate the Commerce Clause of the US Constitution, and that Secretary Brown lacked the authority to initiate the seizure action in the first place.

POKER IS GAME OF SKILL

During the short time for oral arguments, one of the IGC lawyers stated that poker is a skill game, and argued that as a result it is not gambling, so should be exempt. However, observers commented that they believe there is little hope for a carve out for online poker. The Poker Players Alliance (PPA) had submitted an amicus brief explaining why poker is a game of skill. Judge Wingate had ruled that how the cards fall- chance- determines the winner.

Jennifer Brislin, Director of Communications for the Cabinet, gave her take on the Court of Appeals hearing: "We thought it went very well. From our standpoint, we were able to state our case very well. In essence, we still haven't seen the owners of these sites. They haven't made themselves known."

Representatives for iMEGA said they were pleased by the proceeding. "Clearly, our attorney and the lawyers representing the other groups were excellent," said iMEGA's chairman Joe Brennan. "They were very comfortable with the give-and-take with the judges, and had a command of these important issues."

WILL DANGEROUS PRECIDENT FOR ABUSE OF POWER BE SET?

Brennan added, "We're very confident that we will prevail in this matter and put a stop to this dangerous precedent being set by the governor with this action."

"This matter has generated concerns across the online world about abuse of governmental power," said Brennan. "Kentucky is opening the door for any government - state and local, foreign and domestic - to use what amounts to blackmail to achieve its ends. If this precedent is allowed to stand, it's not hard to imagine a government like China utilizing this kind of seizure power to prevent free media, like the New York Times, from reaching their citizens."

"I think John Tate (attorney for IGC) said it well," Brennan said. "'If we can do it to them, they can do it to us.'"

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