Saturday, Sept. 27, 2008

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Kentucky judge postpones forfeiture hearing

By Shari Geller

In an anticlimactic twist in what was a highly anticipated court hearing, a judge has postponed today's forfeiture hearing on the state of Kentucky's lawsuit seeking seizure of 141 online gaming domain names for seven days.

Franklin County Circuit Judge Thomas Wingate is giving the lawyers for the defendant domains additional time to file legal briefs before he holds the hearing in what he describes as a "very complex" case.

One favorable outcome of today's hearing, according to published reports, is that none of the domain names seized last week by the state will have to transfer ownership during the postponement.  

The eyes of the online poker community had been on today's potentially groundbreaking hearing, which sought to determine whether the state would be successful in its attempt to seize control of the domain names of all online gambling Web sites accessible to Kentucky users.

Kentucky was seeking an order handing over the domain names of 141 online gambling sites to the state. If granted, Kentucky would have the power to disable access to the sites, effectively shutting them down and, in the process, banning online gambling to residents of the state.

Just hours before the forfeiture hearing, representatives of the state were purportedly locked in settlement discussions with representatives of some of the named online casinos, according to government spokeswoman Jennifer Brislin. No information is available yet on the nature or results of these negotiations.

Governor originated lawsuit

The legal proceedings leading to today's hearing began with a lawsuit filed by the Commonwealth of Kentucky against 141 online gaming sites, including such well-known sites as Absolute Poker.com, FullTiltpoker.com and PokerStars.com.

That lawsuit, spearheaded by Kentucky governor Steve Beshear, was brought by the Justice and Public Safety Cabinet on behalf of the state in what the governor called "an unprecedented action" by a state to ban Internet gambling by its citizens.

The stated purpose of the lawsuit was to "stop illegal internet gambling that is occurring within [Kentucky], in blatant disregard for and violation of Kentucky anti-gambling law."

Claiming that Internet gambling is illegal in the state, and that any device that was used to further Internet gambling in the state was similarly illegal, the lawsuit took aim at the very domain names used by the citizens of Kentucky to access the online gaming sites.

Last week, without prior notice to any of the affected Web sites, a hearing was held before Judge Wingate in which the state sought seizure of the domain names of numerous gambling sites.

At the Sept. 18 hearing, the state argued that it had the authority to seize the Web sites pursuant to the language of KRS 528.100, which provides in part that: "any gambling device or gambling record possessed or used in violation of this chapter is forfeited to the state, and shall be disposed of." Because none of the sites' operators had been notified of the hearing, no opposition was presented.

Based on the evidence presented at the hearing by the state, Judge Wingate found that probable cause existed to believe that the domain names in question were being used in connection with "illegal gambling activity within the Commonwealth of Kentucky in violation of KRS Chapter 528."

He therefore issued an order of seizure against all of the domain names of those sites (including some that are informative only and do not offer visitors any gaming activities).

It was, according to Gov. Beshear, an important first step toward Kentucky being able to keep the sites from being accessed in the state and toward requiring "these illegal enterprises pay damages. With the seizure of the domain names, our hope is to force these operations to face a court in Kentucky to account for their actions."

"A precedent for censorship of the Internet by force"

Reaction to the court order of seizure was swift and harsh. John Pappas, executive director of the Washington D.C.-based Poker Players Alliance (PPA), said in a statement, "The Poker Players Alliance is outraged at the actions taken by Kentucky Governor Steve Beshear and the Franklin County Circuit Court to seize the domain names of Internet gambling websites. We believe this action not only unduly restricts the freedom of Kentucky residents to play games of skill, such as poker, online, but sets a precedent for censorship of the Internet by force."

The Interactive Media Entertainment & Gaming Association (iMEGA), a trade organization that represents the interests of the online gaming industry, released a statement strongly critical of the lawsuit as well. "The actions of the governor and attorneys for the Commonwealth of Kentucky, in their quest to seize control of 141 domains, will create a harmful precedent that would reach to all sectors of the Internet. It would be a terrible blow against Internet freedom, industry and, most importantly, every user of the Internet in the United States."

Notice of the seizure order and the forfeiture hearing was served electronically on the respective registrars according to procedures set out by the Internet Corporation for Assigned Names and Numbers (ICANN).

Top-notch defense team assembled

Although the sites in question missed the Sept. 18 hearing, they were represented at today's forfeiture hearing. The lead attorney for the defendants was Jon L. Fleischaker of Dinsmore & Shohl, LLP on behalf of the iMEGA.

 iMEGA president Edward Leyden, who also planned to attend today's hearing, said of the legal team representing the Internet sites, "iMEGA has assembled what may be one of the most talented, experienced, and certainly well-respected white-collar defense teams in the country, BAR NONE."

Other interested parties sending counsel included Go Daddy, a domain registrar, and the PPA, which submitted an amicus brief opposing forfeiture on a number of grounds including the fact that poker is not "gambling" under the laws of Kentucky as it is a game of skill.

After the announcement that the forfeiture hearing had been postponed, the PPA commented: "The Poker Players Alliance is pleased that the court decided to allow for a full review of this case, including argument from both sides. Until this point, the state and its hired gun class-action attorneys have acted in an ex parte fashion - only presenting one side of the argument to the court. The continuance granted today will ensure all the cards are on the table and allow the current owners of the domain names of the 141 websites to retain ownership in the interim."

The statement went on to add, "The PPA believes that a thorough review of the facts of the case will result in a favorable outcome for the thousands of Kentucky residents who play online poker."

Keep checking back with PokerListings' News section for further updates on the case.

Related Articles:

• Kentucky hearing delayed until Friday
• Kentucky governor seizes gambling site domains

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