Looking deeper into iMEGA's Kentucky appeal


The first volley in what is anticipated to be a number of appellate challenges to the ruling in the Kentucky domain name case has been lobbed by the Interactive Media Entertainment and Gaming Association (iMEGA), the trade association representing many of the affected domain name registrants.

Last week iMEGA's attorneys filed a 55-page writ seeking to overturn the ruling by Kentucky Circuit Court Judge Thomas Wingate granting forfeiture of 141 domain names to the Commonwealth of Kentucky, as well as his earlier seizure order which gave Kentucky control of the domain names. iMEGA is also seeking dismissal of the case its entirety.

"Gambling devices," legal standing at issue

In its writ, iMEGA identifies a number of procedural and legal errors by Judge Wingate, beginning with the claim that the judge wrongfully found jurisdiction against the domain names despite the fact that they are not tangible and have no presence in Kentucky.

The writ also claims Judge Wingate erred by misapplying the Kentucky statue that pertains to the seizure of "gambling devices" which, iMEGA argues, refers only to physical items located in the state and not to intangible domain names.

The relevant Kentucky statute is unambiguous in its definition of a gambling device as being either a slot machine or: "Any other machine or any mechanical or other device, including but not limited to roulette wheels, gambling tables and similar devices, designed and manufactured primarily for use in connection with gambling and which when operated may deliver, as the result of the application of an element of chance, any money or property, or by the operation of which a person may become entitled to receive, as the result of the application."

iMEGA argues that Judge Wingate exceeded his authority by expanding the definition to include domain names, in effect rewriting the statute.

The issue of Judge Wingate's denial of iMEGA's legal standing to represent any of the domain name registrants is also raised in the writ. iMEGA represents registrants, or "users," of the domain names that are issued by a registrar, such as GoDaddy or Network Solutions.

iMEGA had appeared at the forfeiture motion on behalf of its member registrants, but the court ruled - contrary to the law, according to iMEGA - that it lacked legal standing to appear in court on their behalf.

Beyond additional jurisdictional arguments that were raised, the writ also invokes a number of constitutional issues. It argues that the Kentucky action results in prior restraint of commercial speech in violation of the First Amendment by taking away the domain names which are used to advertise the Web sites.

Further, the authors of the writ argue that Kentucky's seizure of the domain names violates the Commerce Clause by interfering with interstate commerce, a protectionist move to benefit Kentucky's gambling industry at the expense of the rest of the world.

The writ takes special objection to the manner in which the Commonwealth first obtained the seizure order, which iMEGA asserts was a violation of their members' First Amendment and due process rights. The hearing was "ex parte," meaning the defendants had no notice or opportunity to participate.

Only the Commonwealth presented evidence to the judge, and the entire court file including the seizure order itself was sealed until five days after the order was handed down. Thus, iMEGA argues, the members' domain names were seized without any opportunity for them to defend themselves in court.

Attorneys for iMEGA indicated that they filed the writ now rather than waiting until after the Dec. 3 forfeiture hearing because of the "irreparable harm" which would be suffered by their members if the Commonwealth took control of the domain names and immediately moved to close them.

The respondents to the writ have 10 days to file a written response to iMEGA's petition. When their response is filed, or when the 10 days has elapsed, the matter will be submitted to the three-judge appellate panel for its review.

If the appeals panel rules against iMEGA, their next step is to appeal to the Kentucky Supreme Court. Based on their allegation of "irreparable harm," it is expected that iMEGA would then request a stay of the forfeiture hearing pending that appeal.

Next step

As of now, the judge has ordered the defendant domain names to prove to the court that they have geo-blocked their sites from Kentucky residents, or turn their names over to the Commonwealth. So far only one company, MicroGaming, has complied with the court's order and geo-blocked Kentucky residents from accessing the online poker rooms that are part of its poker network.

Judge Wingate had originally set Nov. 17 as the date for the forfeiture hearing, but has moved the hearing to Dec. 3. This delay is a result of a request for a Motion for Stay made last week by another online gambling association, the Internet Gaming Council (IGC). Judge Wingate ended the hearing on IGC's motion by stating he would "take the request under advisement."

It is unclear what will happen on Dec. 3 if the foreign registrars simply refuse to come to court and hand over the domain name Web sites. One domain name registrant, Golden Palace, has submitted an affidavit asserting that it does not belong on the list of "unlawful gambling sites," but the judge has indicated that a separate hearing on that issue will have to be scheduled.

There are dozens of other registrars located outside of the United States and without their cooperation it is unclear how Kentucky will actually take possession of their domain names.

Call for boycott

There has been a growing movement for an organized protest against the actions of the Commonwealth of Kentucky and, specifically, its governor, Steve Beshear, who spearheaded the domain name seizure action. Last week, Online Casino Advisory's Senior Gaming Analyst Sherman Bradley called for a boycott of all gambling in the state of Kentucky.

The boycott was picked up by a number of Web sites, including domainnamewire.com which listed "ten ways to pressure Kentucky to drop its assault on the internet," including boycotting Kentucky's own online gambling Web site, TwinSpires.com, and its big sports/gambling event the Kentucky Derby. The site also suggests writing to Beshear's office.

There is also a Web site devoted solely to the boycott, aptly named BoycottKentucky.com. As stated on the site, "BoycottKentucky.com was created to educate the public about the over-reaching and unconstitutional actions of Kentucky Governor Steve Beshear and to harness the economic, political and social pressure necessary to force a reversal of his actions".

The site has a number of suggestions for ways to have an impact on various businesses operating in Kentucky who might then put pressure on the governor to drop the lawsuit. There is also a petition on the site for supporters of online gambling to sign and forward to the governor's office.

In addition to the petition, BoycottKentucky.com is also organizing a call-in campaign for this Friday, Oct. 31, asking those opposed to Kentucky's actions to flood Governor Beshear's office with phone calls opposing Kentucky's unprecedented and outrageous attack on the Internet.

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