On April 2nd, the Kentucky Clerk’s Office approved the Commonwealth’s brief in a case that pits the state against owners of 141 internet gambling domain names. The approval means that the Interactive Media Entertainment and Gaming Association (iMEGA) must file its brief to the Kentucky Supreme Court by June 1st.
The timeline is setting up a summer showdown in the United States between the organization and the Kentucky Justice and Public Safety Cabinet. In January, the Kentucky Court of Appeals ruled by a two to one margin that the State lacked jurisdiction to seize and force the potential forfeiture of 141 internet gambling domain names, including those belonging to online poker sites such as PokerStars and Full Tilt Poker. The industry originally received word of the forfeiture back in September.
Although Commonwealth attorneys originally asked for more space to outline their discord or more time to pare the document down, the final brief weighed in at 50 pages, which is the maximum number allowed by law. The State’s brief opens, “Wagers are accepted in an unregulated underworld without effective age verification, identification, or financial accountability… Persons can instantly wager and lose retirement savings or college funds in secrecy.”
The State also notes that internet gambling may be cutting into its revenues for legalized forms, including horse racing. The city of Louisville is just three weeks away from playing host to the annual Kentucky Derby, which is held on the first Saturday in May. The spectacle takes place at Churchill Downs and brings in an extensive amount of revenue to the state’s economy. The Commonwealth’s brief claims that 2,500 “unregulated sites” solicit U.S. customers. They include 1,083 online casinos, 592 sports books, 532 online poker rooms, 224 Bingo sites, 49 skill game websites, 30 betting exchanges, 25 lotteries, and 17 backgammon sites. These figures are sourced from a Casino City study in 2006.
The brief also gives a lengthy history of arrests and admissions of guilt in the internet gambling industry. Commonwealth attorneys alluded to Party Gaming Co-Founder Anurag Dikshit’s $300 million settlement with the U.S. Government in December of 2008, decisions by ClearChannel and Infinity Broadcasting to cease running advertisements for online gambling sites in 2003, a $7.2 million settlement between Sporting News and the U.S. Department of Justice in 2006, and the arrests of the founders of Neteller.
The question of whether iMEGA and the Interactive Gaming Council (IGC) have standing to sue is also brought into light. The brief asserts, “IGC and iMEGA have refused to identify a single owner they seek to represent. iMEGA has even failed to identify any Domain Defendants its unidentified members claim to own. Appellant has no way to verify whether the associates have the authority to represent an actual entity claiming ownership interest in a domain.” Last March, Judge Mary L. Cooper granted iMEGA standing to sue to declare the Unlawful Internet Gambling Enforcement Act (UIGEA) unconstitutional. That case also currently sits in appeal.
In October, Judge Thomas Wingate did not overturn the seizure order by Kentucky Governor Steve Beshear. The decision prompted iMEGA and the IGC to file a petition for the state’s Court of Appeals to intervene. The organizations’ pleas were granted, setting up a December hearing in Louisville. In January, Judges Michelle Keller and Jeff Taylor agreed that the Commonwealth did not have proper jurisdiction to force the forfeiture of the 141 internet gambling domain names in question. Judge Michael Caperton submitted a dissenting opinion arguing that domain names are part of a much larger “gambling device,” a term that traditionally refers to physical objects like slot machines or roulette wheels found in an underground casino.
No date has been set for the Kentucky Supreme Court to hear the case. Stay tuned to Poker News Daily for the latest from the battle in the Bluegrass State.
