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Law Experts Have Doubts on kentucky Gambling Case

4/8/10 - At least two legal experts have expressed doubts about the prospects for success of Kentucky's latest legal wheeze trying to wring money from Full Tilt Poker and other online poker operators.
 
Civil action 10-CI-505 claims that Full Tilt Poker owner Poker Kings and the other unknown defendants knowingly conducted commercial transactions, solicited money transfers, maintained customer accounts, collected rake, and installed software on machines within the borders of Kentucky.
 
The Kentucky suit, filed in the Franklin Circuit Court at the end of March, cites an obscure state law in its attempt to recover three times the amounts lost by people who placed online bets.
 
Louisville attorney Jon Fleischaker, who represents online gambling interests, told the St Louis Courier-Journal newspaper that an argument can be made that the transactions didn't actually occur in Kentucky because none of the Web site operators are located there. He said it would be akin to the state suing an Indiana casino to recover losses incurred by a Kentuckian who gambled there.
 
"I think there are serious, serious questions about this," he said.
 
Highly respected online gambling law expert and Whittier Law SchooI professor I. Nelson Rose, said the Beshear administration is attempting to use an old statute still on the books in many states. In the case of Kentucky, the law says that in instances of illegal gambling the winners have no right to collect. And losers who pay up can sue to recover triple the amount of their loss under the law.
 
The statute also says that if the loser doesn't sue within six months "any other person may sue the winner."
 
Rose said that, to his knowledge, no other state has attempted such a legal manoeuvre and that he expects the state's lawsuit to fail.
 
"There are a lot of problems using that statute," he said. "These are extremely ancient laws that have almost never been used for 100 years or more. The times have completely changed."
 
Rose exampled one problem with the lawsuit in that in the case of Full Tilt and other online poker sites, Kentucky gamblers win and lose bets made with other gamblers, not the site.
 
The administration has attempted to counter this with the argument that the defendants (the poker site operators) are the ultimate winners because they receive a fee, or rake, for operating the game.
 
The Poker Players Alliance has also weighed in on the latest development, with executive director John Pappas observing: "The one thing that we can be sure of is that a continued assault on poker and attempts to restrict the rights of commonwealth residents to play online poker is a clear waste of state government's scarce resources."
 
However, a spokeswoman for the state's representative, Justice Cabinet Secretary J. Michael Brown, insisted that although the ancient statute "had its origin many years ago, it still remains the valid law of the commonwealth."
 
In this latest legal assault, the Lexington law firm that spearheaded Governor Beshear's attack on 141 international online gambling domains  is again managing the case. Beshear has been previously quoted as saying that the legal fees would not be a burden on Kentucky residents because the law firm volunteered to take the case and gets paid only if the state recovers damages.
 
The Courier-Journal report claims that a subpoena has been issued to an unidentified witness, and that FBI agents or prosecutors have spoken to at least two people involved in disputes with Full Tilt.  The online poker company has also faced legal claims totalling $80 000 from Los Angeles players Lary Kennedy and Greg Omotoy, whom it accused of operating ‘bots’. Full Tilt has dismissed the claims as both baseless and frivolous.



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