10/23/09 – The main focus of industry interest as the week ends was Thursday's Kentucky Supreme Court hearing on whether the state government has the jurisdiction to seize 141 international domain names owned by online gambling companies based beyond the reach of Kentucky enforcement.
The appearance of lawyers to give oral arguments backing up previous submissions to the court is the latest in a series of legal clashes following the state's notorious attempt last year to seize and confiscate the domains.
The case has to date been aired in a district Kentucky court, before a panel of three judges in the Kentucky Court of Appeals and now before the Kentucky Supreme Court as Governor Steve Beshear's outsourced lawyers attempt to reverse court decisions that have consistently gone against them.
Opposing the government's appeal was the Interactive Media Entertainment and Gaming Association, Inc., and the Interactive Gaming Council, two trade associations that have consistently opposed the state's assault on the freedom of the internet and the owneship rights to domain names.
In his address to the court on Thursday, Eric Lycan, a private attorney representing the Kentucky Justice Cabinet argued: "They [the domain owners] have been using these [domains] to violate the law in Kentucky. They are subject to forfeiture."
Attorneys for the state maintain that gambling over the Internet is illegal, and that the state has the authority to stop it from taking place within Kentucky's borders. They say the companies — no matter where they're based – should either block Kentucky residents' access or face seizure from the state. And they claim that the domain names can be defined as "gambling devices" in terms of Kentucky law.
But, reports Associated Press, the attorneys representing the domain owners disagree, arguing that online gambling isn't illegal in the state because the Kentucky General Assembly has not taken any specific action to declare it unlawful. Furthermore, the state doesn't have jurisdiction over companies outside the state and domain names cannot be described as gambling machines or devices.
Attorney Bill Johnson, representing some of the domain owners, argued that the state has improperly mixed civil and criminal elements in the case.
"The ultimate issue in this case is whether a domain name is a gambling device under the statute," Johnson told the court. "This case should have never proceeded in the beginning."
Attorney Jon L. Fleischaker, who represented iMEGA, said state lawmakers have had the opportunity to make online gambling illegal and have not. Fleischaker also said his clients have not had the benefit of proper due process.
"It is mind-boggling," Fleischaker told the court.
A ruling from the court is now awaited, and could take weeks or even months.
With the completion of the oral argments, the Poker Players Alliance – a players association with over a million members – issued a statement on the issue.
"I am very pleased with the arguments presented today supporting the Kentucky Court of Appeals ruling prohibiting the Commonwealth's seizure of these domain names and I strongly believe we will prevail," said executive director John Pappas. "This case is about more than playing poker online – it's about protecting Internet freedom and the individual rights of Kentucky residents.
"If the Commonwealth is truly interested in protecting consumers, it should put its energy in licensing and regulating online poker – which would also bring in millions in revenue – versus attempting to banish online poker through such a bold, broad and unlawful seizure.
"The PPA looks forward to a positive ruling from the Kentucky Supreme Court and hopes to work with lawmakers in the Commonwealth on the common sense solution of licensing and regulation."