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Kentucky Domain Forfeiture Hearing Delayed Again (Update)

September 29, 2008 (InfoPowa News) — The much-anticipated judicial hearing on Kentucky state's application for the forfeiture of 141 online gambling domain names (see previous reports) turned out to be something of a damp squib in the Franklin Circuit Courtroom Friday afternoon.

With so many lawyers representing the state, online gambling operators and interested parties with standing such as the Poker Players Alliance, Interactive Gaming Council, GoDaddy domain registrar and iMEGA, it was perhaps inevitable that the issue became bogged down on technical arguments, starting with the state's representative — Chicago lawyer Robert Foote — demanding that those opposing the forfeitures should establish legal standing by identifying the owners of the domains.

"A domain name has no right to have a lawyer, only a corporation or person can have a lawyer," Foote said. "And no one here is going to tell you they represent anyone."

This was argued by lawyers for online gambling companies, with William Johnson revealing that he was there representing seven clients and Alice Grimes claiming she represents But they — and other attorneys — declined to say who owned those names.

Instead, they argued the action against 141 domain names took place "under cover" and with no notice to their clients. They sought a continuation to brief Judge Wingate on matters of law that they contended will demonstrate that the court has no jurisdiction and should dismiss the action.

Judge Thomas Wingate took the correct course in giving all involved until October 7 to submit detailed legal briefs on their positions and qualifications for legal standing. The judge pointed out that the case was a complex matter in law where decisions reached could set precedents and have far-reaching effects. It was therefore appropriate that those with the right to be heard submitted their arguments for debate and examination.

However, the judge sounded an ominous note when he told lawyers representing the domain names at issue: "You are going to have to eventually pony up and say who these people are."

In the meantime, the judge's temporary seizure of the domains would remain in place.

Even before the parties entered the courtroom there were negotiations in progress between Kentucky officials and some online gambling sites — allegedly among them — which had started banning Kentucky players. According to Associated Press, Justice Cabinet spokeswoman Jennifer Brislin confirmed Friday morning that lawyers for Kentucky and online casino operators are holding talks in advance of a court hearing scheduled for 3:30 p.m.

Brislin said state lawyers want the online casino operators not only to block access in Kentucky but also to pay an unspecified amount of financial damages for 'lost revenue'.

In court, Foote told Judge Wingate that the state is seeking two things: agreement by owners of the domain names to block access from the state of Kentucky, and compensation for previous gambling activity from Kentucky residents. He said the state would not shut down domain names of any person or corporation willing to appear and claim ownership of the names while the two sides "work out a deal."

The Poker Players Alliance, IGC, and iMEGA filed friend of the court briefs opposing the state's action as industry bodies.

The Interactive Media Entertainment and Gaming Association has previous legal standing before a federal court and issued a Motion to Dismiss.

"I have a good feeling about our Motion," Edward Leyden, President of iMEGA, said. "County Judge Thomas Wingate is a very straightforward, common sense judge, and a thoughtful guy, so we are in good hands."

Kentucky Justice Secretary J. Michael Brown said the state's goal is to stop the activity in Kentucky using the only available legal route it has — a 1974 Kentucky law that allows the state to seize illegal gambling "devices."

The state contends the domain names constitute gambling devices.

The PPA later issued a statement on its position, saying that it contends that poker, including online poker, is legal under Kentucky state law and is a game of skill, not chance. As such, the basis for the state's seizure of poker-only website domain names is unfounded.

"The actions by the state of Kentucky are not only extreme, but groundless in that it can be clearly proven that poker is indeed a game of skill and not chance and thereby poker websites should not be part of the state's action," said John Pappas, executive director of the PPA. "The amicus brief filed on behalf of the PPA today proves this."

Key points of the amicus brief include:

• Extensive research citing expert opinion that poker is indeed a game of skill;

• References to academic, gaming, and artificial intelligence experts citing the fact that skill is an essential element to winning at poker, be it against a human or a computer;

• Unequivocal consensus among experts that in the long run a skilled poker player will beat an unskilled poker player;

• Kentucky state law asserts that "a contest or game in which eligibility to participate is determined by chance and the ultimate winner is determined by skill shall not be considered gambling";

• Under Kentucky law, poker is a lawful game of skill because the facts can easily sustain a finding that skill of the player predominates over chance in determining outcome;

• The current case provides no evidence to suggest that any of the poker games played on any of the 141 websites in question are based on chance as opposed to skill;

• Cases in other states as well as a Federal Communications Commission (FCC) letter verify that skill is the dominant factor in the game of poker; and

• The case raises First Amendment free speech issues in restricting residents' access to poker websites that contain news, blogs, and forums as well as the ability to play poker.

The amicus brief concludes that, given the state's lack of evidence, poker as played on any of the websites in question is not a permitted game of skill under Kentucky law, that there is "no reasonable chance of success on the underlying claim of illegality that would support its … basis for forfeiture of the domain names."

Pappas urged the PPA's 13,000 Kentucky members to lodge objections to the Governor's actions. "Poker players in Kentucky are not taking the actions of Governor Beshear and the court lightly," he said.

"They viewed the governor as pro-gambling, and our members helped support him in the election just last year. They view this as betrayal. They are outraged — and rightly so — and will speak their mind until this unfounded assault on their freedoms is stopped."

Forbes business magazine reported that Governor Beshear based his election campaign last year on a promise to open casinos in Kentucky, which allows gambling at horse tracks and bingo halls and operates a state-run lottery. Blocking gambling websites, Beshear said, will protect those operations from unwelcome online competition.

Beshear, a Democrat, pushed the state legislature this year to approve a ballot referendum that, if approved, would have changed the state's constitution to allow casinos. Beshear said allowing casinos to open, then taxing them, would have raised some $500 million in additional st
ate revenue. Kentucky lawmakers rejected the proposal.