KY Supreme Court Questions Standing, Rules for State

March 18, 2010 - The Kentucky supreme court today issued a ruling that it will not lift the freeze by registrars of 141 Internet gambling domain names unless an owner of the names comes forward.

While not a final ruling by the Court, the decision is being viewed as a temporary setback by the affected parties. “In the written decision, the Court clearly indicates they agree with our arguments, and are inviting us to refile, so that the technicality of the standing issue can be resolved,” said Joe Brennan, iMEGA chairman. “It’s unfortunate, but I can’t imagine that Kentucky’s lawyers will celebrate a ruling that says ‘bring us an owner, so we can rule in your favor’”.

iMEGA and the other affected parties, Interactive Gaming Council and Sportsbook.com, have up to 20 days to file a motion for reconsideration. In the ruling, the Supreme Court indicated that no additional briefs or oral arguments were necessary for them to consider the case, and that a petition could be made to the Appeals Court to move the case immediately back to the state Supreme Court.

“All along, it seemed the Court wanted to go our way, and this decision today indicates that is still the case,” Brennan said. “The Court is telling us that all that is necessary is for one domain owner to come forward, and we likely win.”

Brennan indicated that iMEGA would immediately set to work with the other parties to resolve the Court’s issue, and would quickly file a motion to satisfy the court.

“We obviously would have preferred a complete, clean victory today, but reading the decision, it seems this is a technicality that is only delaying the inevitable,” Brennan said.

Link

KY Supreme Court: Decision in Commonwealth v. iMEGA, et al

Kentucky v. iMEGA: No Decision Yet From Kentucky Supreme Court

Jan. 21, 2010 - Though the Kentucky Supreme Court today released a number of opinions for cases on its docket, the anticipated decision in Commonwealth of Kentucky v. iMEGA, et al, was not among them. The next possible date for a decision in the matter will not come until late-March 2010.

In January 2009, iMEGA, who was also joined by the Interactive Gaming Council and Sportsbook.com, won a decision from the Kentucky Court of Appeals that blocked Kentucky from seizing the rights to 141 Internet domain names related to online gambling. Kentucky’s lawyers appealed that decision to the state’s Supreme Court, and both sides argued the case before the Court in October 2009.

Links
Webcast - Kentucky v. iMEGA, et al: KY Supreme Court (courtesy of thePPA.org)
KY Supreme Court order - Commonwealth of Kentucky v. iMEGA, et al
iMEGA Kentucky Supreme Court Brief (PDF format)
iMEGA v. Judge Thomas D. Wingate - KY Court of Appeals decision (PDF format)
iMEGA v. Judge Thomas D. Wingate - KY notice of appeal

New Jersey Introduces In-State Internet Gambling Legislation

Jan. 15, 2010 - A newly proposed law would allow Internet gambling by New Jersey residents, to be offered on Web sites through the state’s casinos in Atlantic City. The bill was introduced into the New Jersey senate by Sen. Raymond J. Lesniak (D-Union), who also introduced a separate bill which calls for New Jersey residents to vote on a constitutional amendment that would permit state-regulated sports wagering in Atlantic City casinos, and to state residents via an intra-state Internet gambling system.

New Jersey currently offers wagering on horse races to state residents through the 4NJbets.com Web site. The state would expand the law to permit Internet versions of games currently allowed in Atlantic City casinos, such as Poker, Blackjack and Baccarat. The intra-state Internet gambling system would be regulated by the New Jersey Casino Control Commission, which would establish a Division of Internet Wagering to oversee operations and licensing.

“We’re happy that New Jersey has taken this issue into their own hands,” said iMEGA chairman Joe Brennan Jr. “New Jersey is recognized as having the toughest gaming regulators in the US, but as a leading gaming state with a long track record of doing things the right way, Internet gambling will have a great home here and the opportunity to begin normalizing the industry.”

Though iMEGA supports efforts in Washington DC, especially by Rep. Barney Frank (D) in the House and Sen. Robert Menendez (D) in the Senate, to create a Federal path to regulation, the association worked with New Jersey legislators on the bill to ensure continued progress toward regulated Internet gambling in the US.

“The efforts to resolve the  Internet gambling issue have stalled in Washington DC,” Brennan said. “If states assert their right to regulate gambling within their borders and take a serious look at permitting Internet gambling, one side effect may be a breaking of the deadlock in the US Congress.”

Links
NJ Senate S3167 - Intra-State Internet Gambling Bill
Bio: NJ Senator Raymond J. Lesniak

Kentucky Lawyers Refuse to Identify New Domain Defendants

Dec. 21, 2009 - Lawyers representing the commonwealth of  Kentucky have refused to name any new individuals targeted in their attempt to seize ownership of 141 Internet domain names, all related to online gambling, and then transfer them to the state. Despite numerous requests from attorneys representing the industry’s trade associations, the commonwealth’s attorneys have sternly declined to identify anyone.

In response to one such request, William C. Hurt, Jr, a lawyer from Hurt, Crosbie & May in Lexington, wrote that no one had the right to any information or even to challenge the motion (Click here to view emails).

“I do not believe anyone has standing to file a response or motion to strike,” Hurt wrote, despite a January 2009 ruling by the Kentucky Court of Appeals that blocked the seizures and decried the lack of due process for the defendants.

In a secret hearing in Franklin Circuit Court in fall of 2008, Hurt and other contingency-fee lawyers for the state convinced Judge Thomas Wingate to sign off on seizure orders for the domain names, despite no notification or representation in court on the behalf of the affected owners. The commonwealth’s lawyers then sought to have the domain owners pay huge cash settlements to regain ownership of their property, as well as promise to block Kentucky residents from accessing their Web sites.

The matter is currently before the Kentucky Supreme Court, which heard arguments from both sides in October. A decision is expected sometime early next year.

Joe Brennan Jr., chairman of iMEGA, an industry trade association fighting the commonwealth’s efforts, felt that the move to secretly add additional names to the suit was a “hail mary” pass attempt in a losing effort.

“These lawyers lost a very public battle with us in the Court of Appeals, and probably sense the same result from the State Supreme Court, so they’ll do anything to keep this thing alive,” Brennan said. “They were counting on a big payday from our members, in the form of settlements to get their own property back, but it doesn’t look like that’s going to happen. Since they don’t get one nickel from the state to pursue this, it’s clear that the drive for big money has taken over, and any sense of fair play or due process has gone out the window.”

Responding to Hurt’s claim that no one had standing to challenge the motion or to request the names of the new individuals added to the suit, Brennan said, “Their strategy all along was to ignore us every step of the way, even after the Court of Appeals recognized our standing and blocked their seizure efforts. They can stick their head in the sand, but we’re not going anywhere, and frankly, neither is their attempt to seize these domain names.”

Link
Emails from Kentucky Lawyers to iMEGA, IGC and Sportsbook.com
Kentucky Asks Court to Add US Defendants to Domain Seizure List

Kentucky Asks Court to Add US Defendants to Domain Seizure List

Dec. 16, 2009 - Lawyers representing the Commonwealth of Kentucky have asked the Franklin County Circuit court to add names of US citizens and companies to a lawsuit that seeks the forfeiture of 141 Internet domain names. Kentucky’s effort to seize those Web site names, all related to Internet gambling, had been blocked by a January 2009 decision from the Kentucky Court of Appeals, in favor of iMEGA and other groups, including the Interactive Gaming Council and Sportsbook.com, representing the domain owners.

Though the new motion was made public by Kentucky’s lawyers, none of the names of the US citizens or companies to be added to the seizure effort were revealed, despite requests by iMEGA’s attorneys.

A decision from the Kentucky Supreme Court is pending, after the state’s lawyers challenged the Appeals Court verdict. Oral arguments from lawyers representing both sides of the dispute were heard by the Court in October of this year .

“In the course of the litigation and the Commonwealth’s continuing investigation, the Commonwealth has learned the identity of certain entities and individuals involved in internet gambling operations, some of whom are U.S. citizens,” read the motion from Kentucky’s lawyers. “The Commonwealth asks for leave to amend its Complaint to add causes of action against these individuals and entities in personam.”

“It’s odd that Kentucky’s lawyers would try something like this at such a late date, since we’re expecting a decision on this matter from the State Supreme Court any day now,” said iMEGA chairman Joe Brennan Jr. “It seems like a ‘Hail Mary pass’ to me.”

“We’re unaware of any ‘investigations’ by the state attorney-general or law enforcement in Kentucky. The attorney-general himself asked to be dismissed from this suit last year. And there are no indictments or convictions that would enable Kentucky’s lawyers to add the names of individual US citizens to their seizure action,” Brennan said. “If anything, this last-minute gambit highlights our argument that Kentucky and the lower court provided no due process to the domain owners, since they seem bent on continuing down that path even now.”

The motion called for a hearing on Jan. 20th, 2010, in Franklin Circuit Court, before Judge Thomas Wingate. In Sept. 2008, Judge Wingate issued the original seizure orders for the 141 domain names during a secret court hearing with Kentucky’s lawyers, one which the owners of the domain names were not informed of or given the opportunity to be represented by their own counsel.

Links
Kentucky v. 141 Domain Names - Motion to Add Defendant Names

Fed Judge: NJ Governor can Join iMEGA Challenge to Sports Betting Law

Nov. 2, 2009 - Over the objections of the US Department of Justice, a Federal judge has ruled that New Jersey Gov. Jon Corzine is permitted to join a legal challenge to a Federal law prohibiting state-regulated sports betting.

US Magistrate Judge Tonianne J. Bongiovanni ordered that Gov. Gorzine’s motion to intervene in iMEGA, et al v. Holder was granted, and that his attorneys must file their complaint no later than Nov. 12th. The lawsuit asks the court to overturn the Professional and Amateur Sports Protection Act (PASPA) of 1991, which prohibits the expansion of state-regulated sports betting to all but four protected states - Nevada, Delaware, Montana and Oregon. The plaintiffs have argued the law is unconstitutional because it favors certain states by allowing them to reap tax revenue from legal sports betting, while barring every other state from doing so.

“It’s nice to clear this hurdle and move closer to a court considering the merits of our challenge,” said Joe Brennan Jr., chairman of iMEGA, lead plaintiff in the suit. “It’s ridiculous the DOJ opposed the motion. We expect they’ll now ask the court to have all of the plaintiffs thrown out for lack of standing. It’s a waste of time and effort, but it seems they’ll do anything to prevent the court from examining this law.”

“The irony is that the DOJ actually opposed this law (PASPA) when it was enacted, on the very same grounds we’ve listed in our suit,” Brennan said.

Links
US District Court of NJ: Order - iMEGA et al, v. Holder (PDF format)
US DOJ - Brief in Opposition to Gov. Jon S. Corzine’s Motion to Intervene (PDF format)
iMEGA, et al v. Holder - Federal PASPA Challenge (PDF format)

iMEGA Attacks Seizures in Kentucky Supreme Court Appearance

Oct. 22, 2009 -  Jon L. Fleischaker, attorney for iMEGA, attacked as “intellectually dishonest” the efforts by Kentucky Gov. Steve Beshear (D) to block state residents’ use of Internet gambling Web sites, during arguments before the Kentucky Supreme Court on Thursday. “They made up a process that is totally lacking in due process,” Fleischaker said.

Fleischaker, along with attorneys representing Sportsbook.com and the Interactive Gaming Council, asked the Supreme Court to uphold a decision earlier this year by the Kentucky Court of Appeals, blocking the seizure of 141 domain names belonging to online gambling sites. Private attorneys representing Gov. Beshear had obtained a court order for the seizures, in an effort to block Kentucky residents from playing poker and other games on the Internet.

In a 2-to-1 decision, the Appeals Court in January rejected the governor’s claim that Kentucky players and the Internet gambling sites had violated state law. The decision also held that a lower court had erred when it applied the state’s “gambling devices” statute to justify the seizure of the Internet domain names.

“[I]t stretches credulity to conclude that a series of numbers, or Internet address, can be said to constitute a “machine or any mechanical or other device…designed and manufactured primarily for use in connection with gambling,” Judge Michelle M. Keller wrote in her majority opinion.

The Supreme Court seemed to agree with Fleischaker about the lack of due process in the seizure attempt. “I’m really, really concerned about the nature of this proceeding,” Justice Will T. Scott said during questioning of Gov. Beshear’s attorney, Eric Lycan.

A decision is not expected before the end of the year.

Links
Supreme Court hears online gambling case - Louisville Courier-Journal
State Supreme court hears online gambling case - Lexington Herald-Leader
KY Supreme Court hears online gambling question - Associated Press

Webcast of KY Supreme Court Hearing on Internet Domain Seizures

Oct. 21, 2009 - Watch oral arguments before the Kentucky Supreme Court between counsel for iMEGA and Gov. Steve Beshear (D), LIVE on Oct. 22nd at 11:00 am ET

Watch LIVE here - Kentucky Supreme Court Webcast

iMEGA looks to again block the Commonwealth of Kentucky from seizing 141 Internet gaming domain names. iMEGA and other groups - including the Interactive Gaming Council, the ACLU, the Electronic Frontier Foundation, eBay, Network Solutions, the Poker Players Alliance and the Center for Democracy & Technology - successfully blocked the Gov. Beshear’s efforts in the Kentucky Court of Appeals earlier this year, but Gov. Beshear appealed to his state’s Supreme Court.

The Webcast feed will be available only during the Supreme Court session on Oct. 22nd.

Kentucky Supreme Court to Hear i-Gaming Suit

Sept. 4, 2009 - The Kentucky State Supreme Court announced that on Oct. 22, it will hear oral arguments for a suit by Gov. Steven Beshear’s (D) that seeks to have 141 Internet gambling domains seized. The appeal was filed after iMEGA and a coalition of concerned groups persuaded the Kentucky Court of Appeals to block a lower court’s order, on the grounds that Judge Thomas D. Wingate had misapplied the state’s gambling devices law, and inappropriately sought a civil forfeiture of domain names from their rights holder.

The Supreme Court has set oral argument in Commonwealth of Kentucky  v. IMEGA, et al for 11 a.m. on Thursday October 22, 2009 in the Supreme Court courtroom.  The order allots 15 minutes for each side.

“We’ve been waiting for this for a long time, and we’re going to win again,” said Joe Brennan Jr., iMEGA’s chairman. “From the beginning, Kentucky law has clearly supported our position, and a win in the State Supreme Court will put the final emphasis on that.”

iMEGA was joined in it’s suit by the Interactive Gaming Council, the Poker Players Alliance, the ACLU, the Center for Democracy & Technology, the Electronic Frontier Foundation, the Internet Commerce Association, eBay and Network Solutions.

iMEGA is represented by Jon L. Fleischaker, of Dinsmore & Shohl in Louisville, KY.

Links
KY Supreme Court order - Commonwealth of Kentucky v. iMEGA, et al
iMEGA Kentucky Supreme Court Brief (PDF format)
iMEGA v. Judge Thomas D. Wingate - KY Court of Appeals decision (PDF format)
iMEGA v. Judge Thomas D. Wingate - KY notice of appeal

UIGEA Upheld by US 3rd Circuit, but States Determine i-Gaming Legal Status

Sept. 1, 2009 - The US 3rd Circuit Court of Appeals upheld the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006, rejecting arguments that the law was vague and intruded on individual privacy rights. The law was challenged by the Washington, DC-based trade association Interactive Media Entertainment & Gaming Association (iMEGA), on the behalf of the Internet gambling industry.

In their decision, the judges clarified that the legality of Internet gambling transactions depended on state law where the bettor was located, and the laws where the betting operator was located. The court emphasized that UIGEA did not establish a blanket Federal ban on Internet gambling.

“It bears repeating that the Act itself does not make any gambling activity illegal,” wrote Judge Dolores Sloviter. “Whether the transaction…constitutes unlawful Internet gambling turns on how the law of the state from which the bettor initiates the bet would treat that bet, i.e. if it is illegal under that state’s law, it constitutes “unlawful Internet gambling” under the Act.”

Joe Brennan Jr., iMEGA’s chairman, said that while the association’s members were disappointed that the court did not overturn the law, they felt there was a silver lining to the court’s ruling.

“The court made it clear - gambling on the Internet is unlawful where state law says so. But there are only a half-dozen states which have laws against Internet gambling, leaving 44 states where it is potentially lawful. It’s not perfect, but it’s a good start.”

Brennan also noted that, in deferring to state law, the court’s decision is consistent with traditional gambling law in the US. “States have always held the power to regulate gambling in this country, not the Federal government. The court’s ruling seems to say ‘back to the future’ when it comes to regulating Internet gambling, so we will turn our attention to the states to make the case that this industry can be properly regulated and produce badly needed tax revenue.”

Brennan also said iMEGA’s legal team would review the ruling and make recommendations on a possible appeal.

Link
US 3rd Circuit - iMEGA v. Holder, et al - decision