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 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

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

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

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)