Thursday, October 16, 2008

Kentucky Takes It Down

Kentucky successfully blocks online gamblingBlue moon of Kentucky, keep on shining,
Shine on the one that's gone and proved untrue;
Blue moon of Kentucky, keep on shining,
Shine on the one that's gone and left me blue.

That is the first verse of Kentucky’s official state bluegrass song, “Blue Moon of Kentucky.” I suppose the moon will shine over Kentucky Governor Steve Beshear tonight, even after he’s gone and left online poker players blue.

Just saw the news over on Pokerati. In the case of the Commonwealth of Kentucky (represented by J. Michael Brown, Secretary of the Justice and Public Safety Cabinet) versus “141 Internet Domain Names” (the defendants), the Franklin Circuit Court has ruled in favor of the plaintiff. No shinola!

That means all of the gambling websites accessible via those domains must block Kentucky residents from doing so within 30 days, or the domains will be permanently forfeited to the Commonwealth of Kentucky.

This is very bad news. And not just for Kentuckians.

Commonwealth of Kentucky Franklin Circuit Court Division II Case No. 08-Cl-1409You can read the 44-page decision here. Or, if you aren’t into that, here’s a quick summary of what the decision says.

After identifying the parties involved and their representation, we get a “Statement of Facts” that summarizes the previous hearings regarding the matter, as well as the Circuit Court’s order to seize the domain names (temporarily) on September 18th. Then comes the lengthy “Discussion of the Issues” which takes up about three-fourths of the order’s length. This section is divided into subsections, each of which is introduced by a question.

To the first question “Does the Court have subject matter jurisdiction over a civil forfeiture action involving internet domain names?” the court found that Kentucky “presented overwhelming evidence” that gambling is indeed prohibited within the state’s borders, and that the defendants (the 141 domains) “have been and are being used in connection with on-line or internet gambling activities available and accessible within the Commonwealth. So the answer to that first question -- according to the Court -- is yes.

Then comes the question “Does the Court have in rem jurisdiction over the Defendants[’] 141 Domain Names?” To answer that, the question of whether or not the domains are “property” is addressed. Somehow the Court determined that since “Property is about the relationships of people with respect to things, both tangible and intangible,” that, yes, indeed, the domains are property. Then comes the question “Do the Defendants[’] 141 Domain Names have a presence in Kentucky?” There, too, the Court said yes, arguing that the “141 Domain Names transport the virtual premises of an Internet gambling casino inside the houses of Kentucky residents.”

Seems preposterous, I know. But that’s what the order says.

The order then asks a couple of questions about how the domains are used, and whether or not gambling is occurring on them. To the question “Are [the] Domain Names, by reason of their illegal or unlawful use, gambling devices?” the order says yes, they do “fall within the meaning of a gambling device” as defined by state law “and are subject to seizure and possible forfeiture as a gambling device.”

Then comes a very interesting question for us: “Is poker gambling as defined by KRS 528.010(3) [i.e., Kentucky state law]?” Takes less than a page to say yes, poker is gambling. The answer concludes by saying that “Chance, though not the only element of a game of poker, is the element which defines its essence. In the end, no matter how skillful or cunning the player, who wins and who loses is determined by the hands the players hold.”

I have said ever since the UIGEA was passed that I wouldn’t be at all surprised to see the courts describe poker this way -- as “a game subject to chance” -- if given the opportunity to address the “skill-vs.-luck” question. Of course, as those of us who have considered the question thoughtfully all know, that two-sentence summary hardly covers the issue. In any event, in terms of legal definitions, we have here a pretty unambiguous conclusion that poker is gambling.

There’s more regarding the status of the forfeiture and the respective “standing” of the plaintiff and defendants, and why the Court isn’t granting any of those motions to “dismiss” or “set aside” the order. Then comes the conclusion, in which the Circuit Court says that it does “note that Opposing Groups and Lawyers argue any judicial interference of the Internet will create havoc.”

But they are Not Impressed. “This doomsday argument does not ruffle the Court,” comes the response. (I am not making this up.) “The Internet, with all its benefits and advantages to modern day commerce and life, is still not above the law, whether on an international or municipal level. The challenge here is to reign in illegal activity and abuse of the Internet within the framework of our nation’s and Commonwealth’s existing common law norms and principles, until expressed guidelines from state and federal legislative bodies say otherwise.”

Thus, the motions to dismiss and or set aside are “DENIED” and the seizure of the domains is upheld in an “AMENDED” state -- namely, with the added proviso that each domain “installs the applicable software or device, i.e., geographic blocks, which has the capability to block and deny access to their on-line gambling sites through the use of any of the Defendants[’] 141 Domain Names from any users or consumers within the territorial boundaries of the Commonwealth.” And if they don’t within 30 days (i.e., by November 15th), the domains are permanently forfeited to Kentucky.

I assume appeals are on the way. And perhaps (some of) the sites already have other back-up plans in place.

But very bad news, this. That most of the sites will go ahead and block Kentucky is probably a given. What is also probably a given will be other states’ following suit with similar attempts to seize the domains.

A “doomsday” of a different sort?

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Blogger gadzooks64 said...

I, too, just read the Pokerati article and some of the ruling.

I can't wait for Kentucky to determine that computers are nothing more than virtual casinos and brothels and ban them forthwith.

This is definitely going to worse before it gets better. But, I do believe it will get better in the long run.

10/16/2008 6:20 PM  
Blogger cheer_dad said...

Thanks Shamus for the in-depth summation of what happened in Kentucky. I'm still scratching my head a little. Still, it just confirms that "the law" has more to do with who argues best than what's right and wrong.

This thing is far from over though, I'd wager (if it weren't illegal) that the appeals were already written up before the judge finished reading his decision.



10/16/2008 7:34 PM  
Blogger F-Train said...

Three words:

Stay pending appeal.

10/16/2008 10:22 PM  
Blogger Greylocks said...

Did anyone bring up the Commerce Clause? There's a pretty clear argument that because this isinternational commerce, the only entity with the constitutional authority to regulate the domain name issue is the federal government.

10/19/2008 10:16 PM  
Blogger ynot said...

There's a reason why they call it K-Y jelly. What a bunch of bastards.

10/20/2008 7:47 AM  

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