Friday, October 23, 2009

Kentucky Still Hoping to Be Master of Your Domains

The Kentucky Supreme Court heard arguments Thursday regarding the domain seizure caseSo you might have heard something yesterday about that Kentucky domain seizure case having popped up once again. With regard to the proverbial that, what, you might be wondering, is, as they say, up?

That purposefully murky-sounding lead is hopefully understood to be symbolic of the murkiness that surrounds this sorta-baffling-yet-undoubtedly-meaningful case. To review...

Back in October 2008 came a Franklin Circuit Court case between the Commonwealth of Kentucky (the plaintiff) -- represented in court by J. Michael Brown, Secretary of the Justice and Public Safety Cabinet and in the media by the state’s governor, Steve Beshear -- and “141 Internet Domain Names” (the defendants). In the case, Judge Thomas D. Wingate somewhat preposterously ruled in favor of the plaintiff, meaning those 141 sites needed to block access by Kentucky residents within 30 days or the domains would be forfeited to Kentucky, sort of like foreclosed homes or something. No shinola!

According to the ruling, if access wasn’t blocked, Kentucky got to take the domains on which the sites resided and do with them whatever they wanted. All of the domains were gambling related, and included several (but not all) online poker sites, including Absolute Poker, Bodog, Cake Poker, Doyle’s Room, Full Tilt Poker, PitBull Poker, PokerStars, Reefer Poker, UltimateBet, and others. In fact, both Cake and the Cereus network (Absolute and UB) immediately began blocking Kentucky residents’ access in response to the ruling.

That ruling was appealed, however, and after a few delays was heard in January 2009 at which time the Court of Appeals overturned the decision. Although that reversal cited multiple problems with the original case, the big one appeared to be the mistaken assumption that an internet website constituted a “gambling device” -- a technical requirement that is part of Kentucky’s anti-gambling law. The Commonwealth immediately responded by saying it planned to appeal the appeal -- this time taking the case to Kentucky’s Supreme Court. And that is what finally happened yesterday.

Incidentally, just before yesterday’s hearing, Full Tilt Poker went ahead and took their case to court in the U.K. -- where the domain registrar (Safenames) used by Full Tilt resides -- to settle the matter of whether or not Kentucky could seize its domain. The U.K. court ruled that since “Kentucky’s proceedings are not enforceable in English law,” Kentucky had no right to seize Full Tilt’s domain. The poker site hadn’t been sure whether or not Safenames would comply should Kentucky in fact win its case, and so went ahead with the preemptive measure.

Am assuming, then, that while fulltiltpoker.com continues to be included among the 141 domains at issue here, if it turns out there is some sort of reversal of the reversal by the Kentucky Supreme Court, Full Tilt Poker is already set to keep its domain from being seized even if it continues to allow Kentuckians’ access.

It's a head-scratcher, all right.I watched yesterday’s hearing, which lasted an hour-and-a-half or so. You can watch it, too, if you are interested. You can find an embedded video of it over at Pokerati by clicking here. To the left there is a shot of one of the judges scratching his head while listening to the testimony. Indeed, the whole sucker is most certainly a head-scratcher.

The fun began with the hilarious Eric Lycan, the attorney representing the Commonwealth’s side, pointing out how none of the owners of the sites hosted on the domains were present in the courtroom, further speculating that they preferred to remain in hiding, operating from afar their “illegal gambling trade associations.” I kid, of course. The dude was as humorless as one would expect.

Lycan then offered various, also unfunny analogies between the situation being discussed and that posed by drug trafficking and pornography. (He’d eventually mention human trafficking later on while making a point as well!)

The judges didn’t really seem to buy any of those comparisons, noting that the Court of Appeals had said the domains were “intangible property” when denying they could be regarded as “gambling devices.” The judges also questioned why the seizure of the domains was needed here. Why not, instead of trying (vainly?) to make the domains inaccessible to the entire world, simply block access in Kentucky?

That was a strategy also suggested by those representing the 141 domains -- Bill Johnson (representing Sportsbook.com), Jon Fleischaker (iMEGA), and John Tate (VicsBingo.com, Interactive Gaming Council). The Commonwealth could have tried to make online gambling illegal if they wished, they argued, but have instead adopted this less direct, less sincere approach that tries to skirt the usual legislative process. The Commonwealth “had no subject matter jurisdiction,” they said, and so Judge Wingate should have immediately dismissed the case.

It should be noted that the good guys were just as humorless as Lycan. Indeed, they were appalled, and made that feeling clear throughout. Although I have to admit I did smile for a moment when Tate noted that he represented VicsBingo. Such a silly word -- “bingo” -- to be uttered so earnestly there in the Supreme Court.

Lycan got one last say before the hearing concluded, and he reiterated the Commonwealth’s view that the operators of the sites are the “real criminals,” adding that every bet in every poker game represents a “contractual obligation,” and, since these contractual obligations were involving Kentucky residents, the state’s law against operating gambling was being broken here.

Apparently there will be a lengthy wait before we discover what the judges ultimately thought of the respective arguments, as a decision is not expected to be handed down for 2-4 months. The Commonwealth’s case remains mighty sketchy, and it continues to appear as though if it weren’t for one curiously-oriented circuit judge (Wingate), this thing would’ve never gotten as far as it has.

But as long as the case remains alive, there remains still another layer of uncertainty with regard to the fate of online poker here in the “land of the free.”

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