Congress, as the court points out, enacted PASPA in 1992 to limit the expansion of sports gambling in the United States by making it unlawful for a government to license or a person to operate a betting, gambling, or wagering scheme based on professional or amateur sports. The grandfathering provision provided an out for those states that conducted a sports wagering scheme prior to PASPA’s passage, and certain sporting activities are beyond PASPA’s reach. The plaintiffs in the iMEGA case claimed that PASPA’s limitations violated myriad provisions of the US Constitution, including the Commerce Clause, the Tenth Amendment (limiting the powers of the federal government), and the Equal Protection Clause of the Fourteenth Amendment.

The court started with the standing issue. Standing is (very generally) the ability of a party to bring a case or participate in it before the court; a party with standing has a sufficient connection to the law or action that’s challenged, or experiences harm from the law or action, to support its participation in the case. iMEGA and the plaintiff representatives of the New Jersey horseracing industry argued that PASPA prevents their members from pursuing the business of sports wagering in New Jersey. It also denies them and citizens of the 46 states not grandfathered in under PASPA (all except Nevada, Oregon, Montana, and Delaware) from the ability to take advantage of several forms and platforms for sports betting based solely on geography.

The court held that iMEGA and the horseracing industry plaintiffs had not demonstrated that they suffered injury. There was no actual or imminent harm resulting from or that would result from the plaintiffs advocating (or “promoting”) that sports gambling should be legalized. As to operating sports gambling businesses, the court noted that these plaintiffs did not actually engage in gambling activities themselves; they sought to represent the interests of their respective members in this respect. However, there must be some injury to a plaintiff (not just its members) and that a plaintiff’s members must face some obstacles preventing them from pursuing their own claims, neither of which the court was satisfied were proved here. In an obiter dictum, the court also held that, even if there were an injury, and even if PASPA were declared to be unconstitutional by the court, that declaration in and of itself would not bring relief to these plaintiffs. New Jersey law would still outlaw sports betting. Presumably there must be a change in New Jersey law first before the court can consider granting an order to address the alleged harm. (That may yet happen, starting with Senate Concurrent Resolution No. 132. That resolution would amend the New Jersey constitution to permit the legislature to authorize sports betting at Atlantic City casinos and certain horse tracks, with some limitations. That amendment will be decided by New Jersey voters in a referendum during the next general election.)

As to Senator Lesniak and another individual intervenor, State Senate President Stephen Sweeney, the court also found that they were without standing. The senators had challenged PASPA on the grounds that the prohibition interfered with their discretionary rights as legislators to propose, consider, and enact legislation (including with respect to sports betting) that was in the best interests of the people of New Jersey; this is the concept of “institutional standing.” The court concluded that the institutional injury that was alleged here was too abstract for redress. It was the New Jersey constitution that constrained the senators here, more so than PASPA, as the constitution currently precludes the New Jersey legislature from legalizing sports betting. As the court put it: “The Senators’ argument thus puts the cart before the horse in many respects, because they presume voter passage of the referendum, subsequent legislative authorization, and then federal preemption via a civil enforcement action … Essentially, this lawsuit is an attempt to preempt the federal preemption of PASPA.” The mere threat of federal preemption here was not sufficient institutional injury for state legislators to have standing to challenge PASPA’s constitutionality.

Finally, all plaintiffs lacked standing to challenge PASPA on Tenth Amendment grounds. Such a claim is reserved to the various states and the State of New Jersey was not a litigant in this case.

What’s interesting about this case is what could happen next. A number of options make the landscape quite fluid. The plaintiffs could appeal. Some of the facts on the ground could change, e.g., the referendum could pass, authorizing the amendment to the state constitution, and the New Jersey legislature could then attempt to act on that. New Jersey could launch its own case and some of the members of the horse racing associations could bring suit. While changes to PASPA don’t seem to be on the radar for federal legislators, this week’s judgment out of New Jersey likely won’t be the last word in the discussion.

After returning from their trip to Jacksonville for the Chad Brown NLHE Championship host Christopher Cosenza & Scott Long come on to discuss a horribly played limit hold’em hand. Once they recap the hand they move on to discuss the pro heavy field that was found in the Chad Brown tournament. If you are looking for a show that contains some poker news along with some strategy talk then this might be a good choice for you. Check out the show on the Ante Up site or download it directly from iTunes.

CardRunners – Pro Chat:

Ever wondered how the top players make the transition to adding a new game into their skill base? This weeks Pro Chat guest is Brian Townsend who discusses his thought process when learning and mastering a brand new game. This podcast is a good one to have in your playlist if only to gain an insight into how some of the top players think. You can either listen to the show on the CardRunners site or download it from iTunes.

Perspectives Weekly:

Although this is not technically a podcast it is a part of my weekly, or whenever a new show gets published, must listen to list. This week host J. Todd catches up with Joe Brennan, iMEGA Chairman, to discuss the current intrastate gaming regulations that various states are proposing. Although this is a short show, that at times has other shenanigans that could be removed and replaced with more content I recommend subscribing via YouTube so that you are able to keep up to date with the episodes. You can watch this weeks show on the APCW site or just watch it below.

In an attempt to kick-start this litigation – which has been bogged down in procedural wranglings and appeals – Kentucky had proposed to divide the in rem defendants into smaller, more manageable groups. Each group would then be addressed by the court using a case management system. The idea was that the owner of the domain name in each group would be given notice and a chance to appear, prove his/her/its ownership of the domain name, and contest the seizure. The first group of domain names was limited to www.playersonly.com, www.sportsbook.com, www.sportsinteraction.com, www.mysportsbook.com, and www.linesmaker.com. The Interactive Media Entertainment & Gaming Association (iMEGA) had opposed Kentucky’s motion and also sought to intervene in the case.

iMEGA has made a case for what’s called associational standing. Associational standing, very generally, allows an organization or group to intervene in a judicial proceeding on behalf of its members. There are a number of tests that need to be met in order to obtain associational standing. While iMEGA would normally have associational standing, the Franklin Circuit Court has now held that it is unclear whether associational representation can extend to an in rem proceeding in Kentucky; this issue is novel and the court needs to consider it further. Accordingly, the next move is that the Court will keep the case management order sought by Kentucky on hold until the associational standing issue can be determined. This is a clear victory for the defendants in this matter, as Kentucky wanted to simply plough ahead with a case management structure and without vetting the associational standing issue.

The parties have 30 days to submit briefs on this issue, after which Kentucky or iMEGA can bring the matter on for an oral hearing.

Stay tuned for more developments in this fascinating state-level case.

Meanwhile, the Washington State Supreme Court ruled unanimously that the state’s ban on online gambling does not violate the dormant commerce clause, deciding against Lee Rousso in his case against the state. That opinion can be read here.

For those interested, video of the hearing is now available below:

Many months ago, a group of organizations representing internet freedoms and the rights of online gambling companies won an important appeal in the Kentucky court system, and that victory prohibited the Commonwealth from proceeding with its attempted seizure of those domains. The state promised to appeal to the Supreme Court, and that latest appeal was granted this month. Those fighting the state on the matter include iMEGA (Internet Media Entertainment & Gaming Association), PPA (Poker Players Alliance), ACLU (American Civil Liberties Union), CDT (Center for Democracy and Technology, EFF (Electronic Frontier Foundation), Internet Commerce Association, eBay, and Network Solutions. (Can we win on number of appellees alone?)

According to iMEGA’s announcement:

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 has a copy of the documents up on their site.

Judge Thomas Wingate previously ordered a December 3rd forfeiture hearing for the 141 gaming-related domain names that Gov. Beshear wanted seized, but the appeals court has stayed that hearing in order to conduct its own hearing on December 12th in Louisville, during which it will consider iMEGA’s petition to overturn Wingate’s original ruling. The courts will hear the iMEGA petition in conjunction with one filed by the Interactive Gaming Council (IGC), both contending that the lower court did not have the jurisdiction to order the domain seizures in the first place.

“We’re please that the Court of Appeals has given us the opportunity to challenge these seizures,” said Joe Brennan Jr., iMEGA’s chairman. “The commonwealth has tried to take these domains for their own financial gain, violating Kentucky law, exceeding their jurisdiction, and setting a terrible precedent in the process.”

At the request of Governor Steve Beshear, the Commonwealth of Kentucky filed a civil action on September 18, 2008 to order sites like Full Tilt, PokerStars, and Doyles Room seized if they didn’t willingly forfeit their domain names, and they would be transferred to the Commonwealth. The order claimed, as did Beshear in his press conference, that the internet domains were “used to promote, conduct, and/or advance illegal gambling within the Commonwealth of Kentucky.” After a continuance, the hearing is today.

According to Gambling911, the Commonwealth of Kentucky seized some of those sought-after domain names last night, including UltimateBet.com, DoylesRoom.com, and CakePoker.com. The three sites are still running as usual, but the Commonwealth could reportedly stop them at any time. Holy Massacre of the Constitution! No need for panic yet….

Attorneys defending the sites, and even some simply standing up for the rights of online poker like iMega, are in court right now trying to stop the madness. Since Dan is on a Clonie-stalking cruise in the Bahamas business trip and I am holed up in my L.A. apartment, we were unable to get to Kentucky for the hearing today. But the PPA is there and will provide updates, and Gambling911 is live blogging from the courtroom.

Updates here as they become available…

The emergency summit is actually being called by the Bluegrass Institute, an independent research and educational institution seeking free market solutions to Kentucky’s problems. The Bluegrass Institute will be joined by the Poker Players Alliance (PPA), Internet Commerce Association, Interactive Media Entertainment & Gaming Association (iMEGA), and Americans for Tax Reform.

When: Monday, October 6th at 1pm
Where: Capital Plaza Hotel in Frankfort, 405 Wilkinson Blvd

According to the PPA’s press release, the purpose of the summit will be as follows:

While the primary focus of the state’s action is online poker, the ramifications extend much farther into the entire realm of online commerce. This is a matter of the gravest importance, and the Bluegrass Institute is urging anyone with an interest in protecting internet freedom to join the protest against this egregious action.

Does Kentucky have jurisdiction to seize these domain names? What are the national and international ramifications should Kentucky succeed in this seizure order? What threat does this action make to the future of internet freedom and technological innovation? Do domain names fit the Kentucky statutorily definition of a gambling device?

Back from Barcelona and feelin’ feisty, we revisit the stupid stunts of the Governor of Kentucky in a not- so-respectful way. But don’t forget there’s other news, too… including updates on Barney Frank’s PSPA Bill which was passed a few weeks ago. Also, the status of the continuing iMEGA court case. Lastly, a brief musical look back at the CAP Convention… this show is a real “hoot”! LOL!

First, a U.S. District Court Judge threw out the Interactive Gaming Media Entertainment and Gaming Association’s case against the U.S. government. You might remember iMEGA had attempted to have the UIGEA’s implementation postponed until it could be determined whether or not the law was unconstitutional. (They had some other points in there, too.) The case was dismissed, but iMEGA was recognized as having “legal standing” and so will surely continue the fight.

Meanwhile, we learned this week what the American Banking Association had to say about the proposed UIGEA regulations. Recall that back in October, the feds presented their proposed regulations & asked for comments. The comment period ended in mid-December, and now the Secretary of the U.S. Dept. of the Treasury and the Chairman of the Board of Governors of the Federal Reserve System are considering those comments as they prepare to “finalize” the UIGEA.

The abridged version: the ABA thinks the UIGEA is not A-OK. Gives the banks too much to do — more than they can feasibly handle. In fact, the ABA believes the UIGEA will place most banks in what they call a “compliance trap” and thus do more to hurt the American payments system than it will do to stop folks from gambling online. Read Haley Hintze’s PokerNews article & also check out the full text of the ABA’s comments over at Kick Ass Poker.

And for more from those comments to the UIGEA regs — including some of what the “webmaster of the popular blog Pokerati.com” had to say about ’em — check out Jason Kirk’s article over at PokerListings summarizing them all: “Stakeholders sound off on UIGEA regulations.”