Update: Internet Gambling Domain Seizure Case in Kentucky

by , Dec 21, 2010 | 7:10 am

The latest order in Kentucky v 141 Internet Domain Names has just come down from the Franklin Circuit Court. Remember that this case goes back to 2008 when the Commonwealth of Kentucky tried to seize certain domain names (including www.fulltiltpoker.com and www.pokerstars.com) on an ex parte basis because the domain names were said to be operating in breach of Kentucky law.

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.

4 Comments to “Update: Internet Gambling Domain Seizure Case in Kentucky”

  1. Grange95

    I’m not so sure I would call the court’s ruling a “clear victory for the defendants”. If the court denies iMega associational standing (which seems probable), then the actual domain owners will need to appear in court to defend themselves, something I think most of them are trying desperately to avoid. So the standing issue may actually end up being a major defeat for the defendants.

    Regardless of the court’s ruling on standing, a 30-90 day delay over the standing issue changes nothing.

  2. Stu Hoegner

    It’s a win for the defendants to the extent that they got what they wanted out of the motion. The state wanted to proceed direclty to case management. I think that the standing issue will be critical – I sense we agree there – but even getting the court to hear arguments without simply moving past it is a victory.

  3. Dan Michalski

    >>domain owners will need to appear in court to defend themselves, something I think most of them are trying desperately to avoid<< and therein lies the crux of so many online poker issues. it's a shame that these domain owners fear appearing in court. isn't this America, where you are totally only kinda-sorta guilty until your high-priced attorneys prove you innocent?

  4. Grange95

    @ Dan Michalski:

    “It’s a shame that these domain owners fear appearing in court.”

    Well, I suppose that’s a matter of perspective. Many (most?) of these online gaming sites have to be fairly concerned they have violated gaming laws in many states. In many cases, their best (only?) real defense is lack of jurisdiction, which I’m not at all convinced is a particularly strong defense. Relying on lack of jurisdiction as your primary defense is akin to the old Tom & Jerry cartoons, where Tom would taunt the bulldog who was tied up, keeping just out of his reach; sometimes, the rope breaks or is untied. So for these domain owners, it’s smart legal strategy to try to keep out of court altogether, rather than risk losing on the merits of whatever defenses they can raise.

    To be blunt, I think many of these domain owners flouted state laws, gambling that they would never see the inside of a state court, so I don’t feel overly sympathetic to their current plight (regardless of what I think of this merits of this particular action by the state of Kentucky, or how I feel about the need to legalize online poker).