Poker Domains in Jeopardy as Kentucky Supreme Court Reverses Earlier Decision

It was a case that iMEGA and many in the poker industry said they expected to win. They had won at the Kentucky Court of Appeals, and they didn’t think it would be any different at the highest court in the state.

But today, the Kentucky Supreme Court ruled that iMEGA and the Interactive Gaming Council had no standing to file a writ of prohibition that stopped the state of Kentucky from seizing control of several well-known poker domains, including sites associated with PokerStars, Full Tilt, DoylesRoom, Bodog, Absolute Poker, UltimateBet, and Cake Poker.

Therefore, it reversed the Kentucky Court of Appeals ruling and effectively ruled in favor — at least temporarily — of the state.

“Because the parties seeking the writ have failed to demonstrate that they have standing to do so, this Court reverses, though this done not foreclose the possibility of future relief,” wrote Justice Mary Noble in the court’s decision.

This case started in September 2008 when Kentucky Governor Steve Beshear announced that the state would attempt to seize 141 domain names that were registered to online companies in an attempt to fight what they considered illegal gambling. A circuit court approved the seizure, citing a law that allowed officials to seize devices that are used for illegal gambling.

The Interactive Media and Gaming Association (iMEGA) and the Interactive Gaming Council (IGC), two gaming associations who claim to represent some of the sites and companies in question, immediately took up the fight. They argued both that online poker was legal and thus not subject to “illegal gambling,” and also that the Kentucky law in question only allowed the state to seize tangible items, not domain names.

The Kentucky Court of Appeals ruled in favor of iMEGA and the Interactive Gaming Council by a 2-1 vote. Governor Beshear was undeterred, however, and immediately announced that he would file an appeal to the state supreme court.

At the time, iMEGA chairman Joe Brennan, Jr. was confident that the state supreme court would uphold the court of appeals decision.

“We’ve been waiting for this for a long time, and we’re going to win again,” said Brennan. “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.”

But the Kentucky Supreme Court, which heard arguments from both sides on Oct. 22, reversed the decision today — not on the merits of the argument, but on what it called an inability to rule for a group that had failed to “bear the burden to demonstrate that they satisfy the requirements of standing.”

The Kentucky Supreme Court cited the associations’ failure to disclose who exactly they represented in the case.

“Instead of owners, operators, or registrants of the website domain names, the lawyers opposing the Commonwealth claimed to represent two types of entities: (1) the domain names themselves and (2) gaming trade association who profess to include as members registrants of the seized domains, though they have yet to reveal any of their identities.”

The court even acknowledged that the lawyers on behalf of the associations made “numerous, compelling arguments endorsing the grant of the writ of prohibition,” but that “(a)lthough all such arguments may have merit, none can even be considered unless presented by a party with standing.”

The court reiterated its position later in the decision.

“While IGC claims to represent 61 of the seized domains and iMEGA purports to represent ‘some’ more, this Court cannot simply take their words for it.”

Brennan seemed unfazed by the ruling, and issued a press release after it indicating that he was still optimistic the poker community would win out in the end.

“In the written decision, the Court clearly indicates they agree with our arguments, and are inviting us to refile, so that the technicality of the standing issue can be resolved,” said Brennan. “It’s unfortunate, but I can’t imagine that Kentucky’s lawyers will celebrate a ruling that says ‘Bring us an owner, so we can rule in your favor’”.

The court acknowledged that associations are not always legally responsible to divulge and identify specific members, but said that this case was atypical because “there is no stipulation as to iMEGA or IGC’s memberships” and that “nothing is known about their members.”

“Through their unwillingness to identify any of their members, iMEGA and IGC failed to meet this burden. As such, iMEGA and IGC lack standing and, therefore, their writ petition should have been denied,” Justice Noble wrote.

The court stated in its opinion that “(i)f a party that can properly establish standing comes forward, the writ petition giving rise to these proceedings could be re-filed with the Court of Appeals…Until then, however, consideration of the merits of this matter is improper for lack of standing.”

Justice Noble authored the decision, which had no dissenting votes. Justices John Minton, Lisabeth Hughes Abramson, Wil Schroder, and Daniel Venters concurred, with Deputy Chief Justice Will Scott concurring “in result only.”

In the iMEGA press release following the ruling, Brennan said his side was still “likely” to win.

“All along, it seemed the Court wanted to go our way, and this decision today indicates that is still the case. The Court is telling us that all that is necessary is for one domain owner to come forward, and we likely win…We obviously would have preferred a complete, clean victory today, but reading the decision, it seems this is a technicality that is only delaying the inevitable,” Brennan said.

Read the entire Kentucky Supreme Court decision here (pdf).

Neither the IGC or the Poker Players Alliance, who submitted an amicus brief on behalf of the sites, have yet to issue a comment following today’s ruling.

It is still unclear at this time exactly what effect this will have on online poker players in Kentucky, but CardPlayer.com will continue to bring its readers the latest news and analysis from this breaking story.

Update — The Poker Players Alliance issued the following statement at 12:15 p.m.:

“The PPA understands the technical nature of the decision issued today by the Kentucky Supreme Court and remains confident that, once that issue is cured, the Supreme Court will address the compelling merits of the arguments in support of the Court of Appeals decision prohibiting the Commonwealth’s seizure of 141 internet gaming sites.

“There are fundamental freedoms at stake in this case, not only the freedom of poker players in Kentucky and globally, but Internet freedom across the globe. The Commonwealth’s effort at such a bold, broad and, we believe, unlawful seizure sets a dangerous precedent for anyone who uses the Internet.

“The PPA and its members continue to encourage Kentucky officials to work with us to implement common-sense licensing and regulation of online poker that will protect consumers and create a much needed revenue stream for the Commonwealth.”

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