Kentucky domains case-Update

The favourable opinion of Judge Wingate of the Franklin Circuit Court in Frankfort, Kentucky on the state's attempt to seize online gambling domains (see earlier InfoPowa reports) if allowed to go unchecked has the potential to spur other US states into similar actions and is therefore worthy of further study.

Certainly some of the judge's findings are sufficiently novel to cause legal representatives to rethink their perspectives and perhaps even strategies, although higher courts could well have the final say in this controversial issue.

One of the chief challenges to the state's civil claim to the domains was that of jurisdiction - the fact that there was no physical presence in the state of Kentucky of the domains, the registrars or the owners, thus denying the court jurisdiction over the matter. The additional claim was made that because there had been no criminal conviction or finding attached to the 141 domain names under dispute, same could not be made the subject of a civil seizure order.

Judge Wingate disagreed, ruling that his court did have jurisdiction to order a civil, rather than criminal, seizure order on the application by the state that alleged domain names were being used "in connection with online or internet gambling activities available and accessible within the Commonwealth" - which he found was a contravention of KRS 528.

Answering a further challenge that Internet domain names were intangible and "ephemereal" items, the judge ruled that they were property that had a value, and therefore the court had "in rem" jurisdiction and could seize the domains. Judge Wingate pointed out that domains are routinely sold, assessed for tax purposes and auctioned as further evidence that they had a value and could therefore be categorised as property. He also claimed that in the past the US Deparftment of Justice had succeeded in domain forfeitures.

Addressing the defence assertion that there was no physical presence in the Commonwealth of Kentucky, Judge Wingate disagreed, finding that websites to which a domain name is connected interacted with Kentucky players, and that such interfaces were therefore rooted 'ubiquitously' in the domain name. Because the domain name was clearly visible when Kentucky players used a gambling website, the judge felt that this was sufficient to establish a presence in the Commonwealth.

Similarly, the judge disagreed with the defence claim that domain names could not be defined as "gambling devices" in terms of exisiting Kentucky laws, which typically were interpreted as physical and mechanical devices such as roulette wheels. The court was of the view that the intention of the legislators was not to limit the lateral meaning of the term "gambling device" and that domain names could therefore be interpreted as falling within the definition.

The court ruled that domain names are "virtual keys for entering and creating virtual casinos from the desktop of a resident in Kentucky," and can therefore be seized with the same authority as that applied to the confiscation of machines or gambling devices under the relevant Kentucky act.

The argument put forward by the Poker Players Alliance as a "friend of the court" that poker can not be defined as gambling in Kentucky law because it is a game of skill, and not one wholly of chance, and is played against other players and not the house was also rejected.

Judge Wingate found that luck or chance "is the element which defines its essence," and he specifically ruled that "no matter how skillful or cunning the player, who wins and who loses is determined by the hands the players hold [are dealt]."

The contention that the Attorney General of Kentucky was the appropriate authority to have standing before the court in the case instead of the Secretary of the Justice and Safety Cabinet who had brought the action, was rejected as well.

Judge Wingate ruled in favour of the Secretary of the Justice and Safety Cabinet (the plaintiff) when it came to the question of legal standing of concerned organisations such as the PPA, the Internet Commerce Association, domain registrar Network Solutions, Inc., the Interactive Gaming Council and iMEGA. He found that these organisations could not properly be said to represent any party to the case and therefore lacked legal standing to argue in the court. Despite this, the judge said that he would continue to consider the views of these parties in the capacity of "friends of the court".

Representatives of seven of the domain names contesting the action were given legal standing by Judge Wingate, although he cautioned that they would have to disclose the identity of their clients and describe the nature of the clients' interests at further hearings (a possibly reference to the November 17 hearings scheduled to make final decisions regarding the seizures.)

In general the judge's ruling rejected the requests by the domain owners for the Kentucky motion for seizure to be dismissed, although he did amend the original order to give owners 30 days to install blocking software to prevent access by gamblers from within Kentucky. Those who could demonstrate to the satisfaction of the Secretary of the Justice and Safety Cabinet that this had been done would be relieved of any further pursuit and the seizure orders on their domains rescinded.

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