Kentucky Verdict - Sigh of Relief for Online Gambling Companies

January 21, 2009 | News Category: Gaming Law

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The Kentucky Court of Appeals has overturned a lower court's decision regarding the request for forfeiture of 141 domain names of online casinos. Two out of the three Court of Appeals judges returned this verdict. The two Kentucky judges, Judge Jeff S. Taylor and Judge Michelle M. Keller found that the state's case against the Internet gambling websites was flawed in a number of ways. Once these flaws were shown, the court found no need to consider any other aspects of the case.

The state built their case around the 'fact' that domain names are considered to be "gambling devices" and may therefore be seized according to the law. The Interactive Media Entertainment and Gaming Association argued that, in Kentucky statutes, the term "gambling device" does not apply to Internet domain names. They further argued that the lawmakers had had the opportunity to include Internet domain names in the law, but had not done so. Both Judge Keller and Judge Taylor agreed with the objections raised by the defendant. When explaining this decision, they noted that the law that was used to bring the proceeding was a criminal statute, however the state had not conducted a criminal case, but a civil one.

Judge Keller further explained that in her opinion, when reversing decisions such as the one the lower court had made, it is usually found that either the court had acted without jurisdiction, or simply that the court had acted in error. She said that since it was decided that Judge Wingate had made the judgement in error when applying the statute against gaming devices to domain names, that there was no need for further review of the charges that were brought. The charges that were brought included arguments that Kentucky had no jurisdiction over the Internet, or arguments regarding whether the Constitution was upheld or not.

The dissenting voice came from Judge Michael Caperton. He reminded the court how circuitous and contorted the legal logic in support of the case could get. He wrote that if a strict definition of "device" was applied as only something that was man-made and not from nature, then computers themselves are devices. He also added that if this were the case, then software and the Internet would also be considered devices, as they are part of a larger gambling construction according to the definition.

Judge Caperton's assertion includes domain names as part of the general gambling device, as are all parts of the computer network, because these "devices", working together, make it possible for people to gamble in online gambling websites. One could therefore argue that electricity could also be seized by the state as it is used to power the computers that are used to do the gambling.

The iMEGA chairman, Joe Brennan Jr. said that it was clear that the judges agreed with their interpretation of the law. He also noted that they were thankful as "this reverses what would have been a terrible precedent for our country and the Internet.