Poker News

South Carolina Attorney General Appeals Poker Skill Game Ruling

The fight for five poker players in South Carolina is far from over. According to the Associated Press, the state’s Attorney General will appeal the October ruling that Texas Hold’em, the world’s premier poker genre, is a skill game.

It’s a familiar debate as the poker industry enters 2010. Is Texas Hold’em a game of skill or is it ultimately determined by chance? South Carolina Attorney General Henry McMaster filed an appeal with the state’s Supreme Court, the Associated Press explained on Thursday: “McMaster's appeal says he doesn't think whether there is skill or just chance involved has anything to do with lawmakers' attempt to ban gambling. The attorney general skipped the Court of Appeals and filed with the state Supreme Court, saying the question deals with the constitution's wording on gambling.”

Five poker players were charged in Mount Pleasant, South Carolina back in 2006. According to the favorable ruling by Judge Markley Dennis in October, the buy-ins for a weekly home game in the South Carolina town varied between $5 and $20. The small blind was $0.25 and the big blind was $0.50, with pots ranging between $5 and $10. Fifty cents was taken from several pots in order to provide food and drink for players, but the “house” did not profit from the game.

The game got ugly on April 12th, 2006, when police officers raided it and began arresting participants on the grounds that they were playing in a “house used as a place of gambling.” The defendants, under the guidance of the Poker Players Alliance (PPA), argued that poker is a game of skill, not chance, and therefore did not constitute illegal gambling. The trial court heard the case in February, which featured World Poker Tour (WPT) host Mike Sexton recap hands played on the roving tournament series to demonstrate poker’s skill component.

Dr. Robert Hannum was also brought in to testify last February. The October ruling explains, “Dr. Hannum also testified that a statistical analysis of professional poker players demonstrated that past performance was a reliable indicator of future success, establishing that the skill of the player was the predominant factor in determining wins and losses.” The lower court ruled that poker was a game of skill. However, because South Carolina’s laws were vague on whether that mattered, the five defendants were found guilty.

An appeal was filed, setting up October’s ruling. Judge Dennis candidly explained, “This Court agrees with Appellants that the South Carolina Supreme Court, if faced with the question, would adopt the dominant factor test for the purpose of defining gambling.” He added, “It should also be noted that the South Carolina Attorney General has consistently applied the dominant factor test when providing opinions about whether certain activities are legal.”

Judge Dennis harped on the overwhelmingly broad nature of South Carolina’s gambling statute, which could be construed to mean that nearly any game played with cards or dice is illegal. Judge Dennis specifically called out Bunco, Go Fish, and Solitaire as possible infractions of state law, saying, “Simply put, [the law], as written, has the potential to make criminals of virtually every man, woman, and child in the state of South Carolina.” Twenty of the original defendants pled guilty to gambling charges, while five fought against the state.

According to the Charleston Post and Courier newspaper, the filing by the Attorney General was 57 pages long and McMaster is a Republican candidate for Governor. The Courier revealed, “No timetable has been set on when the case will be heard, and more rounds of legal filings are expected. The legislature is expected to take up a bill legalizing social card games next year.”

New Defendants in Kentucky Internet Gambling Case Remain Unknown

Following a chain of e-mails sent last week by attorneys for the Commonwealth of Kentucky, the names of additional defendants in the state’s legal action against the owners of 141 internet gambling domain names remain a mystery.

In October, the Kentucky Supreme Court heard the case, which pits industry organizations like the Interactive Media Entertainment and Gaming Association (iMEGA) and the Interactive Gaming Council (IGC) against the Kentucky Justice and Public Safety Cabinet, led by Secretary J. Michael Brown. Despite a ruling by the state’s highest judicial body potentially being handed down any day now, Kentucky attorneys filed a motion to add parties to its complaint last week. How the latest filing will affect the Kentucky Supreme Court’s decision, if at all, remains unknown. The additional parties in question were U.S. citizens and companies engaged in internet gambling.

When lawyers for iMEGA tried to obtain a list of the additional names, counsel for the Commonwealth turned them down. iMEGA Chairman Joe Brennan told Poker News Daily, “They've basically said that they don't recognize our standing. They're just ignoring what happened in the Court of Appeals, which confirmed our standing.” In a chain of e-mails between opposing attorneys available on iMEGA’s website, William Hurt of Kentucky counsel Hurt, Crosbie, and May states, “I do not believe anyone has standing to file a response or motion to strike.”

Brennan lashed out at the State’s attorneys, who are purportedly working on a contingency basis, as part of a press release sent on Monday: “They were counting on a big payday from our members in the form of settlements to get their own property back, but it doesn’t look like that’s going to happen. Since they don’t get one nickel from the state to pursue this, it’s clear that the drive for big money has taken over and any sense of fair play or due process has gone out the window.”

The 141 internet gambling domain names in question include those belonging to online poker giants like PokerStars and Full Tilt Poker. If the Commonwealth of Kentucky were successful, these domains would be inaccessible not just in the southern state, but also around the world. The domains were seized back in September of 2008 on the grounds that they constituted “gambling devices,” a term that traditionally refers to tangible objects like slot machines and roulette wheels that you’d find in an underground casino.

In January, the Kentucky Court of Appeals ruled by a two-to-one margin that the Commonwealth did not have jurisdiction to act, setting up an appeal by the State to its Supreme Court. iMEGA attorney Jon Fleischaker noted in an e-mail, “The Court of Appeals ruled that we had standing in this case, and by implication, a right to intervene. I believe the Supreme Court is likely to rule the same thing.” Hurt retorted that the State would “object to anything that you file, but will nonetheless continue to send you notice.”

Brennan told Poker News Daily that Circuit Court judge Thomas Wingate did not act on the motion to add names filed by Kentucky’s attorneys last week and the next day that it can be considered is January 21st. The motion calls for a hearing on January 20th in front of Judge Wingate, although its future appears to be in doubt. Judge Wingate upheld the State’s actions as part of an October 2008 decision.

The Kentucky Supreme Court has given no indication as to when it will hand down a ruling. As it currently stands, the Kentucky Supreme Court does not have any oral arguments scheduled on its calendar until January 13th. However, Brennan expected a decision from the Kentucky Supreme Court to be issued in January.

Kentucky Attorneys File Motion to Amend Internet Gambling Complaint

In a rather bizarre twist in the Kentucky internet gambling case, Commonwealth attorneys filed a motion on Wednesday to add parties to its case and amend its original complaint. In late October, the Kentucky Supreme Court heard the case.

Now, a hearing is scheduled for January 20th in Frankfort, Kentucky in front of Judge Thomas Wingate, the Circuit Court magistrate who heard the matter originally in late 2008. The case was brought last year against the owners of 141 internet gambling domain names on the grounds that the URLs constituted “gambling devices,” a term typically reserved for tangible items like slot machines, roulette wheels, and dice that you’d find in an underground casino. The Kentucky Supreme Court has not yet issued a ruling in the case.

After reiterating its complaint against the domain name owners, Kentucky’s attorneys explained, “In the course of the litigation and the Commonwealth’s continuing investigation, the Commonwealth has learned the identity of certain entities and individuals involved in internet gambling operations, some of whom are U.S. citizens.” Who this refers to is not yet known, as the Commonwealth has not yet released the names of companies or people to the general public or to counsel for the Interactive Media Entertainment and Gaming Association (iMEGA). Also unknown is whether the new targets are Kentucky residents.

The motion also hinted that further litigation could develop down the road: “The Commonwealth contemplates that further amendments will be sought as its investigation and discovery in this litigation continue.” Kentucky Justice and Public Safety Cabinet Secretary J. Michael Brown heads the case against the domain names in question, which were seized in September of 2008 allegedly without due process. Wingate ruled in favor of the Commonwealth’s actions, prompting iMEGA and several other parties to seek the intervention of the Kentucky Court of Appeals.

In January, the Kentucky Court of Appeals ruled by a two to one margin that the domain names did not constitute gambling devices and, therefore, the Commonwealth did not have jurisdiction to act. The lone dissenting judge noted that domain names were part of a larger gambling device. It remains to be seen what will occur during the January 20th hearing, which is slated for 9:00am ET. Eric Lycan of Hurt, Crosbie, and May in Lexington, Kentucky sign Wednesday’s letter.

Others involved with the fight for internet gambling in Kentucky besides iMEGA include the Interactive Gaming Council (IGC), Poker Players Alliance (PPA), American Civil Liberties Union (ACLU), the Center for Democracy and Technology, the Electronic Frontier Foundation, the Internet Commerce Association, eBay, and Network Solutions. Original estimates pinned a Kentucky Supreme Court decision within three to six months of the October hearing, although the latest motion filed by Commonwealth attorneys may affect that timeline.

In November, Churchill Downs Incorporated, the parent company of the racetrack of the same name in Louisville, Kentucky, purchased the online horse racing wagering site YouBet.com. A market analyst told Reuters at the time, "Given the combination of Youbet's ADW platform with Churchill Downs-owned TwinSpires, which has been the fastest growing ADW this year, they will have 50 percent of the U.S. market and the best brand in horse racing.” Churchill Downs Incorporated owns TwinSpires.com; the site was not among the 141 internet gambling domain names targeted by Commonwealth attorneys.

YouBet.com is traded on the NASDAQ Stock Exchange under the symbol “UBET,” while Churchill Downs Incorporated can be found on the same exchange under the symbol “CHDN.”

Stay tuned to Poker News Daily for the latest developments in the Kentucky internet gambling case.

UIGEA Regulations Officially Delayed Six Months

Online poker players in the United States have a lot to be thankful for this holiday season. On Friday, CNBC and the Associated Press confirmed that U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke had granted requests to delay the mandatory compliance date of the regulations of the Unlawful Internet Gambling Enforcement Act (UIGEA) by six months to June 1st, 2010.

Word of a potential delay first broke on Wednesday from Interactive Media Entertainment and Gaming Association (iMEGA) Executive Director Joe Brennan. However, no official comment had been handed down from Geithner, Bernanke, the Poker Players Alliance (PPA), or the office of Congressman Barney Frank (D-MA). Around 12:15pm ET on Friday, cable station CNBC ran a segment touting the successful six-month delay and an Associated Press article had hit cyberspace 15 minutes earlier.

The six-month delay will take the internet gambling industry to June 1st, 2010. In the interim, the theory goes that sensible legislation governing the industry in the United States will be passed. Frank introduced HR 2267 back in May. The bill, which has attracted 63 co-sponsors, establishes a full licensing and regulatory framework for online gaming outfits to solicit U.S. customers.

An Associated Press article sourced both the Treasury and Federal Reserve as saying that the UIGEA’s regulations would indeed be pushed off until mid-2010. The news service explained, “The delayed rules would curb online gambling by prohibiting financial institutions from accepting payments from credit cards, checks or electronic fund transfers to settle online wagers. The financial industry complained that the new rules would be difficult to enforce because they did not offer a clear definition of what constitutes internet gambling.” Since the UIGEA was approved in 2006, a Third Circuit Court of Appeals ruling stated that the legality of internet gambling may depend on state law, similar to the way that the brick-and-mortar version is governed.

Next Thursday, December 3rd, the House Financial Services Committee will hold a hearing discussing the merits of HR 2266 and HR 2267. The former bill delays mandatory industry compliance with the UIGEA regulations by one year to December 1st, 2010. Its relevance given Friday’s confirmation that the regulations would be pushed back six months is up in the air. The hearing kicks off at 10:00am ET in Room 2128 of the Rayburn House Office Building. Witnesses for the informational hearing have not yet been announced and the proceedings can be followed via a live webcast accessible from the Committee’s website.

Potential overblocking by credit card companies like Visa and MasterCard led the PPA, two horse racing organizations, and members of Kentucky’s Congressional delegation to petition Geithner and Bernanke, urging that the regulations of the UIGEA be shuttled back to December 1st of next year. PPA Executive Director John Pappas told Poker News Daily, “Many believe what you’ll see is overblocking of legitimate transactions. It’s not a good thing for players. It won’t just affect poker; it’ll affect horse racing, lotteries, and other online entities.”

Around 1:00pm ET, the PPA confirmed the news. The organization’s Chairman, Alfonse D’Amato, commented in a press release, “The PPA is extremely pleased with the decision by the Federal Reserve and Treasury to grant the six month extension. This is a great victory for poker, but an even greater victory for advocates of good and fair public policy.”

Stay tuned to Poker News Daily for the latest news and events from Capitol Hill.

CNBC Closing Bell Tackles Internet Gambling

The Global Gaming Expo is currently unfolding from Las Vegas and, as part of its coverage of the event, CNBC’s “Closing Bell” aired a four-minute segment entitled, “Odds Favor Online Gambling?”

Two industry experts joined CNBC “Closing Bell” host Melissa Francis on Thursday, Andrew Parmentire of Height Analytics and David Katz, an Oppenheimer gaming analyst. The former began the discussion, which did not take in a debate form, but rather featured both parties agreeing that legalized internet gambling in the United States is inevitable. Parmentire explained, “Barney Frank has put a bill out there and the stars are lining up in a lot of ways. Harrah’s has shown that they have an online strategy, Congress and states are in desperate need for money, and $50 billion can offset a lot of social programs that Democrats are pushing these days.” The proposed health care initiative, for example, could come with a price tag approaching $1 trillion.

Katz told CNBC viewers, “Gambling in the U.S. has become a far more acceptable consumer product than it was five or ten years ago. That said, we really are much more focused on the publicly traded companies and that would be the brick-and-mortars like Harrah’s as well as the game providers and the technology companies that support those industries.” Katz added that Harrah’s has become a major proponent of licensing online gaming. The Las Vegas-based private company recently launched Harrah’s Interactive Entertainment (HIE), based on Montreal, to oversee its online brand, with former Party Gaming CEO Mitch Garber as its lead figure.

Harrah’s inked an agreement with 888, the parent company of Pacific Poker, to fill its online gaming needs. 888 is a publicly traded company in London, where it can be found under the same three-number acronym. Katz explained that with casinos slowly reaching their limits in the live space, the switch to the Web is inevitable: “If you go to the Bellagio, they have a couple of hundred seats to sit in, so there’s a physical constraint. If you look at the number of states out there that are considering legalizing gaming, they’re going down every year. There’s a finite opportunity for the brick-and-mortar guys to expand in the United States and at some point, they have to start thinking globally.”

The CNBC spot occurred about two weeks prior to December 1st, the date by which the financial services industry in the United States must fall into line with the Unlawful Internet Gambling Enforcement Act (UIGEA). The Poker Players Alliance (PPA), the industry’s main lobbying voice, issued a letter to Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Timothy Geithner to postpone the date by one year while effective legislation can be crafted. However, the two government officials have not yet responded.

The UIGEA was passed during the waning moments of the 2006 Congressional session at the direction of former Senate Majority Leader Bill Frist (D-TN). It was approved by a 3:1 margin in the House of Representatives and by unanimous consent in the Senate after being attached to the SAFE Port Act. The Third Circuit Court of Appeals recently ruled that the UIGEA did not in and of itself make any sort of internet gambling activity illegal. Instead, the legality of an online activity depends on a player’s jurisdiction. Parmentire candidly explained, “There is a lot of anger as to how this happened in 2006.” The PPA has expanded its membership from 50,000 in 2006 to over 1.2 million today.

Concurrently with the Global Gaming Expo, 2009 World Series of Poker (WSOP) Main Event champion Joe Cada, who represents the online poker room PokerStars, has spread goodwill by appearing on mainstream outlets like the “Late Show with David Letterman,” ESPN’s “SportsCenter,” and USA Today. Cada, an online poker pro, became the youngest winner of the $10,000 buy-in tournament ever at age 21, breaking Peter Eastgate’s record of 22 years-old set in 2008.

Kentucky Cabinet Secretary Discusses Internet Gambling Battle

One month ago, the Kentucky Supreme Court heard arguments in a case that pits the state’s Justice and Public Safety Cabinet against the owners of 141 internet gambling domain names, including those belonging to industry titans like PokerStars and Fill Tilt Poker.

Heading the Cabinet is J. Michael Brown, who was present during oral arguments in the Frankfort courtroom and brought the legal action against the domain names in question one year ago. Brown told Poker News Daily that nothing discussed during the October 22nd hearing caught him off-guard. He added, “In discussing some of the procedural background, members of the court touched on some of the underlying issues, everything from whether a domain name is a device and how a device is defined to what measures the Commonwealth can employ to defend itself against unregulated internet gambling.”

Representing the internet gambling sites were a consortium of lawyers, including those from the Interactive Media Entertainment and Gaming Association (iMEGA), the Interactive Gaming Council (IGC), and several of the targeted sites. Despite the large presence of trade organizations during the proceedings, Brown and company questioned why no domain owners had come forth to defend themselves. The Secretary told Poker News Daily, “Who were the stakeholders on the other side? There didn’t seem to be anyone standing up saying that they represent these innocent owners. Their arguments were all over the map, from the First Amendment to likening it to a criminal proceeding. I was pleased that the court spent time looking at the underlying issues.”

Many in the industry have cautioned that the outcome of the Kentucky internet gambling case may set a precedent worldwide. More light could be shed on where domain names are located and who has rights to seize or regulate them as a result of the seven-member Kentucky Supreme Court’s decision. On the global implications of the Commonwealth’s actions, Brown frankly stated, “I’m only focusing on Kentucky. Our interest is in the unregulated gambling that we believe has been going on. I don’t know that our Supreme Court is ready to look at it as a worldwide precedent because a lot of the underlying facts haven’t been completely developed.”

Influencing the Commonwealth is the presence of a booming horse racing industry in Kentucky, headlined every May by the running of the Kentucky Derby. The spectacle, which unfolds from Churchill Downs in Louisville, generates a considerable amount of revenue for the State, bringing in high rollers, celebrities, politicians, and horse racing fans from around the globe.

The 141 internet gambling domain names are owned by companies located in places like Costa Rica, Gibraltar, Canada, and Isle of Man. Brown explained, “You have people who own and operate domain names. In order to regulate them, you have to go to the registrars because the actual owners are all offshore.” Registrars include giants like GoDaddy.com, which features Team PokerStars Pro member Vanessa Rousso as one if its spokesmen.

When the Kentucky Supreme Court will hand down a decision in the case is not yet known. Joe Brennan, Chairman of iMEGA, told Poker News Daily that he would set an over/under of March, 2010. Rich Muny, Kentucky State Director for the Poker Players Alliance (PPA), contrastingly, expected a decision to be rendered by Christmas.

The 141 internet gambling domain names were seized in September of 2008 on the grounds that they were illegal “gambling devices,” a term that traditionally refers to tangible objects like slot machines and roulette wheels that you’d find in an underground casino. Judge Thomas Wingate upheld the Commonwealth’s actions one month later before the industry sought the intervention of the Kentucky Court of Appeals. The judicial body ruled against the State by a two-to-one margin in January, setting up October’s showdown in the Kentucky Supreme Court.

Stay tuned to Poker News Daily for the latest from the Commonwealth of Kentucky.

Poker News in Brief: Oct. 19-25, 2009

This week, Kentucky's attempt to seize 141 online gaming domain names went to the State's Supreme Court, Full Tilt took Kentucky to court in the UK, Zynga's popular Facebook poker found a competitor and the Scandinavian poker world continued to square off on Titan Poker.

Supreme Court hears online gaming domain name seizure appeal

Kentucky's Supreme Court heard arguments this week in the State's appeal of a decision by the Kentucky Court of Appeals blocking the seizure of 141 domain names belonging to online gambling sites.

In a 2-to-1 decision, the Appeals Court rejected Kentucky Governor Steve Beshear's claim that Kentucky players and the Internet gambling sites were acting in violation of state law. The decision held that a lower court had wrongly applied the state's "gambling devices" statute to justify the seizure of the domain names.

Interactive Media Entertainment & Gaming Association attorney Jon L. Fleischaker, along with attorneys representing Sportsbook.com and the Interactive Gaming Council, asked the Supreme Court to uphold the decision, calling Gov. Beshear's efforts "intellectually dishonest."

"They made up a process that is totally lacking in due process," Fleischaker said.

A decision is not expected before the end of the year.

The Scandinavian Titan Championship

Titan Poker continues to gear up for the 2009 Scandinavian Titan Championship final set for December.

The Championship is a league that runs exclusively for Titan Poker players from Sweden, Norway, Denmark, Finland and Iceland including weekly battles leading up to the finals in December.

The winner of each weekly tournament receives a seat in the Dec. 20 final featuring a $2,500 guaranteed prize.

Twelve players have already qualified for the final and Sweden leads the overall standings.

For more information check out Titan's Scandinavian Titan Championship page.

((Full Tilt Poker)) defeats Kentucky in UK court

In a case directly related to the Kentucky Supreme Court online gaming domain name seizure appeal, Full Tilt poker has defeated the State of Kentucky.

Despite the Kentucky Court of Appeals decision blocking the seizure of 141 domain names belonging to online gambling sites, Full Tilt took Kentucky to court in the United Kingdom, claiming the State did not have the jurisdiction to block its domain.

This week, the UK High Court issued a judgment in favor of the site, claiming Kentucky cannot enforce its seizure order against the Full Tilt Poker domain names throughout the UK.

Play poker for prizes on Facebook

Zynga's Texas Hold'em Facebook application, one of the most popular games on the social networking site with more than 15 million monthly users, now has a little competition.

Poker 4 Prizes is a brand new Facebook poker application with a twist.

Instead of players competing merely for points, Poker 4 Prizes players can exchange the points for real prizes, ranging from Apple IPods to GPS systems and even an all-expenses paid cruise.

The application is also running a number of promotions including giving away a flash drive to players who submit screenshots of certain poker hands and IPod Shuffles to anyone spotted playing 3 days in a row.

For more information check out the Facebook application page.

Poker Industry Reacts to Kentucky Internet Gambling Hearing

On Thursday, attorneys representing the owners of 141 internet gambling domain names took to the floor of the Kentucky Supreme Court. Their goal: prevent the forfeiture of URLs belonging to industry giants like PokerStars, Ultimate Bet, and Full Tilt Poker.

Twenty-four hours later, the online poker industry has had an opportunity to digest the proceedings, which played out in Frankfort. Among those looking on via a live webcast of the 90-minute oral arguments was Poker Players Alliance (PPA) Executive Director John Pappas, who told Poker News Daily from Washington, D.C., “Aside from wishing I could be down there, I think the presentation of the prosecution was extremely weak and there were a lot of holes in it in that the Supreme Court justices pointed out. The attorneys for the side of the online sites did a very good job of presenting compelling, reasonable reasons for dismissing this case.”

Word of the seizure broke last September and sent shockwaves throughout the internet gambling industry. If successful, the action by the Commonwealth would render the 141 domain names inaccessible not just in Kentucky, but also worldwide. Interactive Gaming Council (IGC) attorney Ian Ramsey told Poker News Daily, “We felt very good about the arguments we presented. We felt we had the opportunity to present the material issues for this court to consider and welcome a well-reasoned decision.” When the Kentucky Supreme Court will hand down a decision is anyone’s guess; timelines have ranged from 60 days to four months.

Present in the courtroom on Thursday with Ramsey was PPA Kentucky State Director Rich Muny, who has been intricately involved at the local level in the case. Muny took time out from lunch shortly after the hearing and noted, “I thought it went really well. The justices heard from both sides and asked informed questions of everyone. We had great legal counsel in the case and it seemed like questions were targeted more at the Commonwealth than at us, which may indicate which way they’re leaning. It would be worse if we got peppered with difficult questions.” Ramsey added that the six justices present asked considerably more questions than they have in past hearings.

Interactive Media Entertainment and Gaming Association (iMEGA) counsel Jon Fleischaker was the third attorney to take to the podium on Thursday. His animated testimony seemed to speak volumes about the frustrated nature of the industry, which has several of its most well-known domain names at risk. iMEGA Chairman Joe Brennan told Poker News Daily, “John brought the passion today that a lot of people in the industry have felt. This is something that’s just plain wrong and it was great to see that today in court.” Fleischaker called the prosecution’s arguments “unheard of” and “wrong.”

On whether anything in Thursday’s hearing took Brennan and company by surprise, the iMEGA executive commented, “I thought everything went according to plan. We knew the cards that the Governor and the Secretary’s attorneys had with their briefs. They came out of the gate with a weak hand. They continue to make assertions and misrepresent the law and the status of internet gambling.”

In the process, Commonwealth attorney Eric Lycan labeled iMEGA and the IGC “illegal gambling trade associations.” Lycan added that the confiscated domain names would be put up for public auction, following similar action undertaken in the past by the IRS.

A two-to-one ruling by the Kentucky Court of Appeals in January in favor of the internet gambling industry prompted the Justice and Public Safety Cabinet to appeal.

Internet Gambling Proponents Prepare for Kentucky Supreme Court Hearing

On Thursday, lawyers from the Interactive Media Entertainment and Gaming Association (iMEGA) will lead a contingent into Frankfort, Kentucky in a case involving the seizure and potential forfeiture of 141 internet gambling domain names. Among those prepping is Ian Ramsey from Stites and Harbison, local counsel for the Interactive Gaming Council (IGC).

Oral arguments in the case will begin at 11:00am local time. The case is the final one on the docket for the week, leaving many in the industry speculating that the proceedings could last for longer than the scheduled 15 minutes per side. Ramsey told Poker News Daily what he’s expecting to unfold: “I expect that we’re going to have a lot of questions from the bench. The parties have raised many issues and the Supreme Court is going to have to sort through them.”

Among those factors that will contribute to the Supreme Court’s decision is whether the Commonwealth of Kentucky had jurisdiction to seize the domain names on the grounds that they were “gambling devices” and whether the State bringing a criminal gambling charge to a civil forfeiture hearing will hold weight. On the question of jurisdiction, Ramsey cited a ruling by the Arizona Supreme Court on October 16th, which the IGC submitted as supplemental authority in its Kentucky case. The Arizona legal battle ended with the state’s highest judicial body ruling, “However noble the State’s purpose is, in rem jurisdiction requires presence of the subject property in the state.”

The question remains as to where a domain name is located. Is it located on a bettor’s computer? Is it located on a server? Is it located overseas where the internet gambling site is based? Is it located somewhere in cyberspace? The Commonwealth of Kentucky, under the direction of Governor Steve Beshear and Justice and Public Safety Cabinet Secretary J. Michael Brown, charged that domain names were “gambling devices,” a term typically reserved for objects like roulette wheels and slot machines that you’d find in an underground casino.

Ramsey explained the far-reaching impact of the case, which has garnered worldwide attention: “The citizens of the Commonwealth of Kentucky are interested, the citizens of the United States are interested, and anyone around the world on the internet is interested in this case. We look forward to a well-reasoned, thoughtful opinion by our Supreme Court.” In January, the Kentucky Court of Appeals in Louisville ruled by a two to one margin that the State did not have jurisdiction to act. The lone dissenting opinion noted that the domain names were part of a larger gambling device.

The URLs in jeopardy belong to some of the behemoths of the industry like PokerStars, Full Tilt Poker, and Ultimate Bet. Full Tilt Poker sought a backup plan by purchasing FullTilt.com last September, shortly after word broke that FullTiltPoker.com was among those domain names seized. Poker News Daily also learned that Ultimate Bet and Absolute Poker, both members of the USA-friendly CEREUS Network, had contingency plans in the event that their primary domain names were held hostage. If successful, the 141 domain names under fire would be unavailable not only in Kentucky, but also around the world.

Besides iMEGA and IGC, other organizations involved in the legal squabble include the American Civil Liberties Union (ACLU), the Electronic Frontier Foundation, eBay, Network Solutions, the Poker Players Alliance (PPA), and the Center for Democracy and Technology. In its amicus brief, the PPA argued that its one million members will suffer “immediate and irreparable harm” if the domain names are inaccessible and that poker is a game of skill and therefore not illegal gambling.

iMEGA Readies for Kentucky Supreme Court Internet Gambling Hearing

In one week, attorneys for the Interactive Media Entertainment and Gaming Association (iMEGA) will take to the floor of the Kentucky Supreme Court to argue why the Commonwealth did not have jurisdiction to seize 141 internet gambling domain names, including those belonging to PokerStars and Full Tilt Poker.

Next Thursday marks an important day for the internet gambling industry in Kentucky and around the world. One year ago, the Kentucky Justice and Public Safety Cabinet, under the leadership of J. Michael Brown and the direction of Governor Steve Beshear, seized domain names belonging to some of the online poker industry’s giants. Arguments are scheduled for 11:00am on Thursday, October 22nd. Each side has 15 minutes to state its case and the proceedings are the final order of business on the docket for next week, leading iMEGA officials to believe that arguments may run longer than the scheduled time.

iMEGA Chairman Joe Brennan told Poker News Daily, “Since there’s no law as to how to approach this, the Governor and his attorneys went out and came up with a process on their own. They never named who was being served and basically asked people to come to court and identify themselves.” A total of 141 internet gambling domain names were seized under the grounds that they were “gambling devices,” a term that commonly refers to roulette wheels, dice, and other tangible items found in an underground casino.

In January, the Kentucky Court of Appeals ruled by a 2:1 margin that the Commonwealth did not have jurisdiction to act, while the lone dissenting judge argued that a domain name was part of a larger “gambling device.” Brennan explained, “Appellate Courts tend to take a conservative, narrow, statutory look. The gambling device statute is one thing, but there is ample case law regarding due process. I am absolutely certain that you’re going to see the Governor’s attorneys get up and talk about what crooked operators we’re dealing with.”

The trade organization argues that the Commonwealth violated due process by seizing the 141 domain names in question. Its brief to the Kentucky Supreme Court explains, “No real defendants were named, no process was issued, and no owner of any domain names was notified. In short, this was an action by the Commonwealth to seize property without the slightest pretext of complying with the fundamental dictates of due process.” Judge Thomas Wingate upheld the Commonwealth’s actions in a court ruling submitted last October.

Kentucky law describes a “gambling device” as “a machine or mechanical device… designed and manufactured primarily for use in conjunction with gambling.” iMEGA added in its brief that if Kentucky does not wish to permit internet gambling within its borders, then it should pass laws through the General Assembly. Brennan expects a decision by the Kentucky Supreme Court to be handed down in “a matter of months” following Thursday’s hearing, which will take place in Frankfort. A diverse group of organizations have submitted amicus briefs, including the Poker Players Alliance (PPA), American Civil Liberties Union (ACLU), the Center for Democracy and Technology, the Electronic Frontier Foundation, the Internet Commerce Association, eBay, and Network Solutions.

iMEGA is fresh off a mostly positive ruling in the Third Circuit Court of Appeals, which clarified the Unlawful Internet Gambling Enforcement Act (UIGEA) by noting that internet gambling’s legality depends on the laws of individual states. iMEGA claims that legal internet gambling is possible in 44 states, while its brief to the Kentucky Supreme Court explains that eight criminalize the industry to some degree: Illinois, Indiana, Washington, Louisiana, Oregon, Nevada, Montana, and South Dakota.

The Third Circuit disagreed with iMEGA’s assertions that the UIGEA trampled on First Amendment and privacy rights and dismissed the notion that it should be void for vagueness. Neither the Federal Government nor the trade organization has announced an appeal to the U.S. Supreme Court.

We’ll have a full recap of the iMEGA Kentucky Supreme Court hearing right here on Poker News Daily.

Industry Reacts to Kentucky Supreme Court Taking Internet Gambling Case

On October 22nd, oral arguments will be heard in the Kentucky Supreme Court in Frankfort. Attorneys for the Interactive Media Entertainment and Gaming Association (iMEGA) will argue why Governor Steve Beshear and company did not have jurisdiction to seize 141 internet gambling domain names.

The festivities will kick off at 11:00am local time and 15 minutes are allotted for each side to lobby their points. Despite the case centering on internet gambling, it has attracted a variety of interested parties, including the American Civil Liberties Union (ACLU). The organization’s Bill Sharp told Poker News Daily, “We are pleased that the Kentucky Supreme Court has agreed to hear this case because its implications for free speech on the internet are extremely important, not just in Kentucky, but also globally.” A three-judge Court of Appeals panel ruled in favor of the industry in January. Counsel for the Commonwealth of Kentucky appealed one day later.

Also closely monitoring the developments in the Bluegrass State is the Safe and Secure Internet Gambling Initiative (SSIGI). The Washington, D.C.-based organization has been involved in numerous issues on a national level and its spokesperson, Michael Waxman, told Poker News Daily, “We stand united in opposition to the Governor’s misguided attempt to prohibit internet gambling activity. Prohibition has failed before and is not likely to stop Kentuckians or anyone in the U.S. from continuing to find a way to gamble online. The Kentucky Supreme Court should make the right decision and end the illegal seizure of gambling domain names.”

iMEGA claims that it has received support from a broad coalition that includes the Poker Players Alliance (PPA), ACLU, Center for Democracy and Technology, Electronic Frontier Foundation, Internet Commerce Association, eBay, and Network Solutions. PPA Executive Director John Pappas is looking forward to iMEGA’s arguments in the Kentucky Supreme Court on October 22nd: “I think iMEGA will make strong a case before the court. The PPA has filed amicus already and we hope our reasoned amicus talking about poker as a game of skill will hold weight in the justices’ eyes.”

As it currently stands, iMEGA’s case is the third of three on the docket for October 22nd and the final one to be heard that week. A lawsuit between Auto Owners Insurance Company and Omni Indemnity Company will kick off the proceedings at 9:00am, followed by a hearing about Miranda rights at 10:00am. A total of seven justices appear on the Kentucky Supreme Court, led by Chief Justice John Minton, Jr. The remainder of the panel includes Lisabeth Hughes Abramson, Bill Cunningham, Mary Noble, Wil Schroder, Will Scott, and Daniel Venters.

The Commonwealth seized the 141 internet gambling domain names in question on the grounds that they constituted illegal “gambling devices,” a term that traditionally refers to objects like slot machines and roulette wheels that you’d find in an underground casino. The list of sites at risk includes some of the industry’s giants like PokerStars, Ultimate Bet, and Full Tilt Poker. Judge Thomas Wingate upheld the Commonwealth’s actions in October, prompting iMEGA and company to seek the involvement of the Court of Appeals in Louisville.

The Bluegrass Institute held an emergency summit when the seizure first broke last September. Its Director of Policy and Communications, Jim Waters, told Poker News Daily, “Hopefully, the Supreme Court will protect the freedom we’ve enjoyed on the internet in Kentucky. If nothing else, maybe this action will force the State to clearly share its stance on online gambling.” A recent ruling in the Third Circuit Court of Appeals noted that the legality of internet gambling may ultimately depend on the state a player is located in.

Stay tuned to Poker News Daily for the latest from the Kentucky internet gambling case.

Kentucky Supreme Court to Hear Internet Gambling Case

In January, the Kentucky Court of Appeals ruled by a 2:1 margin that the Kentucky Justice and Public Safety Cabinet did not have jurisdiction to seize 141 internet gambling domain names. In October, the Kentucky Supreme Court will hear the case.

The Cabinet appealed immediately following the Court of Appeals decision, which kicked off the 2009 calendar year in the online poker world. Now, attorneys for the Interactive Media Entertainment and Gaming Association (iMEGA) and Commonwealth of Kentucky will take to the floor of the state’s Supreme Court on Thursday, October 22nd at 11:00am local time. On the 10-month turnaround, iMEGA Chairman Joe Brennan told Poker News Daily, “My understanding is that the October 22nd date is fairly expeditious when it comes to the Kentucky Supreme Court. Usually, appellate courts don’t hear things that quickly when there’s nothing driving it. The fact that the court is going to hear oral arguments so soon confirms that it has an interest in the subject matter.”

A bevy of organizations have submitted documents supporting iMEGA’s challenge against the Commonwealth of Kentucky, including the Poker Players Alliance (PPA), eBay, and the American Civil Liberties Union (ACLU). iMEGA is represented by Jon Fleischaker of Dinsmore and Shohl, which is based in Louisville, Kentucky. Brennan forecasted, “We saw the briefings that the Governor’s attorneys brought to the table and they don’t have a lot they can hang their heads on other than making a claim for a Federal ban on internet gambling that doesn’t exist. There’s no Federal law against gambling on the internet and no law in Kentucky. I’m pretty sure we’re going to beat them again.”

Last September, the Commonwealth seized the 141 internet gambling domain names in question, including those belonging to PokerStars, Full Tilt Poker, and Ultimate Bet, on the grounds that they constituted “gambling devices,” a term traditionally reserved for physical objects like dice and slot machines that you’d find in an illegal casino. In October, Judge Thomas Wingate upheld the Commonwealth’s actions, which were prompted by Governor Steve Beshear. iMEGA then sought the intervention of the Court of Appeals, which agreed with the trade association by a 2:1 vote in January.

The news comes on the heels of iMEGA falling short in its constitutional challenge of the Unlawful Internet Gambling Enforcement Act (UIGEA). A three-judge panel in the Third Circuit Court of Appeals disagreed with many of the organization’s basic arguments, but ruled that internet gambling may be legal in the U.S. dependent upon state law. On the UIGEA, the Court declared, “The Act itself does not make any gambling activity illegal. Whether the transaction… constitutes unlawful internet gambling turns on how the law of the state from which the bettor initiates the bet would treat that bet, i.e., if it is illegal under that state’s law, it constitutes ‘unlawful internet gambling’ under the Act.” IMEGA claims the decision could pave the way for legal internet gambling in 44 states.

iMEGA can appeal the Third Circuit’s ruling, although no decision has been made as to whether the organization will pursue that course of action. Brennan explained, “If we were to do something, it’d be applying to the Supreme Court or starting a new challenge against the UIGEA regulations. At this point, I wonder what the best use of our resources is. The Government managed to get the UIGEA upheld in a way that the states have a right to determine what kind of gambling is allowed within their borders.” The Third Circuit dismissed iMEGA’s claims that the UIGEA should be “void for vagueness” and that the 2006 law tramples on privacy rights, among other arguments.

Kentucky’s economy thrives on the presence of horse racing, whose premier event is the annual Kentucky Derby, held each May in Louisville. The parent company of Churchill Downs, the venue of the Derby, also owns and operates TwinSpires.com, which accepts real money wagers from Kentucky residents. Moreover, the state’s lottery offers an online second chance option.

Stay tuned to Poker News Daily for the latest from the Kentucky internet gambling case.

A Closer Look at the U.S. 3rd Circuit Court of Appeals Ruling

Internet Gambling Law Expert Reacts to UIGEA Decision

The story of the week in the internet gambling industry has been the constitutional challenge to the Unlawful Internet Gambling Enforcement Act (UIGEA) brought on by the Interactive Media Entertainment and Gaming Association (iMEGA). Internet gambling law expert I. Nelson Rose comments on the ruling, which was passed down by the Third Circuit Court of Appeals.

The Third Circuit tossed out iMEGA’s arguments that the UIGEA violated the First and Tenth Amendments of the United States Constitution as well as privacy rights and international treaties. However, the judicial body asserted, “It bears repeating that the Act itself does not make any gambling activity illegal. Whether the transaction… constitutes unlawful internet gambling turns on how the law of the state from which the bettor initiates the bet would treat that bet, i.e., if it is unlawful under that state’s law, it constitutes ‘unlawful internet gambling’ under the Act.” The bet must also be legal in the jurisdiction in which the internet gambling operator is located.

Rose was perplexed by the Third Circuit’s ruling, which seemed to, in part, shed light on the UIGEA’s meaning. He told Poker News Daily, “This decision was written by judges who appear to know absolutely nothing about gaming law.” Rose reiterated that only two states, Hawaii and Utah, ban commercial gambling. The 10-page court ruling cites Oregon as a state in which it may be problematic to conduct internet gambling. However, Rose noted, “It is bizarre to use Oregon as an example. Oregon has more forms of legal gambling than Nevada.”

Deferring to the states, therefore, may not be a straightforward endeavor. Rose explained, “I practiced law in Hawaii for over three years and I can tell you that neither these nor any other existing Hawaiian statutes clearly make all forms of internet gambling illegal.  The Oregon statute cited merely makes it a crime to transfer money for ‘unlawful gambling using the internet,’ which brings us back to the question of whether any other existing law covers internet gambling.” The U.S. Department of Justice, for example, may assert that online poker is illegal under the Wire Act, although organizations like the Poker Players Alliance (PPA) would deny such an interpretation.

If internet gambling’s legality varies on a state-by-state basis, then a long road may be in store for financial services outfits like Visa and MasterCard. Rose forecasted, “The reality is that some forms of internet gambling are expressly legal, such as pari-mutuel bets on horseracing in most states. In every other case, it would take a detailed analysis by a competent gaming lawyer to know whether the state’s anti-gambling laws might apply.” A handful of states allow permit lottery purchases, further complicating the matter. For example, TwinSpires.com, a site that offers online wagering on horse racing, is owned by the same publicly traded parent company as Churchill Downs in Kentucky.

A press release issued by iMEGA shortly after the Third Circuit’s decision noted that some forms of internet gambling were “potentially lawful” in 44 states. The organization added, “There are only a half-dozen states which have laws against internet gambling.” The Poker Voters of America (PVA) is leading the charge for licensed and regulated intrastate online poker in California. The PVA is also pushing for intrastate wagering in Florida. California offers a bevy of card rooms sprinkled within its borders, including the Commerce Casino and Bicycle Casino, which host World Poker Tour events.

iMEGA may appeal the Third Circuit’s decision in an effort to overturn the UIGEA, which was its primary goal. However, no decision has yet been made. The U.S. Department of Justice can also appeal the ruling.

Stay tuned to Poker News Daily for the latest on the iMEGA UIGEA challenge. A wealth of information on U.S. internet gambling statutes can be found at Rose’s website, GamblingAndTheLaw.com.

iMEGA, Poker Players Alliance React to UIGEA Ruling

Twenty-four hours ago, the Interactive Media Entertainment and Gaming Association (iMEGA) came up short in its bid to overturn the Unlawful Internet Gambling Enforcement Act (UIGEA). In the process, internet gambling may now become an industry governed by state law.

The Third Circuit Court of Appeals emphasized that the legality of internet gambling transactions may ultimately depend on where the bettor and operator are located. If the industry is permitted in both jurisdictions, then online poker players may be able to return to the felts in droves. The opinion, which was penned by Judge Dolores Sloviter, read in part, “Whether the transaction…constitutes unlawful internet gambling turns on how the law of the state from which the bettor initiates the bet would treat that bet, i.e. if it is illegal under that state’s law, it constitutes ‘unlawful internet gambling’ under the Act.”

In a press release distributed by iMEGA following Tuesday’s historic ruling, Chairman Joe Brennan noted, “The court made it clear - gambling on the internet is unlawful where state law says so. But there are only a half-dozen states which have laws against Internet gambling, leaving 44 states where it is potentially lawful. It’s not perfect, but it’s a good start.” Internet gambling law varies by state based on the type of transaction, number of times the consumer is raked, and game type, among other factors. Several states allow online lottery transactions and wagering on horse racing, while others like Utah and Hawaii ban all forms of commercial gambling.

What happens next is anyone’s guess. States may soon find it prudent to clarify laws and statutes related to internet gambling. In the meantime, a push by the Poker Players Alliance (PPA) on Capitol Hill for legalized and regulated online poker may come to fruition through future passage of a bill by Congressman Barney Frank (D-MA). PPA Executive Director John Pappas told Poker News Daily, “While I am disappointed that iMEGA’s full arguments did not prevail, it was encouraging to see the courts reaffirm that the UIGEA does not make playing internet poker illegal. The PPA and our legal team have long argued that the UIGEA should not force banks to block poker transactions in a vast majority of states. This decision might very well help as banks make those determinations on what to block; simply follow state law.”

On handing over the determination of whether internet gambling is permissible to the states, Brennan commented in the same press release, “States have always held the power to regulate gambling in this country, not the Federal government. The court’s ruling seems to say ‘back to the future’ when it comes to regulating internet gambling, so we will turn our attention to the states to make the case that this industry can be properly regulated and produce badly needed tax revenue.” Land-based gambling is already governed at the state level, with Nevada, New Jersey, and Mississippi leading the way. A bevy of riverboat casinos have also sprung up in states like Illinois, Indiana, and Missouri.

Brennan told Poker News Daily that the organization has not yet decided whether it will appeal the three-judge panel’s decision. The magistrates dismissed iMEGA’s claims that the UIGEA violated the First Amendment, Tenth Amendment, privacy rights, and treaty obligations over the course of its 10-page ruling. In the end, the cloudy law, which was passed during the waning moments of the 2006 Congressional session, was not declared unconstitutional, as iMEGA had hoped. However, the court’s ruling may have ultimately led to the same endgame, clarification of the legality of internet gambling and online poker in the United States.

Stay tuned to Poker News Daily for the latest reaction to iMEGA’s UIGEA challenge.

UIGEA Clarified: Legality of Internet Gambling Depends on State Law

A three-judge panel disagreed with many of the arguments made by the Interactive Media Entertainment and Gaming Association (iMEGA) on Tuesday as to why the Unlawful Internet Gambling Enforcement Act (UIGEA) should be deemed unconstitutional. In the process, however, internet gambling may now be a states’ rights issue.

The Third Circuit Court of Appeals passed down the historic ruling on Tuesday morning, which included the following text that should be of interest to online poker players: “It bears repeating that the Act itself does not make any gambling activity illegal. Whether the transaction… constitutes unlawful internet gambling turns on how the law of the state from which the bettor initiates the bet would treat that bet, i.e., if it is illegal under that state’s law, it constitutes ‘unlawful internet gambling.’” In essence, internet gambling apparently may be treated the same as brick-and-mortar gambling, which is governed at the state level. As it currently stands, six states have laws on the books outlawing internet gambling to various degrees.

The judges also indicated that the legality of internet gambling also depends on where the company accepting the wager is located: “The Act prohibits a gambling business from knowingly accepting certain financial instruments from an individual who places a bet over the internet if such gambling is illegal at the location in which the business is located or from which the individual initiates the bet.”

The panel, while seemingly clarifying the 2006 law, rejected iMEGA’s claims that the UIGEA was “void for vagueness” and violated First Amendment rights. On the latter point, the court explained that “acceptance of a financial transfer” is not a First Amendment right.

Despite the UIGEA not being overturned as a result of Tuesday’s actions, iMEGA Chairman Joe Brennan told Poker News Daily, “The judges went to pains to clarify that the law did not make internet gambling itself illegal. The UIGEA made no act illegal other than the payment processors taking money. The UIGEA defers to state laws to make the determination.” As long as the bettor and the internet gambling outfit are both located in jurisdictions where the activity is not outlawed, the UIGEA is not violated.

Brennan told Poker News Daily that he had not determined whether iMEGA would appeal the Third Circuit’s decision. It is also unclear whether the U.S. Government would appeal. Still also at issue is the Wire Act of 1961, which some would argue makes online poker and other forms of internet gambling illegal in the United States at the federal level. Brennan explained, “The Wire Act only affects businesses. Is the Wire Act still a problem? Yes, but it doesn’t make it illegal.” A feature by the CBS news program “60 Minutes,” for example, labeled online poker illegal multiple times, even though organizations like the Poker Players Alliance (PPA) contend that the 1961 law does not apply to internet poker.

The three-judge panel also rejected iMEGA’s claims that the UIGEA violated privacy rights and the Tenth Amendment. The latter asserts, “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” The Third Circuit instead claimed that as a third party, iMEGA lacked standing to argue the point.

What effect Tuesday’s decision will have on the internet gambling industry in the United States remains to be seen. Congress returns from session after Labor Day, when the PPA plans to push Barney Frank’s (D-MA) HR 2266, which delays financial services industry compliance with the regulations of the UIGEA by one year to December 1st, 2010. The measure has 35 co-sponsors and was introduced in early May.

iMEGA plans to release additional analysis on its UIGEA challenge later today. Stay tuned to Poker News Daily for the latest poker legislation headlines.

Third Circuit Court of Appeals Hears iMEGA UIGEA Case

On Tuesday, lawyers from the Interactive Media Entertainment and Gaming Association (iMEGA) argued in front of the Third Circuit Court of Appeals in Philadelphia. The objective: prove that the Unlawful Internet Gambling Enforcement Act (UIGEA) is unconstitutional.

iMEGA’s case was the second on the docket on Tuesday in the Third Circuit behind a legal battle over whether a Yeshiva school could be constructed on the grounds of a synagogue based on zoning rights. One of the central issues discussed by the trade organization and counsel  for the United States Attorney General’s Office was where a bet placed online actually occurs. iMEGA Executive Director Joe Brennan explained, “We argued that the bet took place in another country like Costa Rica. When a person enters into a bet, it comes from an account already placed on the site.” However, it could be argued that bets originate on a person’s computer, on a server, or somewhere along the way in cyberspace.

Also at the forefront of the debate on Tuesday was whether iMEGA had standing to sue, something Brennan noted was preserved at the District Court level. iMEGA has online poker sites and individual players as members. Brennan recalled, “There was a ruling from the Third Circuit that concluded whether or not third parties could come forward if members were harmed, but [U.S. Attorney General counsel] Nicholas Bagley wasn’t familiar with it.” On his overall impressions, Brennan admitted, “It’s tough to tell. The three judge panel spent a lot of time with us. They didn’t spend as much time with the Government’s attorneys.”

Also questioned was whether it would have been advantageous for iMEGA to find an internet gambler who was harmed to appear in court. It’s a similar quandary that the Poker Players Alliance (PPA) has found itself in with regards to the online poker funds seizure in New York. In essence, anyone who stepped forward would be required to testify under oath that they played online poker. Brennan noted, “We said that, per the language of the statute, a person would essentially incriminate themselves in order to challenge the UIGEA. While there are no criminal sanctions, there are civil penalties for players.”

Judges Dolores Sloviter, Thomas Ambro, and Kent Jordan listened to attorneys for iMEGA and the Federal Government on Tuesday. The panel will now deliberate and return one of a wide variety of verdicts. One of the questions posed concerned the status of bills to license the industry in the United States and delay the implementation of the UIGEA’s regulations. Both were introduced on May 6th and referred to the House Financial Services Committee. HR 2266, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act, is up to 40 co-sponsors. HR 2267, the Reasonable Prudence in Regulation Act, has attracted 23 co-sponsors. Neither has been scheduled for mark-up or discussion on the floor of the House of Representatives. One possible outcome is the Third Circuit deferring a resolution until Frank’s bills are acted on.

Many in the industry are now scrambling to ascertain when the Third Circuit will hand down a decision. Brennan revealed that the court’s average turnaround time is three months and iMEGA does not expect to hear back in the next 30 days. At the District Court level, the organization was left in the dark for nearly six months.

In the meantime, iMEGA will turn its attention to the Commonwealth of Kentucky, where briefs were filed to the state’s Supreme Court in May. To open the year, the Kentucky Court of Appeals in Louisville overturned a lower court ruling by a two to one margin and asserted that the Commonwealth did not have jurisdiction to seize 141 internet gambling domain names. The State quickly appealed. There has been no word on whether the Kentucky Supreme Court will take the case.

Visit the official website of iMEGA.

Judges for iMEGA UIGEA Challenge Announced

The three judge panel from the Third Circuit Court of Appeals that will hear the Interactive Media Entertainment and Gaming Association (iMEGA) argue why the Unlawful Internet Gambling Enforcement Act (UIGEA) is unconstitutional has been named. The Third Circuit will hear the case on July 7th at 10:00am ET.

At the District Court level, Judge Mary L. Cooper disagreed with many of iMEGA’s reasons why the UIGEA should be declared unconstitutional. However, she granted the trade organization standing to sue, prompting an appeal to the Third Circuit. Now, over a year later, lawyers for iMEGA will receive their day in court. Democratic Presidents appointed two of the three judges named to the Court of Appeals panel, leaving many in the industry optimistic that the UIGEA challenge may be successful.

President Jimmy Carter appointed Judge Dolores Sloviter to the Third Circuit in 1979. She is the veteran of the panel and served as the Third Circuit’s Chief Judge from 1991 to 1998. iMEGA Executive Director Joe Brennan told Poker News Daily, “I think this is an interesting panel. Judge Sloviter was part of the panel that blocked the Communications Decency Act, which is a landmark case in internet law.” The panel in question ruled that the Act, which dealt with internet pornography, was unconstitutional under the First Amendment.

President Bill Clinton appointed Judge Thomas Ambro to the Third Circuit in 1999 and Congress approved him one year later. Brennan noted, “Judge Ambro’s best known decisions have consistently upheld First Amendment rights and civil liberties.” Besides First Amendment rights, iMEGA notes that the UIGEA should be “void for vagueness.” Online poker players know all too well that the UIGEA failed to identify what activities are permissible. In response, credit card companies such as Visa and MasterCard have blocked legal online lottery purchases in New Hampshire and North Dakota. To iMEGA, this “over-blocking” is an example of the shortcomings of the 2006 law.

The third and final judge to make up the panel that will hear lawyers for iMEGA and the U.S. Department of Justice debate the constitutionality of the UIGEA is Kent Jordan, appointed by George W. Bush. On whether any residual influence from the Bush Administration will affect Jordan’s views, Brennan commented, “Even Judge Jordan, with his extensive corporate law background, may potentially recognize the undue burden that UIGEA places on banks and credit card companies. Despite assumptions the industry may make on his being nominated by President Bush, who signed the UIGEA, or his religious background, I think this is a good panel.”

Taking the case on behalf of iMEGA is Eric Bernstein, who argued the case in front of Judge Cooper, and Stephen Saltzburg, former Deputy Attorney General of the United States. Nicholas Bagley and Jacqueline Coleman will represent the U.S. Department of Justice, Federal Trade Commission, and Federal Reserve, who collectively serve as the defendants in the case. In a press release distributed by iMEGA, Brennan noted that he is looking forward to an objective panel: “This law will finally have to stand on its own two feet in court, free from politics and all other outside influences. We feel very confident that when the judges take a look at the law, they will see just how defective it is and they will overturn it.”

The organization is fresh off a victory in Minnesota, where the state’s Department of Public Safety rescinded orders to 11 of the world’s largest internet service providers that called for the blockage of 200 internet gambling domain names. iMEGA filed suit to stop the action, effectively ending the Department of Public Safety’s attempts at censorship. If successful, USA-friendly sites like Bodog, Full Tilt Poker, and Players Only would have been inaccessible by Minnesota residents. In addition, a host of online poker rooms that do not accept U.S. customers would also have been blocked.

Stay tuned to Poker News Daily for the latest from the iMEGA legal challenge.

Update on Internet Gambling Legal Battles in Kentucky and Minnesota

With the 2009 World Series of Poker (WSOP) now just one week away, Poker News Daily sat down with Interactive Media Entertainment and Gaming Association (iMEGA) Chairman Joe Brennan to discuss the future of online poker in Kentucky and Minnesota.

iMEGA must file its brief in the Kentucky case by June 1st. The squabble surrounds the seizure and potential forfeiture of 141 internet gambling domain names, including those belonging to industry giants PokerStars and Full Tilt Poker. Brennan told Poker News Daily that iMEGA’s brief will likely be filed before the June 1st deadline and hit the Kentucky Supreme Court’s desk sometime next week. A bevy of amicus briefs have also been submitted from organizations like eBay, the Electronic Frontier Foundation, the Center for Democracy and Technology, the American Civil Liberties Union, Network Solutions, and the Poker Players Alliance. iMEGA’s brief has been completed for two months. Brennan explained the logic in waiting to submit it: “We sat on it because we didn’t feel the need to give Commonwealth attorneys more time than necessary. They’ll get a chance to submit a rebuttal brief.”

In January, the Kentucky Court of Appeals overturned a lower court’s ruling and found that the Commonwealth did not have jurisdiction to seize the 141 domain names in question. The case has the potential to set considerable precedence regardless of how the Kentucky Supreme Court rules. On the State’s brief to its highest court, Brennan told Poker News Daily, “In our mind, they’ve broken no new ground. They haven’t strengthened their case at all. They are falling back on same arguments that were unsuccessful at the appellate level: We are bad people, we don’t deserve to be here, and sites don’t deserve to be represented by groups like iMEGA, which is simply an illegal internet gambling association.” If the State’s seizure and forfeiture are successful, the domain names in jeopardy would be inaccessible not only in Kentucky, but also around the world.

In Minnesota, the deadline is looming for 11 internet service providers (ISPs) to respond to the Minnesota Department of Public Safety. The government entity mandated that ISPs block access to 200 internet gambling domains, although not all of the sites in question accept customers from the United States. Brennan updated Poker News Daily readers on whether any ISP has responded: “Every one we’ve spoken to agrees that Minnesota lacks jurisdiction and authority under the Wire Act. At this time, they’re not going to reply.” iMEGA’s legal team has had extensive conversations with the Minnesota Attorney General’s office, which has agreed not to force responses from ISPs in the near future.

Brennan noted that discussions with the Attorney General’s office and Department of Public Safety in Minnesota have been anything but hostile: “They’ve acknowledged that there is some contention and they seem to be interested in getting things right. While we’re still on the other side of a contentious issue, they’ve behaved reasonably and professionally.” Brennan noted that John Willems, Director of the Department of Public Safety’s Alcohol and Gambling Enforcement Division, has likely never handled a high-profile internet case before. However, upon hearing that 200 sites may be censored, “the opposition moved at internet speed.”

No strict timeline has been given as to when we may see further developments in Minnesota. Two weeks ago, iMEGA filed a lawsuit against Willems in his capacity as head of the Alcohol and Gambling Enforcement Division. However, the organization is not rushing to seek a court order preventing a potential blockage from going into effect. Brennan explained, “We’re not all running to get in front of a Federal judge. Both sides will take a look at this and act in a reasonable timeline.”

Stay tuned to Poker News Daily for the latest from Kentucky and Minnesota.

Barney Frank to Introduce Internet Gambling Legislation on Wednesday

According to a statement released by the office of Congressman Barney Frank (D-MA), legislation to exempt licensed internet gaming companies from the Unlawful Internet Gambling Enforcement Act (UIGEA) will be introduced on Wednesday.

The legislation is expected to establish a comprehensive licensing and regulatory framework for the internet gambling industry in the United States. In essence, it will likely be similar in scope to last session’s HR 2046, the Internet Gambling Regulation and Enforcement Act. The press statement sent out on Tuesday morning reads, “Tomorrow, Financial Services Committee Chairman Barney Frank (D-MA) will hold a press conference to unveil legislation that will enable Americans to bet online and put an end to an inappropriate interference with their personal freedom.” The bill would “create an exemption to the UIGEA for operators that are licensed and regulated. UIGEA, which was enacted in 2006, restricts the use of the payments system for Americans who seek the freedom to gamble online.”

The new legislation does not repeal the UIGEA. Also, according to the Safe and Secure Internet Gambling Initiative, it may not include a provision to tax the industry. During the last Congress, which concluded in December, Congressman Jim McDermott (D-WA) introduced HR 2607, which called for the taxation of 2% of all funds deposited onto regulated internet gambling sites by U.S. customers. The money would then be “deposited in the general fund of the Treasury and treated as revenue,” according to the legislation’s text. Similar companion legislation may be needed once again. A study released by PricewaterhouseCoopers revealed that similar legislation to McDermott’s combined with Frank’s HR 2046 could generate up to $52 billion in revenue over a 10 year period.

The press conference is scheduled for 10:00am ET on Wednesday morning in Room 2220 of the Rayburn House Office Building. The Safe and Secure Internet Gambling Initiative added, “The legislation is expected to include a number of significant consumer protections, including safeguards against compulsive and underage gambling, money laundering, fraud, and identity theft.” HR 2046 was officially introduced to the world on April 30th, 2007 and attracted 48 co-sponsors. However, it was not passed into law during the 110th Congress, leading to Wednesday’s re-introduction of what appears to be similar legislation.

The UIGEA was passed during the waning moments of the 2006 Congressional session and was attached to an unrelated security measure called the SAFE Port Act. Then-Senate Majority Leader Bill Frist (R-TN) was instrumental in its passage. The UIGEA deemed financial transactions between U.S. customers and illegal online gambling operations to be against the law, although no clarification was given as to what constituted “illegal gambling.” The UIGEA’s vagueness has led to a lawsuit by the Interactive Media Entertainment and Gaming Association (iMEGA) to declare it unconstitutional. The Third Circuit Court of Appeals will hear the case on July 6th following a decision by District Court Judge Mary L. Cooper last March, who granted iMEGA standing, but disagreed with many of the organization’s core arguments.

Last week, internet gambling came under fire in Minnesota, where the state’s Department of Public Safety issued written notice to 11 internet service providers (ISPs) calling for blocking access to 200 websites. The list of sites affected by the order includes USA-friendly rooms Bodog, Full Tilt Poker, and Players Only. It also features a bevy of sites that do not accept players from the United States, including World Series of Poker presenting sponsor Everest Poker, iPoker Network flagship site Titan Poker, and Party Gaming’s casino arm, Party Casino. Party Gaming, a publicly traded company on the London Stock Exchange, pulled out of the U.S. market after passage of the UIGEA in 2006. Its online poker room, Party Poker, is not among the 200 sites.

We’ll have a full breakdown of the bill when it is released on Wednesday right here on Poker News Daily.

Americans for Tax Reform Sides with Internet Gambling in Minnesota

The Americans for Tax Reform (ATR) has come out in support of the internet gaming industry in Minnesota. The state’s Department of Public Safety has served written notice to 11 major internet service providers (ISPs) calling for blocking access to 200 internet gambling websites.

Written notice was served on Monday. However, it was made public on Wednesday in a press release issued by the State. Siding with the internet gambling industry shortly thereafter was the ATR, which is based in Washington, D.C. and headed by Grover Norquist. The organization has been intricately involved in the battle for control of 141 internet gambling and online poker domain names in Kentucky and is one of the first to support the industry in Minnesota.

Norquist told Poker News Daily that the actions by the Department of Public Safety parallel a growing nationwide trend for control of the internet: “The State of New York wants to tax people who download movies. There is an effort throughout the states to tax internet sales on sites like eBay. One of the reasons that the internet is so helpful is that it allows competition. The best way to keep taxes low is to allow people to be able to access other jurisdictions.” If successful, 200 websites would be completely inaccessible by Minnesota residents. The affected ISPs, which have up to three weeks to respond, include AT&T, Charter, Comcast, and Qwest.

Poker players in Minnesota may be left with legal card rooms at racetracks and the state’s tribal casinos as the only options if the action to block 200 websites is successful. Norquist explained, “You can’t always pick up and move, but on the internet, you can buy things in other states and other countries. That’s one of the reasons why the internet is so helpful. It’s none of the government’s business what you do online. We just went through this in Kentucky.” In the Bluegrass State, the Kentucky Court of Appeals overturned the seizure of 141 internet gambling domain names, including those belonging to massive industry staples like PokerStars and Full Tilt Poker. The case now moves on to the Kentucky Supreme Court.

Norquist explained his ideal vision for the future of the internet: “We want to keep the internet deregulated and untaxed because it’s so important in terms of protecting individual liberties. It’s not helpful to have politicians pushing people around.” The ATR was founded in 1985 at the request of President Ronald Reagan. It has pioneered the Taxpayer Protection Pledge, which it describes as “a written promise by legislators and candidates for office that commits them to oppose any effort to increase income taxes on individuals and businesses.” In the current Congress, which convened in January, a total of 172 Representatives and 34 Senators have subscribed to it. Last year, the ATR created the Center for Fiscal Accountability. It also organizes an annual Cost of Government Day.

The ATR may now work hand in hand with industry organizations like the Interactive Media Entertainment and Gaming Association (iMEGA) and the Poker Players Alliance (PPA), which have already dispatched legal teams to Minnesota. In Kentucky, a broad coalition was formed to counter the Justice and Public Safety Cabinet. Rich Muny, the PPA’s State Director for Kentucky and member of the organization’s Board of Directors, told Poker News Daily, “Poker players throughout America should be very concerned, as should internet freedom lovers regardless of where they stand on gambling. Once we establish a process of government regulating the internet, where does it stop?”

Other organizations that stood by the internet gambling industry in Kentucky included the Center for Democracy and Technology, eBay, the Bluegrass Institute, and the American Civil Liberties Union. Stay tuned to Poker News Daily for the latest from Minnesota.

Minnesota Seeks to Block Internet Gambling Sites

Fresh off a similar incident that has been appealed to the Kentucky Supreme Court, the Minnesota Department of Public Safety has notified internet service providers (ISPs) that they must prevent access by the state’s residents to 200 internet gambling sites.

The total number of sites to be blocked currently stands at 200. However, at press time, the affected domain names are not yet known. According to the internet gaming press release, Written notice was given by the Minnesota Department of Public Safety’s Alcohol and Gambling Enforcement Division to AT&T, Charter, Comcast, Direct TV, Dish Network, Embarq, Sprint, Frontier Communications, Qwest, Verizon, and Wildblue Communications. John Willems, Director of the Division, commented in a press release distributed on Wednesday, “We are putting site operators and Minnesota online gamblers on notice and in advance. Disruption of these sites’ cash flow will negatively impact their business models. State residents with online escrow accounts should be aware that access to their accounts may be jeopardized and their funds in peril.”

The press release cites the Wire Act of 1961 and overtly charges, “Online gambling is illegal in all U.S. states.” The Interactive Media Entertainment and Gaming Association (iMEGA) has already dispatched a legal team specializing in First Amendment rights to Minnesota to combat the Department of Public Safety. Its Chairman, Joe Brennan, told Poker News Daily, “I'm somewhat troubled by the shaky legal premise on which Minnesota has based this order. They are asserting that there is some blanket Federal prohibition against gambling on the internet, when in fact none exists. In a similar fashion to Kentucky, you have the aggressor citing assertions that are not supported by the laws that are on the books.”

The letters to ISPs were delivered on Monday. The companies have “two to three” weeks to respond. Then, the Department of Public Safety has pledged to take the complaint to the Federal Communications Commission. In addition to the 200 sites whose access may be at risk in the immediate future, the Division expects further expansion: “Willems anticipates the program expanding to address thousands of sites, depending on compliance.” In Kentucky, a total of 141 domain names are in limbo as part of a forfeiture hearing that may be heard by the Kentucky Supreme Court. In Minnesota, no such seizure occurred. Instead, the Department of Public Safety is merely seeking that ISPs block access. Internet gambling is identified specifically.

In addition to their websites being inaccessible, the Department of Public Safety is also calling for the 200 companies’ phone numbers to be blocked. It explained, “For more than two decades, telecoms have shut down telephone numbers at the request of law enforcement agencies when believed to be involved in illegal activities, such as sports book-making telephone numbers.” iMEGA and the 1.2 million member strong Poker Players Alliance (PPA) are among those seeking to prevent the blockage from becoming a reality. In Kentucky, the American Civil Liberties Union (ACLU) and Bluegrass Institute rallied behind the internet gambling industry. In January, the Kentucky Court of Appeals in Louisville overturned a lower court ruling that upheld the seizure order by a two to one margin. The Commonwealth, led by Justice and Public Safety Cabinet J. Michael Brown, immediately appealed.

Matt Werden, the PPA’s State Director for Minnesota, commented in a press release on Wednesday, “This isn’t simply a heavy-handed tactic by the government; this is a clear misrepresentation of Federal law, as well as Minnesota law, used in an unprecedented way to try and censor the Internet. I don’t know what U.S. Code they’re reading, but it is not illegal to play this great American pastime online and we’re calling their bluff.”

Grover Norquist, President of the Americans for Tax Reform, added, “This is nanny-statism at its worst – the government barging into a private matter because people are supposedly too stupid to make decisions and take care of themselves. Individual liberty should not be supplanted by the whims of politicians looking to soak even more money from an over-taxed, over-regulated population while feigning concern over safety issues.” Brennan told Poker News Daily that early speculation revealed that pressure from Indian casinos may be behind the move, although this was not verified. PokerXFactor.com instructor and Minnesota resident Chris “Fox” Wallace speculated that fledgling legal card rooms at racetracks may be to blame.

Willems admitted to the Minneapolis Star Tribune that he did not know how many Minnesota residents gambled online nor provided an estimate. Instead, he stated that he has had gamblers claim they lost $200,000 and needed to borrow money. The Department of Public Safety’s press releases closes by asserting that the internet gambling industry may provide “funding for criminal and terrorist organizations.”

A call placed to press release author Dennis Smith of the Minnesota Department of Public Safety was not returned as of press time. Stay tuned to Poker News Daily for the latest on this developing story.

Online Poker Clients No Longer Welcome on PRWeb

In a change that took effect this week, PRWeb, a major press release distributor, announced that it would no longer accept news from “online gambling or related websites.” The service was previously used by some of the world’s largest online poker rooms, including Ultimate Bet, Ladbrokes, and Titan Poker.

An e-mail sent to PRWeb’s editorial staff from its management mandated, “Moving forward, PRWeb will no longer be publishing releases that promote or link to online gambling or related websites. This shift in editorial has been prompted by legal considerations and brings us in line with the stance that other notable organizations such as Google and Yahoo are currently taking with regard to promotion of online gambling in the U.S.”

A representative from Ultimate Bet told Poker News Daily that the company received notification that an editorial hold had been placed on a release that was scheduled to go out this week. An e-mail sent from PRWeb offered the Tokwiro-owned online poker site a full refund. In response, the spokesperson stated, “We expressed our disappointment that they have chosen to place all gaming-related content in the same category rather than considering poker as a game of skill. We requested that they reconsider the details of their policy and look to exempt poker-related content from this blanket ban on all gaming-based editorial.” Ultimate Bet has not received correspondence from PRWeb to its request.

The change applies to the U.S. and non-U.S. versions of the company’s services. The most recent press release related to online poker that appeared on PRWeb is from Devilfish Poker and is dated April 11th. The feature is entitled “Devilfishpoker.com Players Get Their Chance to Play Dave ‘Devilfish’ Ulliott on the Final Table from Hell.” It is unknown whether online poker affiliate sites or poker news sites will be affected.

A member of PokerSource.com's editorial staff received a letter that explained, "[PRWeb] received a Cease and Desist letter from the Washington State Online Gambling Commission requiring that we immediately halt the distribution of press releases promoting online gambling sites and content." PRWeb is owned by Vocus and based in Ferndale, Washington. The state has one of the harshest online gaming laws anywhere in the country. Playing online poker is a Class C felony, which is punishable by up to five years in prison and a $10,000 fine. In addition, a player’s house, car, or other possessions can be seized in the event of a conviction.

PRWeb’s services range between $80 and $360 per press release. The company takes advantage of longstanding relationships with Google and Yahoo in order to increase the visibility of its clients’ news releases. PRWeb was founded in 1997 and purchased by Vocus on 2006. After opening trading on Tuesday below $16, Vocus’ stock ballooned to $16.88 on Thursday. It is traded on the NASDAQ Stock Exchange under the symbol “VOCS” and is currently fetching $16.32, down $0.07 on the day.

Refunds were being given to internet gambling-related companies that requested them from PRWeb. The company expected refunds to be processed within two business days. PRWeb partners with a bevy of industry giants including AOL, Billboard, Business Wire, LexisNexis, Pheedo, and Topix. Other internet gambling companies that have utilized the popular service include ThisIsTheNuts.com, Carbon Poker, Boyle Poker, Everest Poker, Absolute Poker, Tower Gaming, Poker Heaven, and Paddy Power. Poker News Daily also distributes releases using PRWeb.

The law making playing online poker a Class C felony in Washington was passed in 2006. Last Month, a Court of Appeals upheld a challenge to the law from Poker Players Alliance (PPA) Washington State Director Lee Rousso. The case may now head to the Washington State Supreme Court. The law does not differentiate between skill games and games of chance; rather, all card games are frowned upon.

iMEGA UIGEA Appeal to be Heard on July 6th

In breaking news out of the United States, it was revealed that the Third Circuit Court of Appeals will hear lawyers from the Interactive Media Entertainment and Gaming Association (iMEGA) argue why the Unlawful Internet Gambling Enforcement Act (UIGEA) is unconstitutional.

Last March, Judge Mary L. Cooper granted the organization standing to sue on behalf of the internet gambling industry. However, she disagreed with many of iMEGA’s arguments in the process, prompting the appeal. In a letter from the Third Circuit Court of Appeals, its clerk informed the parties involved that the case has “been tentatively listed on the merits on Monday, July 6, 2009 in Philadelphia [Pennsylvania]. It may become necessary for the panel to move this case to another day within the week of July 6, 2009. Counsel will be notified if such a change occurs.” Further information will be given as to whether oral arguments will be heard, and if so for how long, within one week of the disposition date.

Within seven days, iMEGA and attorneys for the U.S. Department of Justice must advise as to who will serve as counsel in the proceedings on July 6th. Each party must also identify whether its attorney is a member of the bar of the Court. iMEGA Chairman Joe Brennan is looking forward to the organization’s day in court, which is now just two months away. He told Poker News Daily, “The court is going to look at the entire case without technicalities and filing dates. They are going to solely decide it on the merits, not based on anything political or regarding procedure. That’s why you have a judicial system.”

iMEGA is in the midst of a spat with the Federal Government over whether information on the North Dakota and New Hampshire lotteries should be included in the record. Since its brief was filed, iMEGA has learned that customers trying to purchase legal lottery tickets with credit cards are being blocked from doing so. State lotteries have a specific carve-out from the UIGEA. The issues have arisen apparently due to the onset of the UIGEA regulations, which were enacted on January 19th and command full compliance by the financial services industry by December 1st. The regulations have caused Visa and MasterCard to engage in over-blocking rather than risk breaking the law.

The Department of Justice claims that because the new information was not filed by the proper deadline in iMEGA's brief, it should not be included in the record. Also absent from iMEGA’s official brief are the final regulations of the UIGEA, which were accepted by the White House Office of Management and Budget (OMB) in November as so-called “midnight rules.” Brennan told Poker News Daily why the request to supplement the record might be taken seriously by the Court of Appeals: “They are aware that their decision is going down in the history books. They know, we know, and the Department of Justice knows that not accepting our information may be grounds for an appeal.” If unsuccessful, iMEGA could appeal once again to the Third Circuit or seek the intervention of the U.S. Supreme Court.

Originally, the Third Circuit had asked iMEGA for its availability this month for oral arguments. On the two month delay, Brennan speculated, “It tells me that the Court is giving the case more serious consideration than a lot of people thought they were.” There has been no indication as to when the Court of Appeals will decide the future of iMEGA’s request to supplement the record. The case is numbered 08-1981 and is entitled “iMEGA v. Attorney-General USA, et al.”

iMEGA is also a leading party in the case pitting the Commonwealth of Kentucky’s Justice and Public Safety Cabinet against the owners of 141 internet gambling domain names, which risk forfeiture. iMEGA has until June 1st to file its brief in the case.

iMEGA Will File Kentucky Supreme Court Brief by June 1st

On April 2nd, the Kentucky Clerk's Office approved the Commonwealth’s brief in a case that pits the state against owners of 141 internet gambling domain names. The approval means that the Interactive Media Entertainment and Gaming Association (iMEGA) must file its brief to the Kentucky Supreme Court by June 1st.

The timeline is setting up a summer showdown in the United States between the organization and the Kentucky Justice and Public Safety Cabinet. In January, the Kentucky Court of Appeals ruled by a two to one margin that the State lacked jurisdiction to seize and force the potential forfeiture of 141 internet gambling domain names, including those belonging to online poker sites such as PokerStars and Full Tilt Poker. The industry originally received word of the forfeiture back in September.

Although Commonwealth attorneys originally asked for more space to outline their discord or more time to pare the document down, the final brief weighed in at 50 pages, which is the maximum number allowed by law. The State’s brief opens, “Wagers are accepted in an unregulated underworld without effective age verification, identification, or financial accountability… Persons can instantly wager and lose retirement savings or college funds in secrecy.”

The State also notes that internet gambling may be cutting into its revenues for legalized forms, including horse racing. The city of Louisville is just three weeks away from playing host to the annual Kentucky Derby, which is held on the first Saturday in May. The spectacle takes place at Churchill Downs and brings in an extensive amount of revenue to the state’s economy. The Commonwealth’s brief claims that 2,500 “unregulated sites” solicit U.S. customers. They include 1,083 online casinos, 592 sports books, 532 online poker rooms, 224 Bingo sites, 49 skill game websites, 30 betting exchanges, 25 lotteries, and 17 backgammon sites. These figures are sourced from a Casino City study in 2006.

The brief also gives a lengthy history of arrests and admissions of guilt in the internet gambling industry. Commonwealth attorneys alluded to Party Gaming Co-Founder Anurag Dikshit’s $300 million settlement with the U.S. Government in December of 2008, decisions by ClearChannel and Infinity Broadcasting to cease running advertisements for online gambling sites in 2003, a $7.2 million settlement between Sporting News and the U.S. Department of Justice in 2006, and the arrests of the founders of Neteller.

The question of whether iMEGA and the Interactive Gaming Council (IGC) have standing to sue is also brought into light. The brief asserts, “IGC and iMEGA have refused to identify a single owner they seek to represent. iMEGA has even failed to identify any Domain Defendants its unidentified members claim to own. Appellant has no way to verify whether the associates have the authority to represent an actual entity claiming ownership interest in a domain.” Last March, Judge Mary L. Cooper granted iMEGA standing to sue to declare the Unlawful Internet Gambling Enforcement Act (UIGEA) unconstitutional. That case also currently sits in appeal.

In October, Judge Thomas Wingate did not overturn the seizure order by Kentucky Governor Steve Beshear. The decision prompted iMEGA and the IGC to file a petition for the state’s Court of Appeals to intervene. The organizations’ pleas were granted, setting up a December hearing in Louisville. In January, Judges Michelle Keller and Jeff Taylor agreed that the Commonwealth did not have proper jurisdiction to force the forfeiture of the 141 internet gambling domain names in question. Judge Michael Caperton submitted a dissenting opinion arguing that domain names are part of a much larger “gambling device,” a term that traditionally refers to physical objects like slot machines or roulette wheels found in an underground casino.

No date has been set for the Kentucky Supreme Court to hear the case. Stay tuned to Poker News Daily for the latest from the battle in the Bluegrass State.

Online poker loses again in Washington

It was a unanimous decision from judges Stephen Dwyer, Ronald Cox and J. Robert Leach.

"Yes, I was surprised by the ruling," Rousso told PokerListings.

"I thought I had briefed the issues well and presented them well at oral argument. I also thought I had the law right. So I was surprised, but hardly shocked, as it is hard to get a law overturned."

Rousso, a lawyer in Washington as well as the Poker Players Alliance state director, first filed his case against the online gambling laws on the first day of the World Series of Poker in 2007.

His argument is that the state's law, which makes it a felony for people to play online poker, fails to comply with the federal government's Wire Act. The Wire Act has never extended criminal liability to the players.

Rousso also believes the law is in direct violation of the U.S. Constitution's Commerce Clause, which forbids individual states from passing protectionist laws against other states' business.

The three Appeals Court judges ruled that the state's interest in regulating gambling outweighs the burdens on interstate commerce.

"Ultimately, given the importance of the State's interests in protecting its citizens from the ills associated with gambling, and the relatively small cost imposed on out-of-state businesses by complying with the Gambling Act, Rousso has failed to meet his burden of showing that the Gambling Act is 'clearly excessive,'" wrote the judges in their decision.

However, Rousso did find a silver lining in the ruling.

"I was encouraged that the court accepted my argument that Congress has not given the states unambiguous authority to regulate Internet gambling," Rousso said.

"That was a big point of dispute in this case. Instead, the court found that although Congress has not granted this authority, the state's interest still outweighs the burden on interstate and international commerce. So the decision was not a total rejection of my opinion."

Although Rousso has spent nearly two years battling Washington's online gambling ban in the courts, he's not ready to give up yet.

"When I filed my case, I thought it would take about two years to get to the Washington State Supreme Court, so I'm right on schedule," he said.

Rousso is already planning to take that next step of submitting the issue to the state supreme court. He said his sense is that the court would probably accept review of the case since it involves constitutional issues.

At this point, with all the work that has gone into the case, Rousso said another appeal doesn't involve much more work. There isn't much he can add to the case either.

"Instead, as cases go higher, the issues get narrower. I will focus like a laser beam on those points where I think the court of appeals got it wrong," Rousso said.

"In particular, I think the court of appeals erred by failing to contrast what is illegal with what is legal. If one does so, the protectionist nature of the Washington statute becomes much more apparent."

Rousso is referring to the fact that other forms of gambling are legal in the state. Washington has legal casinos and a state lottery.

With respect to the constitutional issue, Rousso said everyone should be concerned about state efforts to control and regulate the Internet. The Commerce Clause was enacted to prevent exactly that type of state action.

"Personally, I think the issue is important because it reflects a willingness of the government to unreasonably intrude in our personal lives," Rousso said. "Nonplayers should be equally concerned about the Nanny State and should be objecting as loudly as I am."

That's why Rousso will keep taking the case as far as he can.

"I'll keep going until they close the courthouse doors in my face," Rousso said. "I really think this is an issue for the Supreme Court of the United States, so I'm hoping that court will accept review after the Washington Supreme Court rules on the case."

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