The Kentucky Court of Appeals has decreed that an Internet gambling domain name does not constitute a gambling device under state law -- meaning, for now, over 100 domain names under threat of seizure will remain beyond the reach of the Kentucky government.
The dispute, initiated by Kentucky's Justice and Public Safety Cabinet on behalf of Governor Steve Beshear, began in September 2008. It was then that J. Michael Brown, secretary of the justice and safety cabinet, won an order in Franklin County Circuit Court to have seized 141 Internet gambling domain names accessible by Kentucky residents. Once seized, the domains were to be forfeit to the state's government.
In October, the Interactive Media Entertainment and Gaming Association, or Imega, petitioned the appeals court to take control of the case after arguing the circuit court lacked jurisdiction and, by ordering the seizure, acted in an unconstitutional manner. The appeals court took control of the case in November, and oral arguments were heard Dec. 12.
In a 2-to-1 decision handed down Tuesday, the appeals court said it "stretched credulity" to conclude that the composites of a domain name -- a series of numbers -- constitute a "machine or mechanical or other device . . . designed and manufactured primarily for use in gambling."
"The reality was that the state of Kentucky was using old statutes that did not apply," Patrick T. O'Brien, an attorney with Greenberg Traurig in Fort Lauderdale, Fla., told IGamingNews Tuesday. "It tried to stretch them, but the court said 'No, you can't, it's up to the Legislature.' "
Mr. O'Brien, who along with William E. Johnson, an attorney with Johnson, True & Guarnieri in Frankfort, Ky., represented clients including PlayersOnly.com and SportsBook.com, called the decision a "major victory." He clarified that were Kentucky to have successfully prosecuted its case, the government would have been able to shut down 141 domains -- worldwide.
"Victory here was essential," he said.
With regard to how the ruling affects other states, Mr. O'Brien said that while it doesn't have value as precedence, it is nonetheless persuasive.
"It's guidance to the other states that if they want to address Internet gambling, they can't do it under obsolete laws," he said. "They have to modify their laws."
Looking ahead, Joseph Brennan Jr., the chairman of Imega, told IGamingNews Tuesday that Mr. Brown and Mr. Beshear will have still to decide whether to take their case to the State Supreme Court.
"It remains to be seen whether they feel that, based on the decision -- and based on the composition of the State Supreme Court -- they feel they have a chance at the next level," he said.
Jennifer Brislin, the communications director for the justice and safety cabinet, did not return phone calls Tuesday afternoon.
Click here to view a copy of the appeals court's decision.
Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.