Gov. Beshear files suit to recover losses from online gambling

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by Associated Press

WHAS11.com

Posted on April 7, 2010 at 8:37 PM

FRANKFORT, Ky. (AP) - Gov. Steve Beshear's administration has filed a lawsuit aimed at recovering losses incurred by Kentuckians who gambled on Web sites.

The suit cites an obscure state law in seeking to recover three times the amounts lost by people who placed online bets, The Courier-Journal of Louisville reported. The suit was filed in late March in Franklin Circuit Court.

Defendants include the Ireland-based Pocket Kings LTD., which operates the popular Full Tilt Poker Web site, as well as unknown entities that operate dozens of other online gambling sites.

It's the second suit filed by Beshear's administration against online gambling sites. If the state succeeds in its legal battles, popular sites such as pokerstars.com could be shut down, not just to Kentuckians but to people around the globe, the Louisville newspaper reported.

In a statement, John Pappas, executive director of the Poker Players Alliance, said: "The one thing that we can be sure of is that a continued assault on poker and attempts to restrict the rights of commonwealth residents to play online poker is a clear waste of state government's scarce resources."

Louisville attorney Jon Fleischaker, who represents online gambling interests, said an argument can be made that the transactions didn't actually occur in Kentucky because none of the Web site operators are located here.

He told the newspaper it would be akin to the state suing an Indiana casino to recover losses incurred by a Kentuckian who gambled there.
"I think there are serious, serious questions about this," he said.

I. Nelson Rose, a gambling law expert at Whittier Law School in California, said the Beshear administration is attempting to use an old statute still on the books in many states.  The Kentucky law says that in instances of illegal gambling the winners have no right to collect. Losers who pay up can sue to recover triple the amount of their loss under the law.

The statute also says that if the loser doesn't sue within six months "any other person may sue the winner."

Rose said that, to his knowledge, no other state has attempted such a legal maneuver and that he expects the lawsuit to be thrown out.

"There are a lot of problems using that statute," he said. "These are extremely ancient laws that have almost never been used for 100 years or more. The times have completely changed."

Justice Cabinet spokeswoman Jennifer Brislin said in a statement that while the statute the latest lawsuit relies on "had its origin many years ago, it still remains the valid law of the commonwealth."

Rose said one problem with the lawsuit is that in the case of Full Tilt and other poker Web sites, Kentucky gamblers win and lose bets made with other gamblers, not the site.

The administration attempts to address that issue in the lawsuit, saying the defendants are winners because they receive a fee for operating the game.

In its previous legal initiative, Beshear's administration filed suit in 2008 in an effort to seize and shut down 141 online gambling domain names - Web sites - in part because of concern that they were draining revenue from the state's horseracing industry.

The Lexington law firm that is representing the state in the domain-name case is the counsel listed on the new lawsuit.

Beshear has said the move isn't costing taxpayers because the firm volunteered to take the case and gets paid only if the state recovers damages.
 

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