Kentucky court overturns seizure of gambling sites

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Associated Press

Posted on February 22, 2014 at 7:01 PM

LOUISVILLE, Ky. (AP) — Kentucky's efforts to seize 132 Internet gambling domain names is on hold after an appeals court ruled Friday that a trade association may represent the owners of the sites trying to fend off forfeiture proceedings.

The decision by the Kentucky Court of Appeals allows the Interactive Gaming Council to step into the 6-year-old case and, at least temporarily, keep the identities of the owners of various Internet gambling sites from being publicly revealed.

Judge Allison Jones, writing for a unanimous three-judge panel, noted that Kentucky has treated the domain names as a group for much of the litigation but wants to handle them individually now to prevent the trade association from becoming involved.

"The Commonwealth cannot now turn the tables and ask the court to require each domain name owner to come forward individually and assert virtually identical legal arguments through separate counsel to resolve threshold, purely legal issues that affect the validity of the entire forfeiture procedure," Jones wrote.

The appeals court sent the case back to Franklin Circuit Court Judge Thomas D. Wingate for further hearings.

"Obviously, we consider this a win," said Interactive Gaming Council CEO Keith Furlong. "We are also proud to be a catalyst for this decision which provides guidance to all associations seeking to represent their members in the Commonwealth of Kentucky."

Jennifer Brislin, a spokeswoman for the Kentucky Justice Cabinet, said the opinion is being reviewed and there's been no decision about whether to file an appeal.

"Also, as a result of the Commonwealth actions, most of the websites that are the subject of the in rem domain name case have stopped doing business in Kentucky," Brislin said.

The ruling comes in the between Kentucky and gambling website owners. The state sought to seize the domain names, saying they were allowing illegal gambling in Kentucky. IGC sought to fight the seizure on behalf of the domain name owners.

In August 2008, Kentucky launched a sting to see whether offshore gambling sites would allow Kentucky residents to conduct transactions. The 141 sites were found to be in violation of the Kentucky statutes. However, FullTiltPoker.com, PokerStars.com, AbsolutePoker.com, UltimateBet.com, DoylesRoom.com, TruePoker.com, Bookmaker.com and Bodog.com have been seized by the federal government and were removed from Kentucky's list, which dropped to 132 sites. A ninth domain was shut down in a related action.

The state initiated a lawsuit in an effort to stop illegal online gambling. Kentucky was the first state to bring an action against Internet gambling operators resulting in the seizure of domain names. Among other things, the state said online gambling drains the state of money by undermining horse racing, a key tourism industry.

Wingate ruled that IGC showed enough to represent one of its members, Pocket Kings Ltd., but not enough information to establish itself as a representative of all the domain names in question. That ruling could have forced owners of the sites to be publicly identified.

Kentucky officials argued that each domain name owner had to come forward and prove that each site did not engage in illegal gambling in Kentucky or that the site was being used to do so without the knowledge and consent of the owner.

If IGC carries the day, those owners will not have to come forward and the association can represent them.

"The alternative — forcing 141 domain name owners to pursue their claims individually — would be burdensome and inefficient," Jones wrote.

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Follow Associated Press reporter Brett Barrouquere on Twitter: http://twitter.com/BBarrouquereAP

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