Judge Wingate's Decision on Internet Gambling Domains is All Symbolic Now

Recently Kentucky court judge Thomas Wingate ordered 132 gambling domain names to be seized and turned over to the state of Kentucky. In a case that has been active since 2008, Wingates final ruling on March 8 was that no owners from the named domains came forward to contest the seizures...

Recently Kentucky court judge Thomas Wingate ordered 132 gambling domain names to be seized and turned over to the state of Kentucky. In a case that has been active since 2008, Wingate's final ruling on March 8 was that no owners from the named domains came forward to contest the seizures and since the Interactive Media Entertainment and Gaming Association (iMEGA) and the Interactive Gaming Council (IGC) did not have proper standing to represent the websites he had no choice but to rule for the state of Kentucky. Wingate also noted that none of the owners took steps to block Kentucky residents from wagering on their websites in the interim despite his original ruling. Without going into great detail, since the case has been written about on numerous occasions, the Governor of Kentucky asked that 141 gambling

"...heavy handed attempts by the government could come back to haunt the FBI..."

domain names be turned over to the state since the websites were allowing Kentucky residents to wager on their sites contrary to Kentucky law. The state argued that web domains were effectively gambling devices and as per the law of the land illegal gambling devices can be seized. iMEGA and the IGC stepped in and asked for the ruling to be overturned on the grounds that it was inane and the appellate court in Kentucky reversed the decision stating that they didn’t believe websites were gambling devices. The case was then sent to the state Supreme Court which overturned the appellate court decision and the Supreme Court judges ruled that they were willing to hear arguments on the cases merits provided someone with standing came forward to represent the websites. They argued that iMEGA couldn't represent the companies just on their say so since the composition of iMEGA was unknown so iMEGA needed to prove standing by providing at least one site owner who would attest that iMEGA indeed represented the websites. The Supreme Court also said that the decision of standing had to be made at the circuit court in front of Judge Wingate so the case was sent back down.

Not surprisingly none of the owners of the websites wanted to come forward in front of the courts. After all, the DoJ already showed on 3 separate occasions that when offshore gambling owners step foot on U.S. soil they are arrested. iMEGA thus attempted to prove standing by providing an affidavit from the owner of TruePoker.com, one of the domain names at risk. In the affidavit the owner of Yatahay Limited (the company that owned the domain name TruePoker.com) admitted to being a member of iMEGA. iMEGA argued that this was sufficient to demonstrate standing but the Kentucky attorneys disagreed with the logic:Identification of one member who is an owner of one domain defendant cannot and does not provide a basis upon which iMEGA may be granted associational standing. The attorneys and court instead, ordered that the owner of Yatahay Limited must come forward himself and defend its own interest. After that date, arguments continued back and forth but no site owner actually appeared before the courts at any time.

In the interim in March 2011 the FBI seized the domain names of Full Tilt Poker, PokerStars, Cereus poker sites, Betmaker and a few other domain names on a date known in the industry as Black Friday. The FBI effectively stated that the websites were a threat to homeland security and consequently went to VeriSign and demanded that the websites be blocked and replaced with a banner stating that gambling was illegal and the site was now owned by the FBI. Naturally once this occurred, other website owners that were catering to the U.S. went into prevention mode and made some alternative arrangements in case their .com web addresses were seized. Betmaker changed their site to Bookmaker.eu, SBGGlobal changed their site to sbgglobal.eu and almost every site that was on Kentucky's list bought domain names with a .eu, .ag or other web extension which were out of the reach of VeriSign. This new site could then be switched over if indeed their .com domain name was seized. In doing so the websites effectively made Kentucky's threat and the ruling by Wingate irrelevant. In fact it's notable that neither iMEGA nor the IGC even made mention of Judge Wingate's ruling of March 8th on their website. Moreover, most of the 131 domains being seized are either dead or are skins for other websites which are already out of the reach of VeriSign. Of the websites that are on the verge of being seized, the most notable are sportsbetting.com, sportsbook.com, wsex.com, linemaker.com and truepoker.com. But in each case it's been reported that the sites have already purchased websites with a non .com extension and shouldn't miss a beat if their .com site is indeed seized. For that reason, what appeared to be a move by the Kentucky government that would paralyze the industry is now seen as a non issue.

To prove this point even more, PokerStars operated without a glitch switching from a .com to a .eu extension on the date after Black Friday, Betmaker hardly missed a beat switching from betmaker.com to bookmaker.eu, Bodog still has almost all its U.S. customers after moving from bodog.com to bodoglife.com to Bovada.lv and most sites that have moved to a non .com website have indicated little if any affect on their business. That said the companies would like to maintain their .com domain names since they put a lot of time and money into building the brand and most people still associate a business with its .com domain name, but losing it isn't the end of the world. And for the state of Kentucky those domains are useless.

In the meantime, while the seizures are now more or less just a symbolic move, the whole case and the way it played out should be troubling to the American public. In fact numerous websites devoted to freedom of speech and freedom of the internet have stated their disgust with the governments action and as noted in previous articles, first amendment lawyer Larry Walters suggested that in his view these seizures are illegal. What is most frustrating is that the government has interfered with the internal decisions of a foreign government and effectively stole property from a foreign website just to prove a point. One has to wonder if the roles were reversed and the country of Antigua or the EU tried to take the domain name from an American company whether they would sit so tight. For example, the EU had a dispute with Microsoft and the U.S. government over whether Microsoft was operating illegally since it was bundling together its media and web browser inside Windows, which the EU claimed broke antitrust laws. Had the EU unilaterally ignored the U.S. governments arguments and blocked all Microsoft websites accessible within the EU to prevent European customers from purchasing Microsoft products one has to wonder how quickly the U.S. government would have cried foul and attempted to insure that those websites were turned back over to Microsoft immediately. And to make matters worse, what if it was the county of Lincolnshire in the UK that seized the domain names from Microsoft and in doing so blocked the entire European Union from accessing the website? Make no doubt that is precisely what has happened here with the state of Kentucky seizing the 132 domain names. The U.S. government may not like the offshore websites and they may be truly concerned about illegal gambling but seizing a website from a country which allowed the website to operate as per the laws of that country is dirty politics if nothing else. And the heavy handed attempts by the government could come back to haunt the FBI and the people of the United States when they need some conciliatory action by that country at a later date.

Also concerning is the decision that a trade organization can't represent standing. Affidavits are accepted all the time in U.S. courts to represent standing and many times the owners will appoint someone else to represent them. The decision of the district and supreme courts in Kentucky were not based on fact or precedent but were clearly made in an attempt to get some site owners to come forward so they could be arrested upon stepping foot in the U.S. If this wasn't the case the courts would have granted them immunity from prosecution should they appear in court. It seems that for whatever reason, on the issue of offshore gambling the courts have made up their own rules which are counter to the accepted laws of the land.

The Kentucky Court of Appeals is scheduled to hear briefs on April 24th at which time it is expected that the domain names will be turned over to the state.

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