Gambling911.com is in Frankfort, Kentucky for the high profile online gambling domain seizure case that has everyone in the industry talking. We have been providing live coverage thoughout the day.
The judge has advised that he will need 7 days in which to render a decision in this matter. While industry attorneys were responding to the commonworth's assertions, the arguments have ended in this matter on both sides.
12:22 pm EST
(Commonwealth Attorney) - Online gambling is clearly illegal by the Federal Government.
There is no interstate commerce. It is illegal in all states. What they are talking about is "the world".
Free Speech argument. Kentucky is not going out into the world to regulate speech.
Judge asks: "What about the argument of free speech? You can't prohibit advertising."
The lawyer explained that these companies get around the law by using a .net extension as a means of using their websites as advertising vehicles that are connected to the .com domain website.
12:18 pm EST
The Commonwealth has been arguing that Internet gambling companies reached into Kentucky. It was not that Kentucky reached out to try and stop them.
They also argued that the California 9th Circuit has ruled that a domain name is property that can be seized. It was noted that the state of Washington has seized the domain names owned by Bodog.com.
Also, in regard to cocaine cases, seizures are announced after the fact and this comparison was drawn to online gambling.
12:05 pm EST -
(Mr. Foote representing the Commonwealth) - Is poker gambling - each of those poker websites refers to what they do as GAMBLING.
We want to today forfeit the 141 domain names then have a hearing where the owners can come and complain.
We need to investigate what is going on with the GoldenCasino.com in respect to compliance with your orders.
Our goal here is to stop these folks from having a casino in Kentucky.
We have asked them to do two things - geoblock Kentucky and second, to pay a fine.
12:00 pm EST -
(Mr. Foote representing the Commonwealth) - Claims none of those in the court room have standing, which is not true.
I want one of the owners to show up here. I know they won't show up. Afraid to have any real owner show up here.
You (You're Honor) did not hear any of the proof from others that shows the domain name is the actual device.
It is here, you're honor.
When someone goes online and downloads the Microgaming software, that is here in Kentucky.
(It should be noted that Gambling911.com was advised the state has a special interest in Microgaming, which is not quite understood why).
11:53 am - Foote argues that none of these operators have shown up. They only have surrogates representing them. Foote brings up the child porn argument over the Internet along with the sales of hashish.
Department of Justice in KY wants to know what can be done to force the registrars to comply who have not as of yet.
Registrar for PitBullPoker.com - our customers instruction was to not comply with the court order.
A court order is a court order and they cannot decide whether they should apply or not.
GoldenCasino.com registrar advised that they were going to unlock domain name because they believe that Kentucky does not have a right to enforce this.
Who is here today? One person who says they represent an unnamed registrar. Greenberg represents 7. iMEGA represents 58 domain names and other representation NOT identifying members.
Nobody has appeared who represents an owner.
What corporation is here that owns one of these domain names? None.
Why are they not here? Because they know what they are doing is wrong. Instead they want to send their surrogates here to speak on their behalf and will not have to submit to my cross examination as to how much money they are taking out of the state. Who is paying for this?
11:41 am - After a brief recess, Attorney Foote (representing the commonwealth) tells the court that he will be brief in presenting his side. 11:40 am - The attorneys representing the online gambling firms (and there were a lot of them) have concluded their arguments.
11:35 am - Leyden stresses that this forfeiture is unprecedented and clearly unusual. He also brought up TwinSpires.com. What is this? It is a legal online horse racing site based on the commonwealth of Kentucky. The site is operated by Churchill Downs, home of the Kentucky Derby. That institution is engaged in online gambling. So gambling in the state is not a novel concept (as it might be in Utah where all forms of gambling are illegal). "
This action taken by the commonwealth was not wholly benevolent," Leyden points out.
Under the Commerce Clause, states are prohibited from engaging in discrimination as a means of eliminating competition.
Protectionism prohibited was the theme and the concept that this whole matter is unconstitutional.
11:20 am EST
Edward Leyden discussed the commerce clause in the context of the Internet. The Internet is a global thing in nature. The Supreme Court has recognized this. The Internet is a unique and wholly new means of communication available to anyone in the world. A good starting point is what the commerce clause says is that the states may not regulate commerce.
Can state regulation burden foreign commerce?
Many previous cases brought by states have already been shot down.
Here we are dealing with a law enforcement measure on properties located outside the commonwealth. Kentucky lacks the authority to regulate.
This proposed forfeiture act would deprive individuals from engaging in the activity in other jurisdictions where the activity is lawful.
These are not criminal enterprises. They pay taxes. They follow rules. They are regulated. In some cases they are publicly traded (The London Stock Exchange). They are located in places we consider allies: Great Britain, Latin America, etc...
It is time we dispel this notion that these (domain owners) are renegades.
This burden is so far reaching it will destroy commerce. This burden cannot be justified in light of the excessive commercial pain that this causes.
10:53 pm EST
Larry Walters has made public he is representing GoldenPalace.com and GoldenCasino.com.
Larry Walters argued "jurisdiction" and questioned the hiring of outside counsel to handle this matter on behalf of the commonwealth.
It should be noted that the Attorney General is not involved in this matter.
Even if domain is property, this was determined under FEDERAL legislation. No registrars are located in the commonwealth.
"Commonwealth is not the proper jurisdiction."
"There must be some attempt to locate the registrar."
10:47 pm EST
An attorney for Greenberg Trauig points out that online gambling is not implicitly illegal in the commonwealth of Kentucky. There are 7 states that do and Kentucky is not one of them.
10:43 pm EST
IMEGA local counsel up discussing the definition of “gambling devices” as limited to a “mechanical device”
The legislature: “Hotel.com” and similar websites were like “an accommodation business” and Judge Russell said “Businesses such as these were truly creatures of the future at the time the statute was enacted. Companies have made that leap to reality.”
Since this time, no amendments have been made to apply to domain names or amend the definition of a “gambling device” to something as intangible as a domain name.
10:20 am EST
Legal counsel for the Internet Gambling Counsel - Defined what a domain is verses what a gambling device is.
Legal counsel for the IGC argued that only a handful of registrars are complying with the court order by handing over certificates to the commonwealth. These certificates are meaningless as the IP address still exists as does the website.
Approximately 10 domain name certificates have been handed over to the commonwealth. The registrars have been trying to find alternatives in order to comply with Kentucky.
10:01 am EST
Legal counsel for the Internet Gambling Counsel:
"Due process imposes limits and this court can not impose them...has not satisfied due process requirements."
Once again the focus was on proper notification not given to registrants or website owners.
"Implications to random these companies for money is that any state can seize a domain name. Any private litigant can seize a domain name. You don't like a sweater that LL Bean sent you, seize their domain name."
9:54 am EST -The Honorable Judge Wingate allowed for the Internet Gambling Counsel to explain how domains work.
"The IP address will remain valid to anyone who wants to type it in. These websites will remain active."
"They (commonwealth) are hijacking domains for ransom. Domain names do not exist in Kentucky. It's just letters on a screen."
"Mr. Foote (the attorney for the commonwealth) knows this."
9:50 am EST
An excellent argument from Mr. Bill Johnson - attorney representing some of the largest online gambling sites - the commonwealth legislature was not given the right to review this matter. Johnson outlined how this case came to be and how proper policy was not followed.
"The commonwealth has not defined public policy here. They (the Governor and his lawyers) want you (the judge) to legislate. This is contrary to the law."
9:11 am EST - Lawyers have begun arriving at the court house in Frankfort, Kentucky. Both of Edward Leyden's navigation systems crashed but he still managed to make it to the court house before anyone else, along with Joe Brennan, founder of iMEGA.org.
Leyden was conferring with local legal counsel.
A little background:
Kentucky Governor Steve Beshear wants to block 141 gambling websites calling them illegal and unregulated. Monday, some of the people who represent those sites fired back calling the governor's action unconstitutional.
"Nobody has been as reckless as Kentucky has on this," said Edward James Leyden, attorney for iMEGA, Interactive Media Entertainment & Gaming Association.
Leyden, whose group was founded to foster cooperation between the online industry and government at all levels, and to promote innovation, openness and freedom on the Internet, was just one of the lawyers and representatives of 141 gambling web sites being targeted by Beshear who aren't happy to be in the Bluegrass state again.
"Here's how I react to it. Governor Beshear needs to read the constitution," said Leyden.
Leyden woke up ready for the fight this morning. He was up all night preparing.
Monday night is was announced that the commonwealth of Kentucky had seized a handful of online gambling domain names from registrar GoDaddy.com including UltimateBet.com, DoylesRoom.com and CakePoker.com. These were still up as of Tuesday morning but the commonwealth could pull the plug at any given time as they now control the certificates for these domains.