A Blog About Current Issues in White Collar Defense
Kentucky Supreme Court Considers Poker
On October 22, 2009, the Supreme Court of Kentucky heard oral arguments in the above referenced case. The case originated when the Commonwealth of Kentucky filed civil seizure and forfeiture proceedings against 141 domain names – virtually all of which offered or involved internet gaming. The Commonwealth contended that domain names constitute gambling devices under state law and as such were subject to seizure under state law. The trial court granted the Commonwealth’s request to seize the sites and scheduled a forfeiture hearing. The 141 sites, lead by both iMega and the Interactive Gaming Council, halted the forfeiture proceeding by filing a Writ of Prohibition with the Kentucky Court of Appeals. The Court of Appeals, in a 2-1 ruling, held that a domain name was not a gambling device subject to seizure under Kentucky law. The Commonwealth appealed to the Supreme Court. The seven justices hearing the case raised questions that cut across issues beyond the narrow ruling of the Court of Appeals, including the propriety of the Commonwealth’s actions, the nature of jurisdiction over domain names registered outside of Kentucky and the legality of internet gaming. The Commonwealth appeared unprepared for questions from the Court involving a recent Supreme Court of Arizona case which held (not surprisingly) that in rem jurisdiction requires the presence of the res in the state before jurisdiction will issue. In its holding, the Arizona court reversed a prior Court of Appeals ruling to the contrary – a Court of Appeals case that the Commonwealth had relied on at every stage of the Kentucky proceedings. Despite the Supplemental Authority filing alerting the Court and the Commonwealth to the Arizona Supreme Court case, counsel for the Commonwealth stated he had neither seen the filing nor been made aware of the critical reversal by the Arizona Court. The Kentucky Supreme Court is expected to rule on this issue of first impression in the next few months.