Kentucky Supreme Court Hears Domain Name Arguments

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On October 22 the Kentucky Supreme Court heard oral arguments in the appeal filed by the Justice and Public Safety Cabinet of the state of Kentucky versus Interactive Media Entertainment and Gaming Association (iMEGA) and other parties. The bench had six justices.

The case has its genesis in the order issued by the state of Kentucky for the seizure of the domain names of 141 Internet gambling operators. The gambling operators, under the stewardship of iMEGA, went to court against this order but lost. They then appealed in the Kentucky Court of Appeals where the judgment went in their favor. The state of Kentucky went in appeal against that judgment in the Kentucky Supreme Court. The initial act that set this whole legal juggernaut in motion took place exactly one year ago.

Eric Lycan was the attorney for the state of Kentucky. He began by pointing out that none of the Internet gambling operators had stopped functioning. Lycan also pointed out that none of the actual domain name owners was present in the courtroom and that they were being represented by "illegal gambling trade associations". He compared Internet gambling with drug seizures and pornography. However this line of reasoning appears not to have gone down well with the justices, one of whom said, "This is not like cocaine, which is inherently illegal." The justices also queried Lycan on how domain names could be gambling devices, whether due processes were followed and whether the state of Kentucky had jurisdiction to act against the Internet gambling operators. In his reply Lycan informed the justices that domain names have been seized in the past by the IRS and auctioned off. He argued that though the domain names are not tangible they are still property and hence can be classified as gambling devices. Lycan’s testimony lasted for 30 minutes.

The next person to present his case was Bill Johnson who was representing a group of Internet gambling operators that included Sportsbook.com. He had two points to make. The first was that the state of Kentucky should have filed a criminal case against the domain name owners had they believed that the law was being violated. A hybrid civil forfeiture proceeding was not called for by the law in question. Johnson also blamed the Kentucky State Legislature for not clarifying the intent of the law. If the legislature had amended the law and made it crystal clear then the present situation would not have arisen.

The next to take the stand was Jon Fleischaker, attorney for iMEGA. He also stressed that the state of Kentucky had picked up a statute that has been repealed and had incorrectly mixed up civil and criminal proceedings. He also pointed out that the due processes of law had not been followed in this case. He said, "There has been no process. There has been no attempt at process. It was a secret proceeding." John Tate representing the IGC pointed out that the state of Kentucky had violated the 14th Amendment of the United States Constitution.

The oral hearing lasted for about 90 minutes. Legal experts have opined that the decision would now be given after another two to four months.

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