Professor I. Nelson Rose, perhaps the leading legal expert in the internet gambling industry, told Poker News Daily that the regulations focus on banks building relationships with their merchants in order to ensure that money funneling in and out of accounts is not being used for illegal internet gambling: “If a bank sets up a relationship with a new commercial customer, they have to make sure they’re not doing unlawful internet gambling. To me, the whole thing seems silly and a tremendous waste of time.”

The text of the rules is chalk full of comments stating that the term “unlawful internet gambling” is not defined by the UIGEA. The regulations include the following analysis: “The Act does not set out the precise activities that are covered by the term… Creating such a list would require the Agencies to formally interpret those laws that are written and enforced by other entities, such as State legislature and law enforcement agencies.” Instead, the text explains that due diligence will be paramount in the UIGEA’s enforcement.

Rose described his perception of the UIGEA’s effectiveness given the new rules: “I don’t think it’s going to make much difference. Publicly trading companies have stopped taking bets from the U.S. If other companies in the industry were violating American law before the regulations came out, then they’re still violating it. If they weren’t violating American law, then they still aren’t.” Rose added that individual transactions will not be scrutinized.

Joe Brennan, President of the Interactive Media Entertainment and Gaming Association (iMEGA), stated in a press release, “It is not possible for our banks and credit card companies to reconcile so many differing state and federal laws on what is considered legal and illegal forms of gambling.” Rose added that the vagueness of the law may have been a result of the authors of the regulations simply giving up.

Poker News Daily asked Rose if he would have advised online poker rooms like Party Poker and Pacific Poker to pull out of the market back when the UIGEA was pushed through Congress by former Senate Majority Leader Bill Frist in 2006. The passage of the UIGEA changed the poker landscape entirely, pushing PokerStars and Full Tilt Poker, who continued to accept customers from the United States, into the front of the industry. Rose commented, “Back when it happened, I certainly would not have advised pulling out immediately the way that Party Poker did. They withdrew before the bill was signed into law. I don’t think that the UIGEA changed anything. Now, the regulations under the UIGEA don’t change anything. But, that’s not to say that what they were doing was legal.”

Part of the reason that Party Poker and Pacific Poker pulled out of the United States was because both publicly traded companies deferred to their shareholders’ interests. Party Gaming and 888 Holdings, the parent companies of Party and Pacific, respectively, are both traded on the London Stock Exchange. Share prices for each of these companies are given at the top of Poker News Daily.

An article that appeared on Politico stated that newly-elected President Barack Obama may try to undo some of the last-minute actions of the Bush Administration, including the implementation of the UIGEA regulations, which are set to go into effect on January 19th. Compliance by financial institutions is not required until December 1st, 2009.

Visit the website of I. Nelson Rose today.

On October 16th, Judge Wingate of the Franklin Circuit Court, which makes its home in the state’s capital of Frankfort, upheld the actions by Governor Steve Beshear to seize and potentially forfeit 141 internet gambling domain names, including those belonging to online poker rooms Ultimate Bet, PokerStars, Absolute Poker, Full Tilt Poker, Cake Poker, Doyle’s Room, and Microgaming. The latter has, as of this week, ordered its licensees to cease taking new customers from the United States. Several Microgaming sites have blocked U.S. players entirely and the website Microgaming.com is inaccessible by users in the United States.

Judge Wingate ordered the owners of the 141 domain names to use blocking technology in order to prohibit Kentucky residents from accessing the site. He noted, “Upon a showing of proof that geographic blocks and/or other similar software or devices have been installed and are operational… the Commonwealth is hereby directed to serve prompt written notice… that the Seizure Order, as to the said relevant internet domain name, has been withdrawn or rescinded.” If domain names were actually forfeited, they would be inaccessible by users from around the world, not just those in Kentucky.

On October 22nd, iMEGA announced that it had filed a writ of mandamus asking the Court of Appeals to intervene in the case. Judge Wingate had initially scheduled a final forfeiture hearing for November 17th. That date was delayed until December 3rd in order to allow for a potential petition to the Court of Appeals. Now, the action at the lower court level is stayed until at least Friday, December 12th, when attorneys for the Kentucky Justice and Public Safety Cabinet as well as iMEGA, the Interactive Gaming Council (IGC), and representatives of several of the domain names will take to the floor of a Louisville courtroom to debate the merits of the seizure in front of Judges Caperton, Keller, and Taylor.

The Poker Players Alliance (PPA) was one of several organizations to file a brief in the case. It took issue with Judge Wingate’s decree that poker was not a game of skill: “Chance, though not the only element of a game of poker, is the element which defines its essence. In the end, no matter how skillful or cunning the player, who wins and who loses is determined by the hands the players hold.” The PPA responded in a press release that is available on its website, “The judge simply ruled on point of fact, without the state offering any facts contrary to the substantial evidence submitted by the PPA. The issue of whether poker is a game of skill, and thus legal in Kentucky, has support in case law and science.”

Other questions in the case concern whether the State had the jurisdiction to seize the 141 domain names in the first place. Doubt also surrounds the means by which the sites were seized, as Beshear claimed they were “gambling devices” similar to tangible objects like slot machines and roulette wheels that you would find in an illegal underground casino. Moreover, the involvement of Justice and Public Safety Cabinet Secretary J. Michael Brown taking on the case, instead of Kentucky’s Attorney General, has become a point of controversy. Constitutional violations outlined by iMEGA include violations of free speech, the Commerce Clause, and due process.

A call placed to the Kentucky Justice and Public Safety Cabinet for comment was not returned at press time.

We’ll have more news for you as it breaks right here on Poker News Daily.

The PPA has over 1.2 million members. There are four actions that the organization is urging its members to take. The first is to call members of Congress expressing displeasure with last-minute rulemaking. Players who call Congressional members or their staff members are encouraged to say that they are a constituent, voter, and poker player, and that they are “outraged that the lame duck administration has finalized the UIGEA regulations which will add additional burdens on our already troubled banking sector.” The PPA is also encouraging its members to request that Congressmen support any effort by incoming President Barack Obama to rescind the regulations.

The PPA is also encouraging its members to e-mail Obama’s Transition Team and say that the regulations were “reckless in that they place unreasonable requirements on our nation’s imperiled financial services industry. Bush was reckless in forcing them on the country in his 11th hour. You should introduce legislation to overturn them.” In addition, support for bills like the ones proposed by Barney Frank, Robert Wexler, and Robert Menendez is also desired. Visit the full talking points by checking out the PPA website at PokerPlayersAlliance.org.

In addition, the PPA is using the setback to call for non-members to sign up and call for existing PPA members to contribute money to the cause; suggested donations range from $10 (an Ante contribution) to $500 (an All-In contribution). Free memberships to the PPA are also available. For $20, a Premium Membership allows players to utilize discounts offered at 600 participating merchants through PPA Advantages. In addition, a Premium Membership allows access to the PPA’s Litigation Network of legal counsel, a card protector, and a window decal. Paying members can also donate to the PokerPAC, which is the online poker lobbying group’s political action committee. Members are also encouraged to tell a friend so that as many people as possible are in the know.

An e-mail distributed by PPA Chairman Alfonse D’Amato to the organization’s members stated, “I am sure that you share my outrage over this last-minute ‘midnight rulemaking,’ but I have not lost my drive to correct this injustice and I call on you to join me and the million strong PPA to help continue our fight.” D’Amato is a former three term Senator from New York. Other members of the PPA’s Board of Directors include PPA President John Pappas, Greg Dinkin, Full Tilt Poker pro Chris Ferguson, Jan Fisher, Allyn Jaffrey Shulman, Poker News Daily columnist Linda Johnson, Howard Lederer, Mary Magazine, and Rich Muny.

The PPA has also kept a close eye on the latest developments in Kentucky, where a three judge Appeals Court panel is scheduled to meet on November 18th, which is next Tuesday, to discuss whether to intervene in a case involving the seizure and potential forfeiture of 141 internet gambling domain names. That case is also being spearheaded by the Interactive Gaming Council (IGC) and Interactive Media Entertainment and Gaming Association (iMEGA). Domain names belonging to online poker sites such as Ultimate Bet and PokerStars would be inaccessible by customers around the world if the lawsuit were successful.

Banks and other financial institutions have until December 1st, 2009 to comply with the UIGEA rules. However, its regulations still do not spell out what is illegal and legal under the law, instead deferring to existing state and federal statutes. The rules read, “Creating such a list [of what is legal and what is not] would require the Agencies to formally interpret those laws that are written and enforced by other entities… The Agencies believe that appropriate due diligence conducted by participants opening accounts would be the most effective method for preventing unlawful internet gambling businesses from gaining access to the payment system.” You can view the full UIGEA regulations by visiting the website of the Poker Players Alliance (PPA).

The UIGEA defines a bet as “the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance.” Fantasy sports receive an exemption in the following language: “Participation in any fantasy or simulation sports game or educational game” is allowed, subject to certain restrictions which the fantasy sports industry has had to adopt. These include up-front prize declarations and rosters not being composed of every player from a certain team.

The definition that the poker and political worlds have been talking about is that of “unlawful internet gambling.” The UIGEA states that the term refers to a “bet or wager [that is] unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise made.” Any bets allowed under the Interstate Horseracing Act of 1978 are allowed, although Congressman Barney Frank, the Chairman of the House Financial Services Committee, stated in a mark-up hearing that online horse racing’s legality ultimately “depended on which department you asked.”

The lack of clarity as to what is allowed under the UIGEA is noted multiple times in the final regulations. HR 6870, the second version of the Payments System Protection Act, sought to develop a list of what is permissible under the law. In September, the bill passed by a 30-19 vote in the House Financial Services Committee. With a lame duck session potentially beginning next week, the attention of Congress will most likely center on the faltering economy. If HR 6870 is not acted upon prior to the adjournment for 2008, it must be reintroduced in 2009.

An article that appeared on Politico outlined some hope for the online poker industry. The piece described the significance of the Congressional Review Act of 1996: “The law contains a clause determining that any regulation finalized within 60 legislative days of congressional adjournment is considered to have been legally finalized on the 15th legislative day of the new Congress, likely sometime in February.” Therefore, it’s conceivable that when Obama takes office, he will look to overturn some of the last-minute rulemaking of the Bush Administration.

Poker News Daily learned last week that the regulations of the UIGEA were sent from the U.S. Treasury to the Office of Management and Budget (OMB) on October 21st. The Bush Administration had a target date of November 19th to pass the rules initially in order to have a 60 day review period expire before Obama took office.

We’ll have more for you on this breaking story right here on Poker News Daily.

A Dow Jones Newswires story published on November 6th revealed that on October 21st, the United States Treasury had sent the final regulations of the UIGEA to the Office of Management and Budget (OMB) to approve. The target date, according to the PPA, of OMB approval is November 19th, as the regulations will then enter a 60 day review period which would end just before President-elect Barack Obama is sworn into office on January 20th, 2009. Members of the PPA are urged to call the Board of Governors of the Federal Reserve at 202-974-7008 or Public Affairs at 202-452-2955.

According to the PPA’s website, callers are asked to make the following four points:

1. The federal agencies responsible for our nation’s economy should not be focused on Internet poker regulations.
2. Finalization of the UIGEA rules will add additional burdens on our already crippled financial systems.
3. Internet poker is a game of skill and form of recreation for millions of Americans; it should be exempted from the UIGEA.
4. Please do not finalize the UIGEA regulations until their impact on our banking systems and average Americans has been fully studied.

Recently, Congressman Barney Frank (D-MA), who has been at the forefront of the fight both to overturn and clarify the UIGEA, authored a letter to Henry Paulson, Secretary of the Treasury, and Ben Bernanke, Chairman of the Board of Governors of the Federal Reserve System. Frank’s letter to Bernanke, in part, read, “I strongly urge you not to burden the new Administration with administering a statute which cannot be carried out.”

Jeff Sandman, spokesperson for the Safe and Secure Internet Gambling Initiative, commented in a press release distributed by the organization on Monday, “At a time when the financial system is in crisis, it is irresponsible for the Bush Administration to rush through a fundamentally flawed regulation that even representatives of the Treasury Department and Federal Reserve have stated on record is unworkable.” The Bush Administration is attempting a number of “midnight rules,” according to the PPA.

The UIGEA was pushed through Congress in 2006 and was ultimately attached to the SAFE Port Act, an unrelated port security measure. The bill was not discussed in the Senate and instead passed by unanimous consent during the final hours of the Congressional session. It was signed into law on Friday, October 13th, 2006.

Adding fuel to the fire this time around is the influence of William Wichterman, who is a Special Assistant to President Bush. A Safe and Secure Internet Gambling Initiative press release explains, “As recently as March 2008, Mr. Wichterman was a paid lobbyist for the NFL, which has been a strong opponent of all forms of Internet gambling except for fantasy sports – an activity that generates more than $1 billion a year in revenues.” Congressman Steve Cohen (D-TN) wrote a letter to White House Counsel Fred Fielding, which is dated November 7th, asking for an explanation of Wichterman’s involvement.

In September, Frank managed to pass HR 6870, the Payments System Protection Act, out of the House Financial Services Committee. The bill seeks to clarify what the UIGEA deems to be “unlawful internet gambling” by drawing up a list of what is and is not allowed. It was passed by a 30-19 vote on September 16th, but was not discussed on the House floor, in part due to adjournment for general elections as well as the financial crisis in the United States and around the world.

Comments to the Federal Reserve can also be submitted online. Visit the PPA website for more information.

The UIGEA was passed in the waning moments of the 2006 Congressional session and attached to the Safe Port Act, an unrelated measure dealing with port security. The bill was not voted on in the United States Senate and instead passed by unanimous consent. In a move reminiscent of the 2006 actions by former Senate Majority Leader Bill Frist, who pushed the UIGEA through at the last minute, the Bush administration is urging for these regulations to be enacted before it departs at the end of 2008. The Dow Jones Newswire article states, “It’s standard practice for outgoing administrations to finalize controversial regulations before leaving office, a practice known as a midnight drop.”

Regulations drafted last year, which were open to public comment, lacked clarity as to what the phrase “unlawful internet gambling” meant. John Pappas, President of the Poker Players Alliance (PPA), told Poker News Daily that although the organization does not have a copy of the final regulations given to the OMB by the U.S. Treasury, to his knowledge this concern was still not met. In addition, he commented on why there is a renewed interest in the UIGEA just three days following the 2008 general elections: “The rush is that the Bush administration is trying to put a final stamp on public policy before they leave much in the way that the UIGEA was passed in the dark of night.”

The final UIGEA regulations reached the OMB on October 21st. Agencies had a deadline of November 1st to submit any pending measures. Pappas gives a glimpse into the forthcoming timeline: “The key date is to finalize the rules before November 19th. That way they go through the standard 60 day review process, after which they can be implemented.” The reason for the date of November 19th is that newly elected President Barack Obama will be inaugurated on Tuesday, January 20th, 2009, just outside of the 60 day review window. This means that he will not be able to intervene in this or any other regulations that are finalized before November 19th.

According to the Dow Jones story, Pappas is scheduled to meet with OMB officials today. He told Poker News Daily, “The rules themselves do not comply with the standards and rules of our government.” The PPA has been actively campaigning against the regulations since they reached the OMB two and a half weeks ago.

Ed Leyden, President of the Interactive Media Entertainment and Gaming Association (iMEGA), whose organization is suing to declare the UIGEA unconstitutional, noted that even if the final regulations included a clear-cut definition of what is legal and illegal under the UIGEA, the process of defining what is acceptable is the responsibility of Congress, not the Executive Branch: “The legislature writes the law, not the Executive Branch. The UIGEA does not change existing law. They would be rewriting a new federal statute that defines what ‘unlawful internet gambling’ is and would be violating the UIGEA itself in the process.” The UIGEA defers to existing internet gambling law to determine what is and is not legal.

Formal statements by the PPA and Safe and Secure Internet Gambling Initiative (SSIGI) may be released this afternoon. We’ll have more information on this developing story as it unfolds right here on Poker News Daily.

Frank represents the Fourth Congressional District of Massachusetts and won his battle against Republican challenger Earl Sholley in a landslide. The final tally saw Frank pull away 68% to 25%, according to election results found on Yahoo.com. More recently, Frank introduced HR 6870, the Payments System Protection Act. HR 6870 was approved by the House Financial Services Committee, of which Frank is its Chair, but has not yet been discussed on the House floor.

The first version of the Payments System Protection Act was HR 5767. Although it was ultimately defeated in Committee, its bipartisan coalition may set the online poker industry up for success in the future. Frank introduced HR 5767 in conjunction with Republican Congressman Ron Paul. Paul, who represents the 14th Congressional District of Texas, ran unopposed. An amendment to HR 5767 was introduced by another Republican, Peter King, who was re-elected on Tuesday night by voters in the Third Congressional District of New York. He defeated Democratic challenger Graham Long by a count of 64% to 36%.

Two internet gambling study bills have been introduced in past Congresses by Shelley Berkley, a Democrat, and Jon Porter, a Republican. HR 2140 is Berkley’s current version. It was nearly discussed in Committee in July in the House Judiciary Committee and will have to be reintroduced in January if it is not acted upon before the end of the year. Berkley was returned to Washington by voters in the First Congressional District of Nevada, beating Kenneth Wagner by a 67% to 28% margin. Porter was defeated by Democrat Dina Titus by a 47% to 42% edge.

Congressman Robert Wexler (D-Fla), who famously gave the “Shuffle up and deal” command during Day 1D of the 2008 World Series of Poker Main Event, has introduced HR 2610, the Skill Game Protection Act. Wexler represents the 19th Congressional District of Florida and emerged victorious 66% to 27% over Republican challenger Edward Lynch. Ben Graber, a third-party candidate, received 6% of the vote in the race.

Congressman Jim McDermott has introduced several tax-related measures that serve as pieces of companion legislation to Frank’s HR 2046. The most recent bill, HR 6501, prescribes up to $40 billion in the 10 years following its passage to those who are in foster care or declining job markets for job training and educational purposes.

Congressman Pete Sessions (R-Tex), who represents the 32nd Congressional District of Texas, defeated Democratic challenger Eric Roberson by a 57% to 40% margin. Sessions has introduced HR 6663, which directed the Attorney General’s office to enforce the Unlawful Internet Gambling Enforcement Act by taking aim at online sports books only. These would become against the law if HR 6663 were passed.

Other members of the House of Representatives who sought re-election on Tuesday night, along with their grades according to the Poker Players Alliance Congressional Guide, where A+ is the best possible grade and F- is the worst, were as follows:

Bob Goodlatte (R-Va) – F-
Defeated Sam Rasoul 61% to 36%

Spencer Bachus (R-Ala) – F-
Ran Unopposed

Linda Sanchez (D-Cali) – A+
Defeated Diane Lenning 70% to 30%

John Conyers (D-Mich) – A+
Defeated two independent candidates 92% to 8%

Melvin Watt (D-NC) – A+
Defeated Ty Cobb 71% to 28%

Steve Cohen (D-Tenn) – A+
Defeated three independent candidates 88% to 12%

Bobby Scott (D-Va) – A+
Ran Unopposed

The response by the Federal Government attacks iMEGA’s assertion that the UIGEA is vague. The response by the Department of Justice reads, “The Act is in any event perfectly clear: It prohibits the knowing acceptance of financial instruments in connection with gambling when the bet in question is illegal in the place it was made or received.”

iMEGA Chairman Joe Brennan commented in a press release posted on the organization’s website, “We’re very confident, after reviewing the government’s brief, that we are on track for having this law overturned. We’re looking forward to the opportunity, once this fatally flawed law has been dealt with, to work toward a reasonable, common sense approach by our country to Internet gaming, one that above all affirms our rights and their place in the online world.”

The lack of clarity as to what the term “internet gambling” means as it relates to the UIGEA has been the subject of a crusade by Congressman Barney Frank (D-MA), Chairman of the House Financial Services Committee. The Payments System Protection Act (HR 6870) and an accompanying amendment require that a list of activities be developed, including what is and is not legal under the law to make the UIGEA’s enforcement by the financial services industry straight-forward. As it currently stands, for example, industry experts may argue that online wagering on horse racing is legal in the United States, yet Frank stated in a Committee hearing that the answer ultimately depended on “which department you asked.” HR 6870 was passed out of Committee in early October.

The government’s brief asserts that iMEGA lacks standing to charge that the UIGEA violates privacy rights of individuals. In addition, the document claims that iMEGA cannot claim that the UIGEA is unconstitutionally vague because the organization “failed to advance this argument to the district court, either in its motion for injunctive relief or in its opposition to the government’s motion to dismiss.” Brennan added, “It’s hard to believe the government is making that claim, when Judge Mary Cooper herself preserved due process concerns in her decision.” The Third Circuit covers parts of Delaware, New Jersey, Pennsylvania, and New York.

Meanwhile, iMEGA and other organizations are squaring off against the Kentucky Justice and Public Safety Cabinet in Kentucky over the seizure and potential forfeiture of 141 internet gambling domain names, including those belonging to some of the world’s largest online poker rooms. The legal activities in the Commonwealth came after its Governor, Steve Beshear, ordered the seizure of the domain names, in his words, in order to “protect our people, especially our children, from this illegal and unregulated activity while also protecting our legal and regulated forms of gaming in Kentucky.”

iMEGA does not expect any complications arising from wagering legal battles on two different fronts. The Interactive Gaming Council (IGC) has also been heavily involved in Kentucky. Both the IGC and iMEGA recently filed petitions to the Kentucky Court of Appeals to intervene.

The case has rapidly advanced. The last major step was a ruling on October 16th by Judge Thomas Wingate that upheld the actions taken by Kentucky Governor Steve Beshear to seize the domain names of some of the largest online poker, casino, sports book, and Bingo companies in the world – Bodog, Ultimate Bet, PokerStars, and Full Tilt Poker, just to name a few. A final forfeiture hearing was originally scheduled for November 17th, but has since been pushed back until December 3rd.

Meanwhile, petitions have been filed asking the Court of Appeals to step in before irreparable harm in the form of lost domain names can be done. Jeff Ifrah, counsel for the IGC and member of the Greenberg and Traurig law firm, told Poker News Daily, “The only court that is going to do anything is the Court of Appeals. Judge Wingate had already decided that he was going to sign off on Beshear’s actions. The Appellate level will be the first time that anyone is starting with a blank page. We filed on Tuesday and the Commonwealth will now come back with its response. The Court of Appeals can then decide the arguments.”

The IGC represents 61 domain names out of the 141 in question. The three judge panel may decide to hear the case and schedule a time for arguments when it meets on November 18th or instead rule that insufficient grounds currently exist for a motion to step in. The panel may also mandate that the forfeiture hearing should occur before an appeal can be filed. Ifrah stated that in addition to the 61 domain names he represents, “We’ve also tried to quarterback lawyers for other domain names in order to speak with unified voice. Not all of the domain names even have counsel, so far and away, we represent the largest contingent.” IGC’s membership is currently not open to sports books, so only online casinos and poker rooms are its clientele.

Ifrah was amazed that not all of the domain name owners were present or had representation in court. He speculated, “Either they think this will blow over or that we’re doing such a good job that they don’t need to pay for lawyers. For a significant period of time after this case began, no one really knew about it. I can’t imagine that someone doesn’t know this is going on, but it’s possible.”

A potential outcome of the case would be that the forfeiture hearing is held, resulting in the loss of each of the 141 domain names in question worldwide. However, companies could in theory register a new domain name in a similar fashion to what Bodog did when it was forced to register NewBodog.com and eventually BodogLife.com after losing the rights to its original website. Ifrah commented, “What the State did was bring an action against a domain name. That means that the content of the domain name can just appear elsewhere.” A case against the new domain name would have to be filed in order for it to be seized or forfeited.

The IGC “champions initiatives that address the multi-various challenges and opportunities facing the Internet gambling industry, in order to ensure an environment of fair and responsible gambling,” according to its website. Its membership includes Full Tilt Poker, Golden Palace, Microgaming, Victor Chandler, eCOGRA, and Boss Media. The organization is based in Vancouver, British Columbia.

Poker News Daily: What went through your mind when you first heard about the case?

Rose: I thought it was silly. I think that local courts and government officials haven’t accepted the reality of the internet. They’re having trouble coping with it. The idea that a county judge could seize the worldwide domain names of international companies seems silly.

I also thought that the Judge was probably wrong on the idea that a county judge can grab domain names simply because he considers them contraband. He was wrong on the question of whether there was a violation of Kentucky state anti-gambling law.

Having read the decision, I think it’s worse than that. Judge Wingate declares web names to be the same as slot machines. The theory is that it helps with gambling and is therefore a “gambling device.” Under that theory, a car is a gambling device because it transports you to play. A house is a gambling device. Money is a gambling device. Everyone knows what a gambling device is.

PND: What did you believe that Judge Wingate would do?

Rose: I thought the case would get overturned. The law can’t allow every county, every state, and every jurisdiction to decide where the internet is or to have the freedom to seize international website names.

PND: In your legal eyes, was the ruling by Judge Thomas Wingate appropriate or did it have pitfalls?

Rose: The easy way out for him would have been to say that domain names are not gambling devices and that Kentucky law doesn’t cover it. If the State wanted to have authority over domain names, then the legislature has to pass a specific law.

PND: Do you think iMEGA’s bid to the Kentucky Court of Appeals will be successful?

Rose: There are a lot of complicated issues. There are a lot of issues surrounding standing and due process in terms of whether everyone was adequately served with notice. A lot of the sites didn’t even have representation at any of the hearings. There are also a lot of procedural issues. A lot might get knocked out just based on procedural issues alone. The Constitution of the United States says that you have to give notice to the actual owners and allow them an opportunity to get a lawyer.

PND: In your opinion, how did this case progress this far, to the point that a final forfeiture hearing is scheduled for December?

Rose: You have an activist Governor, who is actually in favor of casinos and just doesn’t like the internet, and a judge who was willing to go along with him. I don’t consider myself to be on one side or another, but I would think that any Appeals Court would look at this and say that there are too many problems with it.

PND: If one of your clients owned one of the 141 domain names in question, what would you advise them to do?

Rose: I would advise my clients to block Kentucky residents. There is no real downside to doing that. Kentucky isn’t a major market. The Judge made it clear if companies didn’t block Kentucky residents, then their name will be forfeited. You don’t want to become the test case. All you’re giving up is the little market of Kentucky. If a bunch of other states start copying, then you have to fight it, but for now, you have to leave the market even though Kentucky might be in the wrong.