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Offense and Defense in Kentucky Case

By: R. Kingsley, Sunday October 26th 2008
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Some actions in response to the Kentucky case are already visible. Readers will recall that the Kentucky lower court upheld the decision to seize 141 domain names if the owners were not present in court on the date of the final hearing on November 17 and had not geoblocked Kentucky servers by then.

The Interactive Media Entertainment & Gaming Association (iMEGA) has gone in appeal to the Kentucky Court of Appeals against the decision of the lower court. IMEGA represents the interests of the online casinos. iMEGA has questioned the motives of the domain seizure initiative. According to them the motive is to protect Kentucky's horse racing and land casinos from competition and in the bargain extract extravagant penalties from the Internet companies. iMEGA has also questioned the legalities of the judgment. Joe Brennan Jr., the chairman and CEO, said that Judge Wingate had ignored current Kentucky law and relied on a law that had been repealed. He added that if the ruling was not challenged then other segments of Internet commerce would be targeted next and hence iMEGA's fight is not for the Internet gaming industry alone. iMEGA has also pointed out to the Court of Appeals that Kentucky had no jurisdiction to seize the domain names since none of the domain names are owned by Kentucky residents or are registered in Kentucky. Kentucky law has no provision for civil forfeiture and therefore the order to seize the domain names was unconstitutional.

Microgaming meanwhile has gone on the defensive. The online gaming software provider has an enabling provision in its standard terms and conditions that its online casinos will not accept players from the states of Illinois, Indiana, Louisiana, Michigan, Missouri, Nevada, New Jersey, New York, Oregon, South Dakota, Washington, Wisconsin and D.C. However all Microgaming casinos had not implemented this provision. Now Kentucky is being added to the list and Microgaming will be implementing this policy strictly pursuant to the Kentucky lower court ruling. Microgaming online casinos have already informed their affiliates that players from the banned states will be blocked by Microgaming servers. They have also indicated that the Microgaming IP blocking service uses a proxy detector to locate players who use proxies to hide their IP address to bypass restrictions. All players who are from banned states will receive their dues. This is real bad news for American online players since Microgaming was the only one of the big three online software providers that had operations in the United States. Playtech and Cryptologic online casinos do not cater to the American market at all. The only silver lining, if one can call it that, is that players from the banned states will be prevented from making real money deposits at the online casinos. They can continue playing for free.

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