Much has been written recently about the proposed blackout period in the current poker legislation.  Briefly, it would ban all online poker in the U.S. for 15 months until formal and legal sites/regulations are established.  I have held off until now with my thinking on the issue because I did not want to rush a response and because there was a lot of unsubstantiated information swarming around the internet.  Well, here are my thoughts:

(1) I entirely support legal, formal, regulated online poker in the U.S.  Even if that means sacrificing some things we currently enjoy.
(2) I do not want a blackout period.  However, I support a blackout period IF it results in a structured organized online poker apparatus. 
(3) A blackout period is not necessary.  Often legislation is enacted that makes things legal/illegal on Day 2 that were the opposite on Day 1.  For a recent example, take Four Loko.  There is a strict cutoff for making it illegal to sell the drink in New York City.  It is legal on Day 1 and will be illegal on Day 2.  I see little justification for why regulations governing how poker sites are run (21 and over, taxed, GA issues, etc.) cannot be implemented overnight in a software update (or maybe at most over the course of a few days of maintenance).  Heck, most of the changes already exist.  The paperwork for sites to register/get approved to can occur in the interim between legislation passage and the effective date as well.  [NOTE:  Sites voluntarily leaving the U.S. market to better chances of governmental approval is a separate issue.]  And so this now brings me to my main reason for opposing the blackout period…
(4) Call me a cynic, but you may also eventually call me a prophet.  I have strong concerns that once the blackout period goes into effect the legislation will get stalled/changed/repealed/etc. and we will be stuck in a land of no poker and existing legislation that affirmatively makes it illegal to start a site.  Purgatory.  Heck, hell.

Onto other news.  The Kentucky-iMEGA litigation continues.  Kentucky recently filed an opposition to iMEGA’s stance that the state lacks standing (which means having a legal leg to stand on as an injured party) to sue.  This is a standard development in litigation and one that likely will not be resolved for at least a couple of months.  Stay tuned.

Kentucky Governor Steve Beshear again has won a victory in the Kentucky courts in his quest to use an antiquated law that permits the recovery of gambling losses from illegal gambling.  This notch in his belt requires the internet poker domain owners to appear personally in court, rather than through a representative, such as iMEGA.  While this may appear to be a trivial issue, do not underestimate its importance.  Jurisdiction is a necessary element in all litigations, and appearing personally is a step along the path to securing it. 

As for the merits of Kentucky’s argument, which has been discussed on this blog before, somebody please explain to me how it is not hypocritical for a state known mostly for its horseracing (gambling!) to claim another form of gambling — and arguably one that is not pure luck — is not equally valid.  It’s not even clear that internet poker is illegal in the U.S.  At most, clarity on the issue extends only to the transfer of money via U.S. financial institutions.  Not to the wagering itself.  I get the Governor’s true motives, which obviously are to protect Kentucky’s horseracing industry and bolster his state’s coffers.  Valid motives, but he needs to be called on it.  Call a horse a horse and argue the issue on its merits.  Admit the hypocrisy, and then argue the validity of relying on a century old statute to collect from internet-based operators on its own merits.

Mark down July 21 in your poker calendars.  (How many poker players actually keep calendars?)  That’s the day the House Financial Services Committee will hear testimony on Barney Frank’s (Rep.-MA) bill that would legalize and regulate online poker.  Needless to say, it’s  big day.  So if you’re in DC, stop by Room 2128 of the Rayburn House Office Building at 1 pm.  For more information on the hearing/bill, check this article out.

Some big things happening in the poker legal world. 

(1) Rep. McDermott (D-WA) unveiled a new bill that would tax online gambling.  8% of all deposits would be taxed with 6% going to state and tribal governments and 2% going to the federal government.  This is a tough call for poker players — pay the G-men and play legally or operate on the fringes and keep that 8%.  Here’s a thought that could help all poker players, the sites, and the government.  If this bill passes, maybe there will be more reload/deposit bonuses available.  That would enable individuals to minimize their taxable amount and the sites to increase the pool (and their rake).  And the government still to get taxes.  A win-win-win. 

(2) Pennsylvania is sending mixed signals.  On the one hand, the state is moving rapidly toward legalizing live poker and table games.  Yet on the other, a Pennsylvania appellate court just overturned by a vote of 2-1 a lower court’s decision, in the process ruling that poker is a game of chance, even if skill elements are involved.  This is not good.   Especially because it is another precedent future cases might site when looking to rule poker a game of chance.  How about these judges sit in a room with Ivey, Durrr, and Antonius for some PLO.  Then let’s see whether they think poker is predominantly a game of chance.

(3) The Kentucky iMEGA case takes another turn.  An appellate court has granted a motion that could return the case to the State’s high court very quickly.  The thinking is that the court wants to determine the standing issue (legal gibberish for whether the correct party is suing) in case the case ultimately gets sent to the U.S. Supreme Court.  Hard to tell how this will play out, but it’s probably good news for poker players since the last ruling hinted at siding with poker players on the merits of the lawsuit.  Then again, reading courts is almost as difficult as reading facial tells online. 

(4) The American Gaming Association (AGA) has changed its stance and now is “open to” legalized online gaming sites.  This is a powerful ally in the war to legalize poker.

The much-anticipated Kentucky Supreme Court ruling in the iMEGA domain case is in.  But the Court’s decision was nothing more than a dodge of the main event — a decision on whether the domain names constituted “gambling devices.”  The Court avoided the controversial issue by declaring that iMEGA does not have standing to assert the argument.  In other words, that the person actually affected directly by the ruling was not the party asking the Court to rule.  (In U.S. jurisprudence, only the party actually injured may litigate.)  iMEGA is spinning the ruling in its favor as much as possible, however, claiming that the ruling suggests that the Supreme Court wants to decide the issue, since it essentially said “Bring us an owner so we can rule in your favor.”  So what happens now?  The pending cases are being sent back to the lower Kentucky Courts from which they came, and likely will be dismissed.  Meaning that the domain names can be seized.  There is a 20 day window in which the appeal may be re-filed, and likely will be sent directly back to the Kentucky Supreme Court, as opposed to having to wind its way back up over a long period of time.

Here’s the Court’s opinion for your reading pleasure.

One one hand, Kentucky is seeking to outlaw online poker in the pending iMEGA case.  Yet on the other, Kentucky now is seeking to tax online horse betting.  What!?!?!?  At least make a token attempt at pretext.  Give us a reason other than money.  Then again, money is something poker players understand.  So at least we have that in common with Kentucky legislators…  By the way, none of the money is slated go to the State.  Wow.

Despite expectations that the Kentucky Supreme Court would render its much-anticipated decision in the iMEGA domain case on Thursday, it failed to do so.  The next date on which a decision could be released is March 18.  There is no way to tell what the absence of a decision at this time means.  Best to use your reading skills at the tables and wait until March.

In an unexpected move in the Kentucky domain name case, the Commonwealth of Kentucky has sought leave to amend its complaint  and to add parties to the action.  It has insinuated that it likely will seek further amendments and could name individual U.S. citizens as defendants.  In and of itself, seeking leave to amend an action is not unusual in litigation.  What makes the Commonwealth’s action unexpected here is that is was made while a decision on the underlying case is pending before the Kentucky Supreme Court. 

A hearing on the Commonwealth’s motion will be held on January 20th.

More details can be found here.

Christopher Costigan – Poker Players Alliance Drops the Ball

This article criticizes the PPA’s priorities, particularly their insistence to demarcate skill and luck in poker, despite South Carolina’s recent ruling that poker is a game of skill.  It posits that they should instead work with the Interactive Media and Gaming Association (iMEGA) to solve the growing problem of banking institutions cutting ties with payment processors responsible for distributing online poker funds.

http://www.gambling911.com/gambling-news/poker-players-alliance-drops-ball-101209.html

GamingTechLaw

If you are interested in Italian gaming law, a lawyer named Giulio Coraggio runs a blog that specializes in the subject.  I suggest you check it out, as it contains interesting content related to Italian Internet gaming as well as updates on the live gaming market.

http://www.gamingtechlaw.com/

Swedish Gaming Law on the Point of Stupidity

This article argues that Swedish laws that banned virtual stock trading relegate stock trading to a game of chance, and are therefore somewhat legally analogous to poker.  The purpose of this analogy, of course, is to argue that neither are games of chance, exclusively.  For a state’s well-being it is economically crucial to keep currency at home, and Sweden is one of many countries, including the US, to not regulate their market.

http://blog.nordenfelt.com/2009/10/12/swedish-gamling-law-on-the-point-of-stupidness/

The United States Court of Appeals for the Third Circuit has ruled that a determination of whether something is “unlawful internet gambling” under the Unlawful Internet Gambling Enforcement Act (UIGEA) hinges on whether the bet would be illegal according to the laws of the state in which the bet was initiated. In dismissing appellant Interactive Media Entertainment and Gaming Association (iMEGA)’s arguments, the Court stated that the law “clearly provides a person of ordinary intelligence with adequate notice of the conduct that it prohibits.” It appears that six states currently prohibit internet gambling.

The Court further ruled that the legality of the gambling activity also depends on the laws of the jurisdiction in which the company taking the bet is located. As it stated, the “Act prohibits gambling business from knowingly accepting certain financial instruments from an individual who places a bet over the internet if such gambling is illegal at the location in which the business is located.”

The Court did explicitly hold, however, that the UIGEA “itself does not make any gambling activity illegal.”

Separately, iMEGA asked the Court to rule that the UIGEA violates its privacy rights. The Third Circuit dismissed this argument too. The Court ruled that iMEGA did not have standing to assert a privacy right here. But the Court did not stop there. It also ruled that “[g]ambling, even in the home, . . . is not protected by any right to privacy under the constitution.” This aspect of the ruling could have potential affects beyond just the UIGEA.

The Court’s ruling was not unexpected, however. As Joseph M. Kelly, Professor of Business Law at State College at Buffalo and co-editor of Gaming Law Review, stated, “Any time you attack the constitutionality of a law of Congress you have an uphill fight, unless it involves a fundamental right.” The Third Circuit explicitly held that a fundamental right was not involved.

iMEGA has stated its intention to explore avenues for an appeal, which could be to the U.S. Supreme Court.

A copy of the Third Circuit’s opinion can be found here.