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  I have strong concerns that once the blackout period goes into effect the legislation will get stalled/changed/repealed/etc.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.

As you may recall, Kentucky recently sued PartyGaming under an apparently antiquated law seeking to recover gambling losses.  In the first major step of its legal defense, PartyGaming filed a motion to dismissthe lawsuit.  Its primary line of attack is jurisdictional, meaning procedural (yet still very important) technical reasons why the state cannot sue PartyGaming.  These include that the state lacks standing to sue and PartyGaming was not provided the complaint in accordance with the required laws.  PartyGaming’s secondary line of attack contains the more substantive arguments, such as that the state cannot identify any “losers” and the law was not intended to apply to online gambling. 

Motions to dismiss are common in litigation.  Sometimes they even are granted.  Clearly, PartyGaming has a significant interest in the outcome.  But beyond the direct litigants, poker experts are looking keenly at the decision as even a ruling against PartyGaming could provide direction for how to handle future litigations.  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.

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.

On January 20, 2009, the Kentucky Court of Appeals, by a 2-1 majority, ruled that internet domain names are not “gambling devices” under Kentucky law.  Therefore, the State of Kentucky could not lawfully seize them.  Oral argument on the State’s appeal is scheduled to be heard before the Kentucky Supreme Court on Thursday, October 22, 2009.  Poker Law Bulletin will update this story as developments occur.

Update: On October 22, 2009, the Kentucky Supreme Court heard oral argument on iMEGA’s appeal.  The below link summarizes the hearing and opinions of certain people in attendance and/or with knowledge of the event, including PPA Executive Director John Pappas, PPA Kentucky State Director Rich Muny, and iMEGA Chairman Joe Brennan.  Their general view is that the hearing was favorable to iMEGA (and poker overall).  There is no indication as to when the Court will release its ruling.