PokerStars Fires Back Against Kentucky With Court Filing
The parent company behind online poker giant PokerStars sought to undermine the Kentucky government’s claim against the site last week by filing a motion to dismiss.
The motion to dismiss is in specific response to Kentucky’s attempt to seize the PokerStars.com domain. Kentucky has been pursuing this claim for several years now against multiple defendants; the original claim was filed in 2008 and asked for control of over 100 domains that Kentucky officials argued were connected to illegal online gambling.
The action against PokerStars continues despite the settlement Kentucky recently reached with the DOJ over Kentucky’s claims to other online poker domains seized in connection with Black Friday.
Kentucky’s case against PokerStars in a nutshell
In very simple terms, Kentucky is arguing that PokerStars.com functioned as an illegal gambling device. PokerStars, argues Kentucky, was engaging in an illegal gambling business when it accepted customers from the state and allowed them to play online poker for real money when the legality of online poker in the U.S. was unclear.
From that, Kentucky posits, it follows that the PokerStars.com domain itself should be viewed as a device used for gambling, much the same as an actual roulette wheel or slot machine. Under Kentucky law, gambling devices are generally illegal and therefore subject to seizure.
For their part, PokerStars contends that Kentucky simply doesn’t have the authority or jurisdiction to seek control of a domain name that has no real nexus with Kentucky’s borders. PokerStars further argues that there are serious free speech issues that are raised by treating a website as indistinguishable from a slot machine, especially when the website itself doesn’t facilitate gambling.
PokerStars players must download a separate program to actually play poker online. The website itself contains links to this software, but is separate and distinct on a number of logical and technological levels.
Next steps in the case
With the two sides having established their basic positions, the next step in the case is fairly straightforward: Kentucky will have a chance to prepare and offer their response to the motion to dismiss, and then the matter will return to the court. Regardless of which side prevails, additional appeals will likely be available.
The only real question in the matter is one of timing, as it’s unclear how much of a priority this case is for the Kentucky courts. PokerStars would probably prefer that the matter be resolved sooner than later or the sake of its attempts to break into the New Jersey market, but the pace of the calendar from this point on is more or less up to the court.
Separate action against PokerStars still ongoing
Complicating the matter a bit further is the fact that Kentucky is pursuing a related, but separate, action against PokerStars. The secondary action stems from an aspect of Kentucky law that basically allows those who lose money while gambling illegally to sue to recover those losses. These laws are not uncommon in the U.S. – Illinois is another state that has a so-called “loss recovery” statute on the books.
Additionally, Kentucky law permits for a 3rd party to sue in the case where an individual loses during the course of illegal gambling, but does not sue to recover those losses within a set period of time.
And therein lies Kentucky’s second claim against PokerStars. The state is seeking to recover an unnamed amount of losses from PokerStars on behalf of Kentucky residents who played (and lost) at the site.
A similar action against bwin.party netted the Kentucky government a $15mm settlement; the action against PokerStars appears possibly headed for trial after a judge recently refused PokerStars’ requests to dismiss the matter.
