Kentucky is bluffing

Shamus thoughtfully asks whether the governor of Kentucky actually has a hand, in his bid to take control of a bunch of online gambling sites and thereby cut off Kentucky citizens' access to same. (See also Pokerati's reports on the matter here, here, and here.)

Legal blogs are often great sources for informed commentary on such breaking news, but I couldn't find anything on them, not even on one dedicated to Kentucky legal issues. So I'm going to have to wing it alone. I'm not an attorney, but I've been involved in a number of legal cases, and kind of by osmosis gained a reasonable familiarity with how the system works. Here's my quick reaction:

I'm not worried about this, and I wouldn't be even if I lived in Kentucky.

First I'll address one of Shamus's questions--the one about the UIGEA. I think it's pretty safe to conclude that the UIGEA is not being invoked here. The statute says:

§ 5365. Civil remedies(a) JURISDICTION.—In addition to any other remedy
under current law, the district courts of the United States shall have original
and exclusive jurisdiction to prevent and restrain restricted transactions by
issuing appropriate orders in accordance with this section, regardless of
whether a prosecution has been initiated under this subchapter.

The key here is that the federal courts have "original and exclusive jurisdiction" over civil remedies. The simple fact that, according to news reports, Kentucky is filing its action in a state court, rather than federal court, is a pretty clear signal that the UIGEA is not involved here.

But the bigger issue is one of jurisdiction. When you file a suit, one of the first things that you're supposed to do is demonstrate, or at least assert, that the defendants are within the jurisdiction of the court, or take steps to have the court assume jurisdiction. In some situations, if the defendant just shows up in court for the hearing, or has an attorney do so, that is enough for jurisdiction to lie--which is why it won't surprise me if many or all of the sites simply ignore the hearing.

What the judge should do at the hearing, if there is nobody representing the gambling sites, is inquire of the state whether the opposing parties were properly served with notice of the hearing, and ask for evidence of that. He shouldn't be willing to do anything permanent without such evidence. (He might be able and willing to issue a temporary order of some sort, but what would happen with that is the same as what I will predict below would happen with an eventual permanent order.)

But suppose the worst happens, and the judge either disregards the question of whether any of the sites have been properly served and/or have a physical presence in the state such that they fall under the jurisdiction of the state's laws and courts, and he agrees completely with the governor's arguments. He either finds the sites in default for not appearing or he finds against them on the merits. He issues an order transferring control of the domain names to the state.

So what? When one kid threatens to do bodily harm to another, sometimes the rejoinder will be, "Oh yeah? You and what army?" Well, that's about what a site like PokerStars would say to Governor Beshear. You've got your fancy, autographed, embossed piece of paper ordering transfer of the site, but now what are you going to do with it? To whom can the state now deliver that order with any credible enforcement mechanism behind it?

They can mail it, or have it delivered by courier, to, say, the Isle of Man, or the Kahnawake tribe that owns the company that hosts the servers for many gaming sites. But Kentucky's laws don't extend there. Even if the sites disregard the order (as they surely would), and the judge eventually finds them in contempt--again, what, exactly, are they going to do to enforce the contempt order? I promise you, they are not going to try to send the Kentucky State Police to Canada or Great Britain to try to arrest the site owners or operators. And as I understand international treaties, contempt of court is not among the offenses for which foreign governments will use their own law enforcement agencies and courts to arrest you and have you extradicted to Kentucky. Murder? Sure. Contempt of court? Nope.

So I think it's all a sham, a show, grandstanding for purely political purposes. There is no end game that I can see that works out in favor of the plaintiffs.

Gov. Beshear is bluffing. Hollywooding. The floor is going to rule against him.

Have no fear.


Addendum

I see now, reading the court order that Shamus linked to, that this is an in rem action. That's a special kind of civil action that only governments can use, taken against the legal fiction of property as the defendant, rather than against people or corporations. You occasionally run across a case title such as "State v. 2003 Chevrolet Tahoe, VIN ___________," or "United States v. $34,566.92." Those are in rem seizure cases. They are a unique brand of legal action to which all sorts of special rules apply. Most particularly, statutes shift the burden of proof after the government initiate such a case; if you are the owner of the property, you have to prove that the seizure was not justified. Here, it appears that the initial seizure order has already been signed by the judge, and the upcoming hearing is the first point at which the owners of the sites are being given the opportunity to refute the state's claims to the property, which has been seized on allegations that it was used to further criminal activity, as if it were a car transporting crack cocaine.

Nevertheless, the ultimate jurisdictional problem remains. The governor may crow that the state now owns the sites, but good luck actually taking control of them, when the servers are where you can't reach them.


Addendum #2

In the comments, Richard Brodie raises a point I hadn't thought through clearly, and that is the role of ICAAN. Trust, me--Richard Brodie has forgotten more about computers than I'll ever know. (Hey, just because I'm that Internet blog guy doesn't mean I actually understand how this whole Rube Goldberg thing works.)

So suppose that ICAAN does accept the judge's order. If I'm right about how this stuff goes, what they then do is switch what server your browser goes to when you instruct it to take you to, say, http://www.pokerstars.com/. But, unless I'm grossly misunderstanding the basics of the system, Kentucky still could not take over the content of the PokerStars site, since ICAAN can't and doesn't control that; they just control the correlation between a particular web address and what server a command for that address goes to. So the sites would just have to register new names, like Bodog did. Servers owned by the state of Kentucky wouldn't suddenly be running the Stars software and its poker games. This could, of course, cost the sites a lot of money for the changeover, but it wouldn't accomplish what the governor says he is trying to do, which is actually control and modify the sites so that everybody except for Kentucky citizens can use them.

You smart guys out there, is this about right?

As for what it takes to convince ICAAN to recognize a court action, I have no clue. I have no idea where ICAAN is physically located, or in what legal jurisdiction(s) it operates. I also don't know whether it is prone to respecting such judgments voluntarily, even if there is no real enforcement mechanism to which it must bow. All good questions. I'll have to punt the ball at this point.