The ruling by the Court is not final, but the decision is being viewed as a temporary setback by the affected parties.

Joe Brennan Jr.
IMEGA’s chairman

"In the written decision, the Court clearly indicates they agree with our arguments, and are inviting us to refile, so that the technicality of the standing issue can be resolved," said Joe Brennan, Interactive Media Entertainment & Gaming Association (iMEGA) chairman.

"It’s unfortunate, but I can’t imagine that Kentucky’s lawyers will celebrate a ruling that says ‘bring us an owner, so we can rule in your favor’".

iMEGA and the other affected parties, Interactive Gaming Concil and Sportsbook.com, have up to 20 days to file a motion for reconsideration. In the ruling, the Kentucky Supreme Court indicated that no additional briefs or oral arguments were necessary for them to consider the case, and that a petition could be made to the Appeals Court to move the case immediately back to the state Supreme Court.

"All along, it seemed the Court wanted to go our way, and this decision today indicates that is still the case," Brennan said.

"The Court is telling us that all that is necessary is for one domain owner to come forward, and we likely win."

Brennan indicated iMEGA would immediately work with other parties to resolve the Court’s issue, and would quickly file a motion to satisfy the Court.

"We obviously would have preferred a complete, clean victory today, but reading the decision, it seems this is a technicality that is only delaying the inevitable," Brennan sai
 

The bill was introduced into the New Jersey senate by Senator Raymond Lesniak (D-Union), who also introduced a separate bill which calls for New Jersey residents to vote on a constitutional amendment that would allow state-regulated sports wagering in Atlantic City casinos, and to state residents via an intra-state Internet gambling system.

New Jersey currently offers gambling on horse races to state residents through the 4NJbets.com website. The state would expand the law to permit online versions of games currently allowed in Atlantic City casinos, such as Poker, Blackjack and Baccarat. The Internet gambling system would be regulated by the New Jersey Casino Control Commission, which would establish a Division of Internet Wagering to manage operations and licensing.

Joe Brennan Jr.
IMEGA’s chairman

"We’re happy that New Jersey has taken this issue into their own hands," said iMEGA chairman Joe Brennan Jr.

"New Jersey is recognized as having the toughest gaming regulators in the US, but as a leading gaming state with a long track record of doing things the right way, Internet gambling will have a great home here and the opportunity to begin normalizing the industry."

The iMEGA says it supports efforts in Washington DC by Representative Barney Frank (D) in the House and Senator Robert Menendez (D) in the Senate, to create a Federal path to regulation, the association worked with New Jersey legislators on the bill to establish continued progress toward regulate internet gambling in the U.S.

"The efforts to resolve the Internet gambling issue have stalled in Washington DC," Brennan said.

"If states assert their right to regulate gambling within their borders and take a serious look at permitting Internet gambling, one side effect may be a breaking of the deadlock in the US Congress."

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Previously a Franklin Circuit Court Judge ruled for the state saying it was allowed to seize the domain names, but the Court of Appeals overturned that decision. The case was then appealed to the Supreme Court.

Jon L. Fleischaker, attorney for the Interactive Media Entertainment &Gaming Association (iMEGA) called the efforts by Kentucky Governor Steve Beshear to block the state residents’ use of Internet gambling websites "intellectually dishonest."

"They made up a process that is totally lacking in due process," Fleischaker said during arguments before the Supreme Court.

Fleischaker, along with attorneys representing Sportsbook.com and the Interactive Gaming Council, asked the Supreme Court to uphold an earlier decision by the Kentucky Court of Appeals, blocking the seizure of 141 domain names belonging to online gambling sites.

In a 2-to-1 decision, the Appeals Court in January rejected the governor’s claim that Kentucky players and the Internet gambling sites had violated state law. The decision also held that a lower court had erred when it applied the state’s "gambling devices" statute to justify the seizure of the Internet domain names.

"[I]t stretches credulity to conclude that a series of numbers, or Internet address, can be said to constitute a "machine or any mechanical or other devicedesigned and manufactured primarily for use in connection with gambling," Judge Michelle M. Keller wrote in her majority opinion.

A decision is not expected before the end of the year.
 

The law was challenged by the Washington, DC-based trade association Interactive Media Entertainment & Gaming Association (IMEGA), on behalf of the Internet gambling industry.

In their ruling, the judges clarified that the legality of Internet gambling transactions depended on state law where the bettor was located, and the laws where the betting operator was located. The court pointed out that UIGEA did not establish a blanket federal ban on Internet gambling.

"It bears repeating that the Act itself does not make any gambling activity illegal," wrote Judge Dolores Sloviter. "Whether the transactionconstitutes unlawful Internet gambling turns on how the law of the state from which the bettor initiates the bet would treat that bet, i.e. if it is illegal under that state’s law, it constitutes "unlawful Internet gambling" under the Act."

Joe Brennan Jr.
IMEGA’s chairman

Joe Brennan Jr., IMEGA’s chairman said that its members were disappointed that the court did not overturn the law, but the ruling did have some positive aspects.

"The court made it clear – gambling on the Internet is unlawful where state law says so," said Brennan. "But there are only a half-dozen states which have laws against Internet gambling, leaving 44 states where it is potentially lawful. It’s not perfect, but it’s a good start."

Brennan also said in deferring to state law, the courts decision is consistent with traditional gambling law in the U.S.

"States have always held the power to regulate gambling in this country, not the Federal government," said Brennan.

"The court’s ruling seems to say ‘back to the future’ when it comes to regulating Internet gambling, so we will turn our attention to the states to make the case that this industry can be properly regulated and produce badly needed tax revenue."

The suit challenges the constitutionality of the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), which prohibits US financial institutions from processing transactions between online gambling sites and US players, while shifting the determination, burden and cost of enforcement onto the financial institutions.

"This is a very simple argument on which we ask the Court to overturn this law," said Joe Brennan Jr., iMEGA chairman and CEO. "UIGEA should be ‘void for vagueness’, in that Congress has not defined what an ‘unlawful Internet gambling transaction’ is, as they are required."

"Congress cannot delegate that necessary determination as to what is ‘lawful’ or ‘unlawful’ to US banks and credit card companies. The Department of Treasury, which has been tasked with drafting the regulations for UIGEA, has testified before Congress that they themselves cannot make that determination. Because Congress refused to draft necessary standards, the law is so inherently flawed as to make it totally vague and unenforceable, and we are confident that the Court will overturn it."

iMEGA’s appeal comes after a ruling by Judge Mary Cooper (US District Court, Trenton) that established iMEGA’s associational standing to challenge UIGEA on behalf of its members and the Internet gambling industry. The case was dismissed by Judge Cooper without considering the constitutional issues raised in iMEGA’s challenge.