Kentucky Gov Rolls Dice in Gambling Lawsuit

Governor's office says it has jurisdiction to recoup Kentuckians' online losses.

April 9, 2010, 2:22 PM

April 12, 2010— -- If Kentucky Gov. Steve Beshear gets his way, money lost by Kentucky's online gamblers will be money found by the state of Kentucky.

The Democratic governor is using an obscure century-old law to file a lawsuit against "Pocket Kings, Ltd.," an online betting business based in Dublin, Ireland which also operates under the name "Full Tilt Poker."

"There is a law on the books that allows someone to recover gambling losses from illegal gaming," Jennifer Brislin, a representative from Beshear's office told the ABC News Law & Justice Unit.

In Kentucky, gambling is not illegal, but it is illegal to run a casino.

Brislin said the administration feared the online gaming industry was taking advantage of laws put in place before the Internet existed.

"The Internet posed a conundrum that wasn't thought of when the laws were put on the books, the idea of a virtual casino you can go to," Brislin said. "These groups shouldn't be able to hide offshore and flaunt our laws."

She said that Kentucky felt compellled to enforce the anti-casino law because Kentuckians were losing their money to what she said was an illegal operation.

The lawsuit won't turn Kentucky into a gambler's paradise where you get your money back even if you lose. The governor's office said that no private citizens would recoup funds if Kentucky wins its case.

"As far as the money is concerned, any losses that would be recovered would go to the commonwealth on behalf of its citizens, so an individual would not receive those funds," Brislin wrote in an email.

Brislin said other states have contacted the governor's office.

"This is an issue that is a state issue, but everyone deals with," Brislin said. "We have gotten many inquiries from other states asking "What was it you did? How did you do it?"

Kentucky Governor's Suit Against Online Gambling May Face Long Odds

Some critics of the lawsuit feel that Beshear's lawsuit is facing long odds.

"I think there are major weaknesses with Kentucky's case," Professor Nelson Rose told the ABC News. Rose runs the website "Gambling and the Law" and is a senior professor at Whittier Law School. "We are dealing with an ancient statute that is from when all gambling was outlawed everywhere and it comes as a little bit hypocritical for the largest racing state in the country."

Rose also noted that the attorney general of Kentucky decided not to take on the case despite the fact that Beshear's administration asked the state attorney general to review it.

"The governor is running a strange campaign," Rose said. "And they couldn't even get the state attorney general to go along with it, so hired a private firm."

Beshear's office confirmed that the law firm Hurt, Crosbie & May, a Lexington, Ky., firm has been brought in to handle the matter.

A representative from Attorney General Jack Conway's office told ABC News that they could not comment on this filing in particular, except to say that they reviewed the case and decided not to take it on.

Conway's office also attributed a recent 26 percent cut to their budget as one of the many reasons they are not able to take on some of the cases they are asked to review.

Jon Fleischaker, a Kentucky attorney who works for the gambling industry, echoed Rose's sentiments.

"There are those of us who believe the state is going down a false path," Fleischaker said. "We are not sure this lawsuit can be brought by anyone besides the AG and it's something that is being looked into."

Fleischaker said he believes the state is trying to use the obscure law as a means of gaining revenue.

"There is some money there and one has to wonder if the government thinks that they could profit... That's what makes this a suspicious effort. It's disingenuous and a lot of people are upset," he said.

Rose argued, "It's political and it's monetary... Sometimes when these campaigns go on there is another agenda. States could be thinking that a lot of people are using these sites, and 'We better take it over.'"

Kentucky Governor Takes On Online Gambling

Brislin dismissed the idea that Kentucky is waging a campaign against the entire industry through the suit, which also names 139 other domain names as "Unknown Defendants."

"All this action is in no way meant to shut down the industry," she said. "That is not our intent. We are just exercising the laws of Kentucky."

Full Tilt Poker, which has an Irish phone number listed for its main headquarters, did not return calls from ABC News.