When you think of big government abusing its power and taking over private industry, the state of Kentucky usually isn’t the first thing that comes to mind. But such is the problem in America that the progressive movement has so infected both major parties that even a traditionally conservative state like Kentucky has fallen victim.

Last year, Governor Steve Beshear and the state of Kentucky attempted to seize the domain names of 141 online gambling sites. The Interactive Media Entertainment and Gaming Association (iMEGA) and the Interactive Gaming Council (IGC) immediately filed a petition to block the seizure of those domains. Under current state statutes, online gambling isn’t even illegal in the state of Kentucky, though of course laws can be interpreted a variety of ways, which is why lawyers exist.

Yesterday, the state Supreme Court ruled against the 141 gambling sites. In the ruling, the court stated that the domain names themselves cannot serve as an entity and court and they must be owned by a person or entity. With no owners in court, iMEGA therefore did not supply a member of the domain names. In other words, the court threw out the petition because iMEGA’s clients did not appear in court.

As a result of this ruling, the state of Kentucky can once again attempt to seize the online gambling domain names. If they do, however, it’s likely that iMEGA would file another petition. It is the belief of iMEGA that the Supreme Court’s ruling is not final and that if they can produce an owner of one or more of the domain names, the Court would be willing to hear their case.

Joe Brennan, Chairman of iMEGA, stated that “the Court clearly indicates they agree with our arguments and are inviting us to re-file so that the technicality of the standing issue can be resolved.” iMega plans to re-file and when the Supreme Court reaches a decision, we’ll let you know.

In a resounding victory for those who love the government telling people what they can and can’t do, the US 3^rd Circuit Court of Appeals upheld the Unlawful Internet Gambling Enforcement Act (UIGEA), rejecting the challenge by the Interactive Media Entertainment & Gaming Association (iMEGA).

iMega’s argument was that the law was too vague and infringed on the privacy rights of individual citizens. The court disagreed, stating that any vagaries are inconsequential. The good news is that the judges clarified that the law does not actually ban online gambling. Judge Dolores Sloviter wrote that “the Act itself does not make any gambling activity illegal.” She said that whether or not a transaction is unlawful “turns on how the law of the state from which the bettor initiates the bet or would treat that bet.”

That at least is good news for proponents of online gambling. According to the court, only individual states decide whether the gambling transaction is legal or illegal. Strangely, that interpretation is in keeping with the Constitution. Imagine that. According to iMEGA chairman Joe Brennan, currently only 6 states have laws against online gambling, so under the court’s ruling, internet gambling is legal for residents of the other 44 states, as long as the online casino isn’t located in the other 6. Brennan said that though board members were disappointed with the ruling, they saw that clarification that only states determined legality as a silver lining.

What happens next is anyone’s guess. The case can still be appealed to the Supreme Court. For players who want to engage in online gambling in those 44 states, an overturning of UIGEA may not be as necessary as once thought. Still, there are two pending bills in Congress – one in the House and one in the Senate – that could repeal UIGEA. They are expected to be heard in Congress some time next year.

Two Republican senators have spoken out against attempts to legalize online sports betting in New Jersey and Delaware. Senators Orrin Hatch from Utah and Jon Kyl from Arizona sent a letter to U.S. Attorney General Eric Holder expressing their concerns about both states making sports betting more widespread. New Jersey and Delaware, seeking more revenue in a struggling economy, are seeking to overturn the Professional Amateur Sports Protection Act of 1991 (PASPA).

In the letter to Holder, the senators wrote that the efforts of both states “threaten to greatly expand sports gambling and undermine the integrity of our national pastimes.” The senators urged the Department of Justice to enforce the current prohibition against sports betting and protect the integrity of the sports.

Joe Brennan, chairman of the Interactive Media Entertainment & Gaming Association (iMEGA), which is challenging the ban on sports betting, disagrees with the senators, as you might expect. He stated that while he respected their desire to uphold the integrity of the nation’s sports, not legalizing and regulating sports betting leaves a lot of money on the table. He added that the current sports betting market is “unprotected, with no oversight, and at the mercy of criminal elements that are far more able to affect the outcome of a game than if the state stepped in and took the business away from them.”

While his argument makes sense on the surface, saying that the government getting involved with sports betting would rid it of corruption and the criminal element is laughable. Anyone who has been at odds with the government, especially the Obama administration, would probably rather deal with the mafia. In fact, some would consider the Social Security Administration, the Department of Treasury, the Internal Revenue Service and more to be nothing more than legal forms of organized crime. In other words, handing sports betting over from shady bookies to the government would only be trading low-level criminals for more powerful criminals with state and federal backing. So who would you rather deal with?

Joe Brennan, chairman of internet freedom lobby group Interactive Media Entertainment & Gaming Association (iMEGA) has downplayed reports that they are losing the battle against the Unlawful Internet Gambling Enforcement Act (UIEGA) in the courts.

While Democratic Representative Barney Frank has introduced a bill that would repeal the act, which is really Title VIII of the SAFE Port Act of 2006, iMEGA is taking no chances and is challenging it in the courts, claiming that the title is unconstitutional. Brennan calls the act, which prohibits financial institutions transferring money to unlawful Internet gambling sites, unconstitutional. The problem, according to Brennan, is that the language is too vague and no definition was given by Congress as to what constitutes “unlawful Internet gambling.” Only four states have laws that specifically prohibit online gambling. For the other 46, according to Brennan, a reasonable person has no way to tell whether or not they are breaking the law.

Brennan has a point. If there is no definition provided in the act that explains what gambling is legal and what is illegal, how can someone be expected to obey the law? Even if there was a clear definition, it seems a little hypocritical for the federal government to ban online gambling when 43 states have a state-run lottery, some of which can be played online. Not surprisingly, Nevada is one of the states that does not have a lottery, and Senate Majority Leader Harry Reid, backed by a powerful Las Vegas casino lobby that does not want competition, has blocked attempts to legalize and regulate online gambling in the past. If Frank’s bill passes the House, however, Reid will have a tough decision to make, as his Nevada constituents seem to be split on the issue and his approval rating is already in the gutter.

If Frank’s bill passes both houses, Brennan’s lawsuit against the Department of Justice will be unnecessary. However, after the government froze over $30 million in funds to be payed out to winning players of several online casinos, the debate has heated up. The 27,000 players awaiting their earnings don’t want to wait for Congress. Neither does Brennan.