Jan, 2009 : KY Blocks Gambling Domain Seizure Appeal

📅 January 21, 2009 - In the latest chapter of a controversial Governor-supported Kentucky lawsuit that aims to block access to 141 online casino domains, a panel of judges has ruled that an Internet domain name is not a gambling device and the domains are free to go, at least for now.

According to reports from the Associated Press and other major news sources, Kentucky Court of Appeals panel delivered a two-to-one opinion Tuesday judging in favor of the domains. This strikes down the Franklin County Circuit Court's plan to seize Internet domain names belonging to a number of online gambling sites in September.

According to official documents, the Court of Appeals ruled against the inferior court's argument that domains constitute a device for gambling.

"...[G]iven the exhaustive argument both in brief and oral form as to the nature of an Internet domain name," read the statement, "it stretches credulity to conclude that a series of numbers, or Internet address, can be said to constitute a 'machine or any mechanical or other device...designed and manufactured primarily for use in connection with gambling.' We are thus convinced that the trial court clearly erred in concluding that the domain names can be construed to be gambling devices subject to forfeiture..."

Since its introduction in September 2008, this Kentucky ruling has drawn much criticism throughout the world for fear it could set a precedent that enables the government to tell registrars to effectively shutdown online gambling websites registered in another state or country.

To avoid American law and regulations, most online gambling websites are hosted overseas, where US courts normally have no jurisdiction. The legislation has also fuelled the fear that letting the state shut down gambling websites will give the state the right to shutdown other websites.

The court's ruling has been congratulated by the Poker Players Alliance and the Internet Commerce Association, which are among a number of groups that provided testimony regarding online gambling.

"This is a tremendous victory for Internet freedom and the rights of Kentucky residents who enjoy playing online poker," Poker Players Alliance executive director John Pappas said in a statement. "We are pleased that the appeals court has forcefully reversed Judge Wingate's earlier ruling and confirmed many of the arguments that have been raised in opposition to the seizure effort."

Instead of shutting down websites, the Poker Players Alliance suggests tighter regulation, taxation methods and more consumer protection. The alliance does support government involvement, however, instead of the Kentucky court's seizure methods, it endorses the US House of Representatives Financial Services Chairman Barney Frank's HR 2460 legislation that would achieve specific regulatory goals.

The Internet Commerce Association quickly denounced the Kentucky courtroom original ruling in a public statement, and while the ICA congratulates Tuesday's decision, ICA executive director Michael Collins has stated that the court may have not done enough.

"The court chose to not address many other arguments raised by the victims of this seizure including whether domain names are property," Collins stated. "There was a dissenting opinion from Judge Caperton who stated that a software-based invention is a device. This means that he thinks that domain names are software I guess. It sounds a little like 'the Internet is a series of tubes' statement made by a confused politician to me."

While the lawsuit has garnered strong opposition from the online community, Governor Steve Beshear stood by the original ruling, saying online gambling "leeches on our communities," however, he maintains that state-condoned gambling at casinos and horse races should remain legal.