Our story begins on September 18 when the US state of Kentucky‘s Governor Steve Beshear ordered an action filed against 141 online gambling operators. The case was officially filed by Secretary of the Justice Michael Brown on behalf of the Commonwealth of Kentucky as a civil action that sought the seizure and forfeiture of the internet domain names as ones used to promote or provide illegal gambling within the state. Domains included such top names in the industry as Bodoglife.com, AbsolutePoker.com and PokerStars.com as well as a host of others.
Judge Wingate of the Franklin Circuit Court of Kentucky stunned the industry by not only not dismissing the case but by upholding it and ordering the registrars to transfer the domain names to the state of Kentucky. The basis of the entire case rests on Kentucky’s definition of domain names as qualifying as a gambling device, a point with which Judge Wingate obviously concurred. A hearing was set for October 7 in order for both sides to be able to present arguments and motions regarding the case.
Industry groups such as the Interactive Gaming Council (IGC), the Poker Players Alliance (PPA) and the Interactive Media Entertainment and Gaming Association (iMEGA) are up in arms over the case and several have filed briefs in the case as “friends of the court”. Issues raised include the status of poker as a game of chance or a game of skill, whether a domain can be defined as a “gambling device” and whether Kentucky even has jurisdiction.
The judge wanted a week to review all the information presented to him as he admitted that is was a very complicated matter so his ruling was not issued until October 15. In the meantime, most of the websites remained operational other than a couple that had already been transferred by their registrar. To the consternation of everyone involved, the ruling upheld the seizures as well as ordered a forfeiture hearing for December 17. All of the sites involved are to have geoblocking in place that blocks Kentucky residents from using the sites at all. If this is not proven to be in place, the domains will be forfeited.
There are several aspects to this case that have the gambling industry disturbed. The clearly discriminatory way that Beshear is attempting to stop what he terms as “illegal online gambling” but endorses the online horse racing betting as part of the state’s “signature industry” is one of the major disturbances. Another aspect the concern that if one state can get away with seizing domains, so can another, not to mention other countries.
A major issue with this case and its resolution is what the precedent set could mean to any business that operates online. For illustrative purposes, let’s pretend that cell phones are legal in the US but illegal in Canada. Would that give Canada the right to seize the domains of cell phone producers or wireless providers? Allowing the domain seizure to pass opens a Pandora’s Box of issues with jurisdiction throughout the world and opponents are worried that this could mean the end of the internet as we know it.