After Governor Steve Beshear of Kentucky seized 141 domain names as “gambling devices”, the gambling industry has been up in arms over the dangerous precedent that could be seen. Not only did the suit on behalf of the State of Kentucky use this fallacious claim, they had also said that they did so in order to protect the state’s horseracing industry. After having been a vocal proponent of expanding legalized gambling in the state, the industry was stunned by Gov. Beshear’s move against online gambling.

The gambling industry gave a collective sigh of relief and jubilance when the Kentucky Appeals Court tossed that ridiculous ruling aside. The court ruled for iMEGA (Interactive Media Entertainment and Gaming Association) with a 2-to-1 majority opinion on January 20. The Appeals Court blocked the earlier seizure orders that had been issued by Franklin County Circuit Court Judge Thomas Wingate.

The majority opinion included statements made by Judge Michelle M. Keller who found that domain names were not specified as gambling devices by Kentucky law and therefore the state could not rightfully proceed with any forfeiture action.

“[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 device…designed and manufactured primarily for use in connection with gambling,” Judge Keller wrote. “We are thus convinced that the trial court clearly erred in concluding that the domain names can be construed to be gambling devices.”

Judge Jeff S. Taylor further added that the state could not ask for a civil forfeiture based on a criminal statute without actually having a criminal proceeding. Since the state had not charged or prosecuted any of the domain owners in connection with any crime, they could not legally take control of their property, i.e. the domain names in quesion.

One of the attorneys for iMEGA, Jon L. Fleischaker said, “This decision confirms why we went the way we did with suit. We knew when we brought this to the Court of Appeals, that we would get justice for iMEGA and the domain names in Kentucky.”

Although this decision has been taken as a victory for the online gambling industry, the situation may not be completely resolved. Governor Beshear has already made it clear that the state will file an appeal with the Kentucky Supreme Court next. That appeal is expected to be heard in April. Joe Brennan Jr., chairman of iMEGA, attributes the continuation of the suit to motives based more on politics and money than anything else.

“Their attorneys took this on a contingency fee-basis, and have reportedly sunk over a million dollars of their own money in this suit, and other suits like this that they reportedly prepared for other states. Without a win in Kentucky, it will be hard to get those other suits off the ground, and they’ll have taken huge losses on their own gamble.”