Frankfort, KY – In an effort to stop illegal and unregulated gambling in Kentucky, Governor Steve Beshear says the state is seizing the domain names of 141 Internet gambling sites, like goldencasino.com and absolutepoker.com. The governor says the gambling sites are leeches on our communities, and are siphoning money away from legal gambling activities, like horse racing, bingo and the lottery. The culprits are mostly foreign companies. Huge companies that rake in millions to billions of dollars and operate primarily beyond the reach of law enforcement. It's estimated that their take from Kentucky alone is tens of millions of dollars.
Beshear says unregulated, unlicensed Internet gambling poses a tremendous threat to the citizens of the state because of its ease, availability and anonymity. Internet gambling has been called a significant vehicle for money laundering and potential sources of funds for terrorists by both the FBI and the Government Accountability Office.
The lawsuit, filed by the Justice and Public Safety Cabinet on behalf of the Commonwealth, seeks to force the gambling sites to block access to Kentucky users, or relinquish control of their domains. The state also wants online casino operators to pay an unspecified amount of financial damages for lost revenue. Justice Secretary Michael Brown says site owners, when registering domain names, agree to conditions that stipulate the domain names won't be used for illegal purposes. The key issue is, does Kentucky stand defenseless against schemes that are conducted on the Internet to conduct illegal activities. I think the answer has to be no and this is the process by which we're going about doing it.
Shortly after the suit was filed, some online casino operators began blocking access to Kentucky residents and settlement negotiations began in earnest. But when the talks broke down, a hearing in the case was held in Franklin Circuit Court. More than two-dozen lawyers showed up. The state argued the domain names are illegal gambling devices, as defined by Kentucky law, and therefore subject to seizure. Attorney James Leyland, whose clients own some of the seized names, begs to differ. The statute that they used, which talks about gambling devices, like roulette wheels and slot machines, sure doesn't sound like it covers what they're going here, which is an intellectual property.
Judge Thomas Wingate said he needed more information and scheduled a second hearing, at which even more lawyers showed up. Laying out the case for the domain name owners, Attorney Bill Johnson challenged the Justice Cabinet's right to file suit. You don't see a single place that it says that the Justice Cabinet has the authority to take any action like this.
But Attorney Bob Foote, arguing for the state, challenged the other side's right to argue their case, since none of the opposing attorneys would tell the court the true identities of the people they represent. That's what this whole show is about. They're afraid to have any real owner show up here.
The gambling site owners want the lawsuit dismissed. The state wants to move forward with forfeiture of the domain names. Judge Wingate, who heard three-and-a-half hours of testimony, wants time to study the case. Among the questions before him are...Do Kentucky courts have jurisdiction, since none of the domain names are registered in this state? Are the domain names illegal gambling devices, as defined by Kentucky law? Were the domain name owners properly notified of the state's intentions? Does seizure of the domain names violate the interstate commerce clause of the U-S Constitution? A ruling from Judge Wingate is expected next week.