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01|21|2009 12:32 am EDT

Kentucky Appeals Court Shuts Down Attempted Domain Seizure

by Chad Kettner in Categories: Legal Issues

The Kentucky Appeals Court has ruled in a 2-to-1 majority decision against the Commonwealth of Kentucky in its attempt to seize 141 valuable gambling domains, overturning the previous decision by Judge Thomas Wingate of the Kentucky Circuit Court and finally putting an end to Governor Steve Beshear’s efforts to shut down any online gambling websites which could be accessed within the state.

Judge Michelle M. Keller, in her majority decision, found that domain names were never classified as illegal gambling devices by Kentucky law, as had been claimed, and therefore the Commonwealth could not rightfully proceed with its seizure:

“(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, also in the majority, added that the Commonwealth of Kentucky could not seek a civil forfeiture based on a criminal statute unless there was a criminal proceeding, which there was not. Since this failed to happen, the Commonwealth was overstepping its boundaries by trying to seize property which was outside its jurisdiction.

Judge Micheal Caperton, in his dissenting opinion, stated that Internet domain names played a role in the larger mechanism for gambling – which included computers and Internet service – and thus could be considered a “gambling device” by Kentucky law.

The 2-to-1 decision immediately prohibits the seizure of the 141 domain names by the Commonwealth of Kentucky.

“We are very happy with the court’s ruling today,” said Joe Brennan Jr., chairman of the Interactive Media Entertainment & Gaming Association (iMEGA). “The judges clearly agreed with our interpretation of the law and, thankfully, this reverses what would have been a terrible precedent for our country and the Internet.”

In September 2008, Kentucky seized the long list of domain names – including  PokerStars.com, FullTiltPoker.com, BodogLife.com, GoldenPalace.com, Bet21.com, DoylesRoom.com and Rick Schwartz’ IndianCasino.com – stating that the domains were “being used in connection with illegal gambling activity” within the state.

The seizure created an uproar in the domain community, with the Internet Commerce Association (ICA) immediately addressing the situation, GoDaddy refusing to hand over the domains registered through them, and the website owners appealing the decision.

But against all logic, Judge Thomas Wingate of the Kentucky Circuit Court dismissed all objections from the representatives of the 141 domain names and stated that Kentucky did have the right to seize the domains since they were illegal devices used to facilitate gambling within the state borders.

The decision, which also gave domain owners a second chance to maintain control of their domains if they geo-blocked Kentuckians from accessing the websites, didn’t sit well with either side as Governor Steve Beshear didn’t believe the “get out of jail free” card was warranted and the iMEGA filed a motion to stay, claiming Kentucky didn’t have the right to seize domains regardless of any geo-blocking efforts.

In the end, the courts finally sided with the defendants – a monumental decision which will provide added value and security to gambling domain names and websites for now and the foreseeable future.

“We are humbled by this decision and by the overwhelming support received from Internet businesses and free speech organizations everywhere,” said Jeff Ifrah, an attorney representing the Interactive Gaming Council. “The Court of Appeals has now corrected a fundamental misunderstanding by the trial judge in this proceeding of the nature of the Internet and the legality of online poker in Kentucky.”

[via CardPlayer.com and iMEGA]

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5 Comments

Kevin Ohashi

January 21, 2009 @ 2:19 am EDT

Didn’t Godaddy hand them over quite willingly?
http://www.thedomains.com/2008/10/09/did-godaddy-lie/

Chad Kettner

January 21, 2009 @ 3:37 am EDT

Seems you’re right Kevin. The post will be updated shortly. For whatever reason, I had only heard about the initial rumblings from the TRAFFIC Conference. Good catch.

Scott Roberts

January 21, 2009 @ 1:00 pm EDT

Is it just me, or did Judge Caperton try really hard to make a domain name fit the definition of device? Based on his conclusion, why should Kentucky stop at domain names? May as well grab all the backbone routers and fiber trunks too – it’s all one big ‘device.’ Or should I say ‘series of tubes.’

Chris Nielsen

January 21, 2009 @ 8:19 pm EDT

That was my thought also: “Judge Micheal Caperton, in his dissenting opinion, stated that Internet domain names played a role in the larger mechanism for gambling – which included computers and Internet service – and thus could be considered a “gambling device” by Kentucky law.”

Sounds like the “mechanism for gambling” is all Internet service in Kentucky and all of the computers in the state as well, since they can all be used for gambling.

[…] willing to give up on his attempt to seize 141 online poker and gambling domain names. Although the Court of Appeals ruled against the Commonwealth’s forfeiture, Beshear has filed an appeal with the state’s Supreme Court. “The Commonwealth will […]

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