Can Kentucky Kill Online Gambling?

Written by:
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Published on:
Oct/27/2008

The online poker industry may once again be fundamentally changing in the United States.

First came enactment of the Unlawful Internet Gambling Enforcement Act on the national level back in 2006.

Now Kentucky Gov. Steve Beshear has taken it upon himself to try to eradicate internet gambling altogether by seizing 141 of the world's largest domain names. The reason: In part to protect the state's horse racing industry and state lottery.

It doesn't seem plausible that a Governor could single-handedly order the forfeiture of domain names belonging to sites like Bodog, Absolute Poker, Ultimate Bet, PokerStars, Cake Poker, Full Tilt Poker, and Doyle's Room. But that is exactly what has happened. If this were to happen outside the United States many would label it as "censorship" and lambaste it.

The epicenter of the activity in Kentucky is in its capital city, Frankfort, where groups representing the state and the internet gambling industry recently argued in front of Judge Thomas Wingate whether internet gambling domain names can actually be seized under Kentucky law, whether the State has jurisdiction in the case, and whether violations of First Amendment rights have occurred.

Groups such as the Interactive Media Entertainment and Gaming Association (iMEGA), one of the parties involved in the case, have argued that interfering with the internet in Kentucky will set a dangerous precedent throughout the rest of the world. After all, what would stop another city, county, state, or country from doing the same thing? Judge Wingate ruled to uphold the seizure order and has scheduled a hearing for the potential forfeiture of the domain names targeted in the case.

Wingate's decision said in part: "We note that opposing groups and lawyers argue any judicial interference of the Court will create havoc. This doomsday argument does not ruffle the Court. The internet, with all its benefits and advantages to modern day commerce and life, is still not above the law, whether on an international or municipal level."

The lack of an order to overturn Beshear's actions led iMEGA to file a petition asking the Kentucky Court of Appeals to step in rather than wait for the forfeiture hearing. iMEGA President Ed Leyden recently told us, "We're all on the same side and have the same common enemies. This is an invalid order. The court lacked jurisdiction. The best course of action now is to fight with every fiber in our being."

If the forfeitures are successful, the 141 internet gambling domain names at stake would become property of the Commonwealth of Kentucky and be inaccessible from anywhere in the world. Those internet gambling sites could elect to purchase new domain names (such as PokerStarsKentucky.com, for example) and e-mail all customers notifying them of the change. Each site would have to work tirelessly to market its new name. However, what would stop the Governor from then seizing those latest domains as well?

Finally, it is worth mentioning TwinSpires.com, a website owned by the same company that owns and operates the Churchill Downs horse racing track -- and is not among the 141 domain names in the case.

This favoritism has prompted outcry from the industry, which claims that all internet gambling should be treated equally. After all, why should online wagering on horse racing be any different than playing online poker? If the argument here is protecting children, don't we also want to protect them from wagering on Seabiscuit?

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Jay Lakin, www.pokersource.com

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