Wall Street Journal Picks Up On Kentucky Domain Seizure Case

Written by:
C Costigan
Published on:
Oct/21/2008
Kentucky

The Wall Street Journal blog offered up the following headline in its coverage of a Kentucky online gambling domain case whereby that commonwealth plans to seize some 141 URLs during a scheduled November 17 forfeiture hearing.

It's the latest example of how local governments can affect online businesses with physical operations beyond their jurisdictions, the Wall Street Journal points out.

It is common to think of the Internet as a global network that transcends geography. But online entities are often forced to adhere to laws in the places where they do business. One iconic example is a ruling by a French court in 2000, where the court said a French law banning the sale of Nazi paraphernalia applied to U.S.-based Web site Yahoo.

In the Kentucky case, Circuit Court Judge Thomas Wingate concluded that gambling Web sites were "virtual keys" that provided access to places where one could play online versions of gambling devices such as slot machines and roulette tables, which are illegal in the state.

None of the online businesses-such as GoldenPalace.com, PokerStars.com and UltimateBet.com-are based in Kentucky or rely on technical equipment located in the state. Still, the sites readily accept bets placed by users in Kentucky and process payments from banks based there. That is what triggered Judge Wingate to seize control of the Web addresses.

Groups affiliated with the online casinos are worried about the precedent the ruling sets. "If you're a business operator, you should be subject to the laws where you do and pursue business, and not have to worry about a state halfway around the world taking away your storefront," says Jeremiah Johnston, president of the Internet Commerce Association, which monitors legal matters for online businesses. He adds that there is no reason that other governments couldn't use the same technique to challenge online businesses for whatever reason they choose.

Something else we derived from the piece is that Moniker Online Services will likely comply with the Kentucky ruling. An attorney for Moniker subsidiary Oversee.net said that many of the registrars are based in the U.S. even if the Web sites aren't, meaning that they have to comply with the court's order. Moniker has two of the 141 online gambling domain names.

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Christopher Costigan, Gambling911.com Publisher

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