Kentucky Seizes US Gambling URLs

The Commonwealth of Kentucky seized over 140 domain names belonging to online casinos and card rooms Tuesday. It did so at the behest of Franklin County Circuit Court Judge Thomas Wingate after the state’s Public Safety Cabinet filed a suit against the sites last week.

Gov. Steve Beshear announced the suit at a press conference Monday, saying it named 141 sites regi- stered in the U.S. The suit demands the named sites block access to Kentucky residents or relinquish ownership of their URLs to the commonwealth.

Among those named in the suit are several high-profile gambling sites, including Bodoglife.com, Doylesroom.com and Fulltiltpoker.com. However, the suit is careful to exclude sites that are subsidiaries of legal establishments like Twinspires.com—which is owned by the Churchill Downs.

The news comes as the U.S. House of Representatives considers the Payment System Protection Act, approved by the House Financial Services Committee last week. If passed, it could undercut Kentucky’s suit by allowing payment systems used for Internet gambling to operate legally.

Kentucky, home to the Kentucky Derby, is the first state to successfully bring action against online gam- bling sites. It is also the first to seize control of privately held URLs on legal grounds.

Some critics charge that Kentucky’s actions are hypocritical, due to the state’s continued support for horse racing and Gov. Beshear’s longtime advocacy for gambling. Beshear, a Democrat, based his 2007 campaign on a proposed amendment to the state’s constitution that would make brick-and-mortar casino operation legal in the state. At the time, he touted the $500 million in annual tax revenue that such operations could raise.

But Beshear finds no contradiction between his platform and the current suit, saying, “I’m not looking at it so much from a moral standpoint as from protecting the public in terms of the tax dollars, the tax revenue and protecting our industries here in the state that have legalized gaming.”

“The real culprits are foreign companies, huge companies that rake in millions to billions of dollars and operate beyond the reach of law enforcement.”

Beshear went on to call such sites “leeches on our community” and said that unchecked Internet gambling is a “threat to our National Security.” He added that, because the sites are free from government oversight, a customer who thinks a site has scammed him has no legal recourse.

Judge Wingate ordered a hearing for Thursday, Sept. 25, to decide if ownership of the seized domain names is forfeit to the state. He also ordered that the suit be sealed until that time.

If Wingate rules in favor of the forfeiture, it would effectively shut down the sites’ ability to operate in- ternationally. The European Union, home to many online gambling sites, has already decried the move as violating international trade agreements. Although sites registered outside the U.S. are at no legal risk from the suit, the EU and the Remote Gambling Alliance claim that provisions in U.S. law that give horse racing establishments “wire” privileges make Kentucky’s seizure on par with protectionism.