Kentucky moves to seize 141 online gambling domains

Franklin County Circuit Judge Thomas Wingate will be holding a forfeiture hearing regarding domain names to 141 online gambling sites Friday at 3:30 p.m. in Frankfort, Kentucky. Last week, the Commonwealth of Kentucky was granted an order to seize these domains as part of lawsuit trying force online gambling operators to stop offering services to Kentucky residents. (View the complaint)

"Unlicensed, unregulated, illegal Internet gambling poses a tremendous threat to the citizens of the Commonwealth because of its ease, availability and anonymity," said Governor Steve Beshear in a statement. "The owners and operators of these illegal sites prey on Kentucky citizens, including our youth, and deprive the Commonwealth of millions of dollars in revenue. It's an underworld wrought with scams and schemes."

"By seizing the domain names, Kentucky can require that the illegal casino operators use readily available technology to block their domains from being accessed in the Commonwealth," the statement said.

Among the sites targeted by Kentucky are PokerStars, Full Tilt Poker, Absolute Poker, Bodog and Slotocash.

The list of sites targeted was "developed by attorneys (conducting the investigation) and are sites where people from Kentucky, using Kentucky addresses, were able to place bets," said Jennifer Brislin, communications director for the Justice and Public Safety Cabinet, which filed the lawsuit on behalf of the government.

The targeted domains are held by a mix of domestic and international registrars, Brislin added.

Kentucky doesn't have a law that specifically targets Internet gambling. But it does have laws that prohibit possession and use of gambling devices. In the case of this lawsuit, Brislin says domain names are considered gambling devices.

"Our end game is to stop that activity (gambling) within Kentucky," Brislin said. "We have no interest to shut it down elsewhere in the country or worldwide."

The lawsuit asks for these sites to use "readily available technology" to deny access to Kentucky residents and to pay for prior damages, Brislin said.

Brislin also said that because they don't know who the owns these sites, the lawsuit was the only tool they had available to force action.

While the lawsuit has generated plenty of buzz, it's unlikely that the order will hold up to federal scrutiny, says Buffalo State business law professor Joe Kelly.

"If a state can do this, it would create chaos," Kelly said. "Can you imagine if some province in South Africa asked for seizure if they didn't like violence? Here's an American company putting on a show and allowing South Africans access to it, but because it's against the province's law, they'd ask for the same remedy as Kentucky."

"If the federal government did this, at least it's the country requesting the action -- not a state within a state," Kelly added. "This is sort of thing that should regulated at the national or international level."

Kelly also said that the case would not likely hold up under federal scrutiny.

"This could very well violate the Commerce Clause (in the Constitution). If 50 states could do this sort of thing, there would be a negative impact."

"I can't predict what Kentucky judge would do," Kelly added. "But if someone appeals it to a federal judge, the order won't hold up."