In a 2-1 decision today, the Kentucky Court of Appeals ruled that Governor Steve Beshear did not have the right to seize 141 gambling domain names which his government attempted to do in September 2008. Beshear called offshore gambling sites "leeches on our community" and argued that domain names were gambling devices and hence could be seized by the state since citizens of Kentucky were able to access the sites. The action was opposed by the Interactive Gambling Council, Poker Player's Alliance, Internet Commerce Association and council for Network Solutions. The web sites themselves whose domain names were under threat of seizure were represented by the internet protection and lobby group iMEGA that argued that domain names were not gambling devices and that Kentucky had no jurisdiction over the domains since the sites were all located outside of the United States and none of the domains were hosted in Kentucky. Thus they asked for Bashear's motion to be thrown out. In October, Kentucky circuit court judge Thomas Wingate dismissed all requests by the opposing council, suggesting that domain names were "keys to the internet" and hence were open to seizure.
Fortunately for the gambling sites as well as anyone who values freedom of the internet, the Kentucky Court of Appeals immediately halted the seizure of domain names after Judge Wingate made his decision until such a time it could rule on the case. Today the appeals court decided that domain names were not gambling devices and hence were not open to seizure. According to iMEGA's website (www.iMEGA.org), Judge Michelle M. Keller stated in reaching her decision: "it 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'. We are thus convinced that the trial court clearly erred in concluding that the domain names can be construed to be gambling devices."
iMEGA also stated that Judge Jeff S. Taylor added that there was no criminal proceeding against the websites so they could not seek civil forfeiture when there is no criminal conviction. The one dissenting vote was by Judge Michael Caperton who suggested that domain names were gambling devices.
Today's appeal court decision is logical and this issue should never have reached this stage. While Kentucky, obviously, is concerned with the declining horse racing industry, it needs to look at the issues that are causing the decline and try to rectify them. Blaming offshore websites and trying to block access to those sites does nothing to address the reasons for horse racing's decline in North America. In the end, Governor Bashear will probably thank the appeals court for this decision. If the state had been given the right to seize the domain names there was nothing to stop other countries from seizing the domain name TwinSpires.com or similar Kentucky websites, citing a similarly ridiculous claim that those sites are immoral and illegal devices in other countries.
The internet must remain free, and it hasn't been lost on myself or others in the industry that today's decision came about on the first day that George W. Bush and the Republican Party were finally shown the door and a new President who ran on a platform of being less dogmatic and more conciliatory with other countries has taken over the reigns.
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