Victory for Domain Owners in Kentucky

Stephen Yagielowicz
LOUISVILLE — The Kentucky Court of Appeals has enacted an order prohibiting the Franklin Circuit Court from seizing scores of Internet domain names.

The move hopefully brings to an end the democratic Governor Steve Beshear's effort to seize the domain names of 141 gambling-related websites as a protectionist move to bolster the state's gaming industry, which centers on horse race wagering.

Beshear prompted Franklin Circuit Judge Thomas Wingate to issue the widely contested seizure order, which never had any real effect as the state cannot control a website's content until the names are forfeited to the state.

"We have Kentucky exercising worldwide jurisdiction," attorney William E. Johnson said of the proceedings, which have seen friend-of-the-court filings by the Electronic Frontier Foundation, the Center for Democracy and Technology, the American Civil Liberties Union of Kentucky, Network Solutions and The Poker Players Alliance.

According to Erik Lycan, an attorney representing the state, gambling sites are engaged "in a massive offshore criminal conspiracy [masquerading] as a legitimate business."

According to Larry Walters, an attorney representing Golden Palace in the underlying case, the site owners were obviously quite pleased with the court's decision.

"The parties raised so many legal and constitutional defects in the Commonwealth's position, that we were not sure which one would bring down the house of cards," Walters told XBIZ.

One issue at hand was whether or not domain names can be classified as gambling devices, since they do not meet the legal definition of being a manufactured electronic device and as such covered under Kentucky's 1974 gaming statutes which predate the commercial availability of the Internet.

"The Appellate Court decided to focus on whether domain names could constitute 'gambling devices' under Kentucky law," Walters said. "Not surprisingly, it found that they did not and therefore could not be seized."

Thus, the Constitutional conundrums were avoided.

"A basic principle of constitutional law requires the courts to avoid ruling on constitutional questions if there are other grounds on which to resolve a dispute," Walters noted. "In this appeal, the court avoided the difficult constitutional issues relating to Freedom of Speech and the Commerce Clause by honing in on the 'gambling device' issue, and shutting down this ill-conceived prosecution."

During a hearing in the appellate court last month, two of the three judges reportedly expressed skepticism as to the case's merits; with Judge Jeff Taylor raising concerns over how the government could seize domain names without prosecuting the website operators and giving them their day in court.

"We'll have to wait and see whether the Commonwealth decides to pursue this case any further, but for now, our clients are pleased with the result," Walters concluded.

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