The commonwealth of Kentucky is known for three things – bourbon, tobacco, and horse racing. So it may come as a surprise that Kentucky is taking on the role of the temperance police in the Court of Appeals as they attempt to confiscate the Internet domain names of over one hundred online poker sites. But in a fifty-six page brief, the sanctimony – along with the hypocrisy – comes dripping off the page as the Commonwealth warns of the “particularly harmful” nature of Internet gambling.
The background of this dispute is as follows. After the Kentucky governor Steve Beshear was unable to follow up on a campaign promise to bring casino-type gambling to Kentucky, he decided to marshal his forces behind closing 141 Internet gambling sites that were available in – though not located in – Kentucky. His secretary of justice and public safety brought a criminal seizure action against 141 Internet domain names pursuant to Kentucky statue 528, which provided for seizure of “unlawful gambling devices” operating within the Commonwealth.
In a closed-door hearing, the Commonwealth was able to convince a judge to order the seizure despite the fact that the domain names had not been notified, had not had an opportunity to object, and were not located in the state. At a subsequent forfeiture hearing, lawyers representing the domain names, the online gambling industry, and other free speech organizations objected to the seizure on a number of grounds, including that domain names are not “gambling devices” (defined under the statute as being a device such as a slot machine or roulette wheel. They also argued that the Commonwealth improperly used a criminal forfeiture statute in a civil proceeding, and improperly ordered seizure without first finding a criminal violation.
Those representing the defendant domain names lost at the trial court, but were successful in bringing a writ prohibiting the trial court from following through with the forfeitures. The Commonwealth appealed this decision and last month filed its mammoth brief. Despite the fact that the governor of Kentucky had run for reelection on the promise of bringing casino gambling to the state, and despite the fact that the Kentucky-based online gambling site TwinSpires.com was excluded from the seizure and forfeiture order, the Kentucky brief wraps the Commonwealth in all that is good and pure in its fight against the evils of demon-gambling.
The brief calls the world of online gambling an “illegal racket” which is particularly dangerous because it is easy, available and anonymous, operating in an “unregulated underworld” where gamblers can gamble in relative isolation and “instantly wager and lose retirement savings or college funds in secrecy.”
Putting aside the over-wrought, hysteria in this loaded language, what the brief fails to do is explain how that differs from the Kentucky-based TwinSpires.com, the online gambling site of Churchill Downs, where the first button on the home page is “wager now.” If their complaint is that these gambling sites are located off shore, then welcome them to set up in Kentucky. I’m sure they‘ll be happy to.
But this case is not about protecting the citizens of Kentucky from the sin of online gambling at offshore sites, but about protecting the business of Churchill Downs from losing money to competing online gambling sites. The Commonwealth’s attack on online gambling is about two things – protectionism and money. They want to protect their own gambling interests and hold these off shore sites hostage in exchange for monetary payoffs.
Hopefully, the Court of Appeals will see through the hysteria and evaluate the legal issues at the heart of this case and affirm the order prohibiting the seizure of the domain names and letting them operate free from protectionist interference.