Kentucky Supreme Court considering online gambling case over Internet domain names

Ky. Supreme Court hears online gambling question

FRANKFORT, Ky. — The Kentucky Supreme Court is deciding whether the state has the power to seize Internet domain names involved in online gambling after hearing arguments Thursday from lawyers on both sides of the issue.

At issue is whether the more than 100 domain names the state has tried to seize are tantamount to gambling devices such as slot machines, and whether the state has authority for the seizures.

An appellate court has previously ruled that the state can’t seize the domain names.

“They have been using these to violate the law in Kentucky,” Eric Lycan, a private attorney representing the Kentucky Justice Cabinet, said. “They are subject to forfeiture.”

The state previously sued 140 Web sites after determining that they allowed Kentuckians to gamble illegally and asked a judge to either force the sites to block Kentucky users or allow the state to take possession of the domain names — essentially shutting them down. Most of the sites are offshore and serve gamblers in and outside of the state.

Kentucky already allows gambling on horse racing and bingo and has a state lottery.

Attorneys for the state, however, maintain that gambling over the Internet is illegal, and that the state has the authority to stop it from taking place within Kentucky’s borders. They say the companies — no matter where they’re based — should either block Kentucky residents’ access or face seizure from the state.

But attorneys representing the Internet gambling sites disagree.

They argue that online gambling isn’t illegal in the state because the Kentucky General Assembly has not taken any specific action to make it against the law. And, the state doesn’t have jurisdiction anyway, the attorneys claim.

Attorney Bill Johnson, who represents a group of online gambling sites, claims the state has improperly mixed civil and criminal maneuvers in the case.

“The ultimate issue in this case is whether a domain name is a gambling device under the statute,” Johnson told the court. “This case should have never proceeded in the beginning.”

Attorney Jon L. Fleischaker, who represents the Interactive Media Entertainment and Gaming Association, Inc., said state lawmakers have had the opportunity to make online gambling illegal and have not. Fleischaker also said his clients have not had proper due process.

“It is mind-boggling,” Fleischaker told the court.

A ruling from the court could take anywhere from weeks to months.