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Kentucky Governor Sought To Seize Gambling Domains

Added on: Feb. 10, 2013

In September of 2008, the governor of Kentucky, Steve Beshear, was confronted with a dilemma: he had run on a platform of expanding gambling in the state's pari-mutuel facilities, including Churchill Downs, and knew that was not going to be an especially easy undertaking. At the same time, he realized that there were online operators of gambling sites, which included sports betting and horse race betting, serving the citizens of his state through the facilities they had set up offshore which were licensed within their own respective jurisdictions.

What to do?

Well, Beshear went forward with the bizarre action of trying to seize 141 domain names that were being used by online gambling operators, thus crippling the businesses. He received the go-ahead from his attorney general, Jack Conway, who was connected to the racing industry through both his family and his own ownership of horses, and this came on the basis that the names themselves were "gambling devices" enabling the "illegal" games to take place, admittedly a rather broad definition of the term.

The appeal was made to domain registrars who had the power to take control of the names, and Kentucky got some cooperation in that regard. Some of the largest operators in the business, such as Bodog, UltimateBet and FullTilt Poker, were threatened by this action. According to an official spokesman for the justice department in the Bluegrass State, "We think it creates a tremendous disadvantage for our legitimate, licensed and taxed gaming interests, and there are some damages that are due to the commonwealth as a result."

Naturally the theme of the gaming operators was that they were not headquartered there, and neither were the registrars, and therefore there was no authority for Kentucky to take action whatsoever. Indeed, there is no mention in Kentucky's law about virtual casinos, and nothing that specifically points to the names as "devices" except in an extremely liberal interpretation of that law.

In July of 2012, the U.S. Department of Justice not only issued an opinion that this seizure by Beshear "lacked constitutional standing," they sought to have it struck down in district court. Meanwhile, online operators are certainly not encouraging Kentucky residents to play their games.