International: Kentucky URL seizure overturned
Tuesday, the Kentucky Court of Appeals overturned a Franklin County Circuit Court decision that allowed the state to seize 141 online-gambling URLs. The appeal panel handed down a 2-1 opinion stating that URLs cannot be considered gambling devices.
According to the panel’s majority opinion, the seizure could only have been legal if a criminal court had first established that the sites’ owners were guilty of illegal activity and only if existing state laws included URLs in their definition of “gambling devices.”
However, the panel said, even if the state’s government did enact such a law it could lead to indiscriminate seizure regardless of a URL’s use and would therefore be unconstitutional.
“Suffice it to say that, given the exhaustive argument both in brief and oral form as to the nature of an Internet domain name, 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,’” Judge Michelle Keller wrote in the majority opinion. “We are thus convinced that the trial court clearly erred in concluding that the domain names can be construed to be gambling devices subject to forfeiture.”
The decision answers an appeal filed by the Interactive Gaming Council and the Interactive Media Entertainment and Gaming Association. The two organizations have represented the 141 domain names’ owners since circuit-court proceedings commenced last year.
Gov. Steve Beshear’s office instigated the legal battle in August when it filed a lawsuit against the domain names’ owners. According to the document, the named gambling sites violated of the federal Unlawful Internet Gambling Enforcement Act of 2006 and therefore violated the state’s laws.
A closed hearing was held in September to finalize the complaint. At the hearing, Judge Thomas Wingate ordered the temporary seizure of all 141 URLs until a later hearing could determine if the sites had moved to block access to Kentucky residents. If the domain names’ owners did not block Kentucky residents from accessing their sites, Wingate said, their URLs would be forfeit to the state.
After several continuances, Wingate ruled that permanent seizure of the URLs was legal according to a Kentucky statute that permits state confiscation of illegal “gambling devices.”
Online-gaming operators and civil-liberties organizations see the appeal panel’s decision as a decisive victory. Many - including the Electronic Frontier Foundation, the Center for Democracy and Technology, and the American Civil Liberties Union of Kentucky - worried that the Kentucky seizure could lead to a spate of URL confiscations in other jurisdictions.
It also comes on the heels of Pennsylvania Judge Thomas James’s ruling that some forms of online poker are “skill games” that cannot be construed as “illegal gambling” according to the UIGEA. The legal definition provided by James’s decision could prevent Kentucky from taking further legal action against several sites named in its original suit because they offer online poker exclusively.
“(The appeal panel’s ruling) is a very important decision for anyone doing business on the Internet, ” IGC attorney Jeff Ifrah said. “We hope this will prevent misguided state officials from considering litigation against online industries located outside state boundaries. While this proceeding was ill-conceived, the judicial process was permitted to properly function, for which we are grateful.”
Wednesday, Kentucky’s Justice and Public Safety Secretary, J. Michael Brown, filed a notice of appeal with the state Supreme Court in response to the ruling.