REACTION TO KENTUCKY RULING MOUNTS (Update)

24 October 2008

Disappointment and surprise at Kentucky judge's ruling in domains case

 

Judge Thomas Wingate's generally negative findings in the attempt by the state of Kentucky to seize the international domains of online gambling companies (see previous InfoPowa reports) continued to generate adverse comment across a range of media going into the weekend.

The covert nature of the official events leading up to the seizure attracted criticism as the court's judgement was pored over by interested parties.

The initial application to Judge Wingate to issue a seizure order was made on August 26 by lawyers commissioned by the state, and it was accompanied by a request that the file be sealed until the actual hearing on the seizure motion. Judge Wingate granted the request, effectively empowering the state's lawyers to move on the seizure before the owners of the domains even knew they were being legally ambushed.

Then, some weeks later on September 18, the state presented evidence to Judge Wingate that computers located in Kentucky were, "through the use of domain names," able to access gambling Web sites over the Internet offering online slot machines, roulette and poker. The state's representatives also introduced testimony from a 'cybercrimes' expert that domain names were devices that allow Kentucky residents to engage in illegal gambling....again without the owners being warned that actions possibly detrimental to them were in progress.

Based on the evidence and testimony presented, the court then ordered seizure of the domain names. The court found probable cause existed to support a finding that the defendant 141 domain names were being used in connection with illegal gambling activity with the Commonwealth.

It was at this point that the court required the service of the seizure order on each domain name registrar and any other person identified in the WHOIS information database as claiming ownership for each of the domain names.

Finally, the defendants had the opportunity to fight the state's actions when Judge Wingate set a hearing for September 26 to determine whether any party was entitled to the return of their domain names or whether the domain names would be forfeited to the Commonwealth.

That hearing involved a further brief continuance before defendants were offered the opportunity to submit legal briefs on October 7, at the conclusion of which the judge retired to consider his verdict, finally returning it on October 16 after a 24 hour "computer glitch" delay.

Reports that the state had instigated the domain confiscation moves through outsourced lawyers who would be paid on a contingency basis elicted comment from at least one lawyer, who pointed out that the ruling did not go as far as the state had hoped for, in that it did not order punitive fines or damages from the defendants.

Speculation is that the lawyers free-lancing for the state could be in line for massive payments based on a percentage of the "damages" awarded to the state.

"I've got a feeling it sent a cold shiver down the spine of plaintiff's lawyers who have a contingency contract for getting money in the matter," said Bill Johnson, a Frankfort attorney who is representing seven of the Web sites.

However, when asked for comment Kentucky governor's office spokesman Jay Blanton would only say "..it's too early to speculate on legal fees."

Referring to the judge's ruling that rejected attempts to have the case dismissed, spokesmen and blogs were generally critical of Judge Wingate's findings.

"This decision must not be allowed to stand, because of the threat it poses to the Internet as a whole," said Joe Brennan Jr., the chairman of iMEGA in a statement.

"Judge Wingate has ignored the clear laws of his own state in coming to a decision that essentially green-lights any jurisdiction - in the U.S. and abroad - to ignore our rights and abuse their power to do away with competition or speech or content with which they oppose, regardless of the law. This is a dark day for Internet freedom.

"What Judge Wingate has done is to create the 'ultimate weapon' to be used by the powerful and influential to attack content they oppose," Brennan continued. "This will enable government to eliminate competition from differing ideas, beliefs and commerce. This decision today is where it starts, but where will it stop?"

The ZDnet.com blog hosted some lively exchanges that included:

"I can't see where a state court could have jurisdiction over domain names and sites not residing in its state. It is nearly impossible for them to block everyone in the state. It is more reasonable for the state's ISP's to block access. But even this goes in the face of the sanctity of the Internet. If it is illegal then the user should be held responsible. When a user logs on he/she should have to check a box indicating they are not from Kentucky. This would put the responsibility where it belongs. This is a very scary precedence. This judge sounds like he is simply on a power trip.

"I hope these site owners take this to the supreme court."

"It's scary to think a judge believes the state has the jurisdiction to demand the domains be transfered to the state regardless of if online gambling is illegal in the jurisdiction. Would that not be unlike an orthodox state deeming that, oh, Amazon.com is illegally showing women in clothing that does not conform to their moral code and they attempt to seize the Amazon.com domain name?

"The concept behind net neutrality is that even down to the content level, the net is not to be censored. If an individual gambles on a web site and it is illegal for them to do as much, the individual is the criminal. The moment we start letting our judges and government decide how to regulate access to the internet, we take one step closer to becoming a nanny state."

"There are a few other things the Judge failed to take into account. One this is a violation of interstate commerce. Not the first time Kentucky has done this. Once again it comes down to money and the state. In this case the state will eventually lose and end up paying the legal fees of all involved. Tax payers money being wasted yet again.

And the posts were not all critical, like this one:

"The "online gambling" websites are nothing more than THIEVES, performing thefts daily in absolute anonymity and protecting from any sort of recourse. I hope absolutepoker, ultimatebet and bodoglife all crash and burn harder and go down completely in flames... PERMANENTLY."

At PC World there was more blog activity:

"Kentucky v. 141 Internet Domain Names has the potential to strike a fatal blow to the heart of Internet gambling, a phenomenon that has riled the Congress and Senate and been an ongoing debate for years. If it passes, other concerned states could follow in its footsteps and bar Internet gambling from residential servers on the basis that it damages the state's own lottery and/or casino industries. Then if it spreads across the United States, it could herald the death of online gambling as we know it."

"I think issue here is taxes. Many Internet gambling sites are based overseas and do not contribute to individual state's economies. So while politicians such as Gov. Beshear may disguise the issue as damaging the morality of youth, a fine read between the lines tells a tale of money and competition -- ironic given the nature of the case."

Further afield, Jeremiah Johnston, ICA president, noted that his organisation is extremely disappointed in the decision.

"This is a dangerous decision not just for domain name investors and developers but for all who value commerce and free speech on the Internet," Johnston said.

"The Court has incorrectly held that domain names are a form of property subject to in rem jurisdiction anywhere on the face of the Earth where their associated Web sites may be viewed on a computer screen. "

Johnston went on to opine that if Judge Wingate's decision was broadly adopted, then Internet commerce and speech would be at risk on a global basis.

"For example, U.S. companies conducting legal business activities in this nation could be subject to seizure orders for their domain names issued by foreign courts for lack of compliance with local law and regulation merely because their websites can be viewed abroad," he said.

"Even more worrisome, the courts of totalitarian regimes could issue seizures orders against domain names used to spread truth and advocate freedom to their repressed populations. The remedy proposed by the court - geographic blocking so that none of the subject websites can be viewed from within Kentucky - is infeasible for individual domain names which could be subject to different laws and regulation in thousands of jurisdictions worldwide."

Rich Muny, Kentucky state director for the Poker Players Alliance, also voiced his disappointment, together with that of thousands of Kentucky poker players: "In essence, Governor Beshear and Judge Wingate are denying law-abiding citizens this form of [online gambling] recreation simply because it is enjoyed on the Internet. This is Internet censorship by judicial fiat, plain and simple."

His colleague, PPA executive director John Pappas said: "I am certain that many of the defendants in this case intend to quickly appeal this matter. We are confident that the Kentucky Appellate Court will review the facts and overturn today's order. At the same time, the PPA will continue its efforts to protect the rights of Kentucky citizens to play poker online."

The business publication Forbes.com posters were active too: "Is this really worth an effort, money and time spent? Kentucky is always trying to improve it's image and not be seen as a backward state but they seem to mess it all up with crap like this. Way to enter modern era."

Web Host Industry posters wrote: "This case should be thrown out of court for the sole reason of being unconstitutional. What's next? Are states in the Bible belt going to seize control and subsequently block adult websites, because they don't want their residents viewing porn? If Judge Wingate allows Kentucky to take control of these domain names, we're going to be no better than China is and how they already censor the Internet."

Online Casino News courtesy of InfoPowa