Kentucky Seizes 141 Domain Names of Internet Gambling Sites

A Franklin County Circuit judge last week ordered the transfer of the domain names of 141 illegal Internet gambling sites to the commonwealth of Kentucky in an effort to stop illegal and unregulated online gaming. The Kentucky Governor' Office in a release, said this is the first state to bring an action against Internet gambling operators that has resulted in the seizure of domain names.

The order came Thursday in response to a suit filed by the Justice and Public Safety Cabinet on behalf of the commonwealth seeking to force the sites to block access to Kentucky users, or relinquish control of their domains. Judge Thomas Wingate ordered a forfeiture hearing for Sept. 25th on the matter. The Justice Cabinet had asked the court to order Internet registrars to transfer control of the domain names to the commonwealth, pending a hearing on whether forfeiture is required.

"Unlicensed, unregulated, illegal Internet gambling poses a tremendous threat to the citizens of the commonwealth because of its ease, availability and anonymity," said Governor Steve Beshear. "The owners and operators of these illegal sites prey on Kentucky citizens, including our youth, and deprive the commonwealth of millions of dollars in revenue. It's an underworld wrought with scams and schemes."

By seizing the domain names, Kentucky can require that the illegal casino operators use readily available technology to block their domains from being accessed in the commonwealth, according to the release.

Beshear said Kentucky loses tens of million of dollars a year to online gambling, which is illegal in all 50 states. And, he said, the illegal activity has repercussions far exceeding its monetary losses to the Commonwealth:

• Unlicensed Internet gambling significantly undermines and threatens horseracing, Kentucky's signature industry and a key tourism industry, by creating unregulated and untaxed competition
• The accessibility of the Internet, and the unregulated and private nature of Internet gambling, creates conduits for youths to log on and place wagers
• The anonymity of the Internet and sophistication of encryption devices make it difficult to trace online laundering schemes
• The unregulated gaming lacks consumer protections to ensure that individuals who choose to gamble are actually paid for their winnings.

Kentucky law has long reflected its strong public policy prohibiting unlicensed, illegal, and unregulated gambling operations, Beshear noted, adding that the commonwealth is uniquely suited to bring action against illegal Internet gambling operators. Sections of KRS Chapter 528 specifically mandate the forfeiture of any gambling devices, such as domain names and Web sites for Internet gambling, and make it illegal to conduct, promote, advertise, own, profit from or conspire to profit from an illegal gambling operation.

Secretary J. Michael Brown said that site owners, when registering domain names, agree to conditions that stipulate the domain name not be used for illegal purposes. He noted that some online gambling sites already block access to Kentucky users.

"Governor Beshear has once again demonstrated that he is willing to take bold and innovative steps to protect Kentuckians and Kentucky's legitimate businesses," Brown said. "Illegal Internet gambling poses a unique threat to our commonwealth. For individuals -- particularly our youth -- it is tantamount to a virtual home invasion. For some of our vital and most venerable legitimate enterprises, it undermines their exemplary regulatory compliance and siphons away their constituents.

"We are hopeful that once this litigation is concluded, the commonwealth will be off limits to these illegal purveyors."