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Kentucky's Governor Goes All In

I've been meaning to write about this amazingly ridiculous and downright scary litigation for some time but for some reason, just haven't gotten around to it. In case you haven't heard about it before now, let me fill you in briefly on what Kentucky's hypocritical Governor has been up to.

At the Governor's direction, the Commonwealth of Kentucky has seized the domain names of 141 online gaming companies, including some of the biggest names in the business. In an order issued in Franklin Circuit Court, in Frankfort, Kentucky, Judge Thomas Wingate agreed with the Commonwealth's argument that the website names were "gambling devices" under Kentucky's gambling statutes and therefore capable of being seized by the state. Since Kentucky residents could access the sites, Judge Wingate determined that they were doing business in the state and subject to the state's jurisdiction. A copy of the decision can be found here.

Needless to say, this case has stirred up a hornet's nest of opposition and not just from gaming site operator's. If this decision, which has been appealed, is allowed to stand it would set a very difficult precedent for the operators of websites everywhere. It would mean that all websites would be subject to 50 different state statutes not to mention 200 something different national legal schemes, rather than just the legal system in the state and nation in which the operator is physically located.

An appeal has been filed by the Interactive Gaming Council (IGC) and the Interactive Gaming and Media Association (IMEGA) and will be heard by the Kentucky Court of Appeals (the intermediate appellate court) on November 18th, which is unusually fast for Kentucky. It is difficult for me to believe that the seizures could ultimately be upheld, if not by this court then by the state or US Supreme Court. If ever there was an instance of interstate commerce which should be reserved to the federal government, this would seem to be a shining example of it. I would also point out that the state's signature industry, thoroughbred racing, is allowed to maintain its own Internet gaming sites, see twinspires.com, a unit of Churchill Downs, which certainly smacks of unfair and discriminatory treatment.

As this case moves forward, I will try and keep you posted. If you are concerned about the future of the Internet and ability to keep it free and unfettered from regulation, be very, very concerned about this case.

Full post as published by Sports Biz on October 29, 2008 (boomark / email).