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Ky Appeals Court Restores Sanity, Blocks Domain Name Seizure

Last fall, Franklin County, Kentucky Circuit Court Judge Tom Wingate upheld the seizure of 141 domain names of online gaming sites by the Commonwealth of Kentucky. Judge Wingate found that the domain names were gaming devices within the meaning of Kentucky's gambling statutes and, as such, were subject to seizure. Since the sites were accessible to Kentucky residents, the owners of the sites were doing business in Kentucky and subject to state jurisdiction.

In a 2-1 ruling issued today, the Kentucky Court of Appeals restored some degree of sanity to the state's legal system by prohibiting the seizure of the domain names. Judge Michelle Keller, writing for the majority, found that the domain names were not "gambling devices" within the meaning of the gaming statutes ( no kidding). She noted that the Kentucky General Assembly could have included domain names within the definition of gambling devices had it intended to do so, but it chose not to, and therefore, the Commonwealth could not proceed with the seizure action.

"[I]t 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 Keller wrote. "We are thus convinced that the trial court clearly erred in concluding that the domain names can be construed to be gambling devices."

In his concurring opinion, Judge Jeff Taylor added that the Commonwealth could not seek a civil forfeiture based on a criminal statute where there had been no criminal prosecution. Since there had been no criminal proceeding or conviction against any of the domain name owners, the Commonwealth could not take control of any of their property.

I'm glad to see that at least one court in Kentucky understands how to read a statute book, especially since the Commonwealth's hypocritical governor surely does not. Why hypocritical? His major campaign issue just a short year and one half ago was the legalization of casino gaming in the Commonwealth. So, I guess he believes he should shut down all Internet gaming in order to eliminate competition for his new casinos if he ever manages to get the General Assembly to approve casino gaming, an effort which failed miserably last year. So, he's not against gambling, just gambling on the Internet where the state can't get its cut. Sad, really, really sad. Oh, and I forgot to add, this poor excuse for a statesman happens to be a lawyer to boot.

Before I leave this, I should add that this case is important also for the substantive reason that the poorly reasoned and just wrong lower court opinion should not be allowed to stand as good law. The issue is too important for internet commerce to rest on a poorly reasoned opinion by a Kentucky circuit judge who apparently did not fully understand the internet and how it operates.

Full post as published by Sports Biz on January 20, 2009 (boomark / email).