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Casino and Gambling Domain Name Seizure Drama in Kentucky
News Date: October 1, 2008

In the last week of September the Kentucky Governor Steve Beshear obtained a court order to seize domain names of online gaming sites that took on Kentucky citizens as clients. These sites, totaling 141 in number, included online casinos and poker rooms. Since most of these online gambling sites are serviced from outside the United States there was no actual seizure and the online casinos are carrying out business as usual for the moment.

What has worried the online gaming industry is the motive for the attempted seizure. The Governor was quoted as saying, "The owners and operators of these illegal sites prey on Kentucky citizens, including our youth." But this appears to be a front and the real reason for stopping online gambling seems to be commercial. If the statements issued by the Governor and other officials are put into perspective then a different picture emerges. The government seems to be aggrieved by the fact that these online casinos that cater to Kentucky citizens bring no benefits to the state. Unlike land based casinos and racetracks they pay no state taxes, do not provide jobs to Kentucky residents and do not bring tourists to Kentucky. The governor has gone so far as to call the Internet gambling organizations parasites. The bigger problem has not been as clearly brought out. The land based gambling organizations are losing business to online gambling and Kentucky Secretary J. Michael Brown has called the Governor’s initiative as protection of "Kentucky’s legitimate businesses." Proponents of online gambling have decried the Governor’s actions and denounced his reasoning. They say that online gambling is not illegal under Kentucky law and that Kentucky has chosen not to regulate it. Therefore the argument that online gambling is unregulated does not stand.

The online poker industry is being backed by the Poker Player’s Alliance and the online casino industry by the Interactive Gaming Commission and the Interactive Media Entertainment and Gaming Association. These organizations have filed independent “friends of the court” briefs stating why the Governor’s action was improper. The online gambling industry has got a stay on the seizure order and permission for the continuance of their business till the next hearing early in October. However the temporary reprieve was given in order that the legal counsel may prepare for the case and not on merits of the arguments. Hence the sword still hangs.

It is expected that some sort of compromise will be reached. The worst that is expected for the online casinos is some sort of a fine and prevention from taking on players from Kentucky in the future.

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