Last week Kentucky's Justice and Public Safety Cabinet filed litigation seeking to force some 141 sites to block access to Kentucky users, or relinquish control of their domains. Judge Thomas Wingate of the Franklin County Circuit ordered the transfer of the domain names of the 141 'illegal' Internet gambling sites to the Commonwealth of Kentucky in response to the suit.
Kentucky is the first state to bring an action against Internet gambling operators that has resulted in the seizure of domain names, and the action is a potent reminder to operators and providers alike to carefully consider where their domains are registered, and how vulnerable to this sort of activity they might become.
The Kentucky Justice Cabinet has now 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," Governor Beshear told the Kentucky Post. "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.
Beshear said Kentucky loses tens of million of dollars a year to online gambling, which he claimed was illegal in all 50 states. And, he said, the illegal activity has repercussions far exceeding its monetary losses to the Commonwealth. He said that unlicensed Internet gambling significantly undermines and threatens horseracing, Kentucky's signature industry and a key tourism industry, by creating unregulated and untaxed competition.
He added that there were also dangers to the underaged, and that Internet gambling had too few consujmer protections and could be used in money laundering.
Beshear pointed out that state law in Kentucky law has long reflected a strong public policy prohibiting unlicensed, illegal, and unregulated gambling operations, and 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 websites for Internet gambling, and make it illegal to conduct, promote, advertise, own, profit from or conspire to profit from an illegal gambling operation.
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