UK Court Says Kentucky Has No Right To Seize Gambling Domain Name

from the not-that-it-cares dept

We've covered the bizarre legal battle in Kentucky, where the governor tried to have a long list of gambling-related domain names (none of which had anything to do with the state of Kentucky) declared "illegal gambling devices" so that the state could seize the domain names. The governor has been pretty open that this has nothing to do with any moral issue over online gambling, but is a blatant attempt to help protect local gambling establishments in the state. Of course, it's ridiculous to think that a state governor could claim the right to seize domain names that are not based in Kentucky at all, and after a lower court (that didn't seem to understand the issue) sided with the governor, an appeal court overturned that ruling. Rather than recognize how silly this campaign is, the case is going to the state Supreme Court.

But, apparently the lawsuits aren't just happening in Kentucky. Michael Scott points us to the news that one of the companies targeted by Kentucky brought a lawsuit both against Kentucky and its own registrar in the UK to get a ruling that it is not subject to the whims of Kentucky politicians. The state of Kentucky ignored the proceedings, which resulted in the court agreeing that Kentucky has no right to seize the domain name. Of course, the state of Kentucky probably couldn't care much less about what a court in England thinks (which explains why it didn't even bother to respond), so the victory may be somewhat meaningless. However, at the very least, if Kentucky somehow wins its case in the US, perhaps the registrars in the UK can point to this ruling to refuse handing over the domain names.

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Kentucky's Attempt To Seize Gambling Domain Names Goes To State Supreme Court

from the waste-of-kentucky-taxpayer-dollars dept

A year ago, we were surprised to hear that Kentucky's governor was trying to seize the domain names of a long list of over 100 sites that had something to do with gambling. The governor was basing this on a Kentucky law that let the government seize "devices" used for gambling, even though none of the sites in question were based in Kentucky. The governor -- who many say did this to protect local Kentucky gambling operations -- compared these website to "a virtual home invasion." While a judge originally was going to allow the seizure, the state appeals court overturned the ruling, saying that it was clear that a domain name is not a gambling device.

Rather than back down, the governor pushed ahead and is using taxpayer money to appeal the ruling. Ragaboo alerts us to the news that the Kentucky Supreme Court is getting set to hear the case. It's difficult to see how the governor has much of a leg to stand on here. He's trying to seize the domain names of businesses operated entirely outside the state. Allowing such a seizure of domain names would set a horrendous precedent and create all sorts of problems. Hopefully the Kentucky Supreme Court sees this, and Governor Steven Beshear realizes it's best to give up this dangerous crusade.

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Minnesota Gives In; Won't Block Gambling Sites

from the good-for-them dept

Back in April, the state of Minnesota tried to force ISPs to block certain gambling websites. Similar attempts had been tried in a few other states, and quickly shot down by the courts -- and it didn't take long for a lawsuit to emerge in Minnesota. However, the good news is that the state has apparently agreed to back down rather than trying to fight a bogus and costly lawsuit. Basically, it sounds like enough lawyers explained to state officials that their likelihood of winning was pretty slim -- so the state just folded. At least they didn't keep trying to waste taxpayer money trying to fight for such censorship.

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Minnesota Sued Over Online Gambling Ban, While Frank Again Introduces Bill To Legalize It

from the know-when-to-hold-em dept

We noted several days ago that Minnesota was trying to force ISPs to block gambling web sites, going down a path trodden by several other states. That path, of course, has always ended in failure after the courts have weighed in. It looks like the courts will now get their chance to rain on Minnesotan politicians' parade, as a trade group has sued the director of the state's Department of Public Safety's Alcohol and Gambling Enforcement division to stop the ban. The group uses the suit to remind the director that he doesn't have the authority to mandate the blocking by ISPs, something the court will likely reinforce.

Meanwhile, online gambling's biggest friend in Congress, Massachusetts Rep. Barney Frank, has again introduced legislation that would legalize and regulate online gambling in the US. It sounds pretty much the same as his earlier attempts, all of which have failed, and would take the eminently reasonable step of allowing Americans to gamble in a regulated environment where they're protected by rules and law, as opposed to the current situation where they're pushed into the gray market (or worse), and have no protection. Frank also says he'll introduce separate legislation that will stop the enforcement of the UIGEA, which says that banks must stop processing any transactions that fund online gambling. At least one big casino company seems to think Frank's got a good chance of finally getting his law through: Harrah's, which recently hired the former CEO of major online gambling company PartyGaming to head its online efforts ahead of legalization.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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Minnesota Is The Latest State To Try To Force ISPs To Block Gambling Sites

from the this-will-end-badly-too dept

There have been a few attempts by state governments to force ISPs to block certain sites, and such attempts almost always end badly. Recently, for example, the state of Kentucky has been not just trying to block access to gambling-related websites, but to seize the domains in question. That failed when the courts pointed out how ridiculous it was. Perhaps the most famous such attempt was Pennsylvania's law to try to force ISPs to block "undesirable" sites from a list the gov't would put together. A federal court tossed the law, saying that it was unreasonable. You would think that other states would take notice before trekking down a similar path. But, apparently the news hasn't reached Minnesota.

Slashdot points out that Minnesota is trying to twist a law from half a century ago to mean that ISPs need to block gambling websites. Basically, the law says that common carriers need to comply with government requests to block gambling services. Of course, that assumes that ISPs are, in fact, common carriers -- a point that many would dispute. Also, the law was clearly intended for a very different purpose than someone using a broadband connection to access a gambling site. Still, gambling is another topic that politicians love to grandstand about, so expect this to keep moving forward, even if it makes no sense and has little chance of surviving a legal challenge.

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Frank To Push For Repeal Of Internet Gambling Ban

from the busted-out dept

Congressman Barney Frank will apparently soon introduce legislation to repeal the US ban on online gambling, as the EU looks like it's preparing to push the WTO to take action against the ban. Along with being ineffective and useless, the ban falls foul of WTO regulations, and could lead to the US being subject to punishments from the organization. It sounds as though the WTO would like to give the US government the chance to sort out the illegal ban on its own before taking action on a complaint about it. Though, even with the changed political climate in the US, it remains to be seen if the repeal could stick. It's also really hard to see how a ban on online gambling, and forcing financial institutions to police it, remains preferable to a well-regulated environment that protects consensual bettors. Hopefully US politicians will agree.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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Court Says It's Not Online Gambling If You Can Renege On A Bet

from the hello-loophole dept

The US has always had this odd hatred for online gambling -- but no state has been more aggressive about the issue than Washington state -- even to the point of threatening people with arrests for even talking about online gambling. So, you can imagine that the state didn't look too favorably on the launch of a person-to-person "wager" site called Betcha.com which claimed it had found a nice loophole that made it legal: you could renege on your bet. Yes, if you lost a wager, you could click a button saying "I refuse to pay." The catch, of course, was that the site had a rating system, and if you reneged, it was likely to harm your rating, and others might refuse to bet against you. Betcha claimed that the presence of the renege button meant that it wasn't actually gambling, because you never actually had to bet any money.

The state of Washington not only disagreed, it took a month or so until state authorities raided the company, arrested its founders and seized its computers. That seems pretty extreme for what does seem to be a rather open question in the law. And, in fact, a state appeals court found that the Betcha founder is right: the presence of the renege button means that the site is not a gambling site:

"Accordingly, there is nothing risked, which is the essence of both the common law and statutory definition of 'gambling.'"

Of course, that doesn't mean Betcha is coming back into existence. Since its founder (who has a law degree and had carefully researched gambling laws to make sure the loophole was legit) was arrested, thrown in jail, extradited to Louisiana, charged (in Louisiana) with gambling-related felonies finally forcing him to negotiate a plea bargain, dropping the charges if he agreed to certain conditions. With that experience in mind, restarting the site and risking it happening again just doesn't seem that appealing.

So, way to go Washington State -- you tossed a guy in jail for a completely legal web business.

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Court Of Appeals Overturns Kentucky Gambling Domain Seizure

from the good-ruling dept

Back in September, the state of Kentucky tried to seize over 100 domain names, claiming they violated a local state law against "gambling devices." None of the domains were run or hosted in the state of Kentucky, which made this quite a stretch in legal terms. While many of the domain names were for gambling websites, some were merely parked domains. The politicians who ordered the seizure were quite open that this was an attempt to "protect" local gambling interests -- but it seems like an incredible legal reach to claim that because of local protectionist laws, the state somehow has the right to seize domain names from around the world. The domain owners complained, but a local Kentucky state court ruled in favor of the government. However, an appeals court quickly told the state to hold off seizing the domains until it could review the case.

That court has now overturned the lower court ruling saying that a domain name is clearly not a gambling device, and is not covered by the law. However, this does potentially leave the door open for Kentucky politicians to change the law to include domain names... at which point we'll need to go through this whole silly legal battle all over again.

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Are Online Penny Auctions Actually Gambling?

from the here-come-the-regulators... dept

A few weeks back, we wrote about a site that seemed to have modified the old "dollar auction" concept and created a borderline evil business plan that would get plenty of people to pay money to "bid" on way underpriced goods. People keep bidding, because the costs seem so low -- but since everyone has to pay to bid, the companies ends up making a ton of money -- often many times the actual cost of the product. Basically, the company and whoever "wins" the auction are likely to make out okay -- while every other bidder loses. Apparently, there are a number of such sites doing similar models, and the UK government is noticing that it's pretty similar to gambling and probably should be regulated as a gambling site.

The reasoning is that people are paying money and might not get anything back for it -- which makes it akin to gambling. However, depending on how these sites are run, it's not as though the results are a real gamble -- it's still about whoever bids the highest for a good, so it seems like a stretch to call it gambling. It is a dumb move to get involved in any of these auctions in the first place (in many ways, worse than gambling), but that doesn't necessarily mean that they should be regulated like gambling sites.

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Gaming Giants Still Can't Make Up Their Mind On Internet Gambling

from the wanna-bet? dept

The American Gaming Association, the casino industry's biggest trade group, is struggling to reach a consensus on internet betting, as its members take up divergent viewpoints. Some casino companies support federal regulation for it, while others want states to be able to regulate it (though maybe not Kentucky); others, of course, want to see the blanket ban continue, fearful of anything that might let new competitors in to the market. The AGA's latest approach appears to be to support legislation to study whether to legalize online betting -- which, we're pretty sure, sounds about as wishy-washy as could be.

The facts surrounding online gambling in the US are already pretty clear: previous legislative efforts may have reduced online gambling, but they've also driven American bettors to largely unregulated services and forced them to use some other often-shady services to fund their activities -- since US banks are given the responsibility to stop gambling sites' funding. The result is that gamblers keep up the same activity they were doing before, but are now exposed to more danger and risk, while US authorities are missing out on the chance to collect some taxes. This still seems pretty irresponsible, since gaming regulators in mature markets would argue that driving consumers into unregulated territory where they're not protected by laws and rules governing casinos isn't a great idea.

Meanwhile, the AGA's waffling isn't a surprise, since many of its members hate to see new competition in any form. But existing casino operators are, arguably, better placed than anyone to compete in new, highly regulated markets that don't require huge capital outlays on the scale of expensive new properties. Also, it's hard to understand how more competition for gambling dollars could hurt consumers, when competition might actually deliver them a number of significant benefits, particularly over gray-market services of questionable legality.

Carlo Longino is an expert at the Insight Community. To get insight and analysis from Carlo Longino and other experts on challenges your company faces, click here.

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Kentucky Appeals Court Tells Kentucky To Hold Off Seizing Domains

from the wait-just-a-second... dept

While a lower court in Kentucky had agreed to allow the state to seize 141 domain names as being "illegal gambling devices" despite having nothing to do with the state of Kentucky, other than being available on internet connections there (and everywhere else), an appeals court has now issued an injunction to stop the state from seizing the domains until the appeal can be heard. While we still have to wait for the full appeal, at least damage won't be done in the interim.

There's one other interesting note in the article, which is that Kentucky's Attorney General appears to be trying to distance himself from the case. Even though most state actions are normally taken by the AGs office, in this case, the lawsuit was filed by the state's Secretary of Justice and Public Safety (there's some question if it's legal for this person to bring the suit). Either way, the AG's name was on the case, but he's now specifically asked to have his name removed from the case. That seems like quite a statement. When even the Attorney General of the state wants nothing to do with the lawsuit, perhaps it's time for the state to admit it overstepped some legal bounds.

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EFF, ACLU Ask Court To Strike Down Kentucky's Domain Name Seizure

from the good-for-them dept

You may recall that a judge recently allowed Kentucky's governor to seize a bunch of domain names that were related to gambling -- even if neither the owners nor the servers were based in Kentucky -- setting a terrible precedent. That's why it's good to see the EFF, the ACLU and the Center for Democracy and Technology (CDT) team up yet again to ask an appeals court to overturn this decision. Hopefully the appeals court recognizes how truly awful the original decision was, and notes how it seems to violate multiple clauses of the Constitution.

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Whitehouse Accused Of Trying To Push Through Anti-Gambling Regulation No One Wants

from the hurry-up-and-regulate dept

Even as some of our elected representatives are trying to re-legalize poker, the White House appears to be trying to shove through the regulations put in place a couple years ago to stop online gambling. The Unlawful Internet Gambling Enforcement Act of 2006 put the responsibility on financial institutions to stop any financial transactions used in online gambling. As we see all too often, it's a situation where the government is putting the liability on a third party to stop an undesirable activity, rather than on those actually involved in the activity. Not surprisingly, financial institutions have been protesting any regulations enforcing this law -- and with the current financial collapse going on, they're pushing back hard on any effort to enforce the law. So, what happens? Apparently, the White House has assigned a former NFL lobbyist working for the White House to try to force the regulations through, apparently putting tremendous pressure to get things moving. Congress is now asking the White House to explain why they're trying to rush this through, just as financial institutions are having so much trouble. It certainly does raise questions. Considering the push to reverse the law in the first place, combined with the protests from financial institutions that it shouldn't be their problem to stop online gambling, why is the White House putting excess pressure to try to make it happen?

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Judge Allows Kentucky To Seize Domain Names

from the bad,-bad-news dept

Last month, we wrote about a judge allowing Kentucky's governor to seize 141 domain names that were somehow associated with gambling sites under a bizarre interpretation of Kentucky law. Pretty much everyone involved admits that this is just Kentucky's governor protecting local gambling establishments who supported him in the election. No one is even hiding the fact that this is purely about protecting the governor's political supporters from any sort of competition.

However, what's scary is in how the seizure is incredibly broad and far-reaching. None of the sites are based in Kentucky. Many of the sites are nothing more than holding pages, rather than actual online casinos. And, the law itself interprets these sites as "illegal gambling devices" which seems like a big stretch. There was some pushback, as people explained to the judge what an incredibly bad precedent this ruling would set -- as it would effectively allow any local law to be used to take possession of any website.

Apparently, the judge doesn't care. Late last week, the judge upheld the original ruling, giving one small out to the various sites. If they implement filters that block access to any IP address in Kentucky, they can keep their domain names. That's backwards. It shouldn't be the responsibility of a website that is just online to use geocoding techniques to comply with every single local law. If that were the case, the internet would ground to a halt, as any website would face so many different liabilities from so many different jurisdictions to make it impossible to comply -- and in each lack of compliance, face a potential seizure of the domain name. This is a bad ruling by any stretch of the imagination, made even more bizarre by the judge's unilateral ruling before a hearing was even held. The whole thing sounds quite questionable, and hopefully will be dumped on appeal.

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Sorry, But Google Ads Aren't Driving People To Gamble

from the get-real dept

Google has apparently banned advertisements for online gambling operations in the UK for years. Even though online gambling is legal in the UK, there were strict rules on advertising that Google didn't want to have to deal with. However, those rules have now been relaxed, so Google is now starting to accept those ads again... and are being attacked by a variety of different groups, including the Church of England, claiming that the global financial crisis could be made worse if Google drives people to gamble.

Can we take a break here and inject a little common sense into the discussion? Google is not the guilty party here.

An ad on Google is not going to drive someone to gamble. If someone wants to do some online gambling, they'll find a way to do it. If they do a search on online gambling, they'll find plenty of sites in the organic results, let alone the paid spots. And it means they sought it out. This isn't to deny that some people have a problem with being unable to moderate their gambling, but to blame it on Google ads is simply grandstanding over something that has no impact on the issue.

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Kentucky's Gambling Domain Name Grab Sets A Terrible Precedent

from the governors-who-want-more-power dept

Last month, we wrote about a bizarre lawsuit in Kentucky, where a judge gave the government the ability to seize the domain names of numerous online gambling sites, even though none of them were based in Kentucky, or even registered via Kentucky-based registrars. The whole thing smelled of corruption, given that the governor is closely tied to offline casino interests, and his campaign apparently included a big promise to bring more offline casinos to Kentucky. This effort seems mostly focused on not just blocking out online competitors, but seizing their domain names. Lots of people are pushing back and explaining how ridiculous the scenario is to the judge, noting, for example, that following similar logic would allow any country to seize any domain name. For example, China could decide that the BBC website violates its laws and demand that the BBC domain name be turned over to the Chinese government. Most folks would recognize that this is ridiculous -- but it's effectively what the Kentucky governor has done.

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Kentucky Governor Seizes Online Gambling Domain Names

from the can't-have-competition-for-horse-racing dept

It's always fascinating to watch US politicians act as complete hypocrites when it comes to gambling. They talk about moral issues on why they need to stop online gambling, but allow their own personal favorite types of gambling, such as horse races and lottery. Kentucky, of course, is a big horse racing state, so perhaps it should come as no surprise that the state has strict anti-online-gambling laws. These laws are so strict that the state's governor is using them to seize 141 domain names of sites that the state claims are used for illegal gambling. Of course, it appears that many of the domains aren't online gambling sites at all, but parked domains. The state doesn't seem shy about the fact that it's doing this to "protect" the horse racing business, but of course, throws in the moral argument as well:

"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."

Home invasion? Really? A parked domain is the equivalent of a home invasion?

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Create An Ad For An Online Gambling Company? Face Jail Time!

from the is-that-even-illegal? dept

The US gov't has long had an odd fascination with stopping online gambling (except for horse racing -- which politicians engage in -- and state lotteries, for obvious reasons). Sometimes, this obsession reaches bizarre levels, such as the claim a few years back that it wasn't just illegal to run an online gambling operation, but that it was illegal to help advertise one. Most have pointed out that this has little actual legal basis, and is likely a violation of free speech rights -- but that hasn't stopped the government from using such threats.

Two years ago, the feds charged some ad execs with a whole bunch of crimes simply because they had the company BetOnSports as a client. BetOnSports, of course, was completely legal outside the US, but that didn't stop the US from claiming otherwise (even arresting BetOnSports' CEO as he was traveling through the US in a completely separate action from the lawsuit in this post). Even if it turns out that BetOnSports is somehow illegal, it makes no sense to drag in execs from a totally different company that only created promotional campaigns for BetOnSports. That hardly seems to deserve getting charged criminally.

But, when the gov't wants to put you down, it finds a way. The three ad execs have now all plead guilty in the case. Even though they had nothing to do with running the gambling site, they agreed to a plea bargain to avoid a lengthy and costly trial that could have resulted in a lot of jail time. It's not clear yet what the sentences will be in this case, as that will be announced in October, but at least some of the execs may get off without jail time. That's good, but it still remains ridiculous that they had to go through this two year ordeal just because they created promotions for the company.

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LA Includes Piracy With Drugs, Gangs, Prostitution And Gambling As 'Detrimental To Public Health & Safety'

from the but-of-course dept

Various laws have allowed local governments to declare specific property "detrimental to public health & safety" when that property becomes overrun with drugs, gangs, prostitution or gambling. However, the entertainment industry's hometown gov't in Los Angeles has now expanded the list to include music and movie piracy as well. Whatever you think of unauthorized copying of content, it's difficult to see how you can, with a straight face, claim that it is the equivalent of property being overrun with drugs, gangs prostitution or gambling.

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Hollywood Is Hardly An Innocent Victim In Trade Disputes

from the poetic-justice dept

My Cato colleague Sallie James describes the ongoing standoff between the US and the rest of the world at the World Trade Organization over gambling. When Congress banned online gambling, tiny Antigua filed a complaint alleging that the actions violated WTO rules. Antigua won, but the United States has so far bullied them out of taking advantage of their victory. The US has threatened to retaliate against Antigua if the latter begins targeting US copyrights as authorized in the trade ruling. James says that the United States is in the process of negotiating alternative compensation, including increased access to other American services markets. If that deal falls through, she warns, Hollywood might find itself "footing the bill" for the US government's ill-conceived gambling ban.

I certainly agree with her that the gambling ban was a bad idea, but I'm not sure it makes sense to paint Hollywood as an innocent victim here. After all, Hollywood has been pushing for decades to link trade policy and copyright law, going so far as to support free-trade agreements that include terms micro-managing other countries' copyright policies and requiring them to enact laws like the DMCA as a condition of access to American markets. Free traders rightly object when special interests try to use free trade agreements as a way to coerce countries into enacting their preferred labor and environmental policies. We should be equally incensed when Hollywood lobbies for the use of trade agreements to coerce countries into enacting their preferred copyright policies. So there's a certain amount of poetic justice in the fact that Hollywood has found its copyrights in the crosshairs of a trade dispute. James also correctly notes that retaliatory tarriffs are an insane way to impose damages on the losing country in a WTO dispute because tariffs hurt consumers in the "winning" country at the same time it hurts producers in the "losing" country. In contrast, if damages are imposed by targeting copyright law, consumers in the winning country will actually be made better off by lower prices for the copyrighted products in question. So while it would be best of Congress repealed its idiotic gambling ban, I'm not going too upset if Hollywood's attempts to link copyright law to trade policy come back to bite them.

Timothy Lee is an expert at the Insight Community. To get insight and analysis from Timothy Lee and other experts on challenges your company faces, click here.

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