Net gaming sites appeal domain name seizures

By Beth Musgrave - bmusgrave@herald-leader.com

FRANKFORT — Internet gambling companies and online commerce groups want the state Court of Appeals to toss the state's lawsuit that resulted in the seizure of 141 online gambling Web site domain names by the state.

The companies also want the court to stop a Nov. 17 forfeiture hearing in the Internet gambling case, which has attracted national and international attention.

The appeals, filed in the past two weeks, say Franklin Circuit Court Judge Thomas Wingate had no standing to order the seizure of the domain names and that Kentucky has no jurisdiction over international companies — many of which are organized in foreign countries.

The state, in an effort to clamp down on the betting businesses that officials say drain money from the state's legitimate gambling interests, filed legal action against the sites in August. Wingate ordered the seizure of 141 domain names by Kentucky and later set the November date for further forfeiture proceedings.

William Johnson, a Frankfort lawyer who represents some of the online gambling sites, said this week that at least three different groups — representing online companies or online commerce groups — have appealed Wingate's decision to the state Court of Appeals. It's likely that those appeals will be consolidated, Johnson said.

The state has not filed a response to the appeals but still has time to do so.

Jay Blanton, a spokesman for Gov. Steve Beshear, said the state will proceed with the lawsuit and plans to file a response to the appeals despite state revenue projections that show a potential $294 million shortfall. To argue its case, the state is using private law firms, but they are paid only if they win, Blanton said.

"Our primary focus is protecting Kentuckians and Kentucky families from these illegal predators," said Blanton.

Wingate had ruled that the gambling Web sites' domain names — for example, sportsbook.com, — were actual gambling devices. The domain name is nothing more than a name, the online gambling sites argue. Kentucky statutes give the state authority to seize only actual gambling devices.

Wingate ordered the seizure of the 141 domain names after a hearing at which the owners of the Web sites were not present. The case, filed by Secretary Michael Brown of the Justice and Public Safety Cabinet, was sealed. Their due-process rights were violated, the Internet groups argue.

A state Court of Appeals hearing has not been set.