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Kentucky Appeals Court Stays Internet Domain Seizures

Washington, DC  November 14, 2008 - The Court of Appeals of Kentucky has granted a motion to stay a forfeiture hearing for 141 Internet domain names. Kentucky Gov. Stephen Beshear and Michael J. Brown, the state's Secretary of Justice and Public Safety, had sought the seizure of the domain names, most related to Internet gambling, in an effort to protect the state's own gambling industry from competition by online gambling sites.

The Interactive Media Entertainment & Gaming Association (iMEGA), an Internet trade association in Washington, DC, asked the appeals court to stay the forfeiture hearing ordered by district court Judge Thomas Wingate scheduled for Dec. 3rd, until the appeals court had an opportunity to consider iMEGA's petition to have the lower court seizure ruling overturned. A hearing to consider that petition has been scheduled for Dec. 12th in Louisville.

"We're pleased that the Court of Appeals has given us the opportunity to challenge these seizures," said Joe Brennan Jr., iMEGA's chairman. "The commonwealth has tried to take these domains for their own financial gain, violating Kentucky law, exceeding their jurisdiction, and setting a terrible precedent in the process."

The appeals court also decided to combine iMEGA's petition with a narrower petition filed by Interactive Gaming Council (IGC), of Vancouver, BC, an international online gambling trade group. Both groups contended that the lower court lacked jurisdiction to order the domain seizures. iMEGA contends that the lower court misapplied Kentucky's specific "gambling devices" law in order to provide a rationale for permitting the seizures. iMEGA also argues that Kentucky's actions violate the Commerce Clause of the US Constitution, and that Secretary Brown lacked the authority to initiate the seizure action in the first place.

"This matter has generated concerns across the online world about abuse of governmental power," said Brennan. "Kentucky is opening the door for any government - state and local, foreign and domestic - to use what amounts to blackmail to achieve its ends. If this precedent is allowed to stand, it's not hard to imagine a government like China utilizing this kind of seizure power to prevent free media, like the New York Times, from reaching their citizens."

None of the 141 domain names are owned by individuals or companies located in Kentucky.

Gov. Beshear claimed the Internet gambling sites were sapping money from the state's own gambling businesses, calling them "leeches on our community".