Kentucky's Democratic Governor, Steve Beshear, recently went to his state's courts, and declared that all off-shore gambling websites' domain names be confiscated, since he felt that their gaming software was directly contributing to the loss in revenue being suffered by legalized Kentucky gambling sites (namely, horse racing and lottery sites). Beshear claimed that 141 casino and poker website domain names that he named, should be seized to prevent their operations from continuing. Hence, the beginning of the Kentucky Domain Seizure case.
Beshear's argued that even though the named websites (and their software) physically reside outside of the United States, their domain names were registered via a U.S.-based registrar, GoDaddy.com, and thus should be confiscated. Beshear's argument stipulated that given that these sites were "authorized" in the United States, they should be subject to local Kentucky law. Despite the fact that most of these websites are regulated by the local jurisdictions that they reside in, Beshear's argued that these domain names are considered to be "gaming devices", which is illegal by Kentucky standards.
Judge Wingate, of the Kentucky County Circuit Court, made a judgement in favor of Beshear and the state of Kentucky, and ordered all websites to either block access to the state of Kentucky or be faced with their domain names being seized on December 3, 2008. Related to this, GoDaddy.com also agreed to abide by the Court's decision, and turn over all domains to the state of Kentucky, if the ruling was not followed.
On the flip side, attorneys for the defense (namely, the Interactive Media Entertainment and Gaming Assocition known as IMEGA, and the Internet Gaming Counsel) are vehemently in the process of challenging this rendered decision, and have plans of challenging it at both the federal and state levels. Additionally, defense attorney have alluded that they would be willing to take this case up to the federal Supreme Court, since they allege that the local Kentuck Circuit Court and its laws should not have jurisdiction over the global Internet.
To date, some of the effected 141 web sites have decided to block access to Kentucky, and some have decided to block access to all states in the U.S. Yet others appear to be ignoring the verdict rendered by the Kentucky courts.
Although on the surface, the decision rendered by the Kentucky Courts seems to be very focused (gambling only) and very locale restricted (Kentucky only), the full ramifications of this ruling are profound. If these sites decide to comply, then surely other states will follow suit. Should this ruling stand after appeals are made, this decision may become the basis for any local jurisdiction to challenge the commerce of a non-local website in their area. Clearly, the ramifications of this are enormous, in that a local electronics store could claim that BestBuy.com, which is based in another state, is siphoning away business from this local vendor. In this instance, could a local judge order the confiscation of the BestBuy.com domain name or order that it block access to the state's residents ?
Without question, the issue of Internet freedom (the entire basis for the Internet) is now under attack, based on this ruling. The risk is that the globalization aspect of the Internet is now under scrutiny, and whether or not local law should be able to supercede it. The entire future of the Internet may depend on the appeal process and its results.