Kentucky’s Domain-Name Grab

The governor of Kentucky, Steve Beshear, is cracking down on Internet gambling sites, which he refers to as “leeches on our communities.”  (See story.)  The governor filed a lawsuit in Kentucky state court in an attempt to force gambling sites to prevent access to Kentucky residents.   To get the sites’ attention he asked the court to transfer ownership of their respective domain names to the state.  It’s an audacious strategy that raises a number of issues about the state’s power to achieve it.  Assignment of the names to the state is not the same thing as garnishment but still this case reminds me of NSI v Umbro International–perhaps because I reread it a few days ago.   This is the Virginia case in which Umbro attempted to attach a domain name as collateral for the domain name owner’s debt to Umbro.  NSI, the domain name registrar, objected to the attachment.  The court refused to treat the domain name as property.  The court held that a domain name contract gives the name’s owner a license to use the name for a set period of time.  More specifically, it gives the name owner the right to have domain name root servers point to the owner’s website when someone enters the domain in a web browser address bar.  This contract for services does not give the owner a property right that a creditor can attach.

Blocking these sites from Kentucky residents’ access is also novel, and difficult.  Kentucky is not China or Saudi Arabia, where the government exercises significant control over what Internet traffic crosses the border.  The remedy seems futile.

The trial court judge refused to grant the governor’s motion to transfer the names, asking all parties to brief the issues so he can consider what to do.

3 thoughts on “Kentucky’s Domain-Name Grab”

  1. It is amazing to me what politicians can do when they put their mind to it. Now even though it is unlikely that Governor Beshear will be successful with his lawsuit, it shows that politicians CAN do something in an attempt to better their constituents (no matter misguided this approach may be). The Kentucky resident quoted at the end of the article frames the non-legal part of this story nicely with his disappointment in the Governor’s waste of time and resources especially when the country has more pressing issues at hand. If politicians applied this much effort to other problems within respective states or to the nation as a whole we might be able to fix a number of our looming issues – perhaps avoided them altogether.

    Legally, I feel Governor Beshear is crazy. What you call a novel idea I call egotistical grandstanding. I’m not sure who is advising the governor on this matter, but as you aptly note Kentucky is not China nor is it Saudi Arabia. I’m not sure how much more there is to discuss about the legality of this case as it seems to be something of the absurd. I’d be interested in seeing the briefs the State of Kentucky files in this matter.

    From every other stand point, this is still absurd. Transferring 141 domain names to the State of Kentucky is a huge undertaking and makes little sense when those websites operate and serve customers in many other locales. If the Govern gets his wishes someone working for the State of Kentucky will receive a huge headache in the management of those 141 domains.

    All that’s left is to shake my head and wonder if there is any hope for better politicians in the near future.

  2. As long as the Governor’s motion is reviewed under the rational basis test, it might easily be passed. Is the law banning online poker (or all gambling) rationally related to a legitimate state interest? For the state government, not only does online gambling deprive KY of potential revenue that could be collected in physical casinos (which the Gov supports), but it also serves to “protect” the citizens from predator gaming sites which could misrepresent gaming odds and move your money into offshore accounts (also depriving KY of tax revenue from in-state gaming operations).
    This does seem to be round-about remedy to a financial problem best solved by just increasing taxes in some other area.

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