March 25, 2019

Kentucky vs. 141 Domain Names

Yes, that is a title of a real, current legal case and controversy.

(And, no, the links in this post are not spam… mostly gambling news sites seem to be reporting on this.)

The Governor of Kentucky, through his Justice and Public Safety Cabinet, has moved in court to have 141 gambling-related domain names transferred to the Kentucky state government, partially because other legal gambling operations in Kentucky, like horseracing, lose revenue to online gaming. Yes, you read that right: by allegedly violating KY law, the state can move to have property used in these unlawful acts transferred to the state. In this case, the “property” in question is the domain names themselves.

This case is definitely novel in the realm of cyberlaw, but also is a bit controversial for how it originally proceeded. At first, the state met with the judge in a unilateral hearing where the judge granted a seizure order directing the registrars of each domain name to transfer the domain name to the state of Kentucky (a few registrars transferred the domain names immediately upon receiving the order). The judge also then established a date for a forfeiture hearing (think of it as a last chance opportunity for affected parties to appear and dispute the seizure of their property). A phalanx of attorneys for various gambling outfits (presumably, see below) as well as industry and players associations showed up to this original hearing. The judge decided to accept briefing on the various issues presented; his order was due on Wednesday but was delayed until yesterday due to a computer glitch.

Judge Wingate’s order was handed down on Thursday. There’s so much interesting stuff in this case, perhaps it deserves a few more posts; I’d like to highlight a few things:

  • Identifying parties — For obvious reasons related to gambling being illegal in many parts of the United States, many of the 141 Domain Names defendants don’t want to be identified. However, to have standing — that is, to be able to present a legal argument as a direct party to a case — one needs to have an attorney and be identified as one of the named defendants (or anyone could make the case).
  • Domain names as property — Are domain names more like an address or phone number or are they more like a piece of physical property? Here the judge relies on a case from the 9th Circuit in California, Kremen v. Cohen 337 F.3d 1024 (9th Cir. 2003), where Justice Kozinski had to decide if a domain name was property that could be stolen under California law. That case established an “attributes test” for intangible property that includes 1) is there an interest capable of precise definition? 2) can it be excluded from possession or otherwise controlled? and 3) can the purported owner establish a legitimate claim to exclusivity? Applying this test (and some additional muddled reasoning), Judge Wingate found that domain names are indeed intangible property.
  • Devices and chance — The state maintains, and presented expert testimony to the effect, that domain names are a “device or transport device allowing Kentuckians to engage in internet gambling.” In my opinion, this is where Judge Wingate goes a bit off the deep end. The part of Kentucky law that defines a “gambling device” (KRS 528.010 (4)(a) and (b)) as a tangible device manufactured and designed specifically for gambling. Wingate compares domain names to “virtual keys” for “virtual casinos” and finds that reading the law literally is not appropriate here and, rather, Kentucky courts have to uphold the intent of the law. And how much virtual intent can we read into Kentucky law? I would further quibble with Wingate’s assertion that these particular domain names have been designed to attract players; most of the successful gambling sites in the list of 141 seem to have more branding value in their domain names rather than cachet due to clever word choice.

    Also, under KY law, games of chance are explicitly illegal while games of skill are not. The Poker Player’s Alliance, a group that represents players of poker and poker enthusiasts, argued in an amicus brief that the poker-related subset of the 141 Domain Names should not be subject to the forfeiture due to their not being illegal under KY law. Wingate seems on more solid ground with the chance element raised by the Poker Player’s Alliance. The part of KY law relevant here (KRS 528.010(3)) in that it defines chance as only one element of what constitutes “gambling” with risking something of value and the opportunity of winning something of value as the other elements.

What’s the upshot of all of this? To me, it’s pretty scary: A state government moved to order seizure of domain names that it found were illegal “devices” and a judge issued an order demanding the transfer of these domain names before any hearing or opportunity to protest. The state has so far successfully argued that domain names are property and devices used for illegal gambling within Kentucky and that the 141 Domain Names defendants must identify themselves to have standing to contest the seizure and forfeiture. The last shoe to drop is that Judge Wingate, as part of his order from yesterday, ordered the state to rescind any forfeiture for gambling sites that block Kentucky gamers using geographical blocking methods (the wording was, essentially: Defendants who install a “software or device […] which has the capability to block and deny access to [the defendant’s] online gambling sites […] from any users or consumers within the […] Commonwealth [of Kentucky] and reasonably establishes to the [state] or this Court that such geographical blocks are operational, shall be relieved from the effects of the Seizure Order and from any further proceedings [in this action.]”).

What is to stop other local governments from mandating blacklisting of geographical user bases (despite the plain futility of this protection measure)? What’s to stop an authoritarian state from seizing the domain name of a dissident group? I don’t see a good solution.

Finally, the only general amicus brief submitted was from the Internet Commerce Association representing domain name registrars. Where is the public interest voices in this? Where are my friends from the Electronic Frontier Foundation?

Comments

  1. The obvious solution to the problem is using off-shore registrars. A Kentucky judge cannot issue orders to companies based in the Caymans, for example.

  2. I don’t see how a Kentucky judge can legally issue orders to an out of state registrar, as they have here. And this goes further than gambling. Suppose you have a site dealing with evolution and is critical of creationism. What’s to stop a future Texas court from taking your domain by claiming it hurts their education system (they’re continually trying to institute the teaching of creationism under the “intelligent design” banner)?

    There are numerous other possibilities. Anti-gambling is the thin edge of a very nasty wedge.

  3. What’s the upshot of all of this? To me, it’s pretty scary: A state government moved to order seizure of domain names that it found were illegal “devices” and a judge issued an order demanding the transfer of these domain names before any hearing or opportunity to protest.

    If this happens a lot (and I doubt it will), then the domain name sytem will switch over to something else that is more difficult to subvert in this way (route around the obstacle). I’m not exactly sure what it will morph into but with all those intelligent Internet users out there thinking about it, there will be an answer.

    No one feels very sorry for Internet gambling houses, we can all be sure they will stay in business regardless of what the State of Kentucky decides to do. People determined to give their money away will do so one way or another. Probably, the gambling houses will take it to a higher authority and get the WTO to issue an order preventing local protectionism (which would be amusing). I believe that the WTO fully supports free trade in “recreational services”, which is only to be expected, since the WTO has no particular moral position, and was designed for exactly the purpose of preventing local Kentucky judges trying to regulate kickbacks to local industry.

  4. Question for clarity: Kentucky is attempting to claim ownership of domains registered to businesses that do not have operations in Kentucky? Is this not essentially imposing Kentucky law on a world-wide scope? If this becomes a regular occurrence, then anything that is illegal *anywhere* is at risk for takedown worldwide. Can you imagine the Middle Eastern Imams taking possession of the New York Times (.com) for reprinting the infamous anti-Islamic Dutch cartoons illegally? Or the government of Thailand taking possession of YouTube for illegally slandering their King?

    Or are the 141 domains all registered to businesses based in Kentucky? If that is the case … well … I’m sure they’ll just move offshore.

    I can think of at least one precedent for a domain being handed over unilaterally, though, perhaps, it has some justification. The IFPI (International Federation of the Phonographic Industry) had its domain claim-jumped when it failed to renew promptly. Whoever jumped the claim then turned around and donated the domain to the infamous piracy site, The Pirate Bay, which installed a parody site in place of the former industry site. The IFPI successfully sued to regain ownership. I’m not sure what the grounds were I’m afraid, but The Pirate Bay *did* own the domain legally for a short time.

    There are also numerous examples of domains being treated as “spoils of war” (i.e. as property). Whenever the music industry successfully takes down a piracy site, the domain seems to end up in the possession of the RIAA (Recording Industry Association of America). Sometimes these occur as a result of legal settlements, but there have also been cases when the domain has been transferred immediately after a raid takes place (i.e. before the case is heard in court). I would assume that domains in this case are treated like property taken into custody as evidence after such a raid, but I’m really not legally qualified to say for sure.

    Can anyone else think of other examples?

  5. One of the problems with looking at domain names as property is that they’re all in the custody of people with different rules (and different degrees of care in following those rules) about what will cause them to transfer this “property” to someone else. But of course the registrars have no real stake in refusing anything that looks like a legitimate order for transfer, because in most cases they’re insulated from whatever damage may be caused by a mistaken or fraudulent transfer.

    What surprises me more, in a way, is that other jurisdictions, especially the more or less authoritarian states, haven’t taken this route. If a registrar sells domains to citizens of a country it’s hard to claim they’re not doing business there.

    I also wonder what the Kentucky court would consider adequate filtering — is checking the box that says “I am over 18 and not currently located in Kentucky” sufficient, or do they have to unwind every possible proxy? (Note that the credit-card billing address might not do it, because the law doesn’t prevent kentucky residents from gambling when they’re somewhere else — or does it?)

  6. The use of “Onion Routing” http://en.wikipedia.org/wiki/Tor_%28anonymity_network%29 makes it impossible to limit access to anywhere by a government, or from anywhere by a web service. Is the next step to prohibit encryption? Outlaw SSH in KY?

  7. Problem was nobody knew about this until the order came down, but it’s being challenged, and your friends weighed in at the appellate level: http://www.eff.org/press/archives/2008/11/13

    Fingers crossed this court sees it the right way.