Gambling with Free Speech on the Net
Upset at what he saw as competition to the state lottery and to state-taxed parimutuel betting, last year Kentucky Governor Steve Beshear (D) initiated efforts to seize the internet domain names of 141 offshore online poker, sports betting, and casino gaming sites. This action was undertaken despite the fact that these sites are operating legally in their home nations and have no physical presence in Kentucky.
With his plan in place, Beshear hired an out-of-state contingency-fee only law firm to assist him with his scheme. The governor and his team of hired guns went to a state circuit court to initiate the seizure and forfeiture of the domain names in question. His stated intention was to release the domain names to their rightful owners only after they paid a large cash settlement and agreed to use blocking technology to prohibit Kentucky residents from viewing content the governor found objectionable. In other words, Beshear sought to assess a non-existent tax on foreign companies and unilaterally establish trade policies while censoring the world’s Internet sites to control content accessible to Kentuckians.
Beshear moved his case through the state circuit court, but lost 2-1 on appeal. The Kentucky Supreme Court will hear Beshear’s appeal of that loss next month, and supporters of internet freedom are lining up to tell the court where they stand. eBay, Network Solutions, the Poker Players Alliance, the Interactive Media Entertainment and Gaming Association, the Electronic Frontier Foundation, the American Civil Liberties Union of Kentucky, the Bluegrass Institute, the Center for Democracy and Technology, and many others are demanding that the Kentucky Supreme Court uphold the appeals court ruling.
Beshear’s contention that any court in the world should be permitted to seize domain names of internet sites operating legally in their home jurisdictions is deeply disturbing to those who value internet freedom and U.S. sovereignty, and with good reason. For example, under this scheme CNN's internet domain name could be at risk if they were to run an article critical of Cuba or China. Similarly, the Family Research Council’s domain name could be seized by a court in a small town in Syria if FRC were to run an article critical of Islam.
A few years ago, a French court ordered the web site Yahoo.com to block French citizens from accessing parts of the site deemed by the court to have content unlawful under French law. Yahoo resisted, citing free speech rights. If French courts had the authority to seize the domain “www.yahoo.com” to force compliance, they could have muzzled Yahoo. If Beshear succeeds, our First Amendment free speech protections could be rendered moot on the internet.
Beshear’s scheme is also dubious on constitutional grounds. The U.S. Constitution’s commerce clause clearly delegates authority over interstate and foreign commerce to the federal government (“the Congress shall have power to… regulate commerce with foreign Nations, and among the several States”). State courts are typically hesitant to cede any authority to the federal government, but federal courts - likely the next step for the sites if the Kentucky Supreme Court rules against them - may not so cavalierly ignore the Constitution.
Beshear’s attack on the Internet is not even necessary. If Beshear wishes to help poker players, all he needs to do is employ a market-based approach. If he were to support legislation creating a legal framework for online poker, Kentucky’s players would choose licensed sites over unlicensed ones almost every time. Licensed sites would be perceived as being safer, and market forces would drive compliance via natural competitive advantage. This is surely preferable to a doomed scheme to police the world’s internet from the Kentucky governor's office.