Online Gambling

Kentucky Takes Over the Internet

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In a sweeping move, Kentucky Gov. Steve Beshear last month attempted to seize the domain names of websites that offer Internet gambling.

Beshear didn't adopt the usual posturing line about web-based gambling undermining public morality.  Rather, he argued that online gambling was taking money away from the state, both from the state lottery and from the tax revenue generated by horse racing.

Both are unlikely.  Internet poker is overwhelmingly the most popular form of online gambling.  While there's some element of chance associated with poker, it's a game of skill.  Such is why thousands of people make a living playing poker.  No one makes a living playing the lottery.  At least not for very long.

It's a dubious proposition to think that were it not for online poker, thousands of Kentuckians would be pissing their money away on poker-themed scratch-offs, which not only require no skill at all, but pay out some of the worst odds of any form of gambling.

Unfortunately, Beshear got the backing of a state judge this week.  In a fairly stunning ruling, Kentucky Franklin Circuit Judge Thomas Wingate wrote that, "The Internet, with all its benefits and advantages to modern-day commerce and life, is still not above the law, whether on an international or municipal level."

The implications of that sentence are pretty profound.  If it's upheld, it would mean that web-based businesses would have to familiarize themselves with the laws of every government entity in the world, then tailor their websites to conform to local law.  Otherwise, they'd risk having their domains seized by local governments.

Seems like the Internet porn industry would be the next logical target.

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  1. Seems like the Internet porn industry would be the next logical target.

    Interstate commerce. This will go down in flames. But the hick governor got a press conference out of it. Some taxpayer payed state attorney will waste weeks defending it in court.

  2. pfft… Let Kentucky try to censor the internet like China, see how far it gets them. Who knows, maybe Utah might even make a go of it as an “internet free zone”.

  3. Where’s Montag to play “guess the party”?

  4. Is this Governor of any particular political Party, Radley?

    Not sure if anybody else noticed, but Kentucky Gov. Steve Beshear’s argument, as conveyed here, is almost identical in structure to the argument that the ‘president’ of East Germany (‘mayor’ of East Berlin?) had when the East Germans cut off free travel to/from the west: The West is stealing our labor!

    Also, see the arguments put forth by Governors cutting off supplies/access to Indian reservations, invoking a loss in tax revenue because their neighbors don’t feel like doing the accounting for States like New York.

  5. JD,

    Right there within seconds of your post.

  6. Where’s Montag to play “guess the party”?

    Indeed. The answer’s “Democratic Party,” BTW.

  7. The thing about the Internet is that address lookup is done by Domain Name Servers.

    So let’s posit two web servers with two different numerical addresses, A and B. A is owned by a gambling site, and B is owned by the Kentucky government.

    The gambling house purchases the domain http://www.gamble.com and registers the numerical address A with a registrar. This information is slowly propagated out to all DNS servers on the internet, and so when someone types “www.gamble.com” into their browser, their request is directed to address A.

    Now the Kentucky judge issues his court order. Well, to enforce the order, the owers of the DNS servers have to change their tables so that a request of “www.gamble.com” points to numerical address B.

    However, what if some DNS servers don’t make the change? Well, the computers sending their lookup request to those servers would still get A as an answer.

    It is only a matter of time before the DNS server network fragments, where multiple indpendent and contradictory naming schemes pop up. This will only occur if the government persists in idiotic attempts to push people around like this.

    like Emperor Norton I of CA, the judge can claim sovereignty over anything he wants to. Without the consent of large numbers of people, he isn’t going to get anywhere.

  8. JT,

    Ah, so the answer to why this crazy scheme and even crazier excuse is not “racism”. Must be something else, like ‘fairness’.

  9. Damn I’m good.

  10. How much “revenue” can the state of Korntucky be losing from the 3 residents sharp enough to use the interweb, let alone play poker?

  11. The importance of this dispute cannot be understated.

    A web site does not offer its services to Kentuckians. A web site offers its services to anyone with access to the web. Surprisingly, given the fact that there are things on the web Governor (nah, lets call him Mullah, for reasons explained below) Beshear disapproves of, Kentucky allows its citizens to access the web. And while it probably has to do that with regard to speech (that pesky First Amendment we have in the US) there is no reason Mullah Beshear couldnt just make it illegal for Kentuckians to engage in commerce on the web (oh wait, there is that commerce clause thing, but it can obviously be ignored when inconvenient). I suspect, however, that the Mullah may run into opposition IN KENTUCKY if he tried to tell Kentuckians what they can and cannot do on the web.

    So instead of telling Kentuckians what they can and cannot do, Mullah Beshear decides to tell the web sites what THEY can and cannot do. Doesnt matter that no part of them, their owners. employees, their operation or anything else has ever been “IN” Kentucky in any way, Kentuckians can access it!

    And then along comes Judge (Mullah) Wingate who basically agrees: Kentuckians are accessing your site, so you must do what WE say! You could, at expense and effort not required by the place in which you operate, block Kentuckians from accessing your site, but since you didnt, you have given us “jurisdiction” and must do what we say. The only way out for you site owners is to not allow Kentuckians access to your site.

    This is the precise legal position of Iran with respect to the interent. It was the position of the Chinese, but they modified it somewhat in the face of world pressure. Of course, both of those countries also have no problem prosecuting their own citizens for accessing “bad” sites.

    So, what kind of internet do you want? One where it is the responsibility of each site operator to know the laws of every local jurisdiction in the world and block access from those jurisdictions where the site content is illegal (or be subject to prosecution)?

    Or wouldnt you prefer an open internet where it is the responsibility of the jurisdiction to police its own citizens if it wants them to not access certain sites that are illegal in that jurisdiction but perfectly legal where they operate?

    We already know what the Mullahs want.

  12. It’s an interesting issue (tax loss) but one which should be settled through the policy process, not in the courts.

    My main thought here: keep incidents like this in mind when we talk about how we need to believe in federalism and keep power closer to the people.

  13. Where’s Montag to play “guess the party”?

    Indeed. The answer’s “Democratic Party,” BTW.

    FWIW, Judge Thomas Wingate (the guy whose fault this is) was appointed to his current position by a Republican, former Governor Ernie Fletcher. This is bipartisan douchbaggery.

  14. How much “revenue” can the state of Korntucky be losing from the 3 residents sharp enough to use the interweb, let alone play poker?

    Answer: All revenue shortages at this time can be attributed to money flying from the Commonwealth in an untaxed fashion. Unless this loophole is plugged, the Governor can not be held responsible for any shortfalls.

    IF this loophole is plugged, then the next excuse reason will be discovered, like people crossing borders to by things in VA, IN and TN.

  15. Beshear didn’t adopt the usual posturing line about web-based gambling undermining public morality. Rather, he argued that online gambling was taking money away from the state, both from the state lottery and from the tax revenue generated by horse racing.

    This by itself could have been enough indication that he was a Democrat not a Republican, no? IIRC, Deval Patrick did something similar in MA, trying to legalize state regulated casinos while banning Internet gambling at the same time.

  16. I, for one, would love to type “jumbobooty.com” into my browser and be re-directed to Kentucky’s homepage.

  17. It’s an interesting issue (tax loss) but one which should be settled through the policy process, not in the courts.

    And it is quite amazing how sales climb when you are in the lowest tax area of your “neighborhood”, so to speak.

  18. Judge Thomas Wingate (the guy whose fault this is)

    A little strong to say that “the Circuit Judge who ruled that the governor could proceed for now” is “the guy whose fault this is” without more clarification. And it’s a thin reed to make it bipartisan; I strongly doubt that Fletcher appointed Judge Wingate precisely for this purpose, or had any idea how he would rule in this case.

    But the hick governor got a press conference out of it.

    As did Deval Patrick in Massachusetts. It’s not really a “hick” thing to want to make Internet gambling illegal because it takes money from state gambling. Making gambling illegal because it’s immoral is more a hick thing.

  19. Of course, there is a difference between prosecuting gamblers, which Utah, Nevada (no competition here!), and Washington do, and which Deval Patrick wanted Massachusetts to do, and trying to appropriate the website domain registrations.

  20. Beshear? Beshear? Wasn’t he on Star Trek: Deep Space 9?

  21. 1) Move FARK HQ to across the state line.

    2) Cut off all internet access to Kentucky.

    Gov Beshear and Judge Wingate can do what they want, and I wouldn’t care anymore.

  22. As a lifelong Kentuckian, I can assure you the real sreason behind this. Beshear wants legalized casino gambling in this state because he thinks it will economic cure-all that will bring lots of jobs and tourism dollars to the state. But he doesn’t want anyone in this state to have access to a potential online competitor.

  23. This is bipartisan douchbaggery.

    Indeed. Anyone who thinks only D’s and not R’s are capable of stuff like this is na?ve. But I’m sure someone’s out there tallying the gambling-related initiatives by party as we speak…

  24. where is my hat tip for sending in this story a week ago?

  25. robc,

    It was delivered to the same place as my Washington Mutual stock.

  26. I think the answer to this is simple. The site should redirect all people with Kentucky IPs to a page with a phone number of who to complain to at the state house. When is this guy up for re-election?

  27. Seems like the Internet porn industry would be the next logical target.

    And that’s a problem? Good riddance.

  28. ProLib,

    5.45 a share at last trade. Thats cents, not dollars.

  29. Some Guy,

    2011.

  30. And that’s a problem? Good riddance.

    If you don’t like it don’t go looking for it, babydoll.

  31. Using tarran’s ideas as a model (and I don’t understand exactly how this all works, so I’m asking), could someone get the domain http://www.totalfucktard.com and link it directly to the Kentucky Governer’s website?

    Totalfucktard.com appears to be available…

  32. robc,

    I think that’s some sort of accounting fiction. Unless someone is buying up stock in order to join in the lawsuits.

  33. Dello,

    You can on your DNS server. On a DNS server you control, you can point anything you want to anywhere. Unless someone considers yours to be authoritative (and if you were pointing microsoft.com to centos.org or something they probably wont) it wont matter.

    Even if the governor can get the authoritative servers in KY to change their DNS records, that wont stop anyone from getting there by IP address.

  34. robc,

    Mmmmm….(rubs chin with finger tips)

  35. Pro Lib,

    WAMUQ is still be traded. Until the bankruptcy or whatever is final, it will trade.

  36. robc,

    Well, if I sell all of my shares in whatever market one trades near-defunct stock, I could get $5.45. I think I’ll stay in for the shareholders’ derivative suit. Then maybe I’ll get $8, less attorneys’ fees.

    I’ve been following WAMUQ just to prolong my anger, because it makes my desire for revenge stronger. Actually, I liked WM as an employer. It’s the stock that pisses me off.

  37. Sounds like the Great Firewall of Kentucky. It doesn’t matter how many domains the state confiscates, they’ll need to firewall the state off at the border or users will just route around.

  38. O please, please no… NOT PORN!!!

  39. Or wouldnt you prefer an open internet where it is the responsibility of the jurisdiction to police its own citizens if it wants them to not access certain sites that are illegal in that jurisdiction but perfectly legal where they operate?

    How about letting consenting adults do whatever the fuck they want on the web. Why should it be restricted on either end?

    Hell, most of the arguments I have seen against gambling are 1)we have to prevent the fools and their money from being parted or 2)it attracts the wrong element to our town. Internet gambling gets rid of 2, and I do not see why the government should be responsible for 1.

  40. No one makes a living playing the lottery.

    One in 16,000,000 do.

  41. As a native of Kentucky, there are few things worse than a Kentucky Democrat. It’s like a perfect mix of redneck and statist. Each part feeding off each others idiocy.

    I still remember ol’ Wally Wilkinson’s successful campaign for Governor. A former used car salesman, his entire platform could be summed up as “What’s we need is a lot’ry!” (lottery for those folks not versed in bubba speak). It was the answer for everything. Education? Lot’ry! Jobs? Lot’ry! Roads? Lot’ry! I honestly can’t recall if actually had any other issue on his platform. He ended up winning the Democrat primary with a plurality IIRC. Which in those days was the election (How times have changed).

    Maybe to insure Kentucky is the laughing stock of the Union maybe they can just reroute all “bad” traffic to the local creationist museum.

  42. Democratic Republican-

    No, it is an issue that should be decided by the market process. Internet trade and activity, including the buying and selling of nude photos of kids, is off limits to the “democratic process”. It is also off limits to the courts-unless the courts are acting to invalidate legislation that purports to control internet activity.

  43. robc and Pain,

    Two weeks ago, I had an accountant from HBO Sports in New York ask “Do you guys have email at [large state university]?”

    Why must our state keep giving ammo to retards like that?

  44. A little strong to say that “the Circuit Judge who ruled that the governor could proceed for now” is “the guy whose fault this is” without more clarification. And it’s a thin reed to make it bipartisan; I strongly doubt that Fletcher appointed Judge Wingate precisely for this purpose, or had any idea how he would rule in this case.

    Well, if he ruled the other way, the lawsuit would be dead. Though anti-internet gambling laws were passed by a Republican Congress and Republican Senate (and is supported by John McCain), so the elephants hands aren’t clean.

  45. SugarFree,

    Did you respond with, “No, but I get my first pair of shoes next week. I cant wait! Im so excited!”

    Something like that is usually my response.

  46. The money has to come from someplace, folks. Now the Governor just needs to put some teeth into the proposal to deal with all of these confounded untaxed casino riverboats flaunting the Commonwealth’s borders.

  47. robc,

    I held my tongue. Fuckers owe us money; I’ll lay into then when I get paid.

  48. some fed,

    The submarine option has been considered by the state legislature.

  49. While I didn’t vote for Beshear, it’s not like Fletcher (the last governor) was any better at good ideas or making the commonwealth look good.

  50. KY better not fuck around with the riverboats. Ohio has gone to war for less (much less: Toledo)

  51. This is one reason why we have the commerce clause. The judges ruling won’t stand. He’s an idiot if he thinks it will.

    “”””Beshear wants legalized casino gambling in this state because he thinks it will economic cure-all that will bring lots of jobs and tourism dollars to the state. But he doesn’t want anyone in this state to have access to a potential online competitor.”””

    Then he should try to legalized gambling. Places with casinos don’t really complain about internet gambling. They get plenty of buisness.

  52. I’ll echo other KY commenters in saying gambling isn’t so much a moral issue in Kentucky’s government as a revenue issue. Truly, this is just an extension of the mundane limitations of taxation at the state-level.

    States have been trying to band together for years to bring their sales taxes to bear against the Internet. This domain-seizure gambit is just another front in that effort. The next logical target is not porn, but Amazon.com.

    P.S. for TAO:
    Two words: Mounted Raids

  53. Why stop at Amazon? Is the state worried only about tax revenue and state owned businesses? Why not take away anything that hurts businesses in Kentucky? Online schools are taking business away from local universities. 1-800-Contacts takes away business from local opticians. Ebay takes business away from garage sales in Kentucky. Why not just use any excuse they can think of to tell you how to spend your time online?

  54. Just to tidy up the technical end of this …

    There are 13 “root” DNS servers on the planet … the big ones that everyone goes by, and that share their information with each other. KY can set up its own DNS server(s), but getting that info into any of the root servers would involve fraud (“domain jacking”), unless KY was successful in getting the various government entities involved to legally turn over the “offending” domain registrations to them. In other words … KY hasn’t got a chance in hell of appropriating those domains, regardless of how much damage they may do to the KY economy.

    Their only real option is to take the Chinese route … firewall the state’s ISPs … which is not only possible, but the means to do so are already in place. All U.S. ISPs have “packet filtering” systems in place for various reasons … mostly so that aggregators can pay them for the data gleaned as people use the networks (i.e. Comscore, et al.), or to throttle how much bandwidth any user can access (i.e. Comcast, et al.). It is technically trivial to use the same systems for destination filtering.

    Destination-based filtering using “Kentucky IP addreses” is a non-starter, as there is no such thing: IP addresses are assigned to hosting providers in huge blocks that have nothing to do with geolocation in any precise manner. Sure, you can guess that such-and-such user is operating from such-and-such a location because such-and-such IP is located there, but that is a very loose association, and may, in fact, be completely inaccurate.

    They’re just wasting their taxpayer’s money.

  55. Why not just use any excuse they can think of to tell you how to spend your time online?

    Hush dammit!

  56. Rob Midro,

    If the Commerce Clause has been reduced to just an excuse for greater federal intervention in the economy rather that a restraint upon local intervention, I fully expect them to take your advice and make the Internet just as thoroughly regulated and taxed as the rest of the formal economy.

    Besides, this doesn’t have to be thorough. It’s a revenue scheme. They just have to scare the biggest targets into willing compliance so that the revenue exceeds the administration costs.

  57. Seems like the Internet porn industry would be the next logical target.

    Nationalize porn!
    Why didn’t we think of this before?

  58. If only the locavore movement was about only watching porn made within 250 miles of where you live.

    Think globally, porn locally

  59. Maybe I was onto something. I think Ebay has done just as much to kill the local record store as digital music has (used record stores put all the good music online rather than in the store). There’s the solution. Ban Ebay and Kentucky record stores will have a revival. It’s about as logical and within their rights as their proposed internet gambling restrictions.

  60. SugarFree, not just local, but organic porn, too.

  61. Hmm… organismic…

  62. In a sweeping move, Kentucky Gov. Steve Beshear last month attempted to seize the domain names of websites that offer Internet gambling.

    Isn’t there a due process/eminent domain problem here? Doesn’t he either have to pay for what he has seized under the eminent domain clause, or prove in court that the domain names were part of a criminal activity?

  63. Nationalize porn!

    Of course, once it becomes a government enterprise, it will have to comply with equal rights laws. Every porn will have to include specified numbers of minorities. No more Hot Asian Babes; your quota of asian babes will probably be no more than 10%. Similarly, any group sex will have to include two guys going at it.

    And forget having only young people in your porn. That would be age discrimination.

    No, we will have to have Porn that Looks Like America. Which kind of defeats the purpose.

  64. I actually voted for this fuck, mainly because Fletcher (our last governor) was an out and out crook. So, I guess we traded a crook for a tinpot dictator.

    Kentucky is a wonderful microcosm of everything wrong in American politics. Instead of being abstractly doomed no matter who wins an election, we’re actually doomed no matter who wins the election. Kentucky: Bringing the doom home!

  65. Eeeew, RC Dean, FATTIES!

  66. The only way that Kentucky could “seize” gambling organizations (and their domain names) located outside the state would be through legal proceedings in those states or in federal court. And if they try that, the weight of the dormant Commerce Clause will fall mightily upon the heads of the Kentuckian lawyers.

  67. R C Dean:

    Isn’t there a due process/eminent domain problem here? Doesn’t he either have to pay for what he has seized under the eminent domain clause, or prove in court that the domain names were part of a criminal activity?

    Worse … he’s claiming the right to seize property that belongs to, exists in and is maintained by citizens of other nations. It’s like he wants to grab a casino in Monte Carlo because Kentuckians saw the location in a travel guide, traveled to the location and then played poker while they were there.

  68. The gambling website ought to countersue in their own jurisdictions to seize the State of Kentucky.

  69. Gambling on the internet sounds like a solid plan.

    I mean, the house only writes the program. I’m sure they write in lots of opportunities for the player to ‘win’.

  70. James Butler,

    They could also theoretically take all traffic passing through routers in Kentucky and run them through a proxy that is running a program like SmartFilter and just block online gambling. (Not necessarily a “firewall” but close enough.)

    There’s certainly no way he can ‘seize the domain names’ though. That’s just dumb.

  71. The Horse Racing industry has been struggling for years. Other states like Maryland subsidize it considerably and are considering ways to support it without more taxpayer money (slots anyone?). Kentucky is no different in this respect. Horse Racing and gambling are part of Kentucky’s identity.

    I doubt the Commonwealth of Kentucky would go after Amazon next since Amazon has a couple of major distribution centers there.

  72. Prrof if ever it were needed that you don’t need qualifications to be a US politician.

    He’d have been better off proposing regulating online casinos for Kentucky and pumping the revenues into the local economy. Be far more valuable, far more long-term and would’ve stopped him looking totally out of his depth in politics. Too late for that now I guess.

  73. I actually have mixed feelings about this issue. I think the way Bashaer did it was beyond dumb, and gambling in general is not my idea of a sound revenue stream. But I don’t think it’s totally unreasonable for states to want to recoup some of their lost tax moneys from unregulated purchases – although at least some sites do sales tax for at least some states (Amazon being one, as I know I pay state sales tax on Amazon purchases. Of course mine was one of the early states to make a fuss about losing its tax dollars to the nets, and unlike KY, it had a tech sector to back up its demands).

    But I didn’t really mean to make a substantive comment. I just can’t seem to help myself. I really got on here to say that this is the best thought I’ve ever read on the internets, ever:

    “If only the locavore movement was about only watching porn made within 250 miles of where you live.

    Think globally, porn locally”

    My life has a new purpose.

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