Wednesday, September 24, 2008

Kentucky Gov. Wants to Block Online Gambling Sites: Does He Have a Hand?

Dangerous Site - Keep OutSo the governor of Kentucky, Steve Beshear, has asked one of his state’s circuit courts to give the state control of 141 internet domains currently hosting online gambling sites. There is a hearing scheduled tomorrow. (Article here.) If the state is granted such control, the domains themselves will (of course) continue to exist and the sites hosted on them will continue to function. However, citizens who live within Kentucky’s borders -- or really anyone just passing through -- will no longer be able to access sites hosted on those 141 internet domains from their computers.

No idea what is actually going to happen in that Franklin County courtroom tomorrow. The Circuit Court Judge Thomas Wingate could well dismiss the order as an uncalled-for restriction of Kentucky residents’ freedoms. Then again, could those bringing the civil action order actually have a case? How on earth does Gov. Beshear believe he has the legal right to seize such control over citizens’ access to certain domains?

A Civil Action

Technically speaking, the civil action is being brought by the “Commonwealth of Kentucky ex rel J. Michael Brown, Secretary, Justice and Public Safety Cabinet.” That is, the “plaintiff” here is the state and the order is being brought “ex rel” or “upon information” brought by Brown, who is obviously acting according to Gov. Beshear’s wishes.

Just glancing through the list of the 141 domains being targeted, the online poker player recognizes several, including absolutepoker.com, bodoglife.com, cakepoker.com, doylesroom.com, fulltiltpoker.com, microgaming.com, pokerstars.com, and ultimatebet.com. All of these sites are operated offshore, of course. I’m not as familiar with most of the others on the list, but imagine most if not all of those are also non-U.S. based.

So, again, one wonders: What right would the governor of Kentucky have to control whether or not the sites hosted by these domains could be accessed from computers located within his state’s borders?

Does the Unlawful Internet Gambling Enforcement Act of 2006 give him such power?

THE UIGEA and ISPs

The UIGEA does contain a section detailing certain “Civil Remedies” to facilitate the prohibition of Americans’ accessing online gambling sites. If the UIGEA matters at all here, this is the section of primary concern.

In a post from October 2006, I wrote about a couple of the ways the law appears to try to stop us from playing on those sites by “Eliminating the Middle Man.” I discussed the mechanism by which the UIGEA aimed to prevent “financial transaction providers” (or third-party vendors) from facilitating our moving money to and from the online poker sites. That’s the method that has received the most attention thus far, and which has stymied the feds in their attempts to finalize the regulations.

In that same post, I also tried to figure out one other section of the UIGEA that specifically targeted what it refers to as “interactive computer services.” Here is part of what I wrote:

“In part (c) of section 5365 (‘Civil remedies’), we learn that federal agents can force ISPs to block access to online gambling sites, and even access to sites that link to online gambling sites. There it says the responsibilities of ISPs will be limited to ‘the removal of, or disabling access to, an online site violating section 5363 [i.e., an online gambling site], or a hypertext link to an online site violating such section.’ It also says that the Act does ‘not impose any obligation on an interactive computer service to monitor its service or to affirmatively seek facts indicating activity violating this subchapter.’ In other words, unlike banks, credit card companies, other ‘designated payment systems,’ and even some ‘financial transaction providers,’ the Act does not say that ISPs are going to have to police themselves. Nor does it say the ISPs are liable at all if their patrons are accessing such law-breaking sites.”

I went on to speculate that even though ISPs wouldn’t necessarily have to block sites unless “the feds tell them to,” we still had reason to worry. For one, the feds could start telling them to. Also, I wondered then whether the ISPs might start policing themselves and block access to domains hosting sites deemed “unlawful” by the UIGEA. That (probably misplaced) worry was primarily inspired by having witnessed several poker sites (e.g., Party Poker, InterPoker, 888, Titan, etc.) and Firepay voluntarily leave the U.S. market.

In any event, I concluded by saying I saw “very little (really, no) recourse for the online player who suddenly discovers he cannot access his favorite online poker site.”

In my post, I referred only to “federal regulators” (or “the feds”) telling the ISPs to block the domains, but if one looks at the text of the UIGEA one sees I kind of glossed over how it also says that “the attorney general (or other appropriate State official) of a State in which a restricted transaction allegedly has been or will be initiated, received, or otherwise made may institute proceedings under this section to prevent or restrain the violation or threatened violation.” In other words, I think it is possible here for the governor of Kentucky (or the Secretary of the Justice and Public Safety Cabinet) to assume this responsibility and tell his state’s ISPs to block access to the domains hosting the sites.

Does the UIGEA matter here?

An interesting question, I think. And I really don’t know the answer. I’m not completely sure what relevance the UIGEA has in this context. It was signed into law. The Secretary of the Treasury and the Board of Governors of the Federal Reserve System have yet to finalize the regulations. If that happens, the banks will have to do what they are told or risk the severe penalties for failing to do so. All of that seems clear enough.

As I say in the earlier post, though, these “civil remedies” do not have to be followed even when the regulations are finalized. There is no penalty for, say, a federal regulator or state official (e.g., a governor) who doesn’t make the ISPs block access to the domains where online gambling sites are hosted. However, according to the law, the ISPs will be forced to follow the directive should they be told to block access to the domains hosting the sites.

Sounds perfectly crazy, I know. And would set a horrific precedent, not just for those who wish to gamble online, but in terms of Americans’ rights of access to the internet, generally speaking.

It is that latter reason that makes me think this ain’t going anywhere tomorrow. But like I say, I really don’t know what will happen. I guess we’ll find out tomorrow whether the governor really has a hand.

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