In 2008 the state of Kentucky tried to seize 141 domain names in an attempt to prevent its residents from wagering offshore. The state realized it had no way of getting to offshore operators and wasn’t prepared to pass a law which made wagering by its citizens illegal so they decided the best way to stop Kentucky residents from wagering was simply to make the websites inaccessible. The motion was challenged by both iMEGA and the Interactive Gaming Council but the first district court judge allowed the domain seizures. Almost immediately civil rights groups including the American Civil Liberties Union stepped in demanding the ruling be reversed and the court of appeals put a stop on the domain seizures until it could be argued in a higher court. The case has been stuck in neutral since that time as motions relating to the standing of iMEGA and the IGC as well as motions questioning the true power of a state district attorney have been argued back and forth. But for all intents and purposes the case appears dead. And while that may be welcoming news for gamblers in Kentucky, as it turns out it was a moot point because the federal government has taken on the web seizures themselves. As most know, last year the DoJ took the domain names for PokerStars.com FullTilt.com Betmaker.com and numerous others but unlike the state of Kentucky, there never seemed to be consideration of whether they had the right to do so.  As far as the U.S. government is concerned, any domain name that is operating illegally is subject to search and seizure by the federal government, so the FBI went to VeriSign, which controls all .com, .net and .org domain extensions and took control of the websites. The websites still exist but when people type in the URL, instead of getting the actual site they end up redirected to an FBI banner which reads the following:

“This domain name has been seized by the U.S. Immigration and Customs Enforcement – Homeland Security Investigations, Office of the Special Agent in Charge…” It then ends with a statement that “It is unlawful to conduct a gambling business in violation of 18 U.S.C…”

After the seizure of those websites, the DoJ threatened similar action with other websites if they continued to cater to American citizens and last week they acted on that threat when they seized control of bodog.com which was dormant but is still owned by the Bodog brand. While the government may believe it achieved a major coup with these seizures, the actions will hurt them and the country in the long run. The reasons for that are many.

First and foremost, the Internet is global and consequently is full of illicit activities. Some of these include identity theft, fraud, copyright infringements, illegal drug dealing and child pornography. And most of those activities take place in jurisdictions outside of North America. The U.S. is encouraging other countries to work with them to stop these activities at the source, but by lumping online gambling in with the other activities other nations may balk for fear that the U.S. isn’t being forthright. This is especially true since the WTO has ruled that online gambling is not a “moral” issue and should not be treated so. By effectively telling countries like the UK, Antigua, Costa Rica and Canada that their internet laws and licensing practices are irrelevant and illegal, the U.S. has created enemies and those who control the internet in the EU and other nations may say they won’t work with the U.S. because they don’t trust them not to overstep their bounds.  Moreover, the U.S. has urged for more freedom of the internet in countries like China, the UAE and even some democracies but those countries have been reluctant because they want to keep their citizens uninformed in order to keep power. In fact over 40 countries currently censor the Internet by blocking access to sites which they deem dangerous. China, for example still only allows limited access to Google. But the U.S. pleas to open those up will certainly fall on deaf ears since the U.S. has set a precedent that if a country doesn’t agree with an activity it’s ok to block it. In fact it’s almost certain that countries like China, Dubai and Russia are applauding these seizures because it now gives them a solid reason to defy U.S. demands to open up the internet in their countries.

A second reason, the domain seizures are a bad idea is they don’t work. Betmaker.com still has the FBI banner on there but customers of Betmaker now happily play at Bookmaker.eu and by all accounts very few customers cashed out because of the new domain name. Similarly when PokerStars.com was seized, customers immediately started playing at PokerStars.eu without missing a beat. PokerStars.com is now back up and running but the company has numerous other sites with extensions that aren’t in the control of VeriSign that they can simply evoke if the U.S. government ever tries a similar stunt. And in the case of Bodog.com, the site is dormant anyways. Sensing the FBI may indeed consider a similar move against them, the current U.S. facing Bodog site now uses Bovada.lv and the other Bodog sites use a .eu extension. In fact when asked about the seizures Calvin Ayre was clearly disinterested. Naturally he would like to get the domain name back but even if he doesn’t it won’t affect customers of the Bodog brand.

A third reason the domain name seizures are bad policy is that it encourages Internet users to look for new avenues to circumvent the U.S. government. In Canada recently the federal government announced that it wanted to be able to monitor ISP usage so in response many Canadians are now looking to Internet companies that are independent and outside the reach of government scrutiny. In fact Open DNS servers and Google public DNS servers are becoming much more popular for North Americans. As well, proxy servers are being used far more frequently. And since the U.S. government is relying on ISPs to cooperate with them to identify fraudsters, child pornographers etc., it could all backfire if more people look for alternatives to their ISP to access the internet. And the news also gives the true criminals ideas of how to circumvent their local ISP. Essentially it’s like closing down the local Waffle House because there are rumors that drug dealers hang out there but no arrests are actually made. In the end the drug dealers and their clients all move away to more remote and better secured places and the only one that is really affected are those that have done nothing wrong.

A fourth reason why the domain seizure is bad policy is that it may be illegal. I’ve spoken to numerous lawyers almost all of whom say that the web seizures violate the first amendment and probably international law. And a few of them even suggest it’s outright theft. While the U.S. government believes it controls the internet and top tier domain names, the truth is that domain names have always been seen as property. Business.com sold for $5 million and numerous other .com domain names sold for high 6 figures. Companies invest millions of dollars developing a brand and the corresponding website, so to simply take it without due process is unethical if not illegal. That is particularly true when the website is based in another country and is operating legally per the laws of the land. All the domain names seized on Black Friday as well as Bodog fit in that category. Those companies operate legally in the land where they are licensed and by seizing the sites and putting up the banner the FBI essentially has told internet users worldwide that Americans are operating illegally by accessing the site. Imagine the cry from the USTR if say the Russian Federation decided that it didn’t like what Google was printing so it took over Google.ru and replaced the news on the site with Russian propaganda and anti U.S. rhetoric. Or imagine if radicals in the Indian government seized the local McDonald’s website and replaced the menu with propaganda telling the world how they will be hated by God for eating cow meat.

Lawrence Walters, a first amendment attorney at Gameattorneys.com said it best when he wrote:

“Seizing a global website domain based on alleged criminal law violations in a single country served by that domain appears to be abuse of the legal process. At a minimum, a conviction should be required before any type of prior restraint is imposed on the online speech emanating from the domain name. The First Amendment requires as much. Even with a criminal conviction, seizing and forfeiting a venue for online speech and activity that may be completely legal in many other counties seems excessively harsh, and disproportionate to the alleged crime. This practice of routinely reaching out to the .com Registry every time the Department of Justice believes a website operator is violating the law is a practice subject to abuse, and one that should be carefully reviewed by the judges assigned to these cases.”

Finally, the U.S. is creating serious harm to the country by having the department of Homeland Security take responsibility for policies relating to internet gambling. The UIGEA was attached to the Safe Port bill; almost every arrest related to internet wagering involved charges for money laundering and violation of the RICO act; and the web seizures have Homeland Security’s seal on there. Congress agreed to setting up the department of Homeland Security to address issues of American safety such as terrorism and immigration offenses and the public went along with it because they believed the department along with the Patriot Act were necessary to ensure another 9-11 doesn’t happen. But it’s almost certain that few that approved the department at the time would contend that internet gambling fits in that category. To equate David Carruthers or Ray Bitar with Osama Bin Laden makes the whole department appear silly. In fact, the proof that the original purpose of the act wasn’t meant to include internet gambling is that Tom Ridge, the first head of Homeland Security is now a spokesperson for a group that is trying to get online poker legalized. And several congressmen said they would never have voted as they did if they knew what types of activities would be lumped in to the homeland security portfolio.

In conclusion, the U.S. government may be pleased with itself for its ability to seize websites but it should think long and hard before it continues the practice. In the long run the whole plan could blow up in its face as other nations follow suit and American citizens look for ways to circumvent the internet police. The internet is global and intended to be free. Some activities must be curtailed but in order to do so, the U.S. must work with other nations and can’t unilaterally determine what those activities and certainly can’t push their moral beliefs on sovereign nations and take away their property without due process. That would require a change in strategy by the U.S. government and acknowledgement that no country has the right to rule the internet as it sees fit.

Contact Hartley via email at Hartley[at]osga[dot]com.

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