Hello and welcome to the GamblingCompliance podcast in a week that the online gambling industry, many members of which have been gathered at the EIG event in Barcelona, has been struggling to digest news of the local enforcement actions launched against over one hundred internet gambling sites by Kentucky Governor Steve Beshear.

Beshear’s office has supported a court action to seize the domain names of the 140-plus websites believed to be targeting Kentuckian customers.

Kentucky state statutes empower authorities to effectively seize and destroy materials or records used to promote or conduct unlawful, non-charitable gambling in the state – and Beshear’s office contends that this can be applied to the domain names of sites operated by companies such as Poker Stars, Bodog and Absolute Poker.

It says it is seeking to take ownership of the domain names in order to ensure that sites cannot be accessed by Kentucky residents.

A county court upheld the state’s challenge last week, and a further forfeiture hearing has been postponed after originally being scheduled for Friday afternoon.

Legal experts have commented to GamblingCompliance this week that it is highly doubtful whether a US federal court, or internet domain registrations overlords ICANN, would ever allow one individual state to assume ownership over domain names registered elsewhere in the US and belonging to companies based outside the country – leading to the conclusion, as one commentator told the Guardian newspaper, that the actions were merely a “stunt” performed by the Governor’s office.

But while the Governor’s actions will leave Beshear about as popular a Kentuckian amongst the online gambling industry as Colonel Sanders is amongst chickens’ rights advocates, the precise motivations behind Beshear’s clampdown remain unclear.

Observers will point to the powerful gambling lobby in Kentucky, where horseracing truly is the sport of kings thanks to the prestigious Kentucky Derby race held annually at the state’s Churchill Downs racetrack.

A supporter of initiatives to expand Kentucky’s land-based gambling industry, Beshear said that internet gambling websites were “leeches” on the state’s economy and, in particular, its “signature” horseracing industry.

However, it is hard to see why the likes of Churchill Downs should feel threatened by online poker sites such as PokerStars – suggesting that there is more to Beshear’s actions than mere pandering to powerful horseracing interests within the state.

Speculation around the issue will continue, but perhaps the wider concern for online gambling operators is that the Kentucky action raises the specter of state-by-state enforcement actions coming to haunt the US-facing internet gaming industry.

Beshear stated this week that the action made Kentucky the first US state to tackle unlawful internet gambling websites by seeking forfeiture of domain names under state laws.

It remains to be seen whether any others will now follow however, particularly as state authorities have typically focused their anti-internet gambling efforts on lobbying the federal government in Washington DC to tackle the issue on a national level.

It was only two and half years ago that a letter signed by attorneys general for 49 US states including Kentucky, was sent to congressional leaders in both the House and the Senate, urging the federal government to assist state law enforcement agencies in tackling internet gambling.

The attorneys general cited the need for a more coordinated effort to fight a problem which, “transcends state and jurisdictional boundaries and requires that all segments of the law enforcement community (state, federal and local) work together to combat its spread.”

As Oklahoma’s Attorney General Drew Edmondson surmised, “it’s typically up to the legislature for each state to determine what is and is not legal concerning gambling. But Internet gambling transcends state lines, and should be addressed federally.”

It was this state lobbying that ultimately led to the passing of the Unlawful Internet Gambling Enforcement Act in October 2006 that banned the processing of financial transactions associated with internet gambling websites.

The effectiveness of the UIGEA has since been vehemently criticized in many quarters, of course, and Kentucky’s action this week could therefore possibly be a sign that at least one state now wants to take anti-online gambling enforcement back into its own hands.

Whatever happens, the issue seems set to draw out further debate on online gambling regulation and enforcement in the US as the Blue Moon of Kentucky shines on issues already subject to discussion in the heart of Washington.