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The gambling industry has been at odds over a visible and dangerous precedent since Kentucky Governor Steve Beshear confiscated 141 domain names as "gambling devices." The lawsuit, which represented Kentucky, not only took advantage of this false claim, but also said they did so to protect the state's horse racing industry. The industry was stunned by Gov. Beshear's move against online gambling, which was a strong supporter of expanding legalized gambling in Kentucky.
The gambling industry breathed a sigh of relief and joy as the Kentucky Court of Appeals dismissed the outrageous ruling. On January 20, the court ruled against the Interactive Media Entertainment and Gaming Association (iMEGA) in a 2-1 majority opinion. The Court of Appeals blocked an initial seizure order issued by Franklin County Circuit Court Judge Thomas Wingate.

The majority opinion included a statement from Judge Michelle M. Keller, who found that the state could not duly proceed with any confiscation action because the domain name was not specified as a gambling device by Kentucky law.

"[I] add credibility to the conclusion that a series of numbers, i.e. internet addresses, can constitute a 'machine or machine or other device' designed and manufactured primarily for use in connection with gambling," Judge Keller said. "We are therefore confident that the court has clearly misconstrued the conclusion that domain names can be interpreted as gambling devices."

Judge Jeff S. Taylor also added that the state cannot demand civil forfeiture based on criminal law without actually going through criminal proceedings. Since the state did not prosecute or prosecute any of the domain owners in connection with any crime, they could not legally have control over their property, namely the domain name in question.

Jon L. Fleischaker, one of iMEGA's lawyers, said, "This decision confirms why we filed a lawsuit. We knew when we referred this to the Court of Appeal that we could get a definition of the domain names of iMEGA and Kentucky."

The decision was seen as a victory for the online gambling industry, but the situation may not be completely resolved. Governor Beshear has already made it clear that the state will next file an appeal with the Kentucky Supreme Court. The appeal is expected to be heard in April. Joe Brennan Jr., president of iMEGA, says the continuation of the litigation is attributed above all to political and money-based motives.

"The lawyers reportedly based the lawsuit on emergency payments, reportedly invested more than $1 million of their own money in lawsuits like this one and prepared for other states. Without winning Kentucky, other lawsuits would be difficult to go smoothly, and they would have suffered tremendous losses from their gambling."

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