BUSINESS

Kentucky guv a $6m man thanks to online gambling domain grab

TAGs: Department of Justice, domain seizure, Kentucky, PokerStars, Steve Beshear

kentucky-steve-beshear-six-millionCORRECTION: Kentucky’s settlement was actually based on its decision to drop its claim to the domains absolutepoker.com and ultimatebet.com. Kentucky has not abandoned its claim to domains associated with PokerStars and Full Tilt Poker.

Commonwealth of Kentucky Gov. Steve Beshear looks nothing like Col. Steve Austin, but Beshear has also earned the title of Six Million Dollar Man following an agreement to share in the spoils of PokerStars’ financial settlements with the US Department of Justice. In 2008, Beshear had instructed his state’s legal eagles to lay claim to 141 online gambling domain names – including that of PokerStars and Full Tilt Poker – based on a dubious definition of the URLs as illegal “gambling devices” serving Kentucky residents.

The seizure of the domains was immediately challenged by the Interactive Media Entertainment & Gaming Association (iMEGA) and subsequently derided as “unconstitutional” by the DOJ, but Kentucky wouldn’t be deterred, filing additional post-Black Friday forfeiture claims against the poker company domains seized by the feds on April 15, 2011.

On Wednesday, Beshear announced that the feds were cutting Kentucky a $6.075m check based on settlements received via the federal civil prosecutions of PokerStars and FTP. It’s unclear whether this check was pulled from the $731m check Stars wrote the DOJ to settle its Black Friday civil charges or from Stars CEO Mark Scheinberg’s more recent $50m check to settle forfeiture claims stemming from the indictments, but in September 2012, the DOJ announced it was holding $36.5m in reserve in case the courts determined Kentucky’s claims had merit.

Beshear wasted no time in patting himself on the back, claiming the windfall was the result of “our bold and steadfast determination to protect Kentucky consumers, our signature horse racing industry and legitimate charitable gaming interests.” Beshear also credited his actions with creating “a framework for the rest of the country to manage the issue in their own jurisdictions.” A more restrained Justice Secretary J. Michael Brown said he was “pleased with the disposition of this case with regard to the two major players in this arena.”

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