This is very annoying and scary news. I'm surprised there aren't many people rising their voices on the stupidity of this issue. Online gambling is legal in many countries, including the UK, where I live. Just because the domain is accessible from Kentucky doesn't mean the domain or website's existence is limited to Kentucky and their local law.
I think the organisation that controls domain names needs to be an international organisation independent from any government. Otherwise we will see more US originating problems in the future regarding domain industry.
There is also a need for a powerful domainer association that can organise big protests. Member websites and individual domain owners could put up stickers published by the association on a certain day. There are many big domain related websites, namepros being one of them and there are certainly lots of domainers who have high traffic portfolios.
It is disappointing to see namepros so passive on these issues. But I'm not very surprised. In the past we have seen trademark bullies pushing around the domainers and namepros was nowhere to be seen during any of those incidents either. This is not what I expect from the best domainer forum.