Case study: Regulating online gambling

Nevada businessman Kerry Rogers wanted to start an online gambling site, but the Minnesota state attorney general has stopped him in his tracks. Here's a look at the controversial case and what it means to the future of electronic casinos.

Can states regulate gambling in cyberspace?

Wager Net: No Kerry Rogers, the Web site's operator, says Minnesota cannot impose its state gambling laws on his cyberservice.

Minnesota: Yes Attorney General Hubert Humphrey says that, because gambling is illegal in Minnesota, users there cannot place bets through the service.

History of case
Kerry Rogers set up a Web site in Las Vegas advertising the future launch of Wager Net, a private computer network that promises a "legal way" to bet on sports from anywhere in the country. Wager Net claims that the new service will be set up and run by Global Gaming Services, based in Belize, where sports gambling operations also are legal with the proper license.

State Attorney General Hubert Humphrey filed a lawsuit against Rogers, claiming that the Wager Net Web site falsely advertises the future service as legal. Gambling is illegal in Minnesota.

Rogers asked the Minnesota court to dismiss the case on grounds that the state cannot regulate the advertising or business practices of a company based outside its borders. The court ruled in December that Minnesota can sue Rogers after all. Rogers has appealed that decision.

The future
Wager Net has yet to take a bet, but Rogers plans to go all the way to the Supreme Court if necessary. Minnesota wants to prove that it can regulate any gambling within its state lines, including operations that enter the state over the Net.