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State Wins Right To Regulate Web Gambling Site Minnesota Court Case Similar To Legal Action Faced By Coeur D’Alene Tribe

Tue., Sept. 9, 1997

Minnesota has the right to regulate Internet activity, the state Court of Appeals ruled in a widely watched case involving a Las Vegas company’s gambling site on the World Wide Web.

The site’s operator said Monday he would appeal.

“For Minnesota to have jurisdiction over a site that has never taken a bet, that requires someone from Minnesota to go look at it, is ludicrous,” said Kerry Rogers, president of Las Vegas-based Granite Gate Resorts Inc.

Similar legal action is pending against the Internet gambling site being tested by northern Idaho’s Coeur d’Alene Tribe.

The Las Vegas case stems from a push by Attorney General Hubert Humphrey III to block Rogers’ gambling operation from soliciting business from Minnesota residents on the Internet.

The state appellate court opinion said Granite Gate demonstrated a clear intent to solicit business from Minnesota residents, including one successful solicitation.

“They purposefully availed themselves of the privilege of doing business in Minnesota,” the opinion said.

Rogers claimed a lack of jurisdiction because he had not mailed anything or advertised in Minnesota.

“We’ve never taken a single bet in the history of the deal,” Rogers said.

“It was an idea. I’m being sued for an idea.”

The decision upholds a district judge’s refusal to dismiss the case filed in 1995.

The attorney general’s office accused Rogers of false advertising, deceptive trade practices and consumer fraud.

The lawsuit accused the company of operating an Internet site that advertises illegal sports betting and information services.

Humphrey said he would seek a court order to stop the advertising and seek civil penalties of at least $25,000.

Eugene Volokh, a UCLA law professor who specializes in constitutional, copyright and computer-technology cases, said the decision is “a barrier to interstate commerce.”

“This is a very significant case because when you put up a web site in Nevada, you are essentially doing business in every one of the 50 states.”

He said the debate is over how to characterize the business: Does the transaction occur in the state of the site’s origin, the state where the user is, or in cyberspace?


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