Cyber casinos.

• Author: May, Anneliese
• Position: Gambling on the Internet

So far only a few states have attempted to regulate gambling on the Internet, but with 500 sites and limited federal involvement, more legislatures soon will.

For electronic Bugsy Siegels, the stakes have been raised in the Internet casino game. At least two states have considered Internet gambling regulation, and last December a Minnesota trial court held that the state has jurisdiction over a Las Vegas company offering gambling services on the Web.

Today there are almost 500 gambling sites on the Internet. Almost a dozen of these allow players to wager real money. These cyber casinos offer everything from sports books to lotteries to virtual slots and table games. Relatively low start-up capital and operating expenses and the millions of prospective customers add up to a very profitable business. However, concerns about consumer protection, adverse effects on legal gaming establishments, underage gambling and gambling addiction have led Congress to include Internet gambling as an issue to be studied by the National Gambling Impact and Policy Commission. In addition, U.S. Senator Jon Kyl from Arizona plans to reintroduce a bill from last session that would amend the federal Interstate Wire Act to explicitly prohibit Internet gambling.

The Interstate Wire Act prohibits a business from using telephone wires to transmit wagers. The Justice Department has determined that the current act gives it jurisdiction over Internet gambling operations, but concedes that prosecution of such businesses is not a priority at this time. The feds have, in effect, left regulation up to the states.

Minnesota has taken the lead in cracking down on these operations. Hubert Humphrey III, the state's attorney general, filed suit against Granite Gate Resorts, a Las Vegas company, for consumer fraud and false advertising.

The suit was filed against Granite Gate because the company could be served in Las Vegas. Most Web casinos, however, are based off-shore in places like Belize or Antigua, making jurisdiction over them especially hard. "In Belize, a subpoena from Minnesota wouldn't mean anything. They would just laugh at you," says Carolyn Ham, the assistant attorney general prosecuting the case.

Granite Gate disputed Minnesota's jurisdiction over the Web operation. The suit alleged that Granite Gate, by advertising a cyber sports book to Minnesotans over the Internet, was falsely claiming that placing sports bets is legal in Minnesota. Humphrey points out that in...