Ruling leaves larger question of online gambling

Tuesday, May 12, 1998 | 1:11 a.m.

The justices let stand Friday a state Court of Appeals ruling that gave Attorney General Hubert Humphrey III authority to sue a Las Vegas company for claiming on its Web site that people could bet legally online "from anywhere in the world." Humphrey contends that such gambling is illegal in Minnesota, and he accuses the company of false advertising.

The state will ask a judge to order the company not to take bets or solicit business in Minnesota.

A lawyer for the company claimed the site was legal because no bets had been placed and only information was solicited.

"Wagernet is an idea. At this point that's all it is," Eckley Keach, a lawyer for Granite Gate Resorts Inc., said to the justices last week.

Minnesota is among several states telling Internet gambling operators that they can't take wagers from their residents.

The states say their laws prohibiting sports betting and other unauthorized wagering apply to the Internet, and argue that residents wagering from their home or office computers would be gambling illegally in their states.

Internet gambling proprietors counter that the betting is legal because it really occurs where they run the businesses - either in Nevada or in nations that sanction the gambling.

That argument suggests "you can just be magically transported to someplace else," said Carolyn Ham, a Minnesota assistant attorney general.

The ruling marks the first time that a state's high court has given a state power to pursue a consumer-protection lawsuit against an Internet gambling operator in another state or nation, she said.

The justices split 3-3 on the decision. They made no comment on the case and declined to say who ruled on which side. Justice James Gilbert did not participate.

Ron Meshbesher, who is representing Rogers, said he may ask the court to reconsider, given the even split. Their only other option is to ask the U.S. Supreme Court to hear an appeal.

Granite Gate set up an Internet site called WagerNet to take sports bets, and an online odds-making service to give information about point spreads.

When an undercover investigator called Granite Gate president Kerry Rogers, said he was from Minnesota and asked if the betting would be legal, Rogers replied, "Absolutely," according to court documents.

To use WagerNet, bettors would pay $100 for software and then deposit at least $1,000 in an account in Belize. Rogers contends the gambling would occur in Nevada and Belize, not in Minnesota or other states where it's prohibited.

In addition to trying to block Rogers from taking bets from Minnesotans, the attorney general's suit seeks $25,000 in civil penalties from him and Granite Gate.

The Web site in question is: http://www.wagernet.com