Internet gaming charges against Rogers dropped

John Wilen

Monday, April 26, 1999 | 2:58 a.m.

Kerry Rogers' legal problems may be coming to an end.

Manhattan prosecutors last week quietly dropped a criminal complaint that accused the Las Vegas Internet gambling pioneer of violating the Federal Wire Act. Meanwhile, Rogers said he is close to a non-financial settlement of a lawsuit brought by Minnesota's attorney general.

Rogers is most pleased with the decision by the U.S. Attorney's office for the Southern District of New York to drop the criminal charges, announced with much fanfare in March, 1998.

"Obviously, I don't think they had something they could convict on," said Rogers.

Assistant U.S. Attorney Alexander Shapiro could not be reached for comment. Shapiro signed Rogers' complaint dismissal form in January. It was approved by a U.S. magistrate judge on Thursday.

Rogers could have been sentenced to five years in prison and a $250,000 fine. But he was never seriously worried about the New York charges. Rogers says his companies have never accepted an online bet. They simply maintain websites that announce their intention to eventually accept bets.

"My case was more about the First Amendment than it was about gambling online," said Rogers.

Through his company, Granite Gate Resorts Inc., Rogers operates several websites that claim Internet gambling is legal, and that they will soon take bets. Any bets placed via the sites will be routed through a Belizean company, Global Gaming Services Ltd., which Rogers also owns. Internet gambling is legal in Belize, thanks to Rogers' help in drafting that country's Computer Wagering Licensing Act.

In March 1998, the New York prosecutors filed a criminal complaint accusing 14 Americans, including Rogers, of violating the 1961 Federal Wire Act. Several other defendants were later added to the complaint.

Rogers says he had four or five meetings with the prosecutors in which he explained that he wasn't actually accepting bets. But the prosecutors tried to get him to plead guilty to a lesser charge or agree to settle the case by taking down the websites.

"I said, 'No, I'm not settling, I want a dismissal,' " said Rogers. "Finally, they sent a piece of paper saying, 'The U.S. Attorney has decided to dismiss.' "

No explanation was ever offered, Rogers said.

The dismissal will free Rogers to travel to the Caribbean, an area to which prosecutors were for some reason worried Rogers would flee, he said. He was never barred from traveling to Belize or elsewhere outside the U.S.

Las Vegas Internet gaming expert and lawyer Anthony Cabot does not see the dismissal of Rogers' case as terribly significant. Prosecutors drop cases for a variety of reasons, Cabot said. Without an explanation from the prosecutors, it's tough to speculate about their reasoning, he said.

Of the people listed in the March 1998 complaint, most have accepted plea bargains or settlements under which they agree to suspend all Internet gambling activity, Cabot said. But one case, the prosecution of Jay Cohen, president of online sports book World Sports Exchange, is moving forward, Cabot said.

"That's the big one that is going to test the principles," said Cabot. "That's going to establish whether the U.S. can prosecute off-shore book makers."

World Sports Exchange is based in St. John's, Antigua.

USA Today reported that in all, the New York prosecutors charged 22 owners and managers of nine Internet gambling companies in the Caribbean and Central America with accepting bets over the Internet and telephone. According to the newspaper, seven defendants remain fugitives; nine have pleaded guilty. Charges were dismissed against two. Four await trial.

In addition to his problems with New York prosecutors, Rogers was sued by Minnesota Attorney General Hubert Humphrey III in 1995 for false advertising and deceptive trade practices. He challenged Minnesota's jurisdiction, questioning that state's right to try to exert control over websites he maintains in Nevada. But last May, Rogers' motion to dismiss the lawsuit on jurisdictional grounds lost when the Minnesota Supreme Court deadlocked 3-3 on the issue.

Rogers said he is close to accepting a settlement of that lawsuit. The settlement's only terms would be that he put a message on his websites stating that Internet gambling is illegal in Minnesota.

Rogers said he already has a message on his sites urging people to check with local authorities before gambling online. But in the interests of ending the litigation, he said he is willing to put up a message specifically mentioning Minnesota. Rogers said he is waiting for final paperwork to complete the Minnesota settlement.

Rogers has long championed a legal, regulated Internet gambling industry. If U.S. gambling companies don't get into Internet gambling, he warns, they'll lose the market to companies in other countries.

"If you had a choice to place your bets at the Stardust or at some place in a Banana Republic, you'd choose the Stardust," Rogers said.

He points to recent moves by Nevada companies like International Game Technology and American Wagering to enter the legal Australian Internet gambling market as a sign that legalized Internet gambling here is inevitable.

"It's becoming a booming business," Rogers said. "It's an inevitable thing."

Legislation has been introduced in the U.S. Senate that would expressly outlaw Internet gambling. But some observers have noted that the language of the proposed legislation seem to leave it up to states to decide whether to allow Internet gambling among their citizens.