State authorities in the US were given the green light to declare individual jurisdiction over Web site content on Thursday, after a Minnesota judge ruled against a Las Vegas online gambling company in a precedent-setting civil lawsuit.
The suit relates specifically to Minnessota attorney general Hubert Humphrey?s attempt to ban Las Vegas-based Granite Gate Resorts from allegedly soliciting business for its online Wagernet service, from Minnesotta?s 500,000 citizens with Internet access. Gambling is illegal in Minnesota.
But the judge?s ruling has wider implications. It sets a legal precedent that authorities and law enforcement agencies in one state can have jurisdiction over the content of Web sites run out of other states where their content is perfectly legal. Granite Gate Resorts' defence had been that it had not mailed or advertised anything in Minnesota and the server for the Web site was operated out of Nevada, where gambling is completely legal.
The case against Granite Gate Resorts was filed early last year, but was slowed down after Wagernet director Kerry Rogers filed a counter-motion, claiming that the state of Minnesota had no jurisdiction over a Las Vegas business.
But last Thursday Minnesota State District Judge John Connolly decided that this argument was unsustainable in relation to the Internet, clearing the way for Attorney General Humphreys to seek an injunction banning Wagernet from advertising on the Net and imposing a $25,000 fine on the company.
In his written ruling, Judge Connolly decreed: "Once the defendants place an advertisement on the Internet, that advertisement is available 24 hours a day, seven days a week, 365 days a year to any Internet user until the defendants take it off the Internet."
The judge held that, because Wagernet?s mailing lists included Minnesota addresses and there was a telephone number on the Net adverts, the company had effectively run a direct marketing campaign. His decision also took into consideration a warning from Wagernet to its users that it was ready to sue them in their home courts in the event of any dispute arising between supplier and customer.
The Attorney General had presented Wagernet?s own usage records as evidence to support his case. These revealed that during a two-week period last year, 248 citizens of Minnesota had accessed the Wagernet site on numerous occasions and that among the top 500 users of the service were two people from the state.
Rogers said he intends to fight the case to the finish, but is prepared to move his operation outside of US national jurisdiction if necessary. "Can you imagine the state of Minnesota telling Venezuela 'Don?t do that!'?, he asked after the ruling was made public.
The Attorney General must now prove that Wagernet breached consumer fraud laws by falsely claiming that its services were legal. In theory, the Interstate Wire Act makes it illegal to send bets or wager information between states using wire communications. But in practice, this is easily avoided by moving online operations offshore. The National Association of Attorneys General is supporting moves to make it an offence to place or accept bets on the Net.
This is not the first time that the issue of state jurisdiction has been put to test in the US courts. In 1994, the operators of a porn bulletin board run out of California were imprisoned after being convicted under Tennessee state laws.
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