In one of the first undercover stings ever run on the Internet, Missouri Attorney General Jeremiah "Jay" Nixon in late June handed an 18-year-old intern a credit card and sat her down in front of a computer terminal. According to court records, the intern visited the World Wide Web site of Hog's Head Beer Cellars of Greensboro, North Carolina. She succeeded in ordering a 12-pack of microbrews, which were duly delivered.
Then Nixon swung into action. He filed a lawsuit against Hog's Head, alleging that the company had not asked for a driver's license number from the intern or taken other steps to prevent a minor from purchasing alcohol.
"There was no mention on the Web site that you have to be of age," Nixon said. "It's safe to say that any establishment in the state of Missouri [that similarly served drinks to minors] would lose their license."
Co-owner Jim Lowe concedes that Hog's Head lacked an age-checking mechanism when Nixon sicced the minor on him, and says that shortcoming has been remedied by requiring customers to fax a signed waiver form and copy of their drivers' license to get an order processed.
Protecting sovereignty, defining borders
Nixon's beef is not, however, merely about selling alcohol to minors. He speaks of protecting the sovereignty of states and of maintaining order in the increasingly borderless world created by the Net. His targets say, not surprisingly, that he has another agenda, too: waving the flag of supposed cyberspace lawlessness to win votes for his 1998 US Senate campaign.
"He's using this as a political springboard," said Lowe. "People are emailing us saying: Doesn't the AG have anything better to do than surf the Internet?"
Over the past three months, Nixon has made an increasingly visible effort to crack down on what he alleges are illegal businesses run by Web-based firms. He has twice sued online gambling businesses, in one case winning a fine.
Nixon said that he has taken a tough stand on the issues, particularly in the case of Internet gaming, because the federal government has dropped the ball on regulation.
"We're going to have to, as 50 different states, get very, very active that the protections afforded our constituents continue," Nixon said, adding that in the case of gaming, "The federal government has basically been AWOL."
Interference with commerce?
Legal entanglements aside, Lowe said he has a bigger problem with Nixon's approach.
Instead of trying to clarify how the law might operate in cyberspace, Nixon is actually interfering with Internet-based commerce. And Lowe numbers himself among the growing number of merchants that feel they need the Internet to compete.
Meanwhile, Nixon finds himself fighting perhaps more visible cases with two gaming businesses on the Internet. In April, he filed a lawsuit against Interactive Gaming & Communications Corp., accusing the Pennsylvania company of setting up a casino that violates Missouri gaming laws and fails to caution citizens of the Show Me state that what the site promotes is against the law.
Nixon won an initial victory in May, when a court ordered Interactive Gaming to pay $66,050 in penalties and costs. Nixon said the firm refused to pay or to back down. So in June, he asked the grand jury in Springfield to indict Interactive Gaming president Michael Simone. In what is believed to be the first criminal indictment of its kind in the nation, the grand jury handed down a charge of promoting gambling in the first degree, a Missouri Class D felony that could carry a five-year prison sentence and $5,000 fine for Simone and a $10,000 fine for his company.
Interactive Gaming's attorney, Lawrence Elliott Hirsch of Philadelphia, said in a statement that Missouri has no jurisdiction over them. "Michael Simone has never set foot within the state of Pennsylvania," said Hirsch. "Mr. Nixon should not be permitted to be a super-regulator/legislator of activities conducted lawfully on the Internet."
Nixon's response was cool. "Missouri law makes only narrow exception for legal gambling, and the Internet is not one of those exceptions," he said.
Battling a tribal lottery
Nixon is also embroiled in a dispute with Idaho's Coeur d'Alene Indians. Early this summer, he filed suit to prevent the tribe from offering its Web-based US Lottery game in Missouri. As in the Interactive Gaming case, Nixon alleges that the Coeur d'Alene are violating Missouri law - this time because they have not received permission to operate a lottery.
Uncertainty about who really has jurisdiction over Indian gambling complicates the case. The 1988 federal Indian Gaming Regulatory Act permits tribes to establish casinos on their land, with the permission of their home-state governments. The Coeur d'Alene argue that since they have permission from Idaho, and since the Net lottery is run exclusively on their land, they should be able to offer it anywhere they please.
"All the gaming is happening on Indian land - the server is there, the random drawing is there, the game itself is played there, the customer service is there, the cash account is there," said Mike Yacenda, president of Unistar Entertainment, a Connecticut company that manages the Coeur d'Alene lottery. "This is the only legal lottery site on the Internet."
David Matheson, chief executive officer for gaming for the Coeur d'Alene, accuses Missouri of trying to keep the tribe down. "You can stand in their lines and buy their lottery tickets," he said. "They're trying to make us a poster child for their political games."
The legal nature of the Net
Nixon's stance on the Coeur d'Alene puts him at odds with the many who argue that efforts to legislate Net activity - whether the subject is gambling, pornography, spam, or taxation - is doomed to failure because of the network's diffuse global nature.
But the attorney general doesn't buy any of that. He said there's a big difference between Missouri's legal gaming, such as on riverboats, and the intrusions from the outside. He argues that Internet-based casinos are merely trying to excuse unregulated activity on the specious basis that technology makes everything different. Or that when an activity is legal in one area - for example, a reservation - it should be universally legal because of the Internet.
Nixon said if that's the case, other states or countries will use the Net to import activities or substances that are illegal in Missouri but legal in their place of origin. That gets to what Nixon said is his larger point: Some Internet businesses are threatening Missouri's sovereignty and someone needs to "draw a line."
"If we don't draw these lines," he said, "then there are no lines."
