Minnesota regulators betting that a decades-old federal law would lend itself to an online gambling crackdown may have been outplayed. They said Monday they'll withdraw a request that Internet service providers block access to hundreds of sites.
The decision comes amid litigation by the gambling industry, which considered the push a violation of federal commerce and free-speech protections.
In exchange for backing off, a state official said the Interactive Media Entertainment and Gaming Association has agreed to end its court fight.
"Broadly, it's a victory for Internet rights because what you had was a government administrative branch deeming a list of sites to be a black list that should be censored," said Joe Brennan Jr., the industry group's chairman. "It was preventing Minnesota residents from freely accessing the sites."
A Minnesota spokesman for the Poker Players Alliance, which had campaigned loudly against the enforcement action, didn't immediately return a message.
The state had cited a 1961 federal telecommunications law designed to restrict phone calls used for wagering. Some legal experts had questioned whether the law could be applied to the Internet.
The online gambling trade group sought a federal injunction in early May, claiming the state notice was not legally valid.
"Whether or not iMEGA ultimately would have prevailed in court is unknown," said John Willems of the state's Alcohol and Gambling Enforcement Division in a letter to Internet providers.
He added, "I believe it may be more appropriate to resolve this problem by working to create clear and effective government policies concerning regulation of gambling."
Eleven national and regional telephone and Internet service providers were served with written notice in late April instructing them to prohibit Minnesota residents from accessing 200 poker and other gambling sites.
State officials say they aren't giving up.
"We have not folded our hand," said Andy Skoogman, a spokesman for the Minnesota Department of Public Safety, where gambling regulators are housed. He said he expects new strategies for regulating Internet gambling to emerge.
"The action raised awareness of the broader issue about who is policing the Internet and protecting the consumer," he said. "At this point, we don't feel there is anybody. This is an issue that every state is going to face sooner rather than later."