December 26, 2000, 9:39 AM — The New York State Supreme Court this week issued a ruling that may have implications in the Internet tax debate. Judge Charles Edward Ramos ruled that the Antigua-based online casino is subject to state and federal laws because its Web site gambling "creates a virtual casino" within the user's computer.
The operators of the Web site, Suffolk County,
N.Y.-based World Interactive Gaming Corp., said because their servers were located and licensed in Antigua, they weren't subject to New York gambling laws, according to State Attorney General Eliot Spitzer, who brought the suit.
States may use the ruling to argue that a Web-based transaction creates "a virtual store on your computer" that is subject to local taxes, said Michael Erbschloe, an analyst at Computer Economics Inc., a Carlsbad, Calif.-research group. "If that gambling case holds up, it changes everything."