A government can no more dictate prescriptive regulation than prohibitory regulation because both require the threat of sanctions for disobedience. If the Internet takes the ability to sanction non-resident offenders from governments, neither prohibition nor regulation can be forced on these unwilling operators.
Certainly, some operators must submit to regulation because they fall within the jurisdiction of a competent authority. Foremost in this group are land based gaming operators. They have privileged licenses to operate traditional gambling operations, such as casinos or racetracks. These operators need a legal and regulated environment to maintain their privileged licenses and the confidence of the public markets. For these reasons, many Internet gambling operators and potential operators will agree to pay taxes for the privilege of being regulated by a legitimate government so long as the tax structure and the regulators are reasonable.