Donna Harpauer, minister responsible for the Saskatchewan Liquor and Gaming Authority, said Monday that the government has decided not to get involved.
"We did review it and there wasn't a compelling business case to get involved and so we just didn't," she said.
"The officials had looked into what was the potential of profit in e-gaming and what's the risk of getting involved with e-gaming. It was quite a presentation and it just doesn't have a huge business case at this point in time."
The minister was asked about online gaming after media reports said a former First Nation chief plans to launch an online gaming site.
But Bernie Shepherd, from the White Bear First Nation, doesn't have permission from the province to do so.
Harpauer said the move would "probably not" be legal, but she wants to hear the announcement Tuesday before deciding on a next move.
"We'll take a look at that and see what our options are."
This is not the first time that Shepherd has been at odds with the province over gambling.
In 1993, he set up a casino on the reserve in defiance of provincial gaming laws. The RCMP shut it down, seizing slot machines and other gambling paraphernalia in a pre-dawn raid.
The confrontation prompted negotiations between the provincial government and Saskatchewan Indian bands. Eventually, a deal was struck in which the government and the bands share in profits from casinos.
Charges against Shepherd, who was chief at the time, were later stayed.
Indian leaders in Saskatchewan said in June 2011 that it's time to cash in with online gambling.
The Federation of Saskatchewan Indian Nations said last year that $30 million was leaving Saskatchewan through gambling sites offered by other provinces and it was time for the government to talk about expanding into the online gaming business.
Harpauer said it's her understanding that Shepherd's proposed gaming site does not involve the Saskatchewan Indian Gaming Authority, which was created by the federation to operate casinos across the province.