After years of escalating growth, it's poised for its biggest year. That reflects a growing obsession with poker, advances in broadband and wireless technology, and the temptation to strike it rich from a PC.
More than 2,000 gambling Web sites this year will rake in nearly $10 billion in revenue, most from U.S. consumers. That's up 40% from 2004. In 1996, when lawmakers first sought to curb Internet gambling, 30 sites collected $30 million, says researcher Christiansen Capital Advisors. That makes gambling one of the Internet's largest moneymakers, even though it is illegal.
Poker revenue is expected to double to more than $2 billion and attract 1 million players a month. Americans play at 266 Web sites, up from 53 in June 2003, says gaming site CasinoCity.com.
"Poker has jolted the industry," says Mike Sexton, a professional poker player who consults for PartyPoker.com, which is expected to haul in $1 billion in revenue this year. "Playing poker is a skill and considered cool," he says. "It's acceptable whether you're sitting around a table with friends or in front of a PC."
Technology and TV are paving the way. Peer-to-peer technology lets players compete head-to-head over the Internet in real time. Matches on ESPN, Bravo and the Travel Channel draw solid ratings. The popularity of poker, in turn, has further legitimized an industry once considered taboo by squeamish bettors.
"The fear factor is largely going away," says Alex Czajkowski, marketing director for Sportsbook.com. "The bigger, more reputable online casinos are not going to rip you off, and more people are betting."
That has meant more business for virtual slot machines, bingo and roulette. At the same time, advances in wireless technology make it easier for consumers to place wagers on sports events from cell phones or a personal digital assistant.
About 3% of people acknowledge gambling online at work, vs. 2% in 2003, according to a survey by Harris Interactive last year.
The surge hasn't escaped the attention of law-enforcement officials. But they are powerless to stop it.
Almost all gambling sites are offshore, where they are immune from U.S. law.Federal and state officials have discouraged some banks from allowing their credit cards to be used for cyberwagers.
The federal 1961 Wire Act prohibits the use of phone lines for placing bets, but there is no national law that applies to Internet gambling.
Sen. Jon Kyl, R-Ariz., who has spearheaded efforts to crack down on Internet gambling since 1996, might try again this year.
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