From...

June 29, 1999
Web posted at: 1:45 p.m. EDT (1745 GMT)

by Maryann Jones Thompson

(IDG) -- "Children can access Internet gambling sites on the family computer, wager with Mom's credit card, click the mouse and bet the house," said U.S. Senator Jon Kyl (R.-Arizona) as his bill to shut down Internet gambling passed the Senate Judiciary Committee two weeks ago. Kyl is perhaps overstating his case, but still, hard numbers on the size of the online gaming industry are harder to come by than a straight flush on video poker.

"It's an industry that's hard to collect information on, but it's getting better," says Sebastian Sinclair, an analyst at management-consulting group Christiansen/Cummings and one of the few experts on interactive gaming. The National Gambling Impact Study Commission spent two years studying gambling in the U.S. and relies on Sinclair's estimate of 14.5 million Net gamblers worldwide. Cyber Dialogue says its studies show that only 2 percent of U.S. surfers, or 1.2 million people, have ever visited an online gaming site – which doesn't mean they actually gambled. And though there is a fear that Net gambling is growing, the appeal appears somewhat limited: The 2 percent figure has remained constant for the past few years.

Despite the small numbers, these bettors are an active group. The latest figures show that 1999 Net gaming revenues will nearly double to $1.2 billion from $651 million in 1998 – still just a tiny slice of the $600 billion U.S. land-based gaming market. Sinclair estimates approximately 40 percent of 1998 revenues flowed to online sports books and a slightly higher percentage of that went to online casinos. Even assuming Net gambling becomes illegal in the U.S. by 2000, Sinclair forecasts a $3 billion global market in 2002. But one loophole in the current legislation is the lack of a ban on online horse-race betting, which is estimated to be a $340 million U.S. market by 2001.

The Kyl bill aims to force American ISPs to block access to gambling sites. "All but about 5 percent of [the interactive gaming market] will disappear in the U.S.," says Sinclair. Although this will hurt the Antiguan casino operators who receive about 40 percent of their business from American gamblers, growth in other parts of the world will more than make up for the U.S. absence, according to Sinclair. Already, 16 percent of visitors to Inland Entertainment Group Web casinos say their primary language is Russian.