Odds favor Internet gambling

In thousands of houses across the United States at this very moment thousands of people are wagering thousands of dollars on NCAA tournament basketball games without leaving their bedrooms.

Overseas, thousands of operators of thousands of Web sites are collecting a portion of each bet and adding it to the millions of dollars they have pulled in just since breakfast.

This is the phenomenon of Internet gambling, a $15 billion industry driven by the popularity of sports and the growing interest in poker. The industry is the subject of tense debate between companies looking to cash in on the American marketplace and lawmakers looking to ban online gambling.

Analysts predict online betting soon could make up as much as 10 percent of gambling worldwide.

In fact, the total value of some online-gambling companies operating overseas is comparable to that of the major traditional American casino companies — Partypoker.com is worth about $2.4 billion more than Harrah’s — and revenues are expected to top $25 billion by the end of the decade, according to Christiansen Capital Advisors, which tracks gambling data.

Gamblers are expected to bet $4.7 billion on sports online this year. Revenue from online poker, less than $400 million worldwide in 2003, is expected to hit $4 billion. Other casino games, such as craps and roulette, are growing in popularity, as companies expand their offerings. Even bingo soon could become a $500 million game, Christiansen said.

The business of online gambling has made many people very rich. Calvin Ayre, the chief executive officer of Bodog Entertainment, an online gambling and music company based in Costa Rica, recently was featured on Forbes magazine’s list of billionaires.

“It’s been quite a ride,” Mr. Ayre, a Canadian citizen, said last week after the taping of a televised poker tournament at his $3.5 million estate in Santiago.

That ride largely has been funded by bettors in the United States: Nearly two-thirds of all online wagers are placed by people in this country, even though most forms of Internet gambling are illegal, according to the U.S. Department of Justice.

Conservative lawmakers, often at the urging of religious groups, have been trying to stop online gambling since it first surfaced in the mid-1990s. Their efforts largely have been focused on updating the Wire Act of 1961, the pre-Internet-era statute that currently serves as the law governing online-gambling issues.

Their arguments mostly are the same ones they cite in opposing gambling in general: Opponents point to studies that suggest gambling increases personal debt and is responsible for higher rates of divorce, drug use and depression. However, they also argue that the Internet creates additional dangers, allowing minors to place bets and criminals to use stolen credit cards.

“We feel this type of gambling is particularly pernicious,” said Rep. Robert W. Goodlatte, Virginia Republican, perhaps the most outspoken opponent of gambling on Capitol Hill.

However, advocates argue governments would reap big financial gains by making online gambling legal, regulating it and taxing it heavily.

“I could pump $1 billion into the U.S. economy right away,” said Peter Carruthers, chief executive officer of BetonSports.com, which also operates out of Costa Rica and earns most of its revenue from U.S. bettors.

Furthermore, companies say, regulation would protect against many of the problems gambling opponents fear would occur if online betting is legalized in the United States.

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