The internet is set for an explosion of interest in gambling, according to a new report .

Datamonitor says that online gambling is rising rapidly, as low costs and worldwide access encourage operators to move into a $700bn market.

Casinos, lotteries and sports betting dominate the internet market, which is currently worth $535m. It is estimated that it will double by next year and reach over $2bn by 2000.

"Onlline gambling turnovers have the potential to dwarf other interactive services" according to the authors.

Europe has a competitive advantage in gambling, due to the restrictive US gambling laws in many states.

Most of the players are American, but a majority of the sites are located in Europe, the Caribbean, Australia and South Africa.

Improvements in the security of credit card transactions have spurred commercial traffic on the internet. The US Commerce Department has estimated that internet commerce overall will reach $200bn early in the next century.