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Monday, 25 February, 2002, 08:01 GMT
Internet gambling hots up
Casino Net home page
Online gaming now has a much broader audience
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David Schepp

David Schepp
BBC News Online's North America business reporter
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Gambling over the internet has become big business in the United States over the past year despite a recession that has caused an industry-wide advertising slump.

Internet gambling, once thought of in the same seedy vein as online pornography, has gained a level of legitimacy despite myriad controversies facing it.


Online casinos are now competing for advertising with the most visible industries

Charles Buchwalter, internet gaming analyst
The sector has become the fifth largest advertiser online, jumping to 2.5 billion from 911 million ads in the last year. Online gambling firms are now advertising on more mainstream sites, thus appealing to whole new groups of gambling enthusiasts.

The online gaming industry has grown so much and so fast that a web-tracking firm has begun monitoring gambling sites as a separate category in terms of destinations and advertisers.

"Online casinos are now competing for advertising with the most visible industries, including retail, financial services and travel," says Charles Buchwalter, head of media research at Jupiter Media Metrix.

Growth industry

"The fact that casinos are [moving] their ad-buys from niche sites to mainstream portals is proof that this sector is going mainstream," Mr Buchwalter says.

Those "mainstream portals" include sites like Yahoo! and Excite.

The number of visitors to internet-gambling sites has grown significantly. In December, for example, the web analysis firm calculated there were 13.6 million visitors to online gambling websites - up significantly from the previous year.

Las Vegas at night
Online gaming is a viable alternative to resorts such as Las Vegas
Those sites include the likes of Kscasino.com, Webstakes.com and Aceshigh.com, which account for nearly half of all visitors (who may or may not have actually placed bets).

Jupiter's Buchwalter notes that a year ago, a half of the sites it now tracks did not even exist.

Controversies

The numerous controversies surrounding online gambling are tied to both legal and moral issues.

Since gambling enthusiasts can play online in the comfort of their own homes, it makes it much easier for those under the age of 18, the age of legal consent for gambling in many US states, to engage in illegally activity.

Another potentially worrisome trend is the appeal of online casinos to modest wage-earners.

For example, while internet surfers with household incomes of less than $25,000 represent only 11% of the overall online population, they represent 13% of all visitors to gambling sites, according to Jupiter's research.

Internet addiction

The internet, itself long known to be addictive in nature, presents particular problems for those who suffer or may suffer from gambling addiction.

The fundamental reason that people like to gamble - chance, risk, and reward - are the sorts of things everyone can now enjoy whenever they want at online casinos.

Some credit-card issuers, recognising the lure of online gambling and the possibility of further large uncollectable debts, have begun restricting usage of cards at such sites.

Online gamblers, however, have other options in paying for bets placed at online casinos, including debit cards, electronic-funds transfer from checking accounts and wire transfer.

Government regulation

More than two million Americans regularly place bets at casino websites, despite the fact that none are based within the United States. Such sites are usually located in the Caribbean and Australia.

They operate in a legal grey area. No current US federal law prohibits online gaming, although there have been noises by some lawmakers to support a ban on internet gambling.

Detractors say online gambling may never be completely outlawed, rather it is likely to become more tightly regulated.

Las Vegas slot machines
Will virtual slot machines replace the real thing?
Still others say internet surfers are simply reacting to the novelty of it all. Once the newness wears off, casino sites, like the entertainment and retail spots that preceded them, may fade fast.

Analysts also say destination resorts such as Las Vegas and Atlantic City have a lure that no website can replicate.

The bright lights, cacophonous sounds of slot machines and elaborate shows are as much a part of the gambling experience as winning and losing for many gamblers.

But online gambling offers other advantages, including the ability to play whenever the mood strikes and more often.

See also:

05 Jun 01 | Americas
Vegas gambles on cyberspace
30 Jul 01 | Business
US cyber casino goes UK
28 Mar 01 | Business
Australia may ban online gambling
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