Gambling, like the other more dubious diversions of modern life, has rushed wildly to get a piece of the Internet action in the past few years. There are hundreds of Web sites devoted to some form of gambling, and more are being added every month. Many of them are advertisements for licensed and regulated casinos. Others are informational or "how to" sites. And an increasing number are actual online gambling operations.

The problem is, online gambling, at least in most parts of the United States, may be illegal.

The stakes are enormous. Americans shell out approximately $550 billion a year on gambling, not just in casinos but at the racetrack, on sports books and state-run lotteries, in card rooms and church-run bingo halls. It is understandable that Internet entrepreneurs would want to get in on it.

One of them is the International Gaming and Communications Corporation (IGC) of Blue Bell, Pa. Since 1992, IGC has specialized in gambling on major sporting events taking place anywhere in the world. IGC made it legal by opening offshore accounts for its betting customers through a subsidiary, Sports International Ltd. of Grenada, West Indies, and letting the punters place bets using a toll-free number from anywhere in the world.

IGC's International Sports Book has generated approximately $50 million annually in telephone wagers. In May 1995, it accepted its first wager transmitted over the Internet. Since then, a number of sites have sprung up offering sports-book wagering, with offshore accounts, on the Internet. Some sites use play money accounts for pretend blackjack, roulette or slots. IGC, which put a prototype blackjack game on its Sports Book Web site last summer, wants to be the first to implement real-money, live casino-style gambling on the Internet.

The company says it plans to "go live" with its Internet bets in mid-March. "We are opening accounts now, though," said Jeffrey Erb, spokesman for IGC. When it opens, its Global Casino will feature the world's first Internet slot machine tournament, offering players prizes from $10,000 to $1 million. With Global Casino, IGC expects to capture at least 1 percent of the worldwide wagering market. That would amount to well over $1 billion per year.

Is it legal? "We're entirely legal," says Erb. "All gambling accounts are offshore. The money transactions are done through an expatriate subsidiary. The way we're set up, there's nothing we're doing that anyone can criticize."

State and federal law enforcement officials are not so sure. The National Association of Attorneys General and the U.S Department of Justice are closely watching a case working its way through the courts in Minnesota in which the state is taking on a company called On-Ramp Internet Computer Services. Basing its case on consumer protection laws, the state is accusing the company of misleading customers by claiming that they can legally bet through its service -- which is based in Nevada, where gambling is legal -- when in fact to do so would violate both state and federal law.

"Gambling in Minnesota, either advertising it or doing it, is illegal," said Carolyn Hamm, the state's assistant attorney general. "It doesn't matter where the Web site is based or where the monetary transaction takes place. If people can access the site in a state where gambling is illegal, it's illegal."

There is no certainty that the courts will agree. Existing law that prohibits using wire communications for transmitting bets in interstate or foreign commerce does not specifically address the Internet. And until the law is clarified, most Internet gambling entrepreneurs seem to consider themselves immune.

Fortunes are riding on the outcome. "From the time that the Sports Book went online, we've seen a 20 percent increase in volume of wagering over the telephone-based games," says Michael Oryl, president of Intersphere, the IGC subsidiary that developed the Sports Book and Global Casino Web pages. "We anticipate nothing but greater revenues in the future."

Ignored in the chase for profits are the potential social problems a new explosion of gambling could cause. And then there are the regulatory issues: How will states prevent neophyte Internet gamblers from getting ripped off by sleazy operators? And who is responsible for blocking transmission of gambling sites to minors?

In spite of these concerns, it seems that there is no bucking a trend. "Home is where the (gambling) market is going," said Jason Ader, a gaming analyst at Bear Stearns.
Feb. 24, 1997

Erica Rex is a recipient of the National Magazine Award for Fiction. She also writes on technology.