Jun. 20--Gambling is one business that has successfully embraced the internet. And with estimates that worldwide revenue in online gambling will soon surge to $5 billion (UKpound 3.6 billion) a year, the big American casino corporations want a piece of the action. So do tax-hungry states such as Nevada, in which the bricks and mortar casinos mainly operate. Nevada has just passed a law to regulate upcoming online casinos, which would divert a portion of the revenue plus substantial licence fees into State coffers. 

For the moment though, US casinos are technically barred from offering online gambling due to a vaguely-worded 1961 federal law, the Wire Communications Act, which bans the use of telephones in accepting wagers on sporting events. 

However, a recent US federal district court ruling concluded the Act does not apply to casino-style games played on the internet. 

So at present online gambling in America is technically illegal. However, estimates from the Interactive Gaming Council say half of the four million people who gamble online are Americans. Yet no onshore company operates in the field. 

To try to stimulate the regulation of online gambling and to stop revenue going offshore, the Nevada Legislature decided to move forward and approved a Bill this month to allow licensed operators to offer internet gambling as soon as state regulators can offer "reasonable assurance" that minors and players in jurisdictions where such games are illegal can be excluded. 

Nevada will tax online revenue at the same level as that generated in bricks-and-mortar establishments, 6.25 percent , and charge operators $500,000 every two years for the privilege of operating in cyberspace. "The ball is in our court," says Richard Fitzpatrick, president of the Internet Business Alliance of Nevada. 

"It's up to our companies to prove they have the hardware and the software in place to allow the regulatory agencies to be comfortable." 

Yet few believe that, even if everything goes smoothly, Nevada casinos could be taking bets online in less than a year. Others say 18 months to two years would still be optimistic. Until then, casinos are developing "fun" sites. MGM Mirage joined with WagerWorks, a gaming software firm, to develop an online casino that it could use as a play-for-fun product extension. 

Another major player, Harrah's Entertainment, has completed its own play-for-fun internet gambling website for Total Rewards members. 

A study by broker Bear Stearns found there were just two main, regulated markets that function as legitimate, developed internet gambling jurisdictions -- Antigua and Australia. 

The 90 or so online gambling sites based in Antigua account for a large percentage of those that are located in the Caribbean region. Internet casino operators must pay $100,000 annually for a licence. 

Bear Stearns expects Antigua and nearby Barbuda will continue to be among the market leaders of internet gambling, which it says will be a $5 billion business by 2003. Other countries that have made significant progress toward developing their own online gambling regulations include Costa Rica, Britain and South Africa. 

UK gambling legislation has been rather stagnant, Falcone says. The main issue at hand concerning internet gambling with the UK is that the regulations already in place are more than a quarter-century old and therefore are, of course, pre-internet. Earlier this month, Microsoft's UK portal and Harrods Casino announced a two-year marketing agreement in which Microsoft will provide advertising and promotions for Harrods Online subsidiary Sporting Resort. 

The international gaming site provides online bets for slot machines, blackjack, video poker, roulette and keno among other things. 

The moratorium in Australia and the US Federal Government's propensity to want to ban gambling of all kinds, is causing uncertainty within the marketplace. 

"Going forward, we believe operators with strong brands and a solid, established customer base will be the most viable as internet plays," says Falcone. 

While share prices are tumbling all around them, Harrah's is up 43 percent in the past year while MGM Mirage's has advanced nearly 5 percent . 

-----To see more of the Evening Standard, or to subscribe to the newspaper, go to http://www.thisislondon.co.uk UKpound preceding a numeral refers to the United Kingdom's pound sterling. (c) 2001, Evening Standard, London. Distributed by Knight Ridder/Tribune Business News. MGG, HET,