of the amount spent on more traditional formats. Even the precise number of online casinos is hard to calculate. In 1997, published reports put the total number of operating online casinos at 15. Today, a roster on one "gambling portal" site lists well over 200. That figure exaggerates the size of the Internet gambling sector, since some companies operate more than one online betting parlor. Inland, for example, operates two Web sites in addition to the one bearing Kenny Rogers' likeness: Casinoaustralia.com and Goodluckclub.com. Together, these sites have about 4,300 registered customers in 96 countries around the world.
Running an online casino carries all the usual challenges of Internet businesses, from low click-through rates to servers that fail. But according to Inland CEO Don Speer, elusive profits need not be one of them. He claims Inland's Internet gambling business went slightly into the black in March, on annualized revenues of about $1 million. (The company's Indian casino and Web-development divisions make more.) "This is the really exciting point, because I know where it goes from here," Speer said in an interview.
One major barrier to profitability is the law. "Think about what would happen to Wal-Mart (WMT), General Motors (GM) or Microsoft if these companies had to continue to dodge federal roadblocks to access their customers," says Sebastian Sinclair, senior associate at Christiansen/Cummings Associates, a management consulting firm.
Take Interactive Gaming and Communications, another publicly traded company, located in Blue Bell, Pa. At one point, Interactive Gaming looked like it could be an industry leader. But following a 1997 indictment, the state of Missouri settled a suit against the company and its president, Michael Simone, for about $35,000. But the travails associated with fending off lawsuits have essentially put the company out of business. (The company did not respond to repeated requests for an interview.)
For years, another barrier to the growth of Internet gambling has been strong opposition from those most threatened by gambling sites: legal American casinos. The American Gaming Association, a trade group of gaming firms, maintains this view regarding online wagering: "The industry has been state-regulated and we think it should remain that way. The Internet is presently unregulated and we support a federal law regulating Internet gambling."
But over the last several months, at least some traditional casinos have pursued the time-honored strategy of joining an Internet gambling trend that they can't beat. In most cases, this means operating out of Australia. In November 1998, for example, a division of Hilton Hotels acquired the company that runs Centrebet, a Web and telephone sports-wagering system based in Australia (www.centrebet.com.au). Anyone over the age of 18 can set up an account with Centrebet and place money on a variety of worldwide sporting events, including U.S. college and professional sports.
Similarly, the Las Vegas-based public company American Wagering, owner of Leroy's Horse and Sports Place in Nevada, also operates a sports gambling site located in Canberra called MegaSports (www.megasports.com.au). In January, MegaSports began taking Internet bets from Australians; it expects soon to allow global gambling on sporting events.
So how is it that these companies appear to operate legally, but a dozen Caribbean cowboys found themselves under felony indictment?
It's not because they operate in any fundamentally different way. Almost all online gambling sites work the same. Would-be wagerers open an account with a credit card, although some sites also accept cash and cashier's checks. The minimum amount to begin an account varies. Casino games are available on a site or via downloadable software. They almost always include slots, blackjack and video poker, but many sites carry more exotic games, from baccarat to pai gow. Bets generally range from $1 to as much as $300.
Although it uses a CryptoLogic template similar to several other online casinos, Kennyrogerscasino.com may be unique in letting bettors wager as little as a penny at a time. "We get daily reports, and you'll see these people who spend a
