CYBERSPACE CRAPSHOOT

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And Washington, he adds, has barely addressed the problem. Indeed, the Federal Trade Commission told TIME that FTC has no regulatory authority in this area; the Justice Department declined to comment. Senator Jon Kyl of Arizona, chairman of the Senate Judiciary Committee's subcommittee on technology, has introduced a bill that would amend federal statutes to cover online gambling; Congress could, however, choose to wait for the findings of a national commission currently studying the social impact of gambling in America. Its report is not due for two years.

Besides, any new federal law would only raise what Kyl's office dryly calls "enforcement challenges." The Interstate Wire Act makes it illegal for a company in the gambling business to send gambling information over any wire that crosses a state or national boundary. But most such companies today are, like Global Casino, based overseas, which makes existing law extremely difficult to enforce. U.S. citizens, for instance, can place bets via a Website called InterLotto that is operated by the government of Liechtenstein. Nixon wants legislation stipulating that violations of gambling laws occur in the state or nation where the bets are made. In fact, he'd like to outlaw online betting altogether. "If we're not going to do that," he says, "then we should just quit this sham of regulating gambling at all."

In the absence of aggressive legislation, the business is sure to mushroom, as organized groups invade territory held today by small-time pioneers. Under the Indian Gaming Regulatory Act, for instance, Native Americans exempt from federal regulation could easily move their lucrative gambling operations onto the Net. So could other folks with even more bookmaking experience. "I'm not that worried about the Modoc tribe," says Nixon. "I'm worried about the Gambino tribe."

With good reason, according to a software developer who brought a laptop filled with electronic playing cards and roulette wheels to a meeting at Las Vegas' Caesars Palace recently and found his new client wearing expensive designer clothes and stretched out on a couch. "He had these huge bodyguards on either side," the programmer recalls, "and this consigliere bending over to whisper in his ear." According to the programmer, the only questions in his client's mind were on which offshore island to locate his Web servers and from which local official to "buy a license."

Many Netizens consider cybergambling a fait accompli. "There's no way you can stop somebody who's reasonably tech-savvy from gambling," says Dave Herschman, CEO of Virtual Vegas Inc., a software company based in Santa Monica, Calif., whose 3-D casino was designed for Time Warner's soon-to-be-defunct Full Service Network and is headed for the @Home interactive network. Herschman considers current federal policy misguided. "Instead of sporadic antigambling crackdowns, we should be closely monitoring and taxing this industry," he says. "We're going to lose out on what could be one of the largest markets ever." His site today uses pretend money, but Herschman wants to play for real stakes. "We want to be like McDonald's," he says. "When the average American consumer can gamble on the Internet, Virtual Vegas is where we want him to go." Bugsy Siegel would be proud. And Jay Nixon will be waiting.

--With reporting by Dick Thompson/Washington