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Experts: Internet gambling off to slow but promising start, held back by illegal operations

Internet gambling in the United States is off to a slower start than many had imagined, but regulators and industry observers expect it will flourish in time.

Speaking Monday at the East Coast Gaming Congress in Atlantic City, a panel of experts said illegal offshore gambling sites continue to operate, and that's hurting the fledgling online gambling industries in the three states that have legalized it.

New Jersey saw its first decline in Internet gambling revenue in April, falling to $11.4 million from $11.9 million in March. It began in late November as a way to help Atlantic City's casinos gain new revenue and customers. Nevada and Delaware also offer it.

"Internet gambling exists in all 50 states today," said David Rebuck, director of the New Jersey Division of Gaming Enforcement. "It's just not regulated."

He said his state recently sent cease-and-desist letters to gambling companies from out of state that are marketing to New Jersey residents. Internet gambling can only be conducted within New Jersey's borders, according to state law.

California gambling control commissioner Richard Schuetz said over a million people are betting over the Internet in his state — all illegally.

"That industry is between $300 million and $400 million," he said. "That's a huge business that operates without any consumer controls or any benefit to the tax base."

Rebuck also said some people are hesitant to give their Social Security number and credit card information to a gambling provider, even one licensed by the state.

"They can go and get online with an online site without divulging their identity or their address," he said. "Those sites exist. It's a valid concern."

Brian Mattingley, CEO of 888.com, said his company conducted a survey that showed only 10 percent of New Jerseyans realize Internet gambling is legal here.

But despite its relatively slow start, panelists were unanimous that online gambling has plenty of room for growth in the U.S.

"We think what's happening in the U.S. is the single most exciting happening in I-gaming in the world," said Eamonn Toland, president of the North American arm of the Irish-based Paddy Power online betting firm.

He said continuing problems with credit card acceptance are holding the industry back.

"People who come online have 20 minutes in the den; they don't have three hours to work out payments," Toland said. "That needs to be fixed."

Schuetz and several others compared Internet gambling to an infant.

"The people who say it's not doing well enough are like the two parents who look at their 5-month-old and say, 'It doesn't speak any languages!" Schuetz said. "Let's get our expectations in line."

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Wayne Parry can be reached at http://twitter.com/WayneParryAC

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