Encouraged by the recent failure of legislators in the United States to ban online gaming, the Dot Com Entertainment Group, Inc. (DCEG) announced Wednesday that it has signed a licensing pact with Altadena Investments Ltd. of Cyprus to produce and distribute a complete Internet bingo and casino system open to Net users in the U.S. and abroad.

The licensing agreement involves installing DCEG's bingo and casino technology at Altadena's Internet hosting facilities in Costa Rica, and comes amid signs that the Net gaming industry may be moving toward regulation in the United States.

Changing Attitudes?

Over the past several months, major gaming companies in Las Vegas, Nevada, have announced their intention to launch free-play gaming sites. In October, the Nevada Gaming Board approved a measure allowing state residents to bet on football games and horse races using the Internet.

Such developments have set the stage for online betting sites to operate legally in the United States.

Americans have shown strong enthusiasm for gambling on the Net, even though it is illegal to operate an online gambling business within the United States. A report last year from the online gambling industry estimated that 1 million Americans place bets online daily, while 4.5 million Americans have gambled online at least once.

More than 700 Web gambling sites currently exist on the Internet. The River City Group gaming industry consulting firm projects that online gambling revenue will top US$3 billion by 2002.

Rules of the Game

Buffalo, New York-based DCEG is betting its future on the growing acceptance of online gaming and supports the spread of what it considers a legitimate "e-commerce sector."

At the same time, the firm is careful to indicate that it is not an Internet gaming company, licensing the use of its commercial software applications and trademarks to clients who are located within jurisdictions that permit Net gaming.

Online gaming is officially prohibited in the United States by the 1961 Wire Act.

DCEG places special emphasis on Net bingo technology, which it licenses to pay-for-play Internet bingo halls. The company also hopes to promote its licenses for non-gambling bingo played for free at churches and charities.

DCEG estimates that offline bingo halls generate up to $70 billion annually, and said it is striving to capture 1 percent (or $700 million) of that market by taking bingo play online.

The company said that it is involved in active negotiations and discussions with a number of potential licensees in Canada, the United States, the United Kingdom and Australia.

Waiting for Washington

The future of online gaming in the United States depends largely on the attitude of the incoming U.S. Congress. Last summer, the Internet Gambling Prohibition Act failed to secure the required two-thirds vote in Congress.

The Clinton administration also opposed the legislation because it believed loopholes in the measure could inadvertently allow the spread of the many forms of gambling that are currently illegal in many U.S. states.

The bill called for a ban on the sale of lottery tickets online, online casino games and online wagers on sporting events. Horse racing, greyhound racing and jai alai were exempted from the legislation.

The proposed law also carried penalties of up to four years in federal prison and fines of $20,000 or more for those who operate a Web site accepting wagers from Americans.

President-Elect Bush has not yet articulated a policy regarding online gaming.