But final passage of the measure is still being viewed on Capitol Hill as a crap shoot at best. “This is, by no means, a sure thing,” said a senior staffer on the financial services committee. “In fact, I’d call it a long shot.”

That’s because the window to get anything passed is quickly closing. Congress is set to take a seven-week recess, leaving a two-week window in late September before the session breaks again prior to mid-term elections. And then there is the looming possibility of a lame duck session which, which according to the Financial Services Committee staffer, does not bode well for passage of anything.

Pairs Bet

Additionally, Rep. Barney Frank, D-Massachusetts, the committee’s chairman and chief sponsor of the measure, H.R. 2267, the Internet Gambling Regulation, Consumer Protection, and Enforcement Act of 2009, has stressed he wants that bill to go forward paired with a separate piece of legislation, H.R. 4976, the Internet Gambling Regulation and Tax Enforcement Act of 2010. Sponsored by Rep. Jim McDermott, D-Washington, this bill would establish a framework for taxing Internet gambling, including industry profits and individual’s winnings. Proponents say legalizing online gambling might raise $10 billion to $42 billion in new government revenue over 10 years, according to the Joint Committee on Taxation. The House Ways and Means Committee has yet to mark up McDermott’s bill.

Getting McDermott’s companion bill through Ways and Means, and then having both that bill and Rep. Frank’s bill pass in the House, and then the Senate, all in that brief September window, while not impossible clearly looms as a tall order, conceded John Pappas, executive director of the Poker Players Alliance, a Washington, D.C.-based lobbying organization. “We are not talking about an easy task,” Pappas said.

The Menendez Card

Pappas did, however, point to yet another bill, to legalize online poker, coming together in the Senate. It could sneak through in a lame duck session, Pappas said. The bill, sponsored by Sen. Robert Menendez, D-N.J., has not yet had a hearing.

Meanwhile, as the debate rages on full tilt, opponents of online gambling continue to point to a host of negative societal ramifications that to them appear to be a sure thing should legalization come to pass.

“Internet gambling’s characteristics are vastly different than those of other forms of gambling,” said Rep. Spencer Bachus, R-Ala., during a hearing held July 21. Bachus is the ranking GOP member on the Financial Services Committee and perhaps the country’s most vociferous opponent of Internet gambling.

“Online players can gamble 24 hours a day from home,” he said. “Children may play without sufficient age verification. Betting with a credit card can undercut a player’s perception of the value of cash, leading to addiction, bankruptcy and crime.”

‘Click the Mouse, Lose Your House’

Youth are particularly at risk, Bachus said, because “when you put a computer in the bedroom or dorm room of a young person, the temptation is too great for many of them to resist.”

Quoting John Kindt, a professor of business administration at the University of Illinois, Bachus went on to label Internet gambling “the crack cocaine” of betting. “It’s ‘click the mouse, lose your house,’” he said.

By some estimates, as many as 15 million Americans play poker online for money. Online gambling is thought to generating at least a $6 billion in profits annually.

According to a May 2009 Gallup poll, 58 percent of Americans called gambling “morally acceptable,” while 36 percent called it “morally wrong.” But there are concerns. In a Pew poll in 2006, 70 percent said they think legalized gambling encourages people to gamble more than they can afford. Six percent said gambling has been a source of problems within their family.

Compulsive Betting on Rise

A spokesman for Gamblers Anonymous (who in keeping with the organization’s hallmark asked that only his first name, Chuck, be used for this article) said GA has no formal opinion on the effort to legalize Internet gambling, and that they do not comment on public policy issues. But asked whether the proliferation of online gambling sites has swelled the ranks of compulsive gamblers seeking help, Chuck said, “the answer is, unequivocally, yes.”

Chuck had no hard data to support this assertion, only anecdotal evidence. “More and more people are coming into the program and telling us they became addicted online.”

Shawn Jordon, a former compulsive gambler, cofounded a gambling addiction self-help website in 2006. He says around 1,000 people visit the site every day. Jordon said he has gathered data from all over the world suggesting that gambling addiction is soaring.

What Happens in Vegas is Now Everywhere

Historically, Jordon said, looking at any given community, whether a town with 100,000 citizens or a city of one million, various data has suggested that around 5 percent of a population would be considered “problematic” gamblers, that is, they gamble beyond what would be considered recreational. Of those, Jordon said, an estimated 10 percent would be considered “compulsive” gamblers who can’t stop and in many cases rack up enormous debts. In recent years, according to Jordon, that smaller subset of clinically compulsive gamblers has been exploding.

“So in the example of a small town with 100,000 people  instead of there being just 500 compulsive gamblers the number is now closer to 5,000,” Jordon said. “That includes people who play lottery tickets, use Indian casino poker machines, go to the race track, you name it,” Jordon said. “Once upon a time what happened in Vegas stayed in Vegas. Gambling has proliferated to the point where sadly that is no longer the case.”

Litany of Loopholes

Jordon, who resides in Calgary, says he is not opposed to the legalization of Internet gambling. “There’s no way to stop it,” he said. “The genie is out of the bottle. All we can do is help people.”

In the mid-1990s, Congress created the National Gambling Impact Study Commission which in 1999 issued a final report calling for a ban on Internet Gambling. While the federal Wire Act of 1961 expressly prohibits sports betting and other forms of gambling, peer to peer gambling, such as online poker, fell into a gray area. In 2006, Congress passed the Unlawful Internet Gambling Enforcement Act, a law aimed at discouraging financial institutions from transacting with online gambling operations. The law, subject to numerous delays and postponements, officially took effect June 1.

However, because of the various means of getting around the measure  offshore credit card accounts, prepaid credit cards, to name two examples  the Internet poker industry continues to thrive, said PPA’s Pappas.

The law doesn’t specifically ban banks from transacting with online poker sites; rather, it merely requires that banks take proper steps to make sure that they do not facilitate any illegal gambling transactions. Embedded in the law is what amounts to a safe harbor, so that banks that wish to transact with an online poker business simply needs a reasoned legal opinion that their client is not involved in restricted transactions, Pappas explained. Sports betting activity, expressly prohibited by the Wire Act, would not fall into this category. Online poker, which is not expressly prohibited, would not.

On Wednesday, the House Financial Services Committee approved a bill that would effectively legalize online poker and other nonsports betting, overturning a 2006 federal ban that critics say merely drove Web-based casinos offshore.

The bill would direct the Treasury Department to license and regulate Internet gambling operations, while a companion measure, pending before another committee, would allow the Internal Revenue Service to tax such businesses. Winnings by individuals would also be taxed, as regular gambling winnings are now. The taxes could yield as much as $42 billion for the government over 10 years, supporters said.

The two measures — which are backed by banks and credit unions but have divided casinos and American Indian tribes — are far from becoming law. A bill to legalize online poker sponsored by Senator Robert Menendez, Democrat of New Jersey, has not yet had a hearing. The Congressional timetable has little spare room before the midterm elections, and the Obama administration has not taken a position.

But the vote suggests a willingness by Congress to look for unconventional ways of plugging holes in the budget and comes as struggling states have also been looking to extract revenue from the gambling industry, which took a hit as consumers cut back on travel and entertainment during the recession but continues to reap billions of dollars in annual profits. The committee vote Wednesday was 41 to 22, with seven Republicans joining most Democrats on the panel in favor of the measure.

Last year, Colorado expanded casino hours, raised maximum-bet limits and permitted roulette and craps, while Missouri eliminated a $500 loss limit at riverboat casinos. Delaware and Pennsylvania have weighed proposals to allow the conversion of slots parlors into full-service casinos, making further inroads into the eroding Atlantic City gambling industry.

Opponents, who only four years ago, when Congress was controlled by the Republicans, secured a law that banned the use of credit and debit cards to pay online casinos, said they were aghast. “People sometimes resort to drastic things when they are strapped for cash,” said Representative Robert W. Goodlatte, Republican of Virginia, who called the new proposals “unfathomable.”

Representative Barney Frank, the Massachusetts Democrat who leads the Financial Services Committee, has been the legislation’s champion.

“Some adults will spend their money foolishly, but it is not the purpose of the federal government to prevent them legally from doing it,” Mr. Frank said.

The committee’s top Republican, Representative Spencer Bachus of Alabama, noting the passage of far-reaching changes in financial regulation this month, said that “after all the talk last year about shutting down casinos on Wall Street,” he was incredulous that members would vote to “open casinos in every home and every bedroom and every dorm room, and on every iPhone, every BlackBerry, every laptop.”

Mr. Bachus said lobbyists had spent “tens of millions” to overturn the 2006 law. “They’ve had quite a bit of success in turning votes,” he said.

Supporters of legalization said fiscal considerations played a role in their thinking. “I was looking for the money,” Representative Jim McDermott, Democrat of Washington, said in an interview. He sponsored the companion measure to allow taxation of Internet gambling; he wants to dedicate the money to education.

Representative Brad Sherman, Democrat of California, said in an interview that the money was an attractive source of financing for other programs. “We will not pass an Internet gaming bill,” Mr. Sherman predicted. “We will pass a bill to do something very important, funded by Internet gaming.”

He added, “Forty-two billion dollars over 10 years has an effect.”

The legal status of online gambling has long been murky. The Justice Department asserts that the Wire Act of 1961 prohibits it, but prosecutors have largely left individual gamblers alone.

To crack down on the activity, a 2006 law — inserted at the last minute into an unrelated bill in one of Congress’s last actions before Democrats took control — banned financial institutions from transmitting payments to and from gambling operators.

In the same year, the authorities arrested David Carruthers, a British online-gambling executive, as he changed flights at a Texas airport. He was sentenced to 33 months in prison for racketeering. Last year, the authorities ordered four banks to freeze the accounts of online payment processors that owed money to some 27,000 people who had used offshore poker sites.

But the enforcement actions have barely put a dent in the industry, experts say. Gamblers have used online payment processors, phone-based deposits and prepaid credit cards to circumvent the ban. By some estimates, American online gambling exceeds $6 billion a year.

“Today, any American with a broadband connection and a checking account can engage in any form of Internet gambling from any state,” Annie Duke, a professional poker player, testified in May on behalf of the Poker Players Alliance, which hired a former Republican senator from New York, Alfonse M. D’Amato, to lobby for the bill.

Michael Brodsky, executive chairman of YouBet.com, an online site for parimutuel horse racing, said, “As with Prohibition, illegal online gambling is thriving as an underground economy.”

Banks and credit unions said the 2006 law was poorly drafted — so much so that the Obama administration delayed, to June 1 of this year, the deadline for banks to comply with the law, to address concerns about its enforceability.

In 1999, the National Gambling Impact Study Commission urged the prohibition of Internet gambling. Attorney General Eric H. Holder Jr. has said he would not support efforts to legalize online gambling, a view shared by most state attorneys general.

“Because Internet gambling is essentially borderless activity, from a money-laundering and terrorism-financing perspective, it creates a regulatory and enforcement quagmire,” said James F. Dowling, a former special agent with the Internal Revenue Service.

And Mr. Bachus released a November letter from the F.B.I. in which Shawn Henry, the assistant director of the cyber division, said it would be difficult for companies to verify the age and location of their customers.

The bill contains measures intended to protect minors and combat compulsive addiction. It would allow states and Indian tribes to “opt out,” so players from those states and reservations would not be able to make online bets. But those governments would have a potentially lucrative incentive to allow the activity since they could then collect taxes from Internet casinos.

Before voting, the committee approved amendments to delegate enforcement duties to states and tribes, continue a ban on betting on sporting events, ban marketing aimed at children, and prohibit companies that violated the 2006 ban from obtaining licenses.

In a mark up of the Payments System Protection Act (H.R. 5767) in the House Committee on Financial Services on June 25, 2008, Rep. Bachus, citing research at McGill, claimed that one-third of college students who gambled online attempted suicide.

“This assertion, which is reportedly based upon our empirical research, is not predicated upon any factual evidence,” responded Derevensky in an interview with the Safe and Secure Internet Gambling Initiative. “None of the studies conducted with adolescents or college students, to the best of my knowledge, have looked at a connection between Internet wagering and suicide attempts.” Derevensky raised these same concerns in a letter sent last week to Reps. Bachus and Barney Frank (D-Mass.)

Derevensky believes there is an opportunity for Congress to better protect consumers in a regulated environment. “If Congress is serious about minimizing the threat posed by Internet gambling, it should look to create an environment where Internet gambling operators are required to put in place safeguards that protect against compulsive and underage gambling.”

Last week, a study conducted jointly by the University of Western Ontario and University of Nevada, Las Vegas called for the legalization and regulation of online gambling.

“Just as legalized commercial gambling in casinos allows for governments to regulate it, so, too, could the legalization of online gambling allow for better regulation and attempts to reduce the growth of problem gamblers,” said June Cotte, associate professor at the University of Western Ontario, as reported by Poker News.

Existing technology and security controls have already proven to be effective in addressing compulsive gambling. Safeguards currently available in the industry include the ability to control the amount of money wagered, set limits on amounts bet and amounts lost, restrict the duration that someone can play, identify and stop players whose gambling patterns seem out of the ordinary, and allow for consumers to be excluded from online gambling.

“It is disappointing that Rep. Bachus is using scare tactics and false claims in an attempt to justify why Congress should limit my ability to gamble online,” said Jeffrey Sandman, spokesman for the Safe and Secure Internet Gambling Initiative. “We are encouraged by the academic community’s support of Internet gambling regulation. They emphasize the important point that consumers will be better protected if there are safeguards put in place to combat underage and problem gambling.”

The Internet Gambling Regulation and Enforcement Act of 2007 (H.R. 2046), introduced by Rep. Frank, would establish an enforcement framework for licensed gambling operators to accept bets and wagers from individuals in the U.S. It includes a number of built-in consumer protections, including safeguards against compulsive and underage gambling, money laundering, fraud and identity theft. A companion piece of legislation that would ensure the collection of taxes on regulated Internet gambling activities, the Internet Gambling Regulation and Tax Enforcement Act of 2008 (H.R. 5523) was introduced by Congressman Jim McDermott (D-WA).

Additionally, Rep. McDermott introduced last week, the Investing in our Human Resources Act (H.R.6051), which would direct new revenue generated by regulated Internet gambling activities to be spent on job training for those in the declining sectors of the economy and educational assistance for foster care youth. The bill also includes provisions to encourage responsible Internet gambling behavior and an awareness of unsafe practices, something which has been praised by problem gambling advocates.

“Though I support the dedication of resources to raise awareness about problem gambling, I encourage Congress to also provide appropriate funding for research, treatment and the prevention of problem gambling,” added Derevensky.