With 37 states operating their own lotteries, they have a tremendous vested interest in prohibiting Internet gambling. Recognizing that they have very few tools to combat the online competition, the states are looking for help from Washington.

• State lotteries had combined sales of $56 billion in 1997.

• In addition to lotteries, 24 states now allow casino gambling.

• More than 300 Web sites feature sports betting and casino games from blackjack to baccarat -- an industry which foresees worldwide revenue of $8 billion by 2001.

• Americans legally wager more than $500 billion a year -- an amount that has doubled in the past decade.

State lawmen have brought action against the operators of three gambling Web sites since 1997, and New York, Ohio, Missouri and others have moved against online betting parlors.

Sen. John Kyl (R-Ariz.) is sponsoring legislation that would make Internet gambling illegal. "I don't believe it can be regulated," he says, "so we must prohibit it." Kyl calls the suggestion that states want to outlaw Internet gambling to protect their revenues "cynical in the extreme."

Yet his bill exempts activities from which states profit -- lotteries, horse racing, dog tracks -- should they choose the Internet as a venue in the future.

Source: Jason L. Riley, "Will Uncle Sam Trump Internet Gamblers," Wall Street Journal, May 14, 1999.