TEXAS HOLDEM ONLINE POKER

Playing poker, and other casino games, over the Web allows people to hone their skills before walking into a real-life casino, where the stakes can be even higher.

Yet online players take another risk when they ante up in these games. Because it's illegal to run such sites on U.S. soil, most online facilities are based offshore, and operators could easily manipulate the outcomes.

Observers disagree on whether it's legal for people using computers in the United States to play, though there's little evidence of enforcement on the issue. "Laws vary from state to state," said Nelson Rose, law professor at Whittier Law School. "The best you can hope to find is that the state simply has never made this form of gambling illegal."

Today, Jewell will play at a "card table" of nine people, betting about $50 in total. It costs $1 to $2 per hand played at this virtual table. But the playing adds up quickly, and ParadisePoker.com deals about 600 hands per minute, or nearly 900,000 of them in one day.

Online poker is rapidly becoming big business, expected to generate revenue of $2.8 billion a year in revenue, according to Dennis Boyko, whose PokerPulse.com site tracks volume of more than 260 virtual poker sites in real time.

Nearly three-quarters of the revenue comes from the house's 3 percent to 5 percent take from the pot in cash games like the ones Jewell plays. The rest is made in tournaments, with the operator paid about 5 percent to 10 percent of the prize money, often about a half-million dollars.

Online poker's expansion far outpaces the 22 percent expected growth in online gambling overall or the 4.3 percent for live-action gambling, according to research by Dresdner Kleinwort Wasserstein.

And online casinos, free from the brick-and-mortar worries of facilities and staffing, have enviable profit margins.

ParadisePoker.com, which hosts nearly 1 million hands a day, would need about 900 casinos to run the live-action equivalent of that volume of business, said Nigel Payne, chief executive of parent company Sportingbet. Yet virtual tables allow Sportingbet to capture a profit of about 60 percent on the $100 million in revenue it expects this year, he said.

Why are so many Americans taking their chances in virtual card rooms that would appear to be ripe for getting cheated?

"You can't ever be sure if two people are colluding among players," said Jewell. "You can be suspicious based upon behavior, though," he added. "If the same two players are in the same pots, or an abnormal amount of raising activity, that could indicate collusion."

Even so, there are ways to gauge the credibility of a site.

"The top-notch poker rooms have live monitoring and auditing," said Jewell. To get a further sense of trustworthiness, he says he looks for casinos with a large number of players, and he reads feedback reports posted by other players.

Besides the rising comfort level with the legitimacy of the sites, online poker is gaining in popularity because it offers players a convenient way to hone their skills and match wits against people from the world over.

"Online [poker] is absolutely the best way to learn the game," said Phil Gordon, host of the Bravo cable channel's celebrity poker showdown and a professional poker player. "You can play hundreds of hands in an hour, whereas coming to a casino, you might play 30. It's just fantastic."

Amateur players also are drawn by the prospects of getting their 15 minutes of fame.

A Tennessee accountant with the fortunate name of Chris Moneymaker parlayed a $40 investment in an online poker tournament and went on to win $2.5 million as the 2003 World Series of Poker champion. ESPN, which has been televising the tournament for seven years, said the 2003 poker series had "unprecedented ratings," with more than 1 million households in the audience. In 2004, Greg Raymer also gained notoriety by qualifying online first, and then winning $5 million at a major tournament.

"Definitely, with the television, and the Internet, we've seen a big boom in poker," said Matt Savage, tournament director at Bay 101, which recently held the World Poker Tour, a television series of high-stakes contests televised on the Travel Channel, and produced by WPT Enterprises Inc.

WPT Enterprises , based in West Hollywood, Calif., may soon afford investors a way to get a piece of this growing pot. Next month, the company plans to open an online poker operation, though it won't allow U.S.-based players to place real wagers, citing federal gambling laws.

A1961 Wire Act law prohibits betting over the telephone. The Justice Department has issued opinions saying the law applies to gambling over the Internet.

Working beneath the radar of U.S. authorities, many companies that operate online poker sites are privately held. The ones that are public, such as Britain's Sportingbet, are based offshore in one of the 85 jurisdictions around the world where online poker is legal.

In addition to trading on the London Stock Exchange, Sportingbet is listed on the U.S. pink sheets. Last November, its shares soared more than 200 percent after the company acquired Costa-Rica-based ParadisePoker.com.

There's also Neteller PLC , the online poker equivalent of Paypal. The British company went public last year in London, with U.S. shares listed on the pink sheets.

All these stocks have performed tremendously well in the public markets, igniting speculation that other companies will soon be lining up for a public-market debut.

According to widespread media reports, Gibraltar-based PartyGaming, which operates PartyPoker.com, is a candidate to go public in London. PartyPoker generates half the revenue of all the online poker dollars generated around the world, according to Dresdner's Lee.

PartyPoker.com had 6 million unique visitors in the U.S., making it the No. 1 poker site in February, according to comScore Networks.

"We know of at least nine companies interested in going public," said Sportingbet's Payne.

Another company bandied about as a potential IPO candidate is Cassava Enterprises, said PokerPulse's Boyko. Cassava Enterprises operates PacificPoker.com and 888.com. Cassava's properties attracted 8.4 million unique visitors in February, making it the No. 1 online gambling property operator.

Some observers say that the U.K. market is becoming the Silicon Valley for online poker as companies seek to tap the stock market for capital.

But companies will likely be prudent when it comes to going public in the U.S., at least for now. "Your duty to your shareholder will absolutely make you err on the side of safe," said WPTE's general counsel Adam Pliska.

In Las Vegas, the gambling industry regards the online poker boom as a helpful trend because it develops new players.

As they gain confidence, neophytes can turn into seasoned hands, said Joe Weinert, vice president of Spectrum Gaming Group, an industry consultancy. "They feel more in control and [become] more willing to go to a casino or a card room to try live poker."

Indeed, online poker is more complementary than competitive for live-action gambling, and the majority of online players ultimately end up going to casinos, said Gary Thompson, director of tournament operations for the World Series of Poker, which became part of Harrah's Entertainment last year.

Even MGM Mirage , which runs a famous poker room at the Bellagio in Las Vegas, plans to open a new on with 23 tables at the MGM Grand on Monday, because of growing demand for the game.

Of course, live-action poker will always hold a special allure because it involves psychology and body language.

"I find that online poker is not nearly as enjoyable as playing with real people," Jewell said. "Poker is a game of psychology, statistics and luck. When playing online, the psychological elements are significantly diminished since you cannot see your opponent. You lose valuable clues, such as tells [and] player mood. As I've learned the game, I depend more upon my ability to read other players than the pure statistical side of the game."