TEXAS HOLDEM ONLINE POKER

"This is starting to become a significant sector within the gambling industry," said Todd Coupland, managing director of Canadian equity research at CIBC World Markets Inc., which hosted an investment conference yesterday to highlight opportunities in the sector. "The investor community is looking for ways to take advantage."

Management from nine gambling companies presented statistics and forecasts trumpeting the "explosive" growth of the industry, sounding similar at times to pitches made to the investment community several years ago by dot-com startups.

Unlike the suspect business models that characterized the dot-com wave, however, many of the strategies of on-line gambling companies are already proving profitable, Mr. Coupland said.

Costs in the industry tend to be relatively fixed, which means companies can boost their profit exponentially once they acquire a critical mass of customers.

"One of the exciting things is that this is an industry with growth and profitability. This is not dot-com days," said Lorne Abony, chief executive officer of Fun Technologies PLC, whose shares have nearly doubled in price since listing on the Toronto Stock Exchange last October.

Fun Technologies, which is based in Toronto and sells on-line betting technology and sports information, recently reported a loss of £1.3-million ($2.5-million U.S.) on sales of £496,000 for the nine months ended Sept. 30. Analysts expect the company to show an operating profit this year.

The on-line gambling industry will grow by a factor of 10 over the next decade, said Mr. Abony, who was co-founder and president of Petopia, one of the high-profile startups of the dot-com age that tried to sell pet supplies on-line before it was bought by Petco Animal Supplies Inc. in November, 2000.

Mr. Abony is far from alone in his bullish estimates. On-line gambling sites generated $8-billion of revenue worldwide last year, representing 3 per cent of the overall gambling market, according to Christiansen Capital Advisors LLC, a New York firm specializing in analysis of the professional gambling industry.

Total revenue will rise to $10.4-billion this year and hit $12.6-billion in 2006, producing an annual growth rate of about 23 per cent, Christiansen Capital said.

A recent move by the British government to regulate on-line gambling, together with a rash of consolidation, is helping the industry mature, some industry executives said.

The next development phase will see several companies emerge with leading brands, said Oscar Niebor, managing director of Virgin Games, which offers games ranging from bingo to roulette and is privately owned by Sir Richard Branson's Virgin Group PLC.

Companies are still trying to work out the best way to make money from their customers and to keep them coming back to their sites. Virgin is looking at numerous promotional efforts, including offering free air miles that could be used on Virgin Atlantic Airways, Mr. Niebor said.

The on-line gambling industry is also looking at expanding onto mobile handsets.

"The way we use our leisure time is in increasingly in short units, increasingly outside of the home, and increasingly using technology," said Lee Richardson, CEO of Chartwell Technology Inc., which sells gambling systems to on-line operators.

To date, it's been difficult to offer on-line gambling on smart phones because of the fast pace at which device manufacturers are introducing new products. But the gambling industry is close to formalizing standards, which will mean games will eventually work equally well on a variety of devices, he said.

On-line sampler

Fun Technologies PLC is one of several companies in the burgeoning on-line gambling industry that offers person-to-person skill-gaming, exchange-betting, and sports information services.

Skill gaming

Includes any games where the outcome is not based entirely on luck, such as chess, checkers and solitaire. Fun says it has more than seven million registered users on its skill gaming website, SkillJam.com. The site offers cash games and competitive tournaments as well as free games for users to improve their skills.

Sports information

Fun's recent acquisition, Don Best Sports, publishes real-time wagering odds on the Internet. Subscribers pay as much as $550 a month for the service's qualitative analysis of sporting events, which allows them to make a more educated wager and gives them the ability to monitor changes in wagering odds.

Exchange betting

Fun provides person-to-person exchange-betting technology to licensed gaming operators in regulated markets around the world, such as Betmart and betbull. The technology allows users to place bets directly with others and removes the need for the traditional bookmaker in the middle.