As the number of Internet gambling sites multiplies faster than losses in a slot machine, U.S. authorities are becoming increasingly intolerant of the practice. Internet gambling has become a boon for Caribbean islands and Australia, which charge hundreds of thousands of dollars in licensing fees for companies to set up shop and access a global gaming market. With the world as its stage, many online gaming companies are banking on our insatiable lust for the big payout.

In the United States, state attorneys general have been pushing for a federal law that would make Internet gambling a criminal offense. Sen. Jon Kyl (R-Ariz.) headed up a bipartisan effort last year to push through anti-Internet gambling legislation, but the bill got mired in the Judiciary Committee, partly because of fears that users rather than gambling site owners would bear the brunt of the penalties. Kyl says he plans to re-introduce an anti-gambling bill this session.

Internet gambling advocates say all of this fuss is ridiculous, considering that all but two states (Hawaii and Utah) allow some form of gaming, whether it be a state lottery, dog and horse tracks, or out-and-out casino and riverboat gambling. To them, efforts to squash Internet gambling are nothing more than a government and casino industry conspiracy to protect taxes and gaming assets. Besides, they argue, prohibiting online gambling is impossible because of the free-for-all nature of the Internet.

Business 2.0 brought together some of the people influencing this debate in hopes of finding some common ground.

B2: Why has it been such a struggle to legalize online gambling in the United States?

Alan Kesner: If you're going to choose between imperfect regulation or imperfect prohibition, it's better to have prohibition.

Joe Gallagher: We have to do something, quite frankly, because the foreign nationals are going to take over this business. I see it every day. Why? Because they want the business that's coming out of the United States and Canada. That's where 75 percent of this business comes from. They're going to come in and sit down and eat all the food and leave a few crumbs for the United States, and that's not right. Let's come up with a formula that can protect everyone involved, not leave it to some organized crime guy or someone down in the islands just setting up a sports book to scam someone.