Web Casino Ban Could Hurt Ad Players

In addition to potentially shuttering online casino sites, the proposed extension of a 40-year-old interstate gambling law also could have a withering effect on Internet advertising.

On Tuesday, a U.S. House subcommittee voted to revise the 1961 Wire Act, which bans interstate betting, so that it would apply to Internet gambling. While the vast majority casino sites are located offshore and out of U.S. jurisdiction, the proposed bill would allow the government to obtain court orders barring U.S. credit card and financial services companies from working with them.

The result could be a major blow to Web publishers, for whom ads from gambling sites have become a major source of revenue. Researcher Jupiter Media Metrix found that in December, online gambling sites had become the fifth largest advertiser online.

Impressions bought by online casinos increased nearly about 170 percent from December 2000 to December 2001, up to 2.5 billion monthly impressions — just shy of the 2.53 billion impressions purchased by the travel industry during the same month.

Antigua-based Cassava Enterprises, which operates Casino-on-Net.com, is the largest online casino advertiser, purchasing about 46 percent of the industry’s impressions during December and serving them through partners including DoubleClick . Figures weren’t immediately available from DoubleClick on what amount of revenue it made from Web casinos, but the buy made Cassava the 11th-largest advertiser on the Internet that month.

Should the government clamp down on online casinos, mainstream publishers could be some of the hardest hit. With the downturn in online advertising, portals, news and shopping sites have become increasingly willing to accept ads that promote Web gambling. Last December, niche gaming and incentive sites had been responsible for the lion’s share of Web casino impressions. Now, that figure is down to only about 16 percent.

In their place, Jupiter reports that more than 40 percent of casino ads run on major portals, while news and shopping sites contribute an additional 13 percent. Yahoo , for instance, has been running gambling ads for months — though not without the occasional complaint. Last winter, Yahoo was asked by the NFL, an advertiser, to pull gambling ads from its football-related Web pages. Spokespeople for Yahoo were not available for comment.

“The fact that casinos are transitioning their ad-buys from niche sites to mainstream portals is proof that this sector is going mainstream,” said Jupiter’s Charles Buchwalter in February. Buchwalter serves as the firm’s vice president of media research.

One chief reason for casinos’ increasingly ubiquitous online presence has been the fact that they’ve proven resilient to economic and national security concerns, which have hampered publishers’ ability to woo other, more traditional advertisers.

For instance, online gambling ads reached their peak during September, likely due in part to traditional online advertisers’ reluctance to launch new campaigns following the terrorist attacks that month. As a result, almost 5 percent of all online ads were for Web casinos in September.

InternetNews.com parent INT Media Group also runs a gambling ad-supported site, InternetCasinoList.com.