A carefully worded statement jointly issued by Treasury and the Department of Trade and Industry noted that the Council of Ministers had reviewed its policy on the development of the Isle of Man as an online gaming jurisdiction to 'ensure that the Island remains at the forefront of competitive jurisdictions'.

A senior civil servant confirmed that the Isle of Man will now be actively marketed itself as a jurisdiction which does not place any restrictions on companies accepting bets from punters in the US.

Ironically, in this regard nothing has changed.

In terms of the Island's Online Gambling Regulations Act of 2001, licenceholders have always been free to accept bets from any jurisdiction, including the US.

However, it was widely believed within the gambling industry worldwide that the Manx government proscribed Island-based companies from accepting US bets.

The misunderstanding worked in the Island's favour when it was courting global gambling giants such as MGM Mirage and Kerzner International.

The perceived ban was a strong attraction for these companies to set up their online casinos in the Isle of Man — given their grave concerns about running foul of the gaming authorities in Nevada and Mississippi, home to their land-based casinos.

However, the last of the big-name casinos closed down their Island operations around 18 months ago and proponents of the Isle of Man's budding online gaming industry have been warning the government that the perceived US restriction has been proving a serious handicap in the bid to attract inward investment.

Gambling on the internet has shown phenomenal growth. In 1996 an estimated $17 million was bet on around 30 sites worldwide. Research firm Datamonitor forecasts that online gamblers will spend more than $30 billion next year.

The US is the largest single market for the internet gambling industry today with its players making up an estimated 70 per cent of the global online take.

It is widely expected that the UK will allow its operators to accept wagers from US customers when it liberalises its online gambling laws.

This is expected to happen within the next 18 to 24 months — leaving the Isle of Man with a relatively short window of opportunity on which to capitalise.

Island-based commentators are hopeful that the official lifting of 'restrictions' of US bets will trigger an influx of online gaming investment into the Island.

Two of the biggest players — Casino on Net and Party Poker — are reportedly looking to relocate from Gibraltar.

Casino on Net generates around $20 million a month in revenue while Party Poker has a daily turnover of $1 million.

Roger Raatgever, chief executive of Island-based software company Microgaming, has estimated that £15 million in gambling tax per annum would be generated from those two companies alone if they set up operations in the Isle of Man.

However, the Isle of Man Government is anxious to play down the move to officially 'lift' the US restrictions for fear of antagonising the American authorities.

BusinessWeek Online last month reported that a US Justice Department offensive against overseas-based internet gaming has resulted in a number of American publishers dropping lucrative online gambling adverts.

Credit card issuers and other US companies doing business with online gambling operators are also coming under pressure.

However, there is no explicit federal law against online gaming and BusinessWeek reported that the $7.4 billion online industry, which operates thousands of sites legally outside the US, 'is fighting back against what execs say is a heavy-handed and possibly unconstitutional assault on a free market enterprise'.

'Our revenues are greater than Yahoo!'s. Our profits are greater than Amazon's. It's ridiculous,' Alex Czajkowski, marketing director of London-based Sporting Bet, told BusinessWeek.

Last month Antigua won a World Trade Organisation ruling that the US is violating international trade rules by, among other things, allowing credit cards to be used for domestic gambling but not online wagering.

The US is appealing against the ruling.

The Council of Ministers reviewed the Island's online gaming policy after considering a report drawn up by the DTI, weighing up the potential opportunities and the risks involved.

The DTI had consulted widely with interested parties, locally and internationally.

The statement jointly issued by the DTI and Treasury said the regulations associated with the Online Gambling Regulation Act had been reviewed 'in order to make the well-regulated environment more commercially attractive'.

Changes include:
scrapping need for all changes to software to be certified in advance;
the ability to have P2P poker licensed as a regulated activity;
removal of the licence need for a £2 million bond;
at the end of the current Gaming Control Commissioners' term of office, a new membership will be appointed with a new and expanded remit. The Commission will also be transferred from the Department of Home Affairs to the Treasury.

Treasury and the DTI are pulling out all the stops to attract inward investment by online gaming companies as part of the government's bid to further diversify the Island's economy.

A large London-based PR firm has been appointed to raise the Island's profile in the online gaming arena and Island-based John Gilmore has been employed by the government for his knowledge and industry contacts.

Offshore jurisdictions in the northern hemisphere competing with the Isle of Man to attract online gaming companies include Gibraltar, Alderney, Cyprus and Malta.

The Isle of Man is considered the leading contender with Gibraltar handicapped by bandwidth and infrastructural problems.

With a population of 29,000 the Rock also suffers a shortage of labour.

In reconfirming the Island's commitment to the online gambling industry, DTI Minister Alex Downie said: 'I believe that the Island will be the focus of increasing numbers of companies who are looking for a well-regulated and reputable jurisdiction and who are attracted by the superb telecommunications infrastructure and support services that we can offer.'