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The point of making something illegal is to stop people from doing it, and penalize them if they do.

Then there’s Internet gambling. The federal government is clear: gambling on the Internet is against the law. And yet millions of Americans do it on hundreds of Web sites, to the tune of billions of dollars.

Nigel Payne runs Sportingbet, one of the world’s biggest online gambling companies.

For Payne, one big reason online gaming is such a lucrative business is that because he doesn’t face the costs traditional casinos do. “I don’t need a hotel. I don’t need any croupiers. I don’t need any cocktail waitresses. I don’t have to comp any drinks. I don’t have to comp any hotel rooms.” Just type in a credit card or bank account number and you’ll be betting within minutes.

“I believe there’s about 12 and a half million Americans today use internet gambling in its widest form. That’s a hell of a lot of consumer power,” says Payne. It’s so much power that America’s gaming industry, which has long opposed Internet gambling, is shifting its position.

Payne agrees that the pool of potential underage gamblers is bigger than for traditional casinos. “Without doubt. Which is why we have to be 20 times better. But it’s also why we HAVE to be regulated.” Payne argues that if the U.S. legalized Internet gaming, all of the problems associated with gambling could be controlled better.

Addiction to gambling, says Payne, is a huge problem both online and at traditional casinos. And he says online gambling may be better equipped to deal with the issue, since players can be tracked electronically.

Payne says that ina regulated environment, disreputable companies or gambling websites won’t last long, as “consumers vote with their feet.” “Trust is an immense factor. If you say to an American consumer, ‘This site is trusted and licensed and this one isn’t,’ I promise you within 12 months the problems you’re referring to will have disappeared or significantly reduced, because customers will have voted with their feet.”

“The United Kingdom has passed laws to enact Internet gambling. The United Kingdom expressly allows United Kingdom operators to take bets from American citizens,” says Payne.

“We’ve calculated that were America to have regulated the industry in 2004, the American states would have earned $1.2 billion in tax,” says Payne.

He says if the U.S. regulated the industry, he would pay the taxes owed in America by his British company. “And we have volunteered to pay it because this is an industry that has to be regulated.”

Payne doesn’t think people will ever stop gambling.

“Do you think the Internet’s suddenly going to go away? So what are we going to do in ten years time, when this industry is ten times bigger than it is today?” ask Payne. “I often say to people, ‘Please give me one solid plausible argument why you shouldn’t regulate it.’”

Payne rejects the argument that it is bad for you. “If you regulate it, you control it. If you regulate it, you set limits. Is that bad, when the comparator is ‘Ah, just let them do what they want.’ Is that really bad? I don’t think it is.”

Video Interview