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For Patricia Erwin, a 36-year-old Sacramento, Calif., widow, the years following her husband's death were a depressing blur. When he was killed in a motorcycle accident two months after their 1996 wedding, leaving no will, she found herself confronted with huge hospital bills and a bureaucratic nightmare. Unable to sleep, she surfed the Internet in search of legal advice and happened instead on ads for online casinos. Suddenly, she started gambling her nights away, playing blackjack, roulette, and slot machines alone on her home computer. "I had way too much time on my hands," she says. "I thought, `Gee, if I get good at this, maybe I can send a few thousand dollars to the hospital.' " By the time Erwin stopped betting last year, she had maxed out eight credit cards and racked up at least $60,000 in debt. As a bookkeeper, "I go into these small businesses and tell people how to handle money," she says, "and I couldn't even handle my own."

Now Erwin is one of 33 plaintiffs who have launched class-action suits against Visa International, MasterCard International, and American Express, claiming the credit card companies and their issuing banks have no right to collect gambling debts. Their argument: Those companies were participating in an illegal racketeering enterprise. The cases have been consolidated in a federal court in New Orleans, where a judge is expected to rule within the next month on whether to hear them. For the credit card companies, the suits appear to be the last resort of sore losers. "It's pretty outrageous the courts are being used for this purpose," says Noah Hanft, deputy general counsel for MasterCard International. "There's an issue of consumer responsibility here."

But to others, those lawsuits are the latest attempt to put the brakes on the runaway Internet gambling industry, which last year raked in an estimated $1.2 billion in revenues--an 80 percent increase over its 1998 take. "If the credit card companies aren't involved, there won't be any Internet gambling," says Barry Reed, the Minneapolis lawyer who filed the suits. "They're the lifeblood of these operations."

Still, few are betting with Reed that the often-shadowy industry, run mainly out of such offshore tax havens as Antigua and the Dominican Republic, can so easily be reined in. A report released earlier this year by stock analysts at Bear Stearns forecasts that online gaming revenues will nearly triple to $3 billion by 2002. And despite Congress's attempts to outlaw the business, the number of wagering sites on the Web has mushroomed from 40 in 1997 to at least 850. Now, in the most striking development to date, two of the nation's leading glitz-and-mortar casinos--long opposed to their unregulated online rivals--have suddenly positioned themselves to get in on the cyberaction.

No free buffets. In a surprise about-face in August, Kirk Kerkorian's newly created casino colossus, MGM Mirage, announced a partnership with Silicon Gaming to launch six play-for-free sites named after its Las Vegas showplaces like Bellagio. A week later, Harrah's Entertainment signed a promotional deal with one of the most popular computer game sites, iwin.com--a prelude to unveiling its own play-for-free online casino later this fall. "In the event cybercasinos become legal, we want to be ready for it," says Harrah's spokesman Gary Thompson. "We don't want to be put in the position of trying to catch up with the rest of the gaming industry."

Sebastian Sinclair, an analyst with Christiansen Capital Advisors, predicts those moves could propel Internet gambling from the margins of American life to its mainstream as the best-known brand names in Las Vegas become the dominant players in cyberspace. But it also signals a shift in strategy by the major land-based casinos. After years of calling for the prohibition of wagering on the Web, they're now opposing any such initiative in Congress and pushing for its regulation by state authorities instead.

The change of heart comes from watching corporate rivals in other countries cash in on the growing online jackpot. In August, 16 months after winning the first virtual gaming license from the Northern Territory government in Australia, Lasseters Online reported total revenues of $77. 5 million from 85,000 players in 210 countries. Meanwhile, both Monte Carlo and South Africa are considering offering a regulatory haven to Web casinos. "If there is a complete prohibition in the United States," says Alan Feldman, a spokesman for MGM Mirage, "that's going to lock American companies out."

But Feldman insists that the chief reason for the turnabout is the increasing sophistication of technology. Over the past two years, scanners have been developed to identify online consumers by their thumbprints or their retinas, and the use of intranets accessible only to subscribers has become commonplace--both tools that could help screen out minors or players without valid credit. According to Feldman, "The new technology has developed in a way that allows us to say, `Yes, this can be regulated.' "

Authorities in Nevada--one of five states where Internet gambling is expressly outlawed--appear to agree. The state Gaming Control Board didn't betray a hint of opposition when MGM Mirage and Harrah's presented their schemes for moving toward virtual casinos. As analysts point out, licensing Web gaming would bring increased tax revenues to state coffers.

But the casinos' change of game plan has left their powerful Washington, D.C.-based lobbying arm in an awkward spot. Fresh from donating more than $6 million to both parties this year, the American Gaming Association has thrown its clout behind prohibition bills in Congress that its leading board members now oppose. "The board is acting on a vote from a year and a half ago," Feldman says. "This thing is moving at light speed."

Off to the races. The AGA's ambivalence may have helped confound attempts by Virginia Rep. Bob Goodlatte to push his own ban through Congress before its adjournment last week. Some social conservatives charged that in conceding exemptions to such influential interests as the horse-racing lobby, his bill would actually expand the legal reach of Internet wagering. Other critics opposed any regulation of the Internet itself.

Meanwhile, the Justice Department is backing yet another bill that would update the 1961 Federal Interstate Wire Act to encompass Internet technology. In the only successful prosecution of an American for online gambling to date, the U.S. attorney's office in New York used that law, which forbids betting by phone, to win a conviction against Jay Cohen, a former stock trader from San Francisco. Cohen is appealing his 21-month prison sentence and $5,000 fine for running a sports- betting site called World Sports Exchange out of Antigua.

In June, Wisconsin's assistant attorney general, Alan Kesner, warned Washington lawmakers that if they failed to pass a ban this year, "There will probably not be another opportunity to get a bill through." But without regulation, U.S. casino operators fear an antigambling backlash from Americans victimized by shady cyberspace croupiers. Late last month, Sports Bet Online, a site operated by Star Games from the Central American nation of Belize, disappeared overnight from the Web without paying out credits to at least four players who have registered complaints with the Interactive Gaming Council, based in Surrey, British Columbia. Now Star Games's Montreal phone number is no longer in service. Says John Shelk, the AGA's vice president of legislative affairs, "You don't want a scandal by some fly-by-night operator in the islands to give the whole industry a black eye."

Under scrutiny. Even an established company, such as Starnet Communications International, a leading supplier of cybergambling software, can find itself under scrutiny. British Columbia's Organized Crime Agency is still actively investigating the financial affairs of the company after a dawn raid on its Vancouver headquarters last year. A separate pornography probe of the company has been dropped, and Starnet has since sold off its adult entertainment division and moved its operations to Antigua.

In Washington, Justice Department officials have warned that some offshore sites are ripe for fraud and money laundering. "Internet gaming represents a significant opportunity for money laundering," says OCA Inspector Mike Ryan. "Where the site owner is involved with organized crime, then you could literally shovel the money through the system."