Internet gambling will be a $3bn dollar business by 2001, and the concept seems to have matured from being a novelty to a recognized business opportunity. According to a Datamonitor report, Networked Games and Gambling 1997-2001, the market is set to grow to $2.86bn by 2001. London-based Datamonitor says that 86% of total turnover will be generated by two single sectors – 58% by the lottery-lotto and 28% by horse racing and event betting, $1.66bn and $800 million respectively. The analysts warn that the approach taken by regulators is key to the eventual potential of internet services. To date, most governments have fought shy of proactive regulation, largely because of the international nature of the web. Their dilemma is to either accept the risks entailed in unregulated gambling, or to evolve a new legislative framework that enables them to play some guiding role. Datamonitor argues that, if only to protect tax revenues and prevent seepage to countries offering incentives to internet server sites, governments and regulators need to establish coherent strategies. The growth of new operators will force all those concerned to increase the priority they afford the issue, warns Datamonitor.