Despite their abundance, online casinos and betting sites operate in a legal gray area. Online gambling is banned in many countries in Europe and in the US. In places where it’s not banned entirely, it is heavily regulated. Yet operators in off-shore locations have been able to drum up impressive revenues from poker and casino sites as well as sports betting, without governments being able to do that much about it or tax them.

With the economic crisis putting a strain on government budgets everywhere, the US and several European countries are relaxing their legislation to allow for online gambling.

In the US, Congress is currently considering lifting a ban on online gambling instituted just four years ago. Internet gambling is currently illegal in the US. Specifically, it is illegal to operate a gambling site inside US shores and for credit card companies to accept payments to and from such outfits.

The ban itself has hardly worked, online gambling sites still operate from various countries and the monetary issues have been resolved with intermediaries like escrow companies and other means. Now, faced with a shrinking budget, the initial ban may be lifted and online gambling regulated and taxed by the government. The move is expected to bring in $42 billion in the next ten years.

In Europe, France and Italy both relaxed the legislation concerning online gambling with the same intention, to bring in more tax revenue. These moves have analysts predicting huge growth for gambling companies and some are not wasting any time taking advantage of them.

Two of the largest companies in the business, PartyGaming and Bwin Interactive Entertainment, have announced plans to merge. The two companies combined brought in $893 million in 2009. They also operate in different sectors of the market, with PartyGaming focusing on poker and casino games while Bwin focuses on sports betting.