The is talk that the United States may reconsider its ban on online gambling and, if it is repealed, several companies stand to benefit. The House of Representatives has said it will hold a hearing to look at online gambling on Friday, and Barney Frank, Chairman of the House Financial Services Committee, has said that online gambling ought to be legalized, and introduced a bill in April that would repeal the ban.

It's hard to justify the ban on online gambling, given that so many other forms of gambling are legal. The passing of the ban was a classic example of special interest politics, with Las Vegas casinos lobbying hard, not wanting to lose gambling dollars to the internet. Frank has called the issue "a matter of individual freedom" and a repeal of the ban should stand a good chance at passing.

If it does, Cryptologic (NASDAQ: CRYP), which provides software for numerous on ling gaming sites, could be a huge beneficiary. And while World Poker Tour Enterprises's (NASDAQ: WPTE) gambling site hasn't allowed American gamblers in years, its television show would likely prosper in the event of legalization. If people can player poker online, interest in the game will increase.

But stock picks aside, I've never understood the justification for the ban on online gambling. Given that most states have lotteries, how can the government claim to be banning it for moral reasons? The ban appears to have been a result of a desire to protect the Lottery and Las Vegas's monopoly, and that's wrong. Who are these guys in Washington working for anyway?

As part of a port securities bill passed by the House and Senate recently, online gaming in the US would be outlawed for foreign-based companies that offer online betting transactions in American currency. Though the comapnies are generally based in the Caribbean or Central America, they derive the bulk of their revenues from US gamblers. If this legialation is signed into law by President Bush, US gamblers will not longer be able to transfer money to foreign-based gaming companies using credit cards, checks, or electronic fund transfers. I guess gamblers could mail big wads of cash to their off-shore bookies. The legislation is designed to make it harder for terrorist organizations to move money around under the guise of legitimate businesses. Also, domestic gambling operations, such as those in the Gulf Coast region, would have fewer competitors for consumer access to real money poker.

PartyGaming, the world's largest online gambling company, indicated it would cease business operations in the US if this legislation is enacted, as would 888 Holdings PLC and Sportingbet PLC. Shares in PartyGaming have already plummeted by over half, closing recently at 84 cents. 888 Holdings in down by 26% and Sportingbet is the big loser, declining by 65% to close at $1.24.

The legislation seems also to prohibit many forms of sports-related gambling, including wagering on the games leading up to the World Series, as well as the monumental betting pools for the Super Bowl in early 2007.