The product may be touted as a "home ATM and smart card" or a "global debit card"- terminology that might pique any banker's interest and, perhaps, raise concern about competition.

But these are words being bandied about by companies in the Internet gambling business, which is of dubious legality in the United States.

Countless small companies have found ways to skirt domestic laws and let people wager on-line-on sporting events, casino-style games-even President Clinton's impeachment trial.

The firms work through banks and computer servers in other countries- many in the Caribbean-and get foreign merchant processors to help them accept MasterCard and Visa payments.

U.S. residents might be given a free bank account in the host country, which can be funded from afar with a debit card or credit card cash advance.

U.S. banks and transaction companies have turned their backs on this activity, but some overseas institutions have been more flexible. Barclays Merchant Services, a division of Barclays Bank PLC in London, is handling card transactions for at least one on-line casino operator.

In the United States, banks are more intent on figuring out how to support current merchant customers.

"Most banks wouldn't touch a gaming establishment," said Donna Embry, senior vice president of Vital Processing Services in Tempe, Ariz. "Add to it the Internet, and you have double jeopardy."

On-line casino operators are doing all they can to get U.S. banks and processors to play-and lend some legitimacy to these enterprises. That may help explain their adoption of common payment-system terminology, which could cause confusion about their status.

One Las Vegas company, which uses the name eConnect - but has used several other names and addresses - is marketing a "home ATM" device that lets people place wagers by credit card. It aims to install 5,000 terminals in public locations by next February.

Winners Internet Network Inc. of St. Augustine, Fla., said in a recent press release that it wants "to build and maintain a series of global shopping malls utilizing the 'WINR' credit card processing and proprietary currency conversion software." Its processor, Cyberlink Monetary System, is described as a Liechtenstein company.

Many processors are awaiting the outcome of legislative efforts to regulate Internet gambling, and listening to predictions that legalization is inevitable.

"Internet technology renders prohibition futile," Tom W. Bell, director of telecommunications and technology studies at the Cato Institute, said in testimony last May to the National Gambling Impact Study Commission in Chicago. "Consumer demand for Internet gambling and the states' demand for tax revenue will create enormous political pressure for legalization."

"U.S. businesses are losing revenues, and offshore businesses are making money," said Timothy Miller, senior group vice president of operations at Cardservice International, one of the independent sales organizations that specialize in signing up risky merchants for card acceptance.

Cardservice, based in Agoura Hills, Calif., has refrained from serving Internet casinos, though it has embraced other Internet merchants with high fraud and chargeback rates. But the company is intrigued by predictions about growth and profits in this sector.

"Visa and MasterCard need to draw a line in the sand," Mr. Miller said. "There are no specific rules or regulations that say, 'We do not allow Internet gambling.'"

In December, Visa distributed a memo that said on-line gambling establishments could get into the merchant-acquiring network "only if they meet the global member risk-policy requirements established for high-risk telemarketing merchants."

Visa U.S.A. spokesman Kelly Presta said the association's rules "allow the use of Visa products to purchase any service which is legal." Visa leaves it to governments to define what is legal.

The policy has not shielded Visa from being sued by a California woman who amassed $70,000 in credit card debt while gambling on 50 Web sites. Cynthia H. Haines also sued MasterCard and a subsidiary of Providian Financial Corp., arguing that they should not have let her use her cards this way.

"I call this e-money laundering," said Ira Rothken, Ms. Haines' lawyer. Card companies should not "make money off an illegal activity."

Gambling is a thriving industry, and the on-line version is taking off fast. Experts say much of the revenue comes from the United States. The market did $651 million of business in 1998 and will do $811 million this year, according Sebastian Sinclair, a gambling and entertainment analyst for Christian/Cummings Associates, New York.

By 2001, revenues from Internet gambling should rise to $2.3 billion, he said.

"We are seeing the very first baby steps of a developing industry," Mr. Sinclair said. "It is going to be huge."

The governments of Antigua, Costa Rica, Australia, and other countries are welcoming these ventures with open arms. In Antigua, companies can set up casino Web sites by paying the government an annual licensing fee of $100,000. Sports betting pages go for $75,000.

Some companies with operations abroad say they are trying to play by U.S. rules.

Virtual Gaming Technologies Inc. of San Diego runs a service out of Antigua, Constellation Casino and Sportsbook. It does not allow gamblers with U.S. Internet addresses to place bets, said Bruce Merati, chief financial officer.

The Web site-www.virtcasino.com-operates in six languages and clears credit card transactions in more than 60 countries, Mr. Berati said. Barclays agreed to handle the processing after a year of due diligence and after Virtual Gaming deposited a $300,000 reserve in the bank, he said.

U.S. banks and processors do not regard gambling as inherently taboo. The lion's share of merchant processing for the traditional, physical-world gambling industry is handled by Global Cash Access, a joint venture of First Data Corp., BankAmerica Corp.'s BA Merchant Services subsidiary, and USA Processing.

Internet gambling is a "gray area we would rather not get into at this point," said Kirk Sanford, chief executive officer of Global Cash Access. "There is probably a lot of money that can be made, but for us it just doesn't weigh against the risks associated with it."

The Internet casinos are illegal because they are unlicensed, but individual gamblers like Ms. Haines are seldom prosecuted. Last year, the U.S. Senate passed a bill that would have made Internet gambling a crime- punishable by a fine up to three times the greatest amount a gambler wagers-but it died amid the impeachment hearings. Sen. Jon Kyl, R-Ariz., its the sponsor, plans to reintroduce it.

Several state attorneys general want legislation to outlaw Internet gambling.

Federal prosecutors in New York City have filed criminal charges against several operators of an offshore sports betting firm. One defendant, Jay Cohen, runs World Sports Exchange, which is based in Antigua. He has pleaded not guilty and faces trial in federal court.

Meanwhile, companies that operate gambling sites continue trying to get attention. One of them, eConnect, has sent out eight press releases since Jan. 1, mostly relating to mergers and processing deals with other gambling Web sites.

Last week, the company said it was in "acquisition talks" with a casino called 777wins.com. Two weeks ago, it announced it was "progressing in the development of PocketPay, a wireless device (that) will enable consumers" to conduct mobile credit card transactions for gambling.

Last year, under the name "Betting Inc.," this company and its president, Thomas S. Hughes, solicited banks for backing.

Mr. Hughes did not return telephone calls seeking comment for this article. The company referred inquiries to Harry Hargens, president of Tradewinds Technologies in Hampton, Ga., who said he had done consulting work for eConnect.

Mr. Hargens said eConnect's goal is to build "legitimacy and size" and become palatable to U.S. merchant -acquirers.

"The acquiring bank is scared to death of taking on a small operator," Mr. Hargens said. "But if he is a part of a large conglomerate, you know you're dealing with a real company."

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