Virtual Villains; Global gangsters are extorting money from online casinos with a novel threat: we'll spam you to death.

Byline: Avraham Karshmer

It's been 60 years since Bugsy Siegel and his cronies ran Vegas, but gangsters are back in the gambling game, big time. Only now, rather than seeking control of real casinos, they are extorting cash from virtual casinos, which are both the fastest-growing sector of the vast global gambling industry and, by some estimates, the biggest revenue producer of any online business. In short, hoods are going after gambling Web sites because that's where the money is.

The first known wave of threats came last September, with cyber-mafiosi using massive spam attacks to slow betting sites, then following up with bland e-mails asking for payments to "fix the problem." Since then, according to British authorities and industry executives, virtually every major Internet betting site from the Caribbean to Australia has been hit, including those based in Britain, the international hub of online bookmaking. In October, these extortion rackets became the second of two major investigations for Britain's National Hi-Tech Crime Unit (the other is "spoofing"--phony sites set up to steal credit-card numbers and other personal information). Now, the authorities say, this is shaping up as one of the biggest seasons ever for online betting--and for cyber-extortion, as well--with all the usual summer sports events topped by the Athens Olympics.

The weapon of choice for cyber-extortion is what techies call a Distributed Denial of Service attack (or DDoS), which commandeers other computers and bombards a Web site with millions of messages and requests, slowing it to the point of collapse. Such attacks began a few years ago and have been used against various targets--including Microsoft--with occasional success for a range of criminal, ethical and personal reasons. As more and more computers are connected to the Internet via broadband, the DDoS threat grows. But so do the defenses of big corporations like Microsoft and well-insured banks. In response, extortion rings are targeting online casinos in part because they have typically not been as well secured, and cannot afford disruptions during times of heavy gambling.

Internet betting exchanges now take in more than $5 billion a year worldwide, according to British authorities. Betfair.com, the largest British site, generates as much as $160 million in revenue on a busy week. At BetWWTS.com, based in Antigua, where an average weekend turns over roughly $5 million, CEO Simon Noble says his servers began to slow down dramatically on a busy Saturday morning in September. Gamblers couldn't place their bets. His in-house techies were at a loss. After about 20 minutes of chaos and confusion, Noble received an e-mail: "Dear wwts, As you can see your site is under attack. We have found a problem with your network."

The attackers demanded that Noble send $40,000 via Western Union. They promised they could stop the disruption and prevent it from happening again, as long as they got paid. "You will lose more than $40k in the next couple of hours if you do not resolve this problem," they wrote. Noble refused, and his servers buckled under the ...