GAMBLING is becoming a mainstream hobby. Once the preserve of high-rollers in upmarket casinos, or low-rollers in smoky high street bookmakers, gambling is now a middle-class pastime raking in about £4 million a day.

Part of the reason it has become more popular is the willingness of women to play online. Partygaming, the owner of the PartyPoker.com gambling website, which is set to float on the Stock Exchange with a price tag of £4 billion to £5 billion, says that 10 per cent of players are women. Other estimates put the figure at 30 per cent to 40 per cent.

The PartyGaming offer will be open only to institutions. Private investors, who have to wait until the shares start trading before they can buy, will be disappointed by their exclusion because some gambling stocks have been delivering generous returns. For example, if you had put your money on Sportingbet, the AIM-listed online gambling company, when it launched two years ago, you would have seen the price of your shares rise from 18p to 290p.

Tracy Meston, 39, who discovered internet gambling two years ago, exemplifies the new online punter. The horseracing fan spends hours every week poring over odds online at Betfair, the internet betting exchange which is also in line for a possible flotation.

Betfair operates person-to-person, much the same as eBay, the internet auction website. Punters bet against one another, rather than the bookmaker, and Betfair takes a small commission on each transaction.

Research by Paddy Power, the bookmaker, has found that a third of its online poker players gambled only on traditional fixed-odds events before the advent of the internet.

Mrs Meston, who runs her own clay pigeon shooting business, Frock Stock and Barrel, in Leigh-on-Sea, Essex, likes the flexibility of online gaming. “When I discovered Betfair I closed my telephone account. I have about 15 horses that I follow,” she says.

It is not only new gaming businesses that are exploiting the UK’s eagerness to play online. Established bookmakers such as William Hill and Ladbrokes have also reaped large profits from moving into the online market.

Mrs Meston, who holds William Hill shares, has seen the price of her investment rise from 247p in May 2003 to 528.5p this month. “This market is fairly recession-proof,” she says. “There are always going to be people who bet. There is a wealth of gambling companies out there and some are gems which will go great guns.”

But should investors share Mrs Meston’s optimism when it comes to online gambling shares? Richard Hunter, the head of UK equities at Hargreaves Lansdown Stockbrokers, believes that they should. He says: “Gambling used to have a cloak-and-dagger feel. Now you can bet from the comfort of your own home or the office. People who would never set foot in a casino are playing virtual poker online and you can now bet on just about any sport, along with financial stocks and indices.” However, not everyone is as enthusiastic about the future of online gaming. Ryan Hughes, of Chartwell Investment Management, cites resistance to its expansion in the US as a threat to investors.

Online gambling is still illegal in the world’s biggest market. In a rare alliance of God and Mammon, the Church and the casinos of Las Vegas have joined forces to lobby against online gaming companies. This has prompted several big banks and credit card issuers to stop processing online gambling transactions.

Mr Hughes says: “Even if the US relaxes its stance, that could result in the creation of large US gaming companies which could take away market share from UK rivals.”

Justin Urquhart Stewart, of Seven Investment Management, says that the sector has all the hallmarks of a bubble about to burst. He says: “There is excess capacity in the market and some of the smaller players are bound to collapse, which will create nervousness among investors. This is also an unregulated sector which runs the risk of fraud and money laundering. If the sharp growth in share prices continues, there will be a classic mismatch between the stock market valuation and the real price of the business.”

Mr Hughes says that anyone considering buying internet gambling stocks should question whether it will be a sound investment over five years. “The growth in these stocks has been so quick. No one can be sure that it is here to stay,” he says.