The attorneys general praised the ban, saying it has driven many illegal gambling operators from the American marketplace.

"But now, less than a year later, (Frank's bill) proposes to do the opposite, by replacing state regulations with a federal licensing program that would permit Internet gambling companies to do business with U.S. customers," the letter said.

The attorneys general also voiced skepticism about "opt-outs" in the bill, which would allow states to continue prohibiting Internet gambling within their borders.

Nevada Attorney General Catherine Cortez Masto did not sign the letter. Other states with attorneys general who did not sign the letter were Iowa, Kentucky, Massachusetts, Michigan, Nebraska and New York.

Frank said he would be willing to work with the attorneys general who signed the letter to address their concerns, but he also said the letter puzzled him.

"It seems inconsistent that conservatives would want states to regulate the Internet," Frank said.

In addition, the current federal ban on Internet gambling does not give states a regulatory role, Frank said.

Despite the concerns of the attorneys general, Frank acknowledged his bill remains stalled and is unlikely to advance in 2008.

"We still don't have enough support. We're waiting to see if gamblers on the Internet are going to generate that support," Frank said.

So far, Frank's bill has 45 co-sponsors.

An alternative bill by Rep. Shelley Berkley, D-Nev., has 68 co-sponsors, including Frank.

Berkley's bill calls for a one-year study of Internet gambling by the National Research Council of the National Academy of Sciences.

Unlike Frank, Berkley expects her bill to gain traction next year.

"I think my bill would be the appropriate first step," Berkley said. "Otherwise, we are going to continue to legislate piecemeal without having any information from a study whatsoever."

Both Berkley and Frank said this week's settlement between the European Union and the United States should bolster their bills.

On Monday, the European Union agreed not to pursue damages against the United States for banning Internet gambling in exchange for U.S. concessions in other trade sectors.

Still pending is a decision by the World Trade Organization on how much the United States must pay the Caribbean island nation of Antigua and Barbuda. A WTO judicial panel this year ruled in favor of Antigua and Barbuda, which claimed the U.S. ban on Internet gambling damaged the island nation's economy.

Mark Mendel, the lawyer representing Antigua and Barbuda, is asking for $3.4 billion. The decision is expected next month.

"Just by making concessions this week demonstrates the United States is trying to walk across quicksand on this issue," Berkley said.