Sponsorship activity on behalf of online gambling companies shows no sign of slowing down as companies in the category increase their use of the medium to build their brands, gain credibility and attract new users from their target audience of middle-to-upper-income men.

And although pro sports properties still command the bulk of sponsorship dollars spent by Internet casinos and sports books, some companies have begun to expand into celebrity-centric music events.

For example, Leisure & Gaming plc sponsored February’s Grammy Awards on behalf of its Nine.com site, while Bodog Entertainment Group S.A. sponsors events featuring site users going head-to-head with celebrities, including the Ocean Drive/Bodog.net Music 05 party hosted by Jamie Foxx and an MTV Video Music Awards party hosted by Sean Combs.

Recent sports deals include Action Poker Gaming, Inc.’s partnership with the NBA Los Angeles Clippers for its ActionPoker.com site; AlamoPoker.com’s sponsorship of the AFL Austin Wranglers and the Extreme Bullriding Tour; and PokerStars.com’s tie to the Aston Martin Racing team in the American Le Mans Series.

Even causes are benefiting from the growing popularity of online gambling, as sites tie in nonprofits around both sponsored events and community outreach efforts.

For example, AlamoPoker.com supports the Cystic Fibrosis Foundation through its sponsorship of the Alamo Poker Tour Texas Hold’em Poker Challenge.

Companies in the crowded field are fighting for attention and a larger share of a growing pot of money spent on wagering.

Research firm Christiansen Capital Advisors expects worldwide online gambling revenue to total $24.4 billion in 2010, nearly double the $11.9 billion spent last year on more than 2,000 sites.

One impact of the increasing competition and growing importance of the category: higher rights fees.

“The dollars that some of these properties are getting right now is in the stratosphere,” said Steven Rapp, a marketing consultant who screens deals for Bowman Int’l Sports Ltd.’s Bowmans.com, which sponsors four Canadian Football League teams.

Below, IEG SR offers tips on selling the online gambling category.

Measure risk factor. For now, the category remains in a gray area in terms of legality in the U.S., its largest market. While online gambling companies cannot be based in the U.S., the federal government has not yet addressed whether it is a crime to use such services. However, Congress has taken initial steps that could lead to strictly outlawing Internet wagering.

Properties should protect themselves with contract clauses that give them an out should there be a government crackdown.

Consider “play money” sites. Some online gambling companies have circumvented legal restrictions, as well as policies developed by sports sanctioning bodies that prohibit their teams from selling gambling-related deals, by inking ties on behalf of their dot-net sites that are instructional in nature and don’t involve the use of actual money.

For example, PartyGaming plc sponsors on behalf of its PartyPoker.net site, which does not accept bets, instead of its PartyPoker.com gambling site.

Provide demonstration and customer acquisition opportunities. Properties should offer on-site engagement with consumers through product demonstrations or live competitions. Bowmans.com leverages its partnership with the CFL Hamilton Tiger-Cats by hosting live poker games that take place behind the end zone.

Properties should also provide inventory to prompt new user registrations. As part of its three-race sponsorship of a NASCAR Busch Series team last fall, PartyPoker.net offered consumers who opened a free account the chance to become an honorary race crew member and other team-themed prizes.

Offer Web site content. Internet casinos and sports books look for unique content to keep their sites fresh. For example, AlamoPoker.com leverages its endorsement deal with mixed martial artist Dan Henderson by posting videos of him competing in Ultimate Fighting Championship events.

“That lets us give users something else besides poker,” said Jeremy Fisch, AlamoPoker.com marketing director.

Provide access to ethnic markets. U.S. minority populations, particularly Latinos, are a new focus for many sites.

Case in point: PartyPoker.net leveraged its NASCAR sponsorship to tout its connection with driver Carlos Contreras and tap his appeal among Hispanics.

“That was a terrific opportunity to introduce PartyPoker.net to a new audience,” said Vikrant Bhargava, group marketing director for PartyGaming plc.

Similarly, Sportsbook.com sponsors six Golden Boy Promotions boxing events to promote its Spanish-language site.

“The Hispanic market is going to be a vital part of our growth and we are using sponsorship to reach that target,” said Alex Czajkowski, marketing director for the Americas region for Sportingbet plc, which operates Sportsbook.com and other gambling sites.

Work through agency reps or consultants. Since they are based offshore, many companies in the category use U.S. ad agencies or other consultants to screen deals.