QUIETLY and with little opposition, legislation is moving through Congress that would allow gambling on United States-flagged ships in international waters for the first time since it was outlawed 40 years ago.Supporters see it as a way to breathe new life into the moribund US maritime industry. But critics consider it economic fool's gold and worry that the casinos will draw organized crime and other unsavory elements. The action is of particular interest in California, where floating casinos once flourished in coastal waters until a series of high-profile raids in the 1940s, spearheaded by then state Attorney General Earl Warren. Congress went on to ban gambling on US vessels in 1951. "I am appalled by this," says the state's current attorney general, Dan Lungren, who believes the issue is being "thrust upon Congress" without full review. "I thought we learned our lesson in the '30s and '40s," he says. The move to expand gambling on the high seas reflects the growing allure of games of chance in an era of economic hardship. In addition to the ubiquitous lottery, now sanctioned in 36 states, gamblers in Iowa and Illinois can wager on Mississippi riverboats. Slot machines started spinning in three rural Colorado towns last month. New Jersey is considering allowing betting on sporting events. Supporters of US casinos on the high seas say the move would help revive domestic shipbuilding and the American cruise-ship industry. At present, foreign-flagged cruise lines operating between US and overseas ports are allowed to provide gambling entertainment once the ships get beyond state waters, usually about three miles. Proponents argue that changing the 1951 Gambling Devices Act that prohibited such activities on US vessels will "level the playing field" and create American jobs. They point out that since the 1950s the US cruise fleet has gone from 46 vessels to two, in part because of the gambling prohibition and the difficulty of domestic shipbuilders competing with government-subsidized overseas firms. Some 80 percent of all passengers on cruise ships are Americans, generating an estimated $4 billion in revenue for foreign lines. "This is a jobs issue. It is a fairness issue," says Stephen Peranich, an aide to US Rep. Gene Taylor (R) of Mississippi. "We're being excluded from a very lucrative industry by our own law." Legislation by Mr. Taylor eliminating the restrictions on US vessels once they are in international waters was unanimously passed by the US House of Representatives Saturday. Supporters hope to move a measure through the Senate this week. The bill does give states the right to prohibit gambling on ships that travel between ports within a state and on "cruises to nowhere." Amendments inserted into the US crime bill, now before a House-Senate conference committee, back the idea of shipboard gambling. The moves are supported by the maritime industry, including shipbuilders, seafaring unions, and cruise lines, as well as some tourism groups. The Taylor bill had more than 130 co-sponsors. What opposition there has been to gambling on the high seas has come from the US Department of Justice - mainly against the cruises to nowhere. Congressional staff members say the agency did not oppose the Taylor bill, however, because of the provision giving states the right to outlaw such cruises and a proviso that gambling can't be the primary purpose of vessels. This would prohibit the kind of floating casinos that anchored off southern California in the 1940s. Even with these provisions, critics see problems. Law enforcement authorities worry about money laundering, prostitution, loan-sharking, and other criminal activities. Valerie Lorenz, executive director of the National Center for Pathological Gambling, says gaming shouldn't be expanded unless it is accompanied by programs to treat and prevent addiction. "The argument is always made that gambling will create jobs," she says. "The other side is the increase in crime, addiction, welfare costs, and bankruptc ies."