[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4419 Introduced in House (IH)]







106th CONGRESS
  2d Session
                                H. R. 4419

 To prevent the use of certain bank instruments for Internet gambling, 
                        and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 10, 2000

   Mr. Leach (for himself, Mr. LaFalce, Mrs. Roukema, and Mr. Baker) 
 introduced the following bill; which was referred to the Committee on 
Banking and Financial Services, and in addition to the Committee on the 
 Judiciary, for a period to be subsequently determined by the Speaker, 
 in each case for consideration of such provisions as fall within the 
                jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL


 
 To prevent the use of certain bank instruments for Internet gambling, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Internet Gambling Funding 
Prohibition Act''.

SEC. 2. FINDINGS.

    The Congress finds as follows:
            (1) Internet gambling is primarily funded through personal 
        use of bank instruments, including credit cards and wire 
        transfers.
            (2) The National Gambling Impact Study Commission in 1999 
        recommended the passage of legislation to prohibit wire 
        transfers to Internet gambling sites or the banks which 
        represent them.
            (3) Internet gambling is a major cause of debt collection 
        problems for insured depository institutions and the consumer 
        credit industry.
            (4) Internet gambling conducted through offshore 
        jurisdictions has been identified by United States law 
        enforcement officials as a significant money laundering 
        vulnerability.

SEC. 3. PROHIBITION ON ACCEPTANCE OF ANY BANK INSTRUMENT FOR INTERNET 
              GAMBLING.

    (a) In General.--No person engaged in a gambling business may 
knowingly accept, in connection with the participation of another 
person in Internet gambling--
            (1) credit, or the proceeds of credit, extended to or on 
        behalf of such other person (including credit extended through 
        the use of a credit card);
            (2) an electronic fund transfer or funds transmitted by or 
        through a money transmitting business, or the proceeds of an 
        electronic fund transfer or money transmitting service, from or 
        on behalf of the other person;
            (3) any check, draft, or similar instrument which is drawn 
        by or on behalf of the other person and is drawn on or payable 
        through any financial institution; or
            (4) the proceeds of any other form of financial transaction 
        as the Secretary may prescribe by regulation which involves a 
        financial institution as a payor or financial intermediary on 
        behalf of or for the benefit of the other person.
    (b) Definitions.--For purposes of this Act, the following 
definitions shall apply:
            (1) Appropriate federal regulatory agency.--The term 
        ``appropriate Federal regulatory agency'' means--
                    (A) in the case of any creditor, or any national or 
                regional communication network utilized to effect a 
                consumer credit transaction, the appropriate agency of 
                the agencies referred to in subsection (a) or (c) of 
                section 108 of the Truth in Lending Act;
                    (B) in the case of any financial institution 
                involved in an electronic fund transfer, or any 
                operator of a terminal at which an electronic fund 
                transfer may be initiated or any national or regional 
                communication network utilized to effect an electronic 
                fund transfer, the appropriate agency of the agencies 
                referred to in subsection (a) or (c) of section 917 of 
                the Electronic Fund Transfer Act; and
                    (C) in the case of any money transmitting business, 
                or any national or regional communication network 
                utilized to effect a money transmitting service, the 
                Secretary of the Treasury.
            (2) Bets or wagers.--The term ``bets or wagers''--
                    (A) means the staking or risking by any person of 
                something of value upon the outcome of a contest of 
                others, a sporting event, or a game predominantly 
                subject to chance, upon an agreement or understanding 
                that the person or another person will receive 
                something of greater value than the amount staked or 
                risked in the event of a certain outcome;
                    (B) includes the purchase of a chance or 
                opportunity to win a lottery or other prize (which 
                opportunity to win is predominantly subject to chance);
                    (C) includes any scheme of a type described in 
                section 3702 of title 28; and
                    (D) does not include--
                            (i) any bona fide business transaction 
                        governed by the securities laws (as that term 
                        is defined in section 3(a)(47) of the 
                        Securities Exchange Act of 1934 for the 
                        purchase or sale at a future date of securities 
                        (as that term is defined in section 3(a)(10) of 
                        such Act;
                            (ii) any transaction on or subject to the 
                        rules of a contract market designated pursuant 
                        to section 5 of the Commodity Exchange Act;
                            (iii) any over-the-counter derivative 
                        instrument;
                            (iv) any contract of indemnity or 
                        guarantee;
                            (v) any contract for life, health, or 
                        accident insurance; or
                            (vi) any participation in a simulation 
                        sports game or an educational game or contest 
                        that--
                                    (I) is not dependent solely on the 
                                outcome of any single sporting event or 
                                nonparticipant's singular individual 
                                performance in any single sporting 
                                event;
                                    (II) has an outcome that reflects 
                                the relative knowledge and skill of the 
                                participants with such outcome 
                                determined predominantly by accumulated 
                                statistical results of sporting events; 
                                and
                                    (III) offers a prize or award to a 
                                participant that is established in 
                                advance of the game or contest and is 
                                not determined by the number of 
                                participants or the amount of any fees 
                                paid by those participants.
            (3) Gambling business.--The term ``gambling business'' 
        means--
                    (A) a business that is conducted at a gambling 
                establishment;
                    (B) a business that--
                            (i) involves--
                                    (I) the placing, receiving, or 
                                otherwise making of bets or wagers; or
                                    (II) the offering to engage in the 
                                placing, receiving, or otherwise making 
                                of bets or wagers;
                            (ii) involves 1 or more persons who 
                        conduct, finance, manage, supervise, direct, or 
                        own all or part of such business; and
                            (iii) has been or remains in substantially 
                        continuous operation for a period in excess of 
                        10 days or has a gross revenue of $2,000 or 
                        more from such business during any 24-hour 
                        period; and
                    (C) any agent who knowingly solicits for a business 
                described in subparagraph (A) or (B).
            (4) Internet.--The term ``Internet'' means the 
        international computer network of both Federal and nonfederal 
        interoperable packet switched data networks.
            (5) Internet gambling.--The term ``Internet gambling'' 
        means to place, receive, or otherwise make a bet or wager by 
        any means which involves the use, at least in part, of the 
        Internet.
            (6) Other terms.--
                    (A) Credit; creditor; and credit card.--The terms 
                ``credit'', ``creditor'', and ``credit card'' have the 
                meanings given such terms in section 103 of the Truth 
                in Lending Act.
                    (B) Electronic fund transfer.--The term 
                ``electronic fund transfer'' has the meaning given such 
                term in section 903 of the Electronic Fund Transfer 
                Act.
                    (C) Financial institution.--The term ``financial 
                institution'' has the meaning given such term in 
                section 903 of the Electronic Fund Transfer Act.
                    (D) Money transmitting business and money 
                transmitting service.--The terms ``money transmitting 
                business'' and ``money transmitting service'' have the 
                meanings given such terms in section 5330(d) of title 
                31, United States Code.
                    (E) Secretary.--The term ``Secretary'' means the 
                Secretary of the Treasury.
    (c) Civil Remedies.--
            (1) Jurisdiction.--The district courts of the United States 
        shall have original and exclusive jurisdiction to prevent and 
        restrain violations of this section by issuing appropriate 
        orders in accordance with this section, regardless of whether a 
        prosecution has been initiated under this section.
            (2) Proceedings.--
                    (A) Institution by federal government.--
                            (i) In general.--The United States, acting 
                        through the Attorney General or an appropriate 
                        Federal regulatory agency, may institute 
                        proceedings under this subsection to prevent or 
                        restrain a violation of this section.
                            (ii) Relief.--Upon application of the 
                        United States under this subparagraph, the 
                        district court may enter a temporary 
                        restraining order or an injunction against any 
                        person to prevent or restrain a violation of 
                        this section if the court determines, after 
                        notice and an opportunity for a hearing, that 
                        there is a substantial probability that such 
                        violation has occurred or will occur.
                    (B) Institution by state attorney general.--
                            (i) In general.--The attorney general of a 
                        State (or other appropriate State official) in 
                        which a violation of this section allegedly has 
                        occurred or will occur, after providing written 
                        notice to the United States, may institute 
                        proceedings under this subsection to prevent or 
                        restrain the violation.
                            (ii) Relief.--Upon application of the 
                        attorney general (or other appropriate State 
                        official) of an affected State under this 
                        subparagraph, the district court may enter a 
                        temporary restraining order or an injunction 
                        against any person to prevent or restrain a 
                        violation of this section if the court 
                        determines, after notice and an opportunity for 
                        a hearing, that there is a substantial 
                        probability that such violation has occurred or 
                        will occur.
                    (C) Indian lands.--Notwithstanding subparagraphs 
                (A) and (B), for a violation that is alleged to have 
                occurred, or may occur, on Indian lands (as that term 
                is defined in section 4 of the Indian Gaming Regulatory 
                Act)--
                            (i) the United States shall have the 
                        enforcement authority provided under 
                        subparagraph (A); and
                            (ii) the enforcement authorities specified 
                        in an applicable Tribal-State compact 
                        negotiated under section 11 of the Indian 
                        Gaming Regulatory Act shall be carried out in 
                        accordance with that compact.
                    (D) Expiration.--Any temporary restraining order or 
                preliminary injunction entered pursuant to subparagraph 
                (A) or (B) shall expire if, and as soon as, the United 
                States, or the attorney general (or other appropriate 
                State official) of the State, as applicable, notifies 
                the court that issued the order or injunction that the 
                United States or the State, as applicable, will not 
                seek a permanent injunction.
            (3) Expedited proceedings.--
                    (A) In general.--In addition to any proceeding 
                under paragraph (2), a district court may, in exigent 
                circumstances, enter a temporary restraining order 
                against a person alleged to be in violation of this 
                section upon application of the United States under 
                paragraph (2)(A), or the attorney general (or other 
                appropriate State official) of an affected State under 
                paragraph (2)(B), without notice and the opportunity 
                for a hearing as provided in rule 65(b) of the Federal 
                Rules of Civil Procedure (except as provided in 
                subsection (d)(3)), if the United States or the State, 
                as applicable, demonstrates that there is probable 
                cause to believe that the use of the Internet or other 
                interactive computer service at issue violates this 
                section.
                    (B) Hearings.--A hearing requested concerning an 
                order entered under this paragraph shall be held at the 
                earliest practicable time.
    (d) Criminal Penalty.--
            (1) In general.--Whoever violates this section shall be 
        fined under title 18, United States Code, or imprisoned for not 
        more than 5 years, or both.
            (2) Permanent injunction.--Upon conviction of a person 
        under this subsection, the court may enter a permanent 
        injunction enjoining such person from placing, receiving, or 
        otherwise making bets or wagers or sending, receiving, or 
        inviting information assisting in the placing of bets or 
        wagers.
    (e) Safe Harbor for Financial Intermediaries.--
            (1) In general.--No creditor, credit card issuer, financial 
        institution, operator of a terminal at which an electronic fund 
        transfer may be initiated, money transmitting business, or 
        national or regional communication network utilized to effect a 
        credit transaction, electronic fund transfer, or money 
transmitting service shall be liable under this section for the 
involvement of such person, or the use of the facilities of such 
person--
                    (A) in any credit transaction, electronic fund 
                transfer, or money transmitting service described in 
                subsection (a); or
                    (B) in drawing, paying, transferring, or collecting 
                any check, draft, or other instrument described in 
                subsection (a).
            (2) Exception for knowing participation in a gambling 
        business.--Paragraph (1) shall not apply with respect to any 
        person referred to in such paragraph which is a gambling 
        business or which knowingly participates in any activity 
        referred to in subparagraph (A) or (B) of such paragraph as an 
        agent or representative of a gambling business.

SEC. 4. INTERNET GAMBLING IN OR THROUGH FOREIGN JURISDICTIONS.

    (a) In General.--It is the sense of the Congress that, in 
deliberations between the United States Government and any other 
country on money laundering, corruption, and crime issues, the United 
States Government should encourage the enactment and enforcement of 
laws in such country to prevent Internet gambling and the use of the 
financial payment and transfer systems to facilitate Internet gambling.
    (b) United States Votes in International Financial Institutions.--
The Secretary of the Treasury shall instruct the United States 
Executive Directors of each international financial institution (as 
defined in section 1701(c) of the International Financial Institutions 
Act) to oppose any loan, disbursement, or other utilization of 
resources by the international financial institution, other than to 
address basic human needs, for any country that the Secretary of the 
Treasury determines--
            (1) permits a high level of participation in, and the use 
        of the financial payment and transfer systems to facilitate, 
        Internet gambling by United States citizens and residents; and
            (2) is not effectively implementing measures to limit 
        participation in, and the use of the financial payment and 
        transfer systems to facilitate, Internet gambling by United 
        States citizens and residents.
    (c) Denial of Access to the Payment System.--In the case of any 
country with respect to which the Secretary has made a determination 
under subsection (b), the Secretary and the Board of Governors of the 
Federal Reserve System shall take such action as the Secretary and the 
Chairman of the Board, after joint consultation, determine to be 
appropriate to limit or preclude access to the United States payment 
system by financial institutions that are chartered by, or organized 
under the laws of, such country or have their principal places of 
business within such country.
    (d) Report Required.--The Secretary of the Treasury shall submit an 
annual report to the Congress on the deliberations between the United 
States and other countries on issues relating to Internet gambling.

SEC. 5. ENFORCEMENT ACTIONS.

    Section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) is 
amended by adding at the end the following new subsection:
    ``(x) Depository Institution Involvement in Internet Gambling.--
Notwithstanding section 3(e) of the Internet Gambling Funding 
Prohibition Act, if any appropriate Federal banking agency determines 
that any insured depository institution is engaged in any of the 
following activities, the agency may issue an order to such institution 
prohibiting such institution from continuing to engage in such 
activity:
            ``(1) Extending credit, or facilitating an extension of 
        credit, electronic fund transfer, or money transmitting service 
        with the actual knowledge that any person is violating 
        subsection (a) or (b) of the Internet Gambling Funding 
        Prohibition Act in connection with such extension of credit, 
        electronic fund transfer, or money transmitting service.
            ``(2) Paying, transferring, or collecting on any check, 
        draft, or other instrument drawn on any depository institution 
        with the actual knowledge that any person is violating 
        subsection (a) or (b) of the Internet Gambling Funding 
        Prohibition Act in connection with such check, draft, or other 
        instrument.''.
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