[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 692 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                 S. 692

         To prohibit Internet gambling, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 23, 1999

  Mr. Kyl (for himself and Mr. Bryan) introduced the following bill; 
  which was read twice and referred to the Committee on the Judiciary

_______________________________________________________________________

                                 A BILL


 
         To prohibit 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 Prohibition Act of 
1999''.

SEC. 2. PROHIBITION ON INTERNET GAMBLING.

    (a) In General.--Chapter 50 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 1085. Internet gambling
    ``(a) Definitions.--In this section:
            ``(1) 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 of chance, upon an 
                agreement or understanding that the person or another 
                person will receive something of value based on that 
                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, United States Code; and
                    ``(D) does not include--
                            ``(i) a 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 (15 U.S.C. 
                        78c(a)(47))) for the purchase or sale at a 
                        future date of securities (as that term is 
                        defined in section 3(a)(10) of the Securities 
                        Exchange Act of 1934 (15 U.S.C. 78c(a)(10)));
                            ``(ii) a transaction on or subject to the 
                        rules of a contract market designated pursuant 
                        to section 5 of the Commodity Exchange Act (7 
                        U.S.C. 7);
                            ``(iii) a contract of indemnity or 
                        guarantee; or
                            ``(iv) a contract for life, health, or 
                        accident insurance.
            ``(2) Closed-loop subscriber-based service.--The term 
        `closed-loop subscriber-based service' means any information 
        service or system that uses--
                    ``(A) a device or combination of devices--
                            ``(i) expressly authorized and operated in 
                        accordance with the laws of a State, 
                        exclusively for placing, receiving, or 
                        otherwise making a bet or wager described in 
                        subsection (d)(1)(B); and
                            ``(ii) by which a person located within any 
                        State must subscribe to be authorized to place, 
                        receive, or otherwise make a bet or wager, and 
                        must be physically located within that State in 
                        order to be authorized to do so;
                    ``(B) an effective customer verification and age 
                verification system, expressly authorized and operated 
                in accordance with the laws of the State in which it is 
                located, to ensure that all applicable Federal and 
                State legal and regulatory requirements for lawful 
                gambling are met; and
                    ``(C) appropriate data security standards to 
                prevent unauthorized access by any person who has not 
                subscribed or who is a minor.
            ``(3) Foreign jurisdiction.--The term `foreign 
        jurisdiction' means a jurisdiction of a foreign country or 
        political subdivision thereof.
            ``(4) Gambling business.--The term `gambling business' 
        means a business that is conducted at a gambling establishment, 
        or that--
                    ``(A) 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;
                    ``(B) involves 1 or more persons who conduct, 
                finance, manage, supervise, direct, or own all or part 
                of such business; and
                    ``(C) 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.
            ``(5) Information assisting in the placing of a bet or 
        wager.--The term `information assisting in the placing of a bet 
        or wager'--
                    ``(A) means information that is intended by the 
                sender or recipient to be used by a person engaged in 
                the business of betting or wagering to accept or place 
                a bet or wager; and
                    ``(B) does not include--
                            ``(i) information concerning parimutuel 
                        pools that is exchanged exclusively between or 
                        among 1 or more racetracks or other parimutuel 
                        wagering facilities licensed by the State or 
                        approved by the foreign jurisdiction in which 
                        the facility is located, and 1 or more 
                        parimutuel wagering facilities licensed by the 
                        State or approved by the foreign jurisdiction 
                        in which the facility is located, if that 
                        information is used only to conduct common pool 
                        parimutuel pooling under applicable law;
                            ``(ii) information exchanged exclusively 
                        between or among 1 or more racetracks or other 
                        parimutuel wagering facilities licensed by the 
                        State or approved by the foreign jurisdiction 
                        in which the facility is located, and a support 
                        service located in another State or foreign 
                        jurisdiction, if the information is used only 
                        for processing bets or wagers made with that 
                        facility under applicable law;
                            ``(iii) information exchanged exclusively 
                        between or among 1 or more wagering facilities 
                        that are located within a single State and are 
                        licensed and regulated by that State, and any 
                        support service, wherever located, if the 
                        information is used only for the pooling or 
                        processing of bets or wagers made by or with 
                        the facility or facilities under applicable 
                        State law;
                            ``(iv) any news reporting or analysis of 
                        wagering activity, including odds, racing or 
                        event results, race and event schedules, or 
                        categories of wagering; or
                            ``(v) any posting or reporting of any 
                        educational information on how to make a bet or 
                        wager or the nature of betting or wagering.
            ``(6) Interactive computer service.--The term `interactive 
        computer service' means any information service, system, or 
        access software provider that uses a public communication 
        infrastructure or operates in interstate or foreign commerce to 
        provide or enable computer access by multiple users to a 
        computer server, including specifically a service or system 
        that provides access to the Internet.
            ``(7) Internet.--The term `Internet' means the 
        international computer network of both Federal and non-Federal 
        interoperable packet switched data networks.
            ``(8) Person.--The term `person' means any individual, 
        association, partnership, joint venture, corporation, State or 
        political subdivision thereof, department, agency, or 
        instrumentality of a State or political subdivision thereof, or 
        any other government, organization, or entity (including any 
        governmental entity (as defined in section 3701(2) of title 28, 
        United States Code)).
            ``(9) Private network.--The term `private network' means a 
        communications channel or channels, including voice or computer 
        data transmission facilities, that use either--
                    ``(A) private dedicated lines; or
                    ``(B) the public communications infrastructure, if 
                the infrastructure is secured by means of the 
                appropriate private communications technology to 
                prevent unauthorized access.
            ``(10) State.--The term `State' means a State of the United 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, or a commonwealth, territory, or possession of the United 
        States.
            ``(11) Subscriber.--The term `subscriber'--
                    ``(A) means any person with a business relationship 
                with the interactive computer service provider through 
                which such person receives access to the system, 
                service, or network of that provider, even if no formal 
                subscription agreement exists; and
                    ``(B) includes registrants, students who are 
                granted access to a university system or network, and 
                employees who are granted access to the system or 
                network of their employer.
    ``(b) Gambling Businesses.--
            ``(1) Prohibition.--Subject to subsection (d), it shall be 
        unlawful for a person engaged in a gambling business to use the 
        Internet or any other interactive computer service--
                    ``(A) to place, receive, or otherwise make a bet or 
                wager; or
                    ``(B) to send, receive, or invite information 
                assisting in the placing of a bet or wager.
            ``(2) Penalties.--A person engaged in a gambling business 
        who violates paragraph (1) shall be--
                    ``(A) fined in an amount equal to not more than the 
                greater of--
                            ``(i) the amount that such person received 
                        in bets or wagers as a result of engaging in 
                        that business in violation of this subsection; 
                        or
                            ``(ii) $20,000;
                    ``(B) imprisoned not more than 4 years; or
                    ``(C) both.
    ``(c) Permanent Injunctions.--Upon conviction of a person under 
this section, the court may, as an additional penalty, enter a 
permanent injunction enjoining the transmission of bets or wagers or 
information assisting in the placing of a bet or wager.
    ``(d) Applicability.--
            ``(1) In general.--Subject to paragraph (2), the 
        prohibition in this section does not apply to--
                    ``(A) any otherwise lawful bet or wager that is 
                placed, received, or otherwise made wholly intrastate 
                for a State lottery, or for a multi-State lottery 
                operated jointly between 2 or more States in 
                conjunction with State lotteries if--
                            ``(i) each such lottery is expressly 
                        authorized, and licensed or regulated, under 
                        applicable State law;
                            ``(ii) the bet or wager is placed on an 
                        interactive computer service that uses a 
                        private network;
                            ``(iii) each person placing or otherwise 
                        making that bet or wager is physically located 
                        when such bet or wager is placed at a facility 
                        that is open to the general public; and
                            ``(iv) each such lottery complies with 
                        sections 1301 through 1304 of title 18, United 
                        States Code, and other applicable provisions of 
                        Federal law;
                    ``(B) any otherwise lawful bet or wager that is 
                placed, received, or otherwise made on an interstate or 
                intrastate basis on a live horse race, or the sending, 
                receiving, or inviting of information assisting in the 
                placing of such a bet or wager, if such bet or wager, 
                or the transmission of such information, as applicable, 
                is--
                            ``(i) expressly authorized, and licensed or 
                        regulated by the State in which such bet or 
                        wager is received, under applicable Federal and 
                        such State's laws;
                            ``(ii) placed on a closed-loop subscriber-
                        based service;
                            ``(iii) initiated from a State in which 
                        betting or wagering on that same type of live 
                        horse racing is lawful and received in a State 
                        in which such betting or wagering is lawful;
                            ``(iv) subject to the regulatory oversight 
                        of the State in which the bet or wager is 
                        received and subject by such State to minimum 
                        control standards for the accounting, 
                        regulatory inspection, and auditing of all such 
                        bets or wagers transmitted from 1 State to 
                        another; and
                            ``(v) made in accordance with the 
                        Interstate Horse Racing Act of 1978 (15 U.S.C. 
                        3001 et seq.); or
                    ``(C) any otherwise lawful bet or wager that is 
                placed, received, or otherwise made for a fantasy 
                sports league game or contest.
            ``(2) Inapplicability to bets or wagers made by agents or 
        proxies.--
                    ``(A) In general.--Paragraph (1)(A) does not apply 
                in any case in which a bet or wager is placed, 
                received, or otherwise made by the use of an agent or 
                proxy using the Internet or an interactive computer 
                service.
                    ``(B) Rule of construction.--Nothing in this 
                paragraph may be construed to prohibit the owner 
                operator of a parimutuel wagering facility that is 
                licensed by a State from employing an agent in the 
                operation of the account wagering system owned or 
                operated by the parimutuel facility.''.
    (b) Technical Amendment.--The analysis for chapter 50 of title 18, 
United States Code, is amended by adding at the end the following:

``1085. Internet gambling.''.

SEC. 3. CIVIL REMEDIES.

    (a) In General.--
            (1) Jurisdiction.--The district courts of the United States 
        shall have original, exclusive, and continuing jurisdiction to 
        prevent and restrain violations of section 1085 of title 18, 
        United States Code, as added by section 2 of this Act, by 
        issuing appropriate orders in accordance with this section, 
        regardless of whether a prosecution has been initiated under 
        that section.
            (2) Proceedings.--
                    (A) Institution by federal government.--
                            (i) In general.--The United States may 
                        institute proceedings under this subsection to 
                        prevent or restrain a violation of section 1085 
                        of title 18, United States Code.
                            (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 a violation of section 1085 
                        of title 18, United States Code, 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 section 1085 of title 18, 
                        United States Code, is alleged to have 
                        occurred, or may occur, after providing written 
                        notice to the United States, may institute 
                        proceedings under this subsection to prevent or 
                        restrain the violation, unless the United 
                        States has exclusive jurisdiction over the 
                        violation under Federal law.
                            (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 a violation of 
                        section 1085 of title 18, United States Code, 
                        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) 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 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 enter a 
                temporary restraining order against a person alleged to 
                be in violation of section 1085 of title 18, United 
                States Code, upon application of the United States 
                under paragraph (2)(A) of this subsection, or the 
                attorney general (or other appropriate State official) 
                of an affected State under paragraph (2)(B) of this 
                subsection, without notice and the opportunity for a 
                hearing, 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 section 
                1085 of title 18, United States Code.
                    (B) Expiration.--A temporary restraining order 
                entered under this paragraph shall expire on the 
                earlier of--
                            (i) the expiration of the 30-day period 
                        beginning on the date on which the order is 
                        entered; or
                            (ii) the date on which a preliminary 
                        injunction is granted or denied.
                    (C) Hearings.--A hearing requested concerning an 
                order entered under this paragraph shall be held at the 
                earliest practicable time.
    (b) Interactive Computer Service Providers.--
            (1) Eligibility.--For purposes of this subsection, an 
        interactive computer service provider is described in this 
        paragraph only if the provider has established and reasonably 
        implements a policy that provides for the termination of the 
        account of a subscriber of the service system or network of the 
        provider upon the receipt by the provider of a notice described 
        in paragraph (4)(B).
            (2) Use of facilities or services.--Nothing in section 1085 
        of title 18, United States Code, may be constructed to impose, 
        or to provide any basis for, liability against an interactive 
        computer service provider described in paragraph (1) whose 
        facilities or services are used by another person to engage in 
        an activity prohibited by that section--
                    (A) arising out of any transmitting, routing, or 
                providing of connections for the material or activity 
                (including intermediate and temporary storage in the 
                course of such transmitting, routing, or providing 
                connections) by the provider, if--
                            (i) the material or activity was initiated 
                        by or at the direction of a person other than 
                        the provider;
                            (ii) the transmitting, routing, or 
                        providing of connections is carried out through 
                        an automatic process without selection of the 
                        material or activity by the provider;
                            (iii) the provider does not select the 
                        recipients of the material or activity, except 
                        as an automatic response to the request of 
                        another person; and
                            (iv) the material or activity is 
                        transmitted through the system or network of 
                        the provider without modification of its 
                        content; or
                    (B) with respect to material or activity at an 
                online site residing on a computer server owned, 
                controlled, or operated by or for the provider, unless 
                the provider fails to comply within a reasonable time 
                with a notification under paragraph (4) with respect to 
                the particular material or activity at issue.
            (3) Protection of privacy.--Nothing in this section or in 
        section 1085 of title 18, United States Code, may be construed 
        to impose or authorize an obligation on an interactive computer 
        service described in paragraph (1) to--
                    (A) monitor material or use of its service; or
                    (B) except as required by an order of a court, to 
                gain access to, to remove, or to disable access to 
                material in any case in which such conduct is 
                prohibited by law.
            (4) Notice to interactive computer service providers.--
                    (A) In general.--If an interactive computer service 
                provider receives from a Federal or State law 
                enforcement agency, acting within its jurisdiction, a 
                written or electronic notice described in subparagraph 
                (B), that a particular online site residing on a 
                computer server owned, controlled, or operated by or 
                for the provider is being used to violate section 1085 
                of title 18, United States Code, the provider shall not 
                be liable under any Federal or State law if, in a 
                reasonably expeditious manner--
                            (i) the provider removes or disables access 
                        to the material or activity residing at that 
                        online site that allegedly violates that 
                        section; or
                            (ii) if the provider does not own, operate, 
                        or control the site at which the subject 
                        material or activity resides, the provider 
                        notifies the Federal or State law enforcement 
                        agency that--
                                    (I) the provider is not the proper 
                                recipient of such notice; and
                                    (II) upon receipt of a subpoena, 
                                the provider will cooperate with the 
                                Federal or State law enforcement agency 
                                in identifying the person or persons 
                                who control the site.
                    (B) Notice.--A notice is described in this 
                subparagraph if it--
                            (i) identifies the material or activity 
                        that allegedly violates section 1085 of title 
                        18, United States Code;
                            (ii) provides information reasonably 
                        sufficient to permit the provider to locate the 
                        material or activity;
                            (iii) is supplied to any agent of a 
                        provider designated under section 512 of title 
                        17, United States Code, if information 
                        regarding such designation is readily available 
                        to the public; and
                            (iv) provides information that is 
                        reasonably sufficient to permit the provider to 
                        contact the law enforcement agency that issued 
                        the notice, including--
                                    (I) the name of the law enforcement 
                                agency; and
                                    (II) the name and telephone number 
                                of an individual to contact at the law 
                                enforcement agency, and, if available, 
                                the electronic mail address of that 
                                individual.
            (5) Injunctive relief.--
                    (A) In general.--Except as provided in subparagraph 
                (B), a Federal or State law enforcement agency acting 
                within its jurisdiction, may, following the issuance of 
                a notice to an interactive computer service provider 
                under paragraph (4), in a civil action, obtain an 
                injunction or other appropriate relief to prevent the 
                use of the interactive computer service in violation of 
                Federal or State law.
                    (B) Other limitations.--In the case of any 
                application for an injunction against an interactive 
                computer service provider to prevent a violation of 
                section 1085 of title 18, United States Code--
                            (i) arising out of the transmitting, 
                        routing, or providing of connections by the 
                        provider for material or activity that is 
                        prohibited by section 1085 of title 18, United 
                        States Code, or performing the intermediate and 
                        temporary storage of such material or activity 
                        in the course of such transmitting, routing, or 
                        providing of connections, the injunctive relief 
                        is limited to--
                                    (I) an order restraining the 
                                provider from providing access to an 
                                identified subscriber of the system or 
                                network of the interactive computer 
                                service provider, who is using that 
                                access to violate section 1085 of title 
                                18, United States Code (or whose use of 
                                that access involves a violation of 
                                section 1085 of title 18, United States 
                                Code, by another person), by 
                                terminating the specified account of 
                                that subscriber; and
                                    (II) an order restraining the 
                                provider from providing access, by 
                                taking reasonable steps specified in 
                                the order to block access, to a 
                                specific, identified, foreign online 
                                location;
                            (ii) with respect to conduct other than 
                        that which qualifies for the limitation on 
                        remedies set forth in clause (i), the 
                        injunctive relief is limited to--
                                    (I) an order restraining the 
                                provider from providing access to a 
                                material or activity that violates 
                                section 1085 of title 18, United States 
                                Code, at a particular online site 
                                residing on a computer server, owned, 
                                operated, or controlled by the 
                                provider;
                                    (II) an order restraining the 
                                provider from providing access to a 
                                subscriber of the system or network of 
                                the interactive computer service, who 
                                is identified in the order and who is 
                                using such service in violation of 
                                section 1085 of title 18, United States 
                                Code, by terminating the specified 
                                account of that subscriber; or
                                    (III) such other injunctive 
                                remedies as the court considers 
                                necessary to prevent or restrain access 
                                to specified material or activity that 
                                is prohibited by section 1085 of title 
                                18, United States Code, at a particular 
                                online location residing on a computer 
                                server owned, operated, or controlled 
                                by the provider, that are the least 
                                burdensome to the provider among the 
                                forms of relief that are comparably 
                                effective for that purpose.
                    (C) Considerations.--The court, in determining 
                appropriate injunctive relief under this paragraph, 
                shall consider--
                            (i) whether such an injunction, either 
                        alone or in combination with other such 
                        injunctions issued against the same provider 
                        (under section 1085 of title 18, United States 
                        Code, or under this section) would 
                        significantly burden either the provider or the 
                        operation of the system or network of the 
                        provider;
                            (ii) whether implementation of such an 
                        injunction would be technically feasible and 
                        effective, and would not unreasonably interfere 
                        with access to lawful material at other online 
                        locations;
                            (iii) whether other less burdensome and 
                        comparably effective means of preventing or 
                        restraining access to the illegal material or 
                        activity are available; and
                            (iv) the magnitude of the harm likely to be 
                        suffered by the community if the injunction is 
                        not granted.
                    (D) Notice and ex parte orders.--Injunctive relief 
                under this paragraph shall not be available without 
                notice to the service provider and an opportunity for 
                such provider to appear before the court, except for 
                orders ensuring the preservation of evidence or other 
                orders having no material adverse effect on the 
                operation of the communications network of the service 
                provider.
            (6) Effect on other law.--
                    (A) Preemption of state law.--An interactive 
                computer service provider described in paragraph (1) 
                shall not be liable under any State law prohibiting or 
                regulating gambling, or subject to any injunctive 
                relief under any such State law, in connection with the 
                use of the interactive computer service of that 
                provider by any person in interstate or affecting 
                commerce.
                    (B) Immunity from liability.--In the absence of 
                fraud or bad faith, an interactive computer service 
                provider described in paragraph (1) shall not be liable 
                for any damages, penalty, or forfeiture, civil or 
                criminal, under Federal or State law for--
                            (i) taking any action described in 
                        paragraph (1) or paragraph 4(A) to comply with 
                        a notice described in paragraph (4)(B); or
                            (ii) complying with any court order issued 
                        under paragraph (5).
    (c) Relationship to Other Remedies.--
            (1) In general.--Except as provided in subsection (b)(6), 
        nothing in this section may be construed to affect any remedy 
        under section 1085 of title 18, United States Code, or under 
        any other provision of Federal or State law.
            (2) Availability of relief.--The availability of relief 
        under this section shall not depend on, or be affected by, the 
        initiation or resolution of any action under section 1085 of 
        title 18, United States Code, or under any other provision of 
        Federal or State law.

SEC. 4. RULE OF CONSTRUCTION.

    Except as provided in section 3(b)(6) of this Act, nothing in this 
Act or in section 1085 of title 18, United States Code, as added by 
section 2 of this Act, may be construed otherwise to affect any 
prohibition or remedy relating to gambling that is imposed under any 
other provision of Federal or State law.

SEC. 5. REPORT ON ENFORCEMENT.

    Not later than 3 years after the date of enactment of this Act, the 
Attorney General shall submit to Congress a report, which shall 
include--
            (1) an analysis of the problems, if any, associated with 
        enforcing section 1085 of title 18, United States Code, as 
        added by section 2 of this Act;
            (2) recommendations for the best use of the resources of 
        the Department of Justice to enforce that section; and
            (3) an estimate of the amount of activity and money being 
        used to gamble on the Internet.

SEC. 6. SEVERABILITY.

    If any provision of this Act, an amendment made by this Act, or the 
application of such provision or amendment to any person or 
circumstance is held to be uncon- 
stitutional, the remainder of this Act, the amendments made by this 
Act, and the application of the provisions of such to any person or 
circumstance shall not be affected thereby.
                                 <all>