[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2267 Introduced in House (IH)]
111th CONGRESS
1st Session
H. R. 2267
To amend title 31, United States Code, to provide for the licensing of
Internet gambling activities by the Secretary of the Treasury, to
provide for consumer protections on the Internet, to enforce the tax
code, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 6, 2009
Mr. Frank of Massachusetts (for himself, Mr. Paul, Mr. Gutierrez, Mr.
King of New York, Mr. Watt, Mr. Ackerman, Mr. Capuano, Mr. Carson of
Indiana, Mr. McDermott, Mr. Delahunt, Mr. McGovern, Mr. Wexler, Ms.
Berkley, Mr. Cohen, Mr. Perriello, and Mr. Sablan) introduced the
following bill; which was referred to the Committee on Financial
Services, and in addition to the Committees on Energy and Commerce and
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 amend title 31, United States Code, to provide for the licensing of
Internet gambling activities by the Secretary of the Treasury, to
provide for consumer protections on the Internet, to enforce the tax
code, 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 Regulation,
Consumer Protection, and Enforcement Act''.
SEC. 2. FEDERAL LICENSING REQUIREMENT FOR INTERNET GAMBLING OPERATORS.
(a) In General.--Chapter 53 of title 31, United States Code, is
amended by adding at the end the following new subchapter:
``SUBCHAPTER V--REGULATION OF LAWFUL INTERNET GAMBLING
``Sec. 5381. Congressional findings
``The Congress finds the following:
``(1) Since the development of the Internet, millions of
people have chosen to gamble online, and today Internet
gambling is offered by operators located in many different
countries under a variety of licensing and regulatory regimes.
``(2) Despite the increasing use of the Internet for
gambling by persons in the United States, there is no Federal
or State regulatory regime in place to protect United States
citizens who choose to engage in this interstate activity, or
to oversee operators to establish and enforce standards of
integrity and fairness.
``(3) In the United States, gambling activities, equipment,
and operations have been subject to various forms of Federal
and State control, regulation, and enforcement, with some form
of gambling being permitted in nearly every State and by many
Indian tribes.
``(4) Internet gambling in the United States should be
controlled by a strict Federal licensing and regulatory
framework to protect underage and otherwise vulnerable
individuals, to ensure the games are fair, to address the
concerns of law enforcement, and to enforce any limitations on
the activity established by the States and Indian tribes.
``(5) An effective Federal licensing system would ensure
that licenses are issued only to Internet gambling operators
which meet strict criteria to protect consumers, and which--
``(A) are in good financial and legal standing, and
of good character, honesty, and integrity;
``(B) utilize appropriate technology to determine
the age and location of users;
``(C) adopt and implement systems to protect minors
and problem gamblers;
``(D) adopt and implement systems to enforce any
applicable Federal, State, and Indian tribe limitations
on Internet gambling; and
``(E) have in place risk-based methods to identify
and combat money laundering and fraud relating to
Internet gambling, and to protect the privacy and
security of users.
``(6) There is a need to extend the regulatory provisions
of this Act to all persons, locations, equipment, practices,
and associations related to Internet gambling, with each State
and Indian tribe having the ability to limit Internet gambling
operators from offering Internet gambling to persons located
within its territory by opting out of the provisions of this
Act.
``Sec. 5382. Definitions
``For purposes of this subchapter, the following definitions shall
apply:
``(1) Applicant.--The term `applicant' means any person who
has applied for a license pursuant to this subchapter.
``(2) Bet or wager.--The term `bet or wager' has the same
meaning as in section 5362(1).
``(3) Enforcement agent.--The term `enforcement agent'
means any individual authorized by the Secretary to enforce the
provisions of this subchapter and regulations prescribed under
this subchapter.
``(4) Indian lands and indian tribe.--The terms `Indian
lands' and `Indian tribe' have the same meanings as in section
4 of the Indian Gaming Regulatory Act.
``(5) Internet.--The term `Internet' has the same meaning
as in section 5362(5).
``(6) Licensee.--The term `licensee' means an entity
authorized to operate an Internet gambling facility in
accordance with this subchapter.
``(7) Operate an internet gambling facility.--The term
`operate an Internet gambling facility' or `operation of an
Internet gambling facility' means the direction, management,
supervision, or control of an Internet site through which bets
or wagers are initiated, received, or otherwise made, whether
by telephone, Internet, satellite, or other wire or wireless
communication.
``(8) Secretary.--The term `Secretary' means the Secretary
of the Treasury, or any person designated by the Secretary.
``(9) State.--The term `State' means any State of the
United States, the District of Columbia, or any commonwealth,
territory, or other possession of the United States.
``(10) Sporting event.--The term `sporting event' means any
athletic competition, whether professional, scholastic, or
amateur.
``Sec. 5383. Establishment and administration of licensing program
``(a) Treasury Responsibilities.--The Secretary shall have
responsibility for the following activities:
``(1) Exercising full regulatory jurisdiction over--
``(A) the operation of Internet gambling facilities
by licensees; and
``(B) the licensure of all applicants.
``(2) Prescribing such regulations as may be necessary to
administer and enforce the requirements of this subchapter.
``(3) Employing enforcement agents with sufficient training
and experience to administer the requirements of this
subchapter and the regulations prescribed under this
subchapter.
``(4) Enforcing the requirements of this subchapter through
all appropriate means provided under this subchapter and other
provisions of law.
``(b) Internet Gambling Licensing Program.--
``(1) Licensing required for certain internet gambling.--No
person may operate an Internet gambling facility that knowingly
accepts bets or wagers from persons located in the United
States without a license issued by the Secretary in accordance
with this subchapter.
``(2) Authority under valid license.--A licensee may accept
bets or wagers from persons located in the United States,
subject to the limitations set forth in this subchapter, so
long as its license remains in good standing.
``(c) Application for License.--
``(1) In general.--Any person seeking authority to operate
an Internet gambling facility offering services to persons in
the United States may apply for a license issued by the
Secretary.
``(2) Information required.--Any application for a license
under this subchapter shall contain such information as may be
required by the Secretary, including the following:
``(A) The criminal and credit history of the
applicant, any senior executive and director of the
applicant, and any person deemed to be in control of
the applicant.
``(B) The financial statements of the applicant.
``(C) Documentation showing the corporate structure
of the applicant and all related businesses and
affiliates.
``(D) Documentation containing detailed evidence of
the applicant's plan for complying with all applicable
regulations should a license be issued, with particular
emphasis on the applicant's ability to--
``(i) protect underage and problem
gamblers;
``(ii) ensure games are being operated
fairly; and
``(iii) comply with and address the
concerns of law enforcement.
``(E) Certification that the applicant agrees to
submit to United States jurisdiction and all applicable
United States laws relating to acceptance by the
applicant of bets or wagers over the Internet from
persons located in the United States and all associated
activities.
``(d) Standards for License Issuance; Suitability Qualifications
and Disqualification Standards.--
``(1) Suitability for licensing standards.--
``(A) In general.--No person shall be eligible to
obtain a license unless the Secretary has determined,
upon completion of a background check and
investigation, that the applicant, and any person
deemed to be in control of the applicant, is suitable
for licensing.
``(B) Associates of applicants.--If the applicant
is a corporation, partnership, or other business
entity, a background check and investigation shall
occur with respect to the president or other chief
executive of the corporation, partnership, or other
business entity and other partners or senior executives
and directors of the corporation, partnership, or
entity, as determined appropriate by the Secretary, in
the Secretary's sole discretion.
``(C) Background check and investigation.--The
Secretary shall establish standards and procedures for
conducting background checks and investigations for
purposes of this subsection.
``(2) Suitability for licensing standards described.--For
purposes of this subchapter, an applicant and any other person
associated with the applicant, as applicable, is suitable for
licensing if the applicant demonstrates to the Secretary by
clear and convincing evidence that the applicant (or individual
associated with the applicant, as applicable)--
``(A) is a person of good character, honesty, and
integrity;
``(B) is a person whose prior activities,
reputation, habits, and associations do not--
``(i) pose a threat to the public interest
or to the effective regulation and control of
the licensed activities; or
``(ii) create or enhance the dangers of
unsuitable, unfair, or illegal practices,
methods, and activities in the conduct of the
licensed activities or the carrying on of the
business and financial arrangements incidental
to such activities;
``(C) is capable of and likely to conduct the
activities for which the applicant is licensed in
accordance with the provisions of this subchapter and
any regulations prescribed under this subchapter;
``(D) has or guarantees acquisition of adequate
business competence and experience in the operation of
Internet gambling facilities; and
``(E) has or will obtain sufficient financing for
the nature of the proposed operation and from a
suitable source.
``(3) Unsuitable for licensing.--An applicant or any other
person may not be determined to be suitable for licensing
within the meaning of this subchapter if the applicant or such
person--
``(A) has failed to provide information and
documentation material to a determination of
suitability for licensing under paragraph (1);
``(B) has supplied information which is untrue or
misleading as to a material fact pertaining to any such
determination;
``(C) has been convicted of an offense punishable
by imprisonment of more than 1 year; or
``(D) is delinquent in filing any applicable
Federal or State tax returns or in the payment of any
taxes, penalties, additions to tax, or interest owed to
a State or the United States.
``(4) Ongoing requirement.--A licensee (and any other
person who is required to be determined to be suitable for
licensing in connection with such licensee) shall meet the
standards necessary to be suitable for licensing throughout the
term of the license.
``(5) Protection of the public trust.--The Secretary may
take such action as is necessary to protect the public trust,
including the implementation of such safeguards as may be
necessary to ensure the operation of an Internet gambling
facility licensed under this subchapter is controlled only by
persons who are suitable for licensing.
``(6) Enforcement actions.--
``(A) Determination of unsuitability for continued
licensure.--If the Secretary finds that an individual
owner or holder of a security of a licensee, or of a
holding or intermediary company of a licensee or any
person with an economic interest in a licensee or a
director, partner, or officer of a licensee is not
suitable for licensing, the Secretary may determine
that the licensee is not qualified to continue as a
licensee.
``(B) Action to protect the public interest,
including suspension.--If the Secretary may determine
that the licensee is not qualified to continue as a
licensee, the Secretary shall propose action necessary
to protect the public interest, including, if deemed
necessary, the suspension of the licensee.
``(C) Imposition of conditions including removal of
parties.--Notwithstanding a determination under
subparagraph (A), the Secretary may allow a licensee to
continue engaging in licensed activities by imposing
conditions on the licensee under penalty of revocation
or suspension of a license, including--
``(i) the identification of any person
determined to be unsuitable for licensing; and
``(ii) the establishment of appropriate
safeguards to ensure such person is excluded
from any interest in the licensed activities.
``(e) Assessments for Administrative Expenses.--
``(1) User fees.--
``(A) In general.--The cost of administering this
subchapter with respect to each licensee, including the
cost of any review or examination of a licensee to
ensure compliance with the terms of the license and
this subchapter, shall be assessed by the Secretary
against the licensee institution by written notice in
an amount appropriate to meet the Secretary's expenses
in carrying out such administration, review, or
examination.
``(B) Disposition.--Amounts assessed by the
Secretary as user fees under subparagraph (A) shall--
``(i) be maintained by the Secretary solely
for use in accordance with clause (ii);
``(ii) be available to the Secretary to
cover all expenses incurred by the Secretary in
carrying out this subchapter; and
``(iii) not be construed to be Government
funds or appropriated monies, or subject to
apportionment for the purposes of chapter 15 or
any other authority.
``(C) Hearing.--Any licensee against whom an
assessment is assessed under this paragraph shall be
afforded an agency hearing if such person submits a
request for such hearing within 20 days after the
issuance of the notice of assessment.
``(D) Collection.--
``(i) Referral.--If any licensee fails to
pay an assessment under this paragraph after
the assessment has become final, the Secretary
shall recover the amount assessed by action in
the appropriate United States district court.
``(ii) Appropriateness of assessment not
reviewable.--In any civil action under clause
(i), the validity and appropriateness of the
assessment shall not be subject to review.
``(2) Direct and exclusive obligation of licensee.--The
user fee shall be the direct and exclusive obligation of the
licensee and may not be deducted from amounts available as
deposits to any person placing a bet.
``(f) Approval of License.--The Secretary shall grant licenses
under this subchapter if the applicant meets the criteria set by the
Secretary set forth in this subchapter and in any regulations
promulgated thereunder.
``(g) Safeguards Required of Licensee.--No person shall receive or
retain a license under this section unless the person maintains or
requires mechanisms so that the following requirements, and the
standards established under section 5384, are met with respect to any
Internet bet or wager:
``(1) Legal age.--Appropriate safeguards to ensure that the
individual placing a bet or wager is of legal age as defined by
the law of the State or tribal area in which the individual is
located at the time the bet or wager is placed.
``(2) Permissible location.--Appropriate safeguards to
ensure that the individual placing a bet or wager is physically
located in a jurisdiction that permits Internet gambling at the
time the bet or wager is placed.
``(3) Collection of customer taxes.--Appropriate mechanisms
to ensure that all taxes relating to Internet gambling from
persons engaged in Internet gambling are collected at the time
of any payment of any proceeds of Internet gambling.
``(4) Collection of taxes of licensee.--Appropriate
mechanisms to ensure that all taxes relating to Internet
gambling from any licensee are collected and disbursed as
required by law, and that adequate records to enable later
audit or verification are maintained.
``(5) Safeguards against financial crime.--Appropriate
safeguards to combat fraud, money laundering, and terrorist
finance.
``(6) Safeguards against compulsive gambling.--Appropriate
safeguards to combat compulsive Internet gambling.
``(7) Privacy safeguards.--Appropriate safeguards to
protect the privacy and security of any person engaged in
Internet gambling.
``(8) Payment of assessments.--Appropriate mechanisms to
ensure that any assessment under subsection (e) is paid to the
Secretary.
``(9) Other requirements.--Such other requirements as the
Secretary may establish by regulation or order.
``(h) Term and Renewal of License.--
``(1) Term.--Any license issued under this section shall be
issued for a 5-year term beginning on the date of issuance.
``(2) Renewal.--Licenses may be renewed in accordance with
the requirements prescribed by the Secretary pursuant to this
subchapter.
``(i) Revocation of License.--
``(1) In general.--Any license granted under this
subchapter may be revoked by the Secretary if--
``(A) the licensee fails to comply with any
provision of this subchapter; or
``(B) the licensee is determined to be unsuitable
for licensing, within the meaning of this subchapter.
``(2) Final action.--Any revocation of a license under
paragraph (1) shall be treated as a final action by the
Secretary.
``(j) Regulations.--The regulations prescribed by the Secretary
under this subchapter shall include regulations to fully implement--
``(1) safeguards required for licensees under subsection
(g); and
``(2) the requirements for programs relating to the Problem
Gambling, Responsible Gambling, and Self-Exclusion Program
under section 5384.
``(k) Administrative Provisions.--
``(1) General powers of secretary.--The Secretary shall
have the authority to engage in the following:
``(A) Investigate the suitability of each applicant
to ensure compliance with this subchapter and
regulations prescribed under this subchapter.
``(B) Require licensees to maintain appropriate
procedures to ensure compliance with this subchapter
and regulations prescribed under this subchapter.
``(C) Examine any licensee and any books, papers,
records, or other data of licensees relevant to any
recordkeeping or reporting requirements imposed by the
Secretary under this subchapter.
``(D) When determined by the Secretary to be
necessary, summon a licensee or an applicant for a
license, an officer or employee of a licensee or any
such applicant (including a former officer or
employee), or any person having possession, custody, or
care of the reports and records required by the
Secretary under this subchapter, to appear before the
Secretary or a designee of the Secretary at a time and
place named in the summons and to produce such books,
papers, records, or other data, and to give testimony,
under oath, as may be relevant or material to any
investigation in connection with the enforcement of
this subchapter or any application for a license under
this subchapter.
``(E) Investigate any violation of this subchapter
and any regulation under this subchapter and any other
violation of law relating to the operation of an
Internet gambling facility.
``(F) Conduct continuing reviews of applicants and
licensees and the operation of Internet gambling
facilities by use of technological means, onsite
observation of facilities, including servers, or other
reasonable means to assure compliance with this
subchapter and any regulations promulgated hereunder.
``(2) Administrative aspects of summons.--
``(A) Production at designated site.--A summons
issued pursuant to this subsection may require that
books, papers, records, or other data stored or
maintained at any place be produced at any business
location of a licensee or applicant for a license or
any designated location in any State or in any
territory or other place subject to the jurisdiction of
the United States not more than 500 miles distant from
any place where the licensee or applicant for a license
operates or conducts business in the United States.
``(B) No liability for expenses.--The United States
shall not be liable for any expense incurred in
connection with the production of books, papers,
records, or other data under this subsection.
``(C) Service of summons.--Service of a summons
issued under this subsection may be by registered mail
or in such other manner calculated to give actual
notice as the Secretary may prescribe by regulation.
``(3) Contumacy or refusal.--
``(A) Referral to attorney general.--In case of
contumacy by a person issued a summons under this
subsection or a refusal by such person to obey such
summons or to allow the Secretary to conduct an
examination, the Secretary shall refer the matter to
the Secretary of the Treasury for referral to the
Attorney General.
``(B) Jurisdiction of court.--The Attorney General
may invoke the aid of any court of the United States to
compel compliance with the summons within the
jurisdiction of which--
``(i) the investigation which gave rise to
the summons or the examination is being or has
been carried on;
``(ii) the person summoned is an
inhabitant; or
``(iii) the person summoned carries on
business or may be found.
``(C) Court order.--The court may issue an order
requiring the person summoned to appear before the
Secretary or a delegate of the Secretary to produce
books, papers, records, and other data, to give
testimony as may be necessary to explain how such
material was compiled and maintained, to allow the
Secretary to examine the business of a licensee, and to
pay the costs of the proceeding.
``(D) Failure to comply with order.--Any failure to
obey the order of the court may be punished by the
court as a contempt thereof.
``(E) Service of process.--All process in any case
under this subsection may be served in any judicial
district in which such person may be found.
``(l) Civil Money Penalties.--
``(1) In general.--The Secretary may assess upon any
licensee or other person subject to the requirements of this
subchapter for any willful violation of this subchapter or any
regulation prescribed or order issued under this subchapter, a
civil penalty of not more than the greater of--
``(A) the amount (not to exceed $100,000) involved
in the violation, if any; or
``(B) $25,000.
``(2) Assessment.--
``(A) Written notice.--Any penalty imposed under
paragraph (1) may be assessed and collected by the
Secretary by written notice.
``(B) Finality of assessment.--If, with respect to
any assessment under paragraph (1), a hearing is not
requested pursuant to subparagraph (E) within the
period of time allowed under such subparagraph, the
assessment shall constitute a final and unappealable
order.
``(C) Authority to modify or remit penalty.--The
Secretary may compromise, modify, or remit any penalty
which the Secretary may assess or has already assessed
under paragraph (1).
``(D) Mitigating factors.--In determining the
amount of any penalty imposed under paragraph (1), the
Secretary shall take into account the appropriateness
of the penalty with respect to--
``(i) the size of the financial resources
and the good faith of the person against whom
the penalty is assessed;
``(ii) the gravity of the violation;
``(iii) the history of previous violations;
and
``(iv) such other matters as justice may
require.
``(E) Hearing.--The person against whom any penalty
is assessed under paragraph (1) shall be afforded an
agency hearing if such person submits a request for
such hearing within 20 days after the issuance of the
notice of assessment.
``(F) Collection.--
``(i) Referral.--If any person fails to pay
an assessment after any penalty assessed under
this paragraph has become final, the Secretary
shall recover the amount assessed by action in
the appropriate United States district court.
``(ii) Appropriateness of penalty not
reviewable.--In any civil action under clause
(i), the validity and appropriateness of the
penalty shall not be subject to review.
``(G) Disbursement.--All penalties collected under
authority of this subsection shall be deposited into
the Treasury.
``(3) Condition for licensure.--Payment by a licensee of
any civil penalty assessed under this subsection that has
become final shall be a requirement for the retention of its
license.
``(m) Treatment of Records.--In light of business competition,
confidentiality, and privacy concerns, the Secretary shall protect from
disclosure information submitted in support of a license application
under this subchapter and information collected in the course of
regulating licensees to the full extent permitted by sections 552 and
552a of title 5, United States Code.
``(n) Suitability for Licensing Requirements for Certain Service
Providers.--
``(1) In general.--Any person that knowingly manages,
administers, or controls bets or wagers that are initiated,
received, or otherwise made within the United States or that
otherwise manages or administers the games with which such bets
or wagers are associated must meet all of the suitability for
licensing criteria established under this section in the same
manner and to the same extent as if that person were itself a
licensee.
``(2) Subject to same enforcement jurisdiction.--Any
failure on the part of such person to remain suitable for
licensing shall be grounds for revocation of the license of the
licensee for whom such service is provided, in the same manner
and in accordance with subsection (i).
``(o) Reliance on State and Tribal Regulatory Body Certifications
of Suitability for Applicants.--
``(1) Qualification of state and tribal regulatory
bodies.--
``(A) Application for determination.--Any State or
tribal regulatory body with expertise in regulating
gambling may--
``(i) notify the Secretary of its
willingness to review prospective applicants to
certify whether any such applicant meets the
qualifications established under this
subchapter; and
``(ii) provide the Secretary with such
documentation as the Secretary determines
necessary for the Secretary to determine
whether such State or tribal regulatory body is
qualified to conduct such review and may be
relied upon by the Secretary to make any such
certification.
``(B) Determination and notice.--Within 60 days
after receiving any notice under subparagraph(A)(i),
the Secretary shall--
``(i) make the determination as to whether
a State or tribal regulatory body is qualified
to conduct a review of prospective applicants
and may be relied upon to certify whether any
such applicant meets the qualifications
established under this subchapter; and
``(ii) notify the State or tribal
regulatory body of such determination.
``(2) Actions by qualified authorities.--During the period
that any determination of qualification under paragraph (1)(B)
is in effect with respect to any such State or tribal
regulatory body, the State or tribal regulatory body--
``(A) may undertake reviews of any applicant to
determine whether the applicant or any person
associated with the applicant meets the criteria for
suitability for licensing established under this
subchapter;
``(B) may impose on each such applicant an
administrative fee or assessment for conducting such
review in an amount the regulatory body determines to
be necessary to meet its expenses in the conduct of
such review; and
``(C) shall process and assess each applicant
fairly and equally based on objective criteria,
regardless of any prior licensing of an applicant by
the State or tribal regulatory body.
``(3) Reliance on state or tribal certification.--Any
applicant may provide a certification of suitability for
licensing made by any State or tribal regulatory body under
paragraph (2), together with all documentation the applicant
has submitted to any such State or tribal regulatory body, to
the Secretary, and any such certification and documentation
shall be relied on by the Secretary as evidence that an
applicant has met the suitability for licensing requirements
under this section.
``(4) Authority of secretary to review.--Notwithstanding
any certification of suitability for licensing made by any
State or tribal regulatory body, the Secretary retains the
authority to review, withhold, or revoke any license if the
Secretary has reason to believe that any applicant or licensee
does not meet the suitability requirements for licensing
established under this section, or any other requirement of a
licensee.
``(5) Reliance on qualified regulatory body for other
purposes.--At the discretion of the Secretary, the Secretary
may rely on any State and tribal regulatory body found
qualified under this subsection for such other regulatory and
enforcement activities as the Secretary finds to be useful and
appropriate to carry out the purposes of this subchapter.
``(6) Revocation of qualification.--The Secretary may
revoke, at any time and for any reason, the qualification of
any State or tribal regulatory body to certify or to conduct
any other regulatory or enforcement activity to carry out the
purposes of this subchapter.
``Sec. 5384. Problem Gambling, Responsible Gambling, and Self-Exclusion
Program
``(a) Regulations Required.--The Secretary and any State or tribal
regulatory body that has been qualified under subsection 5383(o) shall
prescribe regulations for the development of a Problem Gambling,
Responsible Gambling, and Self-Exclusion Program on the basis of
standards that each licensee shall implement as a condition of
licensure.
``(b) Minimum Requirements.--Any application for a license shall
include a submission to the Secretary or qualified State or tribal
regulatory body setting forth a comprehensive program that is
intended--
``(1) to verify the identity and age of each customer;
``(2) to ensure that no customers under the legal age as
defined by State or tribal law, as applicable, may initiate or
otherwise make any bets or wagers;
``(3) to verify the State or tribal land in which the
customer is located at the time the customer attempts to
initiate a bet or wager;
``(4) to ensure that no customer who is located in a State
or tribal land that opts out pursuant to section 5386 can
initiate or otherwise make a bet or wager prohibited by such
opt-out;
``(5) to ensure that responsible gambling materials are
made available to customers upon request;
``(6) to make available individualized responsible gambling
options that any customer may choose, including any stake
limit, loss limit, deposit limit, and session time limit
option, and any other similar option, that the Secretary or
qualified State or tribal regulatory body may deem appropriate
and require to be made available;
``(7) to protect the privacy and security of any customer
in connection with any lawful Internet gambling activity; and
``(8) to protect against fraud and money laundering
relating to Internet gambling activity.
``(c) List of Persons Self-Excluded From Gambling Activities.--
``(1) Establishment.--
``(A) In general.--The Secretary shall provide by
regulation for the establishment of a list of persons
self-excluded from gambling activities at all licensee
sites.
``(B) Placement request.--Any person may request
placement on the list of self-excluded persons by--
``(i) acknowledging in a manner to be
established by the Secretary that the person
wishes to be denied gambling privileges; and
``(ii) agreeing that, during any period of
voluntary exclusion, the person may not collect
any winnings or recover any losses resulting
from any gambling activity at any licensee
sites.
``(2) Placement and removal procedures.--The regulations
prescribed by the Secretary under paragraph (1)(A) shall
establish procedures for placements on, and removals from, the
list of self-excluded persons.
``(3) Limitation on liability.--
``(A) In general.--The United States, the
Secretary, an enforcement agent, or a licensee, or any
employee or agent of the United States, the Secretary,
an enforcement agent, or a licensee, shall not be
liable to any self-excluded person or to any other
party in any judicial or administrative proceeding for
any harm, monetary or otherwise, which may arise as a
result of--
``(i) any failure to withhold gambling
privileges from, or to restore gambling
privileges to, a self-excluded person; or
``(ii) otherwise permitting a self-excluded
person to engage in gambling activity while on
the list of self-excluded persons.
``(B) Rule of construction.--No provision of
subparagraph (A) shall be construed as preventing the
Director from assessing any regulatory sanction against
a licensee for failing to comply with the minimum
standards prescribed pursuant to this subsection.
``(4) Disclosure provisions.--
``(A) In general.--Notwithstanding any other
provision of Federal or State law, the list of self-
excluded persons shall not be open to public
inspection.
``(B) Affiliate disclosure.--Any licensees may
disclose the identities of persons on the self-excluded
list to any affiliated company or, where required to
comply with this subsection, any service provider, to
the extent that the licensee ensures that any
affiliated company or service provider maintains such
information under confidentiality provisions comparable
to those in this subsection.
``(5) Limitation on liability for disclosure.--A licensee
or an employee, agent, or affiliate of a licensee shall not be
liable to any self-excluded person or to any other party in any
judicial proceeding for any harm, monetary or otherwise, which
may arise as a result of disclosure or publication in any
manner.
``(d) Gambling by Prohibited Persons.--
``(1) Prohibition benefitting from prohibited gambling
activity.--A person who is prohibited from gambling with a
licensee by law, or by order of the Secretary or any court of
competent jurisdiction, including any person on the self-
exclusion list as established in accordance with subsection
(c), shall not collect, in any manner or proceeding, any
winnings or recover any losses arising as a result of any
prohibited gambling activity.
``(2) Forfeiture.--In addition to any other penalty
provided by law, any money or thing of value that has been
obtained by, or is owed to, any prohibited person by a licensee
as a result of bets or wagers made by a prohibited person shall
be subject to forfeiture by order of the Secretary, following
notice to the prohibited person and opportunity to be heard.
``(3) Deposit of forfeited funds.--Any funds forfeited
pursuant to this subsection shall be deposited into the general
fund of the Treasury.
``(e) Problem or Compulsive Gamblers Not on the List of Self-
Excluded Persons.--
``(1) Public awareness program.--
``(A) In general.--The Secretary and any State or
tribal regulatory body that has been qualified under
subsection 5383(o) shall provide by regulation for the
establishment of a program to alert the public to the
existence, consequences, and availability of the self-
exclusion list, and shall prepare and promulgate
written materials to be used in such a program.
``(B) Licensee-provided publicity.--Regulations
prescribed under subparagraph (A) may require a
licensee to make available literature or screen
displays relating to the existence of the program.
``(2) Rule of construction.--No provision of this
subsection shall be construed as creating a legal duty in the
Secretary, a qualified State or tribal regulatory body, a
licensee, or any representative of a licensee to identify or to
exclude problem or compulsive gamblers not on the list of self-
excluded persons.
``(3) Immunity.--The United States, the Secretary, a
qualified State or tribal regulatory body, a licensee, and any
employee or agent of a licensee, shall not be liable to any
person in any proceeding for losses or other damages of any
kind arising out of that person's gambling activities based on
a claim that the person was a compulsive, problem, or
pathological gambler.
``Sec. 5385. Financial transaction providers
``(a) In General.--No financial transaction provider shall be held
liable for engaging in financial activities and transactions for or on
behalf of a licensee or involving a licensee, including payments
processing activities, if such activities are performed in compliance
with this subchapter and with applicable Federal and State laws.
``(b) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) Financial transaction provider.--The term `financial
transaction provider' means a creditor, credit card issuer,
financial institution, operator of a terminal at which an
electronic fund transfer may be initiated, money transmitting
business, or international, national, regional, or local
payment network utilized to effect a credit transaction,
electronic fund transfer, stored value product transaction, or
money transmitting service, or a participant in such network,
or other participant in a payment system.
``(2) Other terms.--
``(A) Credit, creditor, credit card, and card
issuer.--The terms `credit', `creditor', `credit card',
and `card issuer' have the meanings given the terms in
section 103 of the Truth in Lending Act.
``(B) Electronic fund transfer.--The term
`electronic fund transfer'--
``(i) has the meaning given the term in
section 903 of the Electronic Fund Transfer
Act, except that the term includes transfers
that would otherwise be excluded under section
903(6)(E) of such Act; and
``(ii) includes any fund transfer covered
by Article 4A of the Uniform Commercial Code,
as in effect in any State.
``(C) Financial institution.--The term `financial
institution' has the meaning given the term in section
903 of the Electronic Fund Transfer Act, except that
such term does not include a casino, sports book, or
other business at or through which bets or wagers may
be placed or received.
``(D) Insured depository institution.--The term
`insured depository institution'--
``(i) has the meaning given the term in
section 3(c) of the Federal Deposit Insurance
Act; and
``(ii) includes an insured credit union (as
defined in section 101 of the Federal Credit
Union Act).
``(E) Money transmitting business and money
transmitting service.--The terms `money transmitting
business' and `money transmitting service' have the
meanings given the terms in section 5330(d) (determined
without regard to any regulations prescribed by the
Secretary under such section).
``Sec. 5386. Limitation of licenses in States and Indian lands
``(a) State Opt-Out Exercise.--
``(1) Limitations imposed by states.--
``(A) In general.--No licensee may engage, under
any license issued under this subchapter, in the
operation of an Internet gambling facility that
knowingly accepts bets or wagers initiated by persons
who reside in any State which provides notice that it
will limit such bets or wagers, if the Governor or
other chief executive officer of such State informs the
Director of such limitation, in a manner which clearly
identifies the nature and extent of such limitation,
before the end of the 90-day period beginning on the
date of the enactment of the Internet Gambling
Regulation, Consumer Protection, and Enforcement Act,
or in accordance with paragraph (2), until such time as
any notice of any amendment or repeal of such specific
limitation becomes effective under paragraph (2).
``(B) Coordination between state and tribal opt-out
exercises.--Any State limitation under subparagraph (A)
shall not apply to the acceptance by a licensee of bets
or wagers from persons located within the tribal lands
of an Indian tribe that--
``(i) has itself opted out pursuant to
subsection (b) (in which case the tribal opt-
out exercise under such subsection shall
apply); or
``(ii) would be entitled pursuant to other
applicable law to permit such bets or wagers to
be initiated and received within its territory
without use of the Internet.
``(C) Coordination with indian gaming regulatory
act.--No decision by a State under this subsection
shall be considered in making any determination with
regard to the ability of an Indian tribe to offer any
class of gambling activity pursuant to section 11 of
the Indian Gaming Regulatory Act.
``(2) Changes to state limitations.--The establishment,
repeal, or amendment by any State of any limitation referred to
in paragraph (1) after the end of the 90-day period beginning
on the date of the enactment of this subchapter shall apply,
for purposes of this subchapter, beginning on the first January
1 that occurs after the end of the 60-day period beginning on
the later of--
``(A) the date a notice of such establishment,
repeal, or amendment is provided by the Governor or
other chief executive officer of such State in writing
to the Secretary; or
``(B) the effective date of such establishment,
repeal, or amendment.
``(b) Indian Tribe Opt-Out Exercise.--
``(1) Limitations imposed by indian tribes.--No Internet
gambling licensee knowingly may accept a bet or wager from a
person located in the tribal lands of any Indian tribe which
limits such gambling activities or other contests if the
principal chief or other chief executive officer of such Indian
tribe informs the Secretary of such limitation, in a manner
which clearly identifies the nature and extent of such
limitation, before the end of the 90-day period beginning on
the date of the enactment of the Internet Gambling Regulation,
Consumer Protection, and Enforcement Act, or in accordance with
paragraph (2), until such time as any notice of any amendment
or repeal of such specific limitation becomes effective under
paragraph (2).
``(2) Changes to indian tribe limitations.--The
establishment, repeal, or amendment by any Indian tribe of any
limitation referred to in paragraph (1) after the end of the
90-day period beginning on the date of the enactment of this
subchapter shall apply, for purposes of this subchapter,
beginning on the first January 1 that occurs after the end of
the 60-day period beginning on the later of--
``(A) the date a notice of such establishment,
repeal, or amendment is provided by the principal chief
or other chief executive officer of such Indian tribe
in writing to the Secretary; or
``(B) the effective date of such establishment,
repeal, or amendment.
``(c) Notification and Enforcement of State and Indian Tribe
Limitations.--
``(1) In general.--The Secretary shall notify all licensees
and applicants of all States and Indian tribes that have
provided notice pursuant to paragraph (1) or (2) of subsection
(a) or (b), as the case may be, promptly upon receipt of such
notice and in no event fewer than 30 days before the effective
date of such notice.
``(2) Compliance.--The Secretary shall take effective
measures to ensure that any licensee under this subchapter, as
a condition of the license, complies with any limitation or
prohibition imposed by any State or Indian tribe to which the
licensee is subject under subsection (a) or (b), as the case
may be.
``(3) Violations.--It shall be a violation of this
subchapter for any licensee knowingly to accept bets or wagers
initiated or otherwise made by persons located within any State
or in the tribal lands of any Indian tribe for which a notice
is in effect under subsection (a) or (b), as the case may be.
``(4) State attorney general enforcement.--In any case in
which the attorney general of a State, or any State or local
law enforcement agency authorized by the State attorney general
or by State statute to prosecute violations of consumer
protection law, has reason to believe that an interest of the
residents of that State has been or is threatened or adversely
affected by a violation by a licensee pursuant to paragraph
(2), the State, or the State or local law enforcement agency on
behalf of the residents of the agency's jurisdiction, may bring
a civil action on behalf of the residents of that State or
jurisdiction in a district court of the United States located
therein, to--
``(A) enjoin that practice; or
``(B) enforce compliance with this subchapter.
``Sec. 5387. Professional and Amateur Sports Protection Act
prohibitions
``No provision of this subchapter shall be construed as authorizing
any licensee to operate an Internet gambling facility that knowingly
accepts bets or wagers on sporting events from persons located in the
United States in violation of section 3702 of title 28, United States
Code, except for fantasy or simulation sports games (as defined in
section 5362 of this title).
``Sec. 5388. Safe harbors
``It shall be a complete defense against any prosecution or
enforcement action under any Federal or State law against any person
possessing a valid license under this subchapter that the activity is
authorized under and has been carried out lawfully under the terms of
this subchapter.
``Sec. 5389. Relation to section 1084 of title 18 and the Unlawful
Internet Gambling Enforcement Act
``Section 1084 of title 18 and subchapter IV of this chapter shall
not apply to any Internet bet or wager occurring pursuant to a license
issued by the Secretary under this subchapter.
``Sec. 5390. Cheating and other fraud
``(a) Electronic Cheating Devices Prohibited.--No person
initiating, receiving, or otherwise making a bet or wager with a
licensee, or sending, receiving, or inviting information assisting with
a bet or wager with a licensee, knowingly shall use, or assist another
in the use of, an electronic, electrical, or mechanical device which is
designed, constructed, or programmed specifically for use in obtaining
an advantage in any game authorized under this subchapter, where such
advantage is prohibited or otherwise violates the rules of play
established by the licensee.
``(b) Additional Offense.--No person initiating, receiving, or
otherwise making a bet or wager with a licensee, or sending, receiving,
or inviting information assisting with a bet or wager with a licensee,
knowingly shall use or possess any cheating device with intent to cheat
or defraud any licensee or other persons placing bets or wagers with
such licensee.
``(c) Permanent Injunction.--Upon conviction of a person for
violation of this section, the court may enter a permanent injunction
enjoining such person from initiating, receiving, or otherwise making
bets or wagers or sending, receiving, or inviting information assisting
in the placing of bets or wagers.
``(d) Criminal Penalty.--Whoever violates subsection (a) or (b) of
this section shall be fined under title 18 of the United States Code or
imprisoned for not more than 5 years, or both.''.
(b) Rules of Construction.--
(1) Technical and conforming amendment.--Section 310(b)(2)
of title 31, United States Code is amended--
(A) by redesignating subparagraphs (J) and (K) as
subparagraphs (K) and (L), respectively; and
(B) by inserting after subparagraph (I) the
following new subparagraph:
``(J) Administer the requirements of subchapter V
of chapter 53.''.
(c) Clerical Amendment.--The table of subchapters and sections for
chapter 53 of title 31, United States Code, is amended by adding at the
end the following:
``subchapter v--regulation of lawful internet gambling
``5381. Congressional findings and purpose.
``5382. Definitions.
``5383. Establishment and administration of licensing program.
``5384. Minimum requirements: Problem Gambling, Responsible Gambling,
and Self-Exclusion Program.
``5385. Financial transaction providers.
``5386. Limitation of licenses in States and Indian lands.
``5387. Professional and Amateur Sports Protection Act prohibitions.
``5388. Safe harbors.
``5389. Relation to section 1084 of title 18 and the Unlawful Internet
Gambling Enforcement Act.
``5390. Cheating and other fraud.''.
SEC. 3. REPORT REQUIRED.
(a) In General.--Before the end of the 1-year period beginning on
the effective date of the regulations prescribed under section 4(a),
and annually thereafter, the Secretary shall submit a report to the
Congress on the licensing and regulation of Internet gambling
operators.
(b) Information Required.--Each report submitted under subsection
(a) shall include the following information:
(1) A comprehensive statement regarding the prohibitions
notified by the States and Indian tribes pursuant to section
5386 of title 31, United States Code.
(2) Relevant statistical information on applicants and
licenses.
(3) The amount of licensing and user fees collected during
the period covered by the report.
(4) Information on regulatory or enforcement actions
undertaken during the period.
(5) Any other information that may be useful to the
Congress in evaluating the effectiveness of the Act in meeting
its purpose, including the provision of protections against
underage gambling, compulsive gambling, money laundering, and
fraud, and in combating tax avoidance relating to Internet
gambling.
SEC. 4. EFFECTIVE DATE.
(a) Regulations.--The Secretary of the Treasury shall prescribe
such regulations as the Secretary may determine to be appropriate to
implement subchapter V of chapter 53 of title 31, United States Code
(as added by section 2(a) of this Act) and shall publish such
regulations in final form in the Federal Register before the end of the
180-day period beginning on the date of the enactment of this Act.
(b) Scope of Application.--The amendment made by section 2(a) shall
apply after the end of the 90-day period beginning on the date of the
publication of the regulations in final form in accordance with
subsection (a).
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