[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).
                                 <all>