[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 1597 Introduced in Senate (IS)]

111th CONGRESS
  1st Session
                                S. 1597

To amend title 31, United States Code, to provide for the licensing by 
 the Secretary of the Treasury of Internet poker and other games that 
are predominantly of skill, to provide for consumer protections on the 
       Internet, to enforce the tax code, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             August 6, 2009

 Mr. Menendez introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
To amend title 31, United States Code, to provide for the licensing by 
 the Secretary of the Treasury of Internet poker and other games that 
are predominantly of skill, 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; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Internet Poker and 
Game of Skill Regulation, Consumer Protection, and Enforcement Act of 
2009''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
       TITLE I--REGULATION OF INTERNET GAMES OF SKILL FACILITIES

Sec. 101. Findings.
Sec. 102. Federal licensing requirement for operation of Internet games 
                            of skill facilities.
Sec. 103. List of unlawful Internet gambling enterprises.
Sec. 104. Regulations.
Sec. 105. Annual report.
Sec. 106. Conforming amendments.
Sec. 107. Effective date.
Sec. 108. Applicability.
            TITLE II--INTERNET GAMES OF SKILL TAX PROVISIONS

Sec. 201. Amendment of 1986 code.
Sec. 202. Tax on Internet games of skill; licensee information 
                            reporting.
Sec. 203. Withholding for pari-mutuel pool winnings.
Sec. 204. Withholding from certain gaming winnings.
Sec. 205. Withholding of tax on nonresident aliens.
Sec. 206. Information at source; pari-mutuel wagers.
Sec. 207. Exemption from State and Indian tribal government taxation.
Sec. 208. Territorial extent of wagering tax.
  TITLE III--STUDY AND PREVENTION OF PROBLEM AND PATHOLOGICAL GAMBLING

Sec. 301. Authorization of programs for identification, prevention, and 
                            treatment of problem and pathological 
                            gambling.
Sec. 302. Public awareness, research, and treatment.

       TITLE I--REGULATION OF INTERNET GAMES OF SKILL FACILITIES

SEC. 101. FINDINGS.

    Congress makes the following findings:
            (1) In the United States, gambling and gaming activities, 
        equipment, and operations have traditionally 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.
            (2) The demarcation between games of chance and games of 
        skill is not always clearly drawn, and the treatment and 
        definition of ``games of skill'' has varied from jurisdiction 
        to jurisdiction.
            (3) Millions of people in the United States enjoy competing 
        with other players in poker, chess, bridge, mah-jong, 
        backgammon, and similar games where the outcome turns 
        predominantly on the skill of the participants. While each of 
        these games contains an element of chance, over any substantial 
        interval, a player's ultimate success is determined by that 
        player's relative level of skill.
            (4) Poker, in particular, enjoys a long tradition in the 
        United States. Poker is part of the cultural and recreational 
        fabric of the United States and has been since the founding 
        days of the United States. United States poker aficionados have 
        included presidents, judges, and statesmen throughout the 
        history of the United States.
            (5) Since the development of the Internet, online sites 
        offering Internet gambling and similar games have raised 
        numerous policy, consumer protection, and enforcement concerns 
        for the Federal and State governments as millions of United 
        States persons have chosen to play online on sites offered by 
        operators located in many different countries under a variety 
        of licensing and regulatory regimes.
            (6) Bets and wagers made with respect to games in which 
        success is predominantly determined by the skill of the players 
        and in which the bets and wagers are between the participants 
        can and should be treated as distinct from other bets and 
        wagers made with respect to games in which success is not 
        predominantly determined by the skill of the players or in 
        which the wagers are not between the participants such as 
        Internet wagering with off-shore sites on games of chance and 
        betting on sporting events, all of which (with the exception of 
        certain betting on horse racing) are barred by the laws of the 
        United States.
            (7) The hosting by Internet operators of games 
        predominantly determined by the skill of players and in which 
        wagers can be made between the participants should be 
        controlled by a strict Federal licensing and regulatory 
        framework--
                    (A) to prevent underage wagering and otherwise to 
                protect vulnerable individuals;
                    (B) to ensure the games are fair;
                    (C) to address the concerns of law enforcement; and
                    (D) to enforce limitations on the activity 
                established by the States and Indian tribes.
            (8) An effective Federal licensing system would ensure that 
        licenses are issued only to Internet operators who--
                    (A) meet strict criteria to protect consumers;
                    (B) are in good financial and legal standing;
                    (C) are of good character, honesty, and integrity;
                    (D) utilize appropriate technology to prevent those 
                of insufficient age from participating;
                    (E) adopt and implement systems to protect 
                compulsive players;
                    (F) have in place risk-based methods--
                            (i) to identify and combat money laundering 
                        and fraud; and
                            (ii) to protect the privacy and security of 
                        users;
                    (G) adopt strict internal controls which are 
                subject to audit; and
                    (H) adopt and implement systems to collect and 
                remit taxes due.
            (9) Effective regulation requires application of the 
        regulatory provisions prescribed under subchapter V of chapter 
        53 of title 31, United States Code, as added by section 102, to 
        all persons seeking a license to operate an Internet game-of-
        skill facility (as such term is defined in section 5381 of such 
        subchapter), with each State and Indian tribe having the 
        ability to prohibit operators of Internet game-of-skill 
        facilities from accepting bets or wagers from persons located 
        within the territory of the State or Indian tribe by opting out 
        under section 5385(a) of such subchapter, as so added.
            (10) Maintenance of a list of unlawful Internet gambling 
        enterprises and the owners and operators of such enterprises 
        will aid law enforcement efforts to prevent unlawful Internet 
        gambling.
            (11) Longstanding Federal policy against gambling on 
        professional, scholastic, or amateur sporting events, and all 
        criminal laws prohibiting such gambling, should remain in full 
        force and effect.
            (12) Licensing and regulating Internet game-of-skill 
        facilities (as such term is defined in section 5381 of title 
        31, United States Code) in the United States would provide 
        additional tax revenues for the United States and would reduce 
        tax avoidance.

SEC. 102. FEDERAL LICENSING REQUIREMENT FOR OPERATION OF INTERNET GAME-
              OF-SKILL FACILITIES.

    (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 INTERNET GAME-OF-SKILL FACILITIES

``Sec. 5381. Definitions
    ``In this subchapter:
            ``(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 
        meaning given the term in section 5362.
            ``(3) Indian lands and indian tribe.--The terms `Indian 
        lands' and `Indian tribe' have the meaning given such terms in 
        section 4 of the Indian Gaming Regulatory Act (25 U.S.C. 2703).
            ``(4) Internet.--The term `Internet' has the same meaning 
        given the term in section 5362.
            ``(5) Internet game of skill.--The term `Internet game of 
        skill' means an Internet-based game in which success is 
        predominantly determined by the skill of the players, including 
        poker, chess, bridge, mah-jong, and backgammon.
            ``(6) Internet game-of-skill facility.--The term `Internet 
        game-of-skill facility' means an Internet site through which a 
        bet or wager is initiated, received, or otherwise made with 
        respect to an Internet game of skill, whether transmitted by 
        telephone, Internet, satellite, or other wire or wireless 
        communication medium.
            ``(7) Licensee.--The term `licensee' means a person who 
        operates an Internet game-of-skill facility under a license 
        issued by the Secretary under this subchapter.
            ``(8) Operate an internet game-of-skill facility.--The term 
        `operate an Internet game-of-skill facility' means to direct, 
        manage, supervise, or control an Internet game-of-skill 
        facility.
            ``(9) Poker.--The term `poker' means any of several card 
        games--
                    ``(A) that are commonly referred to as `poker';
                    ``(B) that are played by 2 or more people who bet 
                or wager on cards dealt to them;
                    ``(C) in which players compete against each other 
                and not against the person operating the game; and
                    ``(D) in which the person operating the game may 
                assess a commission fee or any other type of fee.
            ``(10) Secretary.--The term `Secretary' means the Secretary 
        of the Treasury.
            ``(11) Sporting event.--The term `sporting event' means any 
        athletic competition, whether professional, scholastic, or 
        amateur, except that such term does not include any activity 
        described in section 3704(a)(4) of title 28.
            ``(12) 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.
``Sec. 5382. 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 game-of-skill 
                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.
    ``(b) Internet Game-of-skill Facility Licensing Program.--
            ``(1) License required.--It shall be unlawful for a person 
        to operate an Internet game-of-skill facility in interstate or 
        foreign commerce, in which bets or wagers are knowingly 
        initiated, received, or otherwise made by individuals located 
        in the United States, without a license issued to such person 
        by the Secretary under this subchapter.
            ``(2) Authority under valid license.--Notwithstanding any 
        other provision of law and subject to the provisions of this 
        subchapter, a licensee may accept a bet or wager with respect 
        to an Internet game of skill from an individual located in the 
        United States and offer related services.
            ``(3) Interstate off-track wagers.--Notwithstanding 
        anything in this subchapter to the contrary, a person may 
        accept interstate off-track wagers (as defined by section 3 of 
        the Interstate Horseracing Act of 1978 (15 U.S.C. 3002)), 
        whether by telephone, Internet, satellite, or other wire or 
        wireless communication without need for a license issued 
        pursuant to this subchapter.
    ``(c) Application for License.--
            ``(1) Application.--A person seeking a license to operate 
        an Internet game-of-skill facility in interstate or foreign 
        commerce shall submit to the Secretary an application therefor 
        in such form and in such manner as the Secretary considers 
        appropriate.
            ``(2) Elements.--Each application submitted under paragraph 
        (1) shall include such information as the Secretary considers 
        appropriate, including the following:
                    ``(A) Complete financial information about the 
                applicant.
                    ``(B) Documentation showing the corporate structure 
                of the applicant and all related businesses and 
                affiliates.
                    ``(C) The criminal and credit history of--
                            ``(i) the applicant;
                            ``(ii) each of the senior executives and 
                        directors of the applicant; and
                            ``(iii) any other person who is in control 
                        of the applicant.
                    ``(D) A detailed description of the applicant's 
                plan for complying with all applicable regulations 
                prescribed under this subchapter, with particular 
                emphasis on the applicant's ability--
                            ``(i) to prevent underage play;
                            ``(ii) to protect compulsive players;
                            ``(iii) to ensure the Internet games of 
                        skill are being operated fairly; and
                            ``(iv) to comply with and address any 
                        additional concerns identified by the 
                        Secretary.
                    ``(E) A certification by the applicant that the 
                applicant agrees to be subject to United States 
                jurisdiction and all applicable United States laws 
                relating to the operation of an Internet game-of-skill 
                facility and 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.--
                            ``(i) In general.--If an 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.
                            ``(ii) Minimum determination.--In carrying 
                        out clause (i), the Secretary shall, as a 
                        minimum, carry out a background check and 
                        investigation of the 5 individuals receiving 
                        the most compensation from the applicant.
            ``(2) Suitability for licensing standards.--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 
                        Internet game-of-skill facilities; or
                            ``(ii) create or enhance the dangers of 
                        unsuitable, unfair, or illegal practices, 
                        methods, and activities in the conduct of 
                        Internet game-of-skill facilities or the 
                        carrying on of the business and financial 
                        arrangements incidental there to such 
                        facilities;
                    ``(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 game-of-skill 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;
                    ``(D) is delinquent in filing any applicable 
                Federal or State tax return or in the payment of any 
                applicable tax, penalty, addition to tax, or interest 
                owed to a jurisdiction in which the applicant or other 
                person operates or does business;
                    ``(E) knowingly accepts or knowingly has accepted 
                bets or wagers on sporting events from persons located 
                in the United States in violation of applicable Federal 
                or State law; or
                    ``(F) has not agreed in writing to submit to 
                personal jurisdiction in the United States for purposes 
                of any matter arising from the operation of an Internet 
                game-of-skill facility or associated activities.
            ``(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) Background check and investigation.--The Secretary 
        shall establish standards and procedures for conducting 
        background checks and investigations for purposes of this 
        subsection.
            ``(6) 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 that the operation of an Internet game-of-
        skill facility licensed under this subchapter is controlled 
        only by persons who are suitable for licensing.
            ``(7) Enforcement actions.--
                    ``(A) Determination of unsuitability for continued 
                licensure.--If the Secretary finds that an individual 
                owner or holder of a controlling or substantial 
                interest in a licensee, or of a holding, parent, or 
                intermediary company of 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 determines that 
                a licensee is not qualified to continue as a licensee, 
                the Secretary shall propose action the Secretary 
                considers necessary to protect the public interest, 
                including, if the Secretary considers 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 management or involvement in operation 
                        of 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 limited to that necessary to meet the 
                Secretary's expenses in carrying out such 
                administration, review, or examination to the exclusion 
                of general overhead and other administrative expenses 
                that are not directly attributable to that licensee.
                    ``(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 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 
                        may recover the amount assessed by action in 
                        the appropriate United States district court, 
                        along with any costs of collection and attorney 
                        fees.
                            ``(ii) Assessment reviewable.--In any civil 
                        action under clause (i), a court may review the 
                        validity and adjust the amount of the 
                        assessment.
            ``(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 established 
by the Secretary under this subchapter.
    ``(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 5383, are met with respect to any 
Internet bet or wager:
            ``(1) Age.--Appropriate safeguards reasonably calculated to 
        ensure that the individual placing a bet or wager is not less 
        than 21 years of age.
            ``(2) Location.--Appropriate safeguards reasonably 
        calculated to ensure that the individual placing a bet or wager 
        is physically located in a jurisdiction that has not prohibited 
        such bets or wagers pursuant to section 5385 at the time the 
        bet or wager is placed.
            ``(3) Collection or reporting of customer taxes.--
        Appropriate mechanisms reasonably calculated to ensure that all 
        taxes relating to Internet games of skill from persons engaged 
        in bets or wagers relating to such games are collected or 
        reported, as required by law, at the time of any payment of 
        proceeds of such bets or wagers.
            ``(4) Collection or reporting of taxes of licensee.--
        Appropriate mechanisms reasonably calculated to ensure that all 
        taxes relating to the operation of an Internet game-of-skill 
        facility 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 reasonably calculated to prevent fraud, money 
        laundering, and terrorist finance.
            ``(6) Safeguards against compulsive play.--Appropriate 
        safeguards reasonably calculated to prevent compulsive betting 
        or wagering.
            ``(7) Privacy safeguards.--Appropriate safeguards 
        reasonably calculated to protect the privacy and security of 
        any person engaged in bets or wagers relating to Internet games 
        of skill, including customers of the licensee.
            ``(8) Payment of assessments.--Appropriate mechanisms 
        reasonably calculated 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 for purposes of 
        this subchapter.
    ``(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 
        requirements prescribed by the Secretary under this subchapter.
    ``(i) Revocation or Denial 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 
                within the meaning of this subchapter.
            ``(2) Final action.--Any revocation or denial of a license 
        under paragraph (1) shall be treated as a final action by the 
        Secretary.
    ``(j) 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 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, 
                any regulation under this subchapter, and any other 
                violation of law relating to the operation of an 
                Internet game-of-skill facility.
                    ``(F) Conduct continuing reviews of applicants and 
                licensees and the operation of Internet game-of-skill 
                facilities by use of technological means, on-site 
                observation of facilities, including servers, or other 
                reasonable means to assure compliance with this 
                subchapter and any regulations under this subchapter.
            ``(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--
                            ``(i) at any business location of a 
                        licensee or applicant for a license;
                            ``(ii) if the licensee or applicant has 
                        been deemed suitable by or is seeking a 
                        determination of suitability from a State or 
                        tribal regulatory authority, at any designated 
                        location in that State or tribal land; or
                            ``(iii) if the licensee or applicant has 
                        been deemed suitable or is seeking a 
                        determination of suitability from the 
                        Secretary, at any designated location in the 
                        District of Columbia.
                    ``(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 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--
                            ``(i) to produce books, papers, records, 
                        and other data;
                            ``(ii) to give testimony as may be 
                        necessary to explain how such material was 
                        compiled and maintained;
                            ``(iii) to allow the Secretary to examine 
                        the business of a licensee; and
                            ``(iv) 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.
    ``(k) 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 agency 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 not later than 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) Scope of review.--In any civil 
                        action under clause (i), the validity and 
                        appropriateness of the penalty shall be subject 
                        to review for abuse of agency discretion.
                    ``(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.
    ``(l) 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.
    ``(m) Suitability Required for Certain Service Providers.--Any 
person that knowingly manages, administers, or controls bets or wagers 
that are initiated, received, or otherwise made within the United 
States or that manages, administers, or controls the games with which 
such bets or wagers are associated shall 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 itself were a licensee. 
Any failure on the part of such person to remain suitable for licensing 
may 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).
    ``(n) 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 
                agency that regulates gambling that would be classified 
                as class III gaming under section 4 of the Indian 
                Gaming Regulatory Act (25 U.S.C. 2703), or a tribal 
                regulatory body that regulates class III gaming, may--
                            ``(i) notify the Secretary of its 
                        willingness to review prospective applicants to 
                        certify whether any such applicant meets the 
                        qualifications set forth by 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--
                                    ``(I) is qualified to conduct such 
                                review; and
                                    ``(II) may be relied upon by the 
                                Secretary to make any such 
                                certification.
                    ``(B) Determination and notice.--Not later than 60 
                days after receiving a notice by a State agency or a 
                tribal regulatory body under subparagraph (A)(i), the 
                Secretary shall--
                            ``(i) make a determination as to whether 
                        such State or tribal regulatory body--
                                    ``(I) is qualified to conduct a 
                                review of prospective applicants; and
                                    ``(II) may be relied upon to 
                                certify whether any such applicant 
                                meets the qualifications established 
                                under this subchapter; and
                            ``(ii) notify such 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 it 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.--An 
        applicant may provide a certification of suitability made by a 
        State or tribal regulatory body under paragraph (2), together 
        with all documentation the applicant has submitted to such 
        State or tribal regulatory body, to the Secretary, and such 
        certification and documentation shall be relied on by the 
        Secretary as evidence that the applicant has met the 
        suitability requirements under this section.
            ``(4) Authority of secretary to review.--Notwithstanding 
        any certification of suitability made by a State or tribal 
        regulatory body, the Secretary retains the authority to review, 
        withhold, or revoke a license if the Secretary has reason to 
        believe that an applicant or licensee does not meet the 
        suitability requirements 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 a 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 a 
        State or tribal regulatory body to certify or to conduct any 
        other regulatory or enforcement activity to carry out the 
        purposes of this subchapter.
            ``(7) Limitation.--The Secretary may not rely upon a State 
        or tribal regulatory body for purposes of this subchapter 
        unless the Secretary determines that the regulations and 
        procedures of such State or tribal regulatory body for the 
        review of an applicant's suitability for a license under this 
        subchapter are no less stringent than the regulations and 
        procedures established by the Secretary for such purpose.
``Sec. 5383. Compulsive Gaming, Responsible Gaming, and Self-Exclusion 
              Program
    ``(a) Regulations Required.--The Secretary and any State or tribal 
regulatory body that has been qualified under section 5382(n) shall 
prescribe regulations for the development of a Compulsive Gaming, 
Responsible Gaming, and Self-Exclusion Program on the basis of 
standards that each licensee shall implement as a condition of 
licensure.
    ``(b) Minimum Requirements.--An application for a license shall 
include a submission to the Secretary, qualified State, or tribal 
regulatory body setting forth a comprehensive program that is 
reasonably calculated--
            ``(1) to verify the identity and age of each customer;
            ``(2) to ensure that no customers under the age of 21 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 5385 can 
        initiate or otherwise make a bet or wager prohibited by such 
        opt-out;
            ``(5) to ensure that responsible gaming materials are made 
        available to customers upon request;
            ``(6) to make available individualized responsible gaming 
        options that any customer may choose, including stake limit, 
        loss limit, deposit limit, and session time limit option, and 
        other similar options that the Secretary or qualified State or 
        tribal regulatory body may deem appropriate and require to be 
        made available;
            ``(7) to prevent persons on the list of self-excluded 
        persons established pursuant to subsection (c) from initiating 
        any bets or wagers;
            ``(8) to protect the privacy and security of any customer 
        in connection with any lawful activity relating to the 
        operation of an Internet game-of-skill facility; and
            ``(9) to protect against fraud and money laundering 
        relating to the operation of an Internet game-of-skill 
        facility.
    ``(c) List of Persons Self-excluded From Gaming Activities.--
            ``(1) Establishment.--
                    ``(A) In general.--The Secretary shall provide by 
                regulation for the establishment of a list of persons 
                self-excluded from gaming 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 gaming 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 gaming activity at any licensee sites.
            ``(2) Placement and removal procedures.--The regulations of 
        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, and a licensee, and 
                any employee or agent thereof, 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 gaming 
                        privileges from, or to restore gaming 
                        privileges to, a self-excluded person; or
                            ``(ii) otherwise permitting a self-excluded 
                        person to engage in gaming activity while on 
                        the list of self-excluded persons.
                    ``(B) Rule of construction.--No provision of 
                subparagraph (A) shall be construed as preventing the 
                Secretary 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, service provider, to the 
                extent that the 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 
        and 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) Gaming by Prohibited Persons.--
            ``(1) Prohibition benefitting from prohibited gaming 
        activity.--A person who is prohibited from gaming 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 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 gaming 
        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 
        Treasury.
    ``(e) Compulsive Players 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 
                section 5382(n) 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 compulsive players 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 thereof, shall not be liable to any person in 
        any proceeding for losses or other damages of any kind arising 
        out of that person's gaming activities based on a claim that 
        the person was a compulsive, problem, or pathological player.
``Sec. 5384. Financial transaction providers
    ``(a) In General.--No financial transaction provider shall be held 
liable for engaging in financial activities or transactions, including 
payments processing activities, in connection with any bets or wagers 
permitted by this subchapter or the Interstate Horseracing Act of 1978 
(15 U.S.C. 3001 et seq.) unless such financial transaction provider has 
knowledge or reason to know that the specific financial activities or 
transactions are conducted in violation of this subchapter, the 
Interstate Horseracing Act, or other applicable provision of Federal or 
State law.
    ``(b) Definitions.--In this section:
            ``(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 (15 U.S.C. 
                1602).
                    ``(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 
                        (15 U.S.C. 1693a), 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 (15 U.S.C. 
                1963a), 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 (12 U.S.C. 1813(c)); and
                            ``(ii) includes an insured credit union (as 
                        defined in section 101 of the Federal Credit 
                        Union Act (12 U.S.C. 1752)).
                    ``(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. 5385. Limitation on licenses in States and Indian lands
    ``(a) State Opt-Out Exercise.--
            ``(1) Limitations imposed by states.--
                    ``(A) In general.--No licensee may knowingly accept 
                a bet or wager, under a license issued pursuant to this 
                subchapter, initiated by a person who is located 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 Secretary 
                of such limitation before the end of the 90-day period 
                beginning on the date of the enactment of the Internet 
                Poker and Game of Skill Regulation, Consumer 
                Protection, and Enforcement Act of 2009, or in 
                accordance with paragraph (2), until such time as 
                notice of any repeal of such 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 not chosen to opt out 
                        pursuant to subsection (b); 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.
            ``(2) Changes to state limitations.--The establishment or 
        repeal 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 or 
                repeal 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 or 
                repeal.
            ``(3) Existing state law.--No provision of State law 
        enacted prior to the Internet Poker and Game of Skill 
        Regulation, Consumer Protection, and Enforcement Act of 2009 
        shall be construed to require a State to provide notice 
        pursuant to this subsection.
    ``(b) Indian Tribe Opt-Out Exercise.--
            ``(1) Limitations imposed by indian tribes.--No licensee 
        may knowingly accept a bet or wager, under a license issued 
        pursuant to this subchapter, that is initiated by a person who 
        is located in the tribal lands of any Indian tribe which limits 
        such bets or wagers if the principal chief or other chief 
        executive officer of such Indian tribe informs the Secretary of 
        such limitation before the end of the 90-day period beginning 
        on the date of the enactment of the Internet Poker and Game of 
        Skill Regulation, Consumer Protection, and Enforcement Act of 
        2009, or in accordance with paragraph (2), until such time as 
        notice of any repeal of such limitation becomes effective under 
        paragraph (2).
            ``(2) Changes to indian tribe limitations.--The 
        establishment or repeal by any Indian tribal government of the 
        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 or 
                repeal is provided by the principal chief or other 
                chief executive officer of such Indian tribal 
                government in writing to the Secretary; or
                    ``(B) the effective date of such establishment or 
                repeal.
            ``(3) Existing tribal law.--No provision of tribal law 
        enacted prior to the Internet Poker and Game of Skill 
        Regulation, Consumer Protection, and Enforcement Act of 2009 
        shall be construed to require an Indian tribal government to 
        provide notice pursuant to this subsection.
    ``(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 later 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 
        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 a bet or wager 
        initiated or otherwise made by a person located at the time of 
        such bet or wager 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 or other chief law enforcement 
        officer of a State or any State or local law enforcement 
        agency, authorized by the attorney general or other chief law 
        enforcement officer of the State 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--
                    ``(A) to enjoin that practice; or
                    ``(B) to enforce compliance with this subchapter.
    ``(d) No Impact on Indian Gaming Regulatory Act.--No decision by a 
State pursuant to this section shall be considered in determining the 
ability of an Indian tribe to offer any class of gambling activity 
pursuant to section 11 of the Indian Gaming Regulatory Act (25 U.S.C. 
2710) or any successor provisions.
``Sec. 5386. Prohibition on bets or wagers on games of chance and 
              sporting events
    ``(a) In General.--No provision of this subchapter shall be 
construed to authorize any licensee to accept a bet or wager knowingly 
from a person located in the United States on--
            ``(1) any game that is not an Internet game of skill; or
            ``(2) any sporting event in violation of section 3702 of 
        title 28 or of any other applicable provision of State or 
        Federal law.
    ``(b) Construction.--Nothing in this subchapter shall be construed 
to repeal or to amend any provision of State or Federal law 
prohibiting, restricting, or otherwise addressing bets or wagers on 
sporting events.
``Sec. 5387. Safe harbor
    ``It shall be an affirmative defense to any prosecution or 
enforcement action under any provision of Federal or State law that the 
activity forming the basis of such prosecution or enforcement action is 
authorized under and has been carried out lawfully in accordance with 
and under the terms of--
            ``(1) this subchapter; or
            ``(2) the Interstate Horseracing Act of 1978 (15 U.S.C. 
        3001 et seq.).
``Sec. 5388. Relation to section 1084 of title 18 and subchapter IV of 
              this title
    ``Section 1084 of title 18 and subchapter IV of this chapter shall 
not apply to any bet or wager--
            ``(1) occurring pursuant to a license issued by the 
        Secretary under this subchapter, subject to section 5386; or
            ``(2) that is permissible under the Interstate Horseracing 
        Act of 1978 (15 U.S.C. 3001 et seq.).
``Sec. 5389. 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 shall knowingly 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, 
shall knowingly 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) 
shall be fined under title 18 or imprisoned for not more than 5 years, 
or both.
``Sec. 5390. Construction and relation to State law
    ``(a) No Impact on Existing Lawful Games.--
            ``(1) In general.--If certain games of skill are not 
        regarded as gambling under an applicable provision of State or 
        Federal law in effect as of the effective date of the enactment 
        of the Internet Poker and Game of Skill Regulation, Consumer 
        Protection, and Enforcement Act of 2009--
                    ``(A) nothing in this subchapter shall be construed 
                to require licensing under this subchapter with respect 
                to such games; and
                    ``(B) fees paid to participate in such games shall 
                not be regarded as bets or wagers for purposes of this 
                subchapter.
            ``(2) Reliance.--Nothing in this subchapter may be relied 
        on as support for the legality or permissibility of games 
        described in paragraph (1) without compliance with the 
        licensing and other requirements of this subchapter.
    ``(b) Public Gaming Facilities Not Authorized.--
            ``(1) In general.--Nothing in this subchapter shall be 
        construed to authorize or otherwise to permit the operation of 
        places of public accommodation, clubs (including clubs or 
        associations limited to dues-paying members or similar 
        restricted groups), and similar establishments for the primary 
        purpose of allowing the public or members access to Internet 
        bets or wagers.
            ``(2) Assumed public gaming facilities.--Any place of 
        public accommodation, club, or similar establishment in which 
        large numbers of computer terminals or similar access devices 
        are made available that are used principally for the purpose of 
        Internet bets or wagers shall be considered a place of public 
        accommodation, club, or similar establishment operated for the 
        primary purpose of allowing the public or members access to 
        Internet bets or wagers under subparagraph (A).
            ``(3) Relation to state law.--Places of public 
        accommodation, clubs, or similar establishments described in 
        this subsection shall be subject to all otherwise applicable 
        State, tribal, and local police zoning and other regulatory 
        powers, which are not intended to be limited in any way by this 
        subchapter.
    ``(c) Interstate Off-Track Wagers.--The provisions of this 
subchapter restricting acceptance of bets or wagers made by individuals 
located in the United States or requiring the blocking or other 
prevention of restricted transactions shall not apply with respect to 
the acceptance of interstate off-track wagers (as such term is defined 
by section 3 of the Interstate Horseracing Act of 1978, as amended (15 
U.S.C. 3002)), whether such off-track wager is made by telephone, 
Internet, satellite, or other wire or wireless communication.''.
    (b) Clerical Amendment.--The table of sections for chapter 53 of 
title 31, United States Code, is amended by adding at the end the 
following:

     ``subchapter v--regulation of internet game-of-skill facilities

``Sec.
``5381. Definitions.
``5382. Establishment and administration of licensing program.
``5383. Compulsive Gaming, Responsible Gaming, and Self-Exclusion 
                            Program.
``5384. Financial transaction providers.
``5385. Limitation on licenses in States and Indian lands.
``5386. Prohibition on bets or wagers on games of chance and sporting 
                            events.
``5387. Safe harbor.
``5388. Relation to section 1084 of title 18 and subchapter IV of this 
                            title.
``5389. Cheating and other fraud.
``5390. Construction and relation to State law.''.

SEC. 103. LIST OF UNLAWFUL INTERNET GAMBLING ENTERPRISES.

    (a) In General.--Subchapter IV of chapter 53 of title 31, United 
States Code, is amended by adding at the end the following:
``Sec. 5368. List of unlawful Internet gambling enterprises
    ``(a) Definitions.--In this section:
            ``(1) Unlawful internet gambling enterprise.--The term 
        `unlawful Internet gambling enterprise' means any person who, 
        more than 10 days after the date of the enactment of this 
        section--
                    ``(A) violates a provision of section 5363;
                    ``(B) knowingly receives or transmits funds 
                intended primarily for a person described in 
                subparagraph (A); or
                    ``(C) knowingly assists in the conduct of a person 
                described in subparagraph (A) or (B).
            ``(2) Director.--The term `Director' means the Director of 
        the Financial Crimes Enforcement Network appointed under 
        section 310(b).
    ``(b) List of Unlawful Internet Gambling Enterprises.--
            ``(1) In general.--Not later than 120 days after the date 
        of the enactment of this section, the Director shall submit to 
        the Secretary a list of unlawful Internet gambling enterprises 
        and shall regularly update such list in accordance with the 
        procedures described in paragraph (3). Such list shall include 
        the following information for each such unlawful Internet 
        gambling enterprise:
                    ``(A) All known Internet website addresses of the 
                enterprise.
                    ``(B) The names of all known owners and operators 
                of the enterprise.
                    ``(C) To the extent known, information identifying 
                the financial agents and account numbers of the 
                enterprise and the persons listed under subparagraph 
                (B).
            ``(2) Distribution of list by secretary.--The Secretary 
        shall make available--
                    ``(A) a copy of the information provided under 
                subparagraphs (A) and (B) of paragraph (1) on the 
                Internet website of the Department of the Treasury;
                    ``(B) to all persons who are required to comply 
                with the regulations prescribed under the authority 
                provided in section 5364 a copy of all the information 
                provided under paragraph (1) in an electronic format 
                compatible with the Specially Designated Nationals list 
                maintained by the Office of Foreign Assets Control; and
                    ``(C) any information required under this paragraph 
                not later than 10 days after receiving any new or 
                updated list from the Director.
            ``(3) Procedures.--The procedures described in this 
        paragraph are the following:
                    ``(A) Investigation.--The Director shall 
                investigate entities that appear to be unlawful 
                Internet gambling enterprises. An initial investigation 
                shall be completed before the end of the 60-day period 
                beginning on the date of enactment of this section. 
                After the initial investigation, the Director shall 
                regularly investigate entities that appear to be 
                unlawful Internet gambling enterprises. If the Director 
                discovers evidence sufficient to prove a prima facie 
                case that any person is an unlawful Internet gambling 
                enterprise, the Director shall provide the notice 
                required under subparagraph (C).
                    ``(B) Requests.--Any Federal, State, tribal, or 
                local law enforcement official, any affected sports 
                organization, any person directly harmed by unlawful 
                Internet gambling, any financial transaction provider, 
                and any interactive computer service (as such terms are 
                defined in section 5362) shall have the right, but not 
                the obligation, to make a written request to the 
                Director for the addition of any person to the list of 
                unlawful Internet gambling enterprises. If the Director 
                determines that the evidence submitted is sufficient to 
                prove a prima facie case that such person is an 
                unlawful Internet gambling enterprise, the Director 
                shall provide the notice required under subparagraph 
                (C) to each person identified as an alleged unlawful 
                Internet gambling enterprise. The Director also shall 
                provide written notice of its decision under this 
                subparagraph, including a decision not to add a person 
                to the list required under paragraph (1), to the 
                requesting party no later than 30 days after the 
                request is received. The Director shall not include on 
                the list any person operating an Internet game-of-skill 
                facility who falls within the scope of section 108(a) 
                of the Internet Poker and Game of Skill Regulation, 
                Consumer Protection, and Enforcement Act of 2009.
                    ``(C) Notice.--Not fewer than 30 days before adding 
                an unlawful Internet gambling enterprise, or an owner 
                or operator thereof, to the list required under 
                paragraph (1), the Director shall provide written 
                notice to such enterprise, owner, or operator. Any 
                enterprise, owner, or operator receiving such notice 
                may contest the Director's determination by written 
                appeal to the Director not more than 30 days after 
                receiving notice.
                    ``(D) Opportunity for hearing.--If a person 
                properly submits a written appeal under subparagraph 
                (C), the Director shall not include such person in the 
                list required under paragraph (1) unless and until the 
                Director provides such person with an opportunity for a 
                hearing not more than 30 days after receiving written 
                notice of appeal. Not more than 10 days after an 
                opportunity for hearing is afforded, whether or not the 
                person requesting the hearing appears at such hearing, 
                the Director shall proceed to add such person to the 
                list of unlawful Internet gambling enterprises unless 
                the Director determines, based on a preponderance of 
                the evidence, that such person is not an unlawful 
                Internet gambling enterprise.
                    ``(E) Injunctive relief.--Any person that the 
                Director determines shall be included in the list 
                required under paragraph (1) after such person appears 
                at a hearing described in subparagraph (D) and any 
                person included in such list who did not receive the 
                notice required under subparagraph (C), may petition 
                for injunctive relief in the United States District 
                Court for the District of Columbia, which shall have 
                exclusive jurisdiction to hear challenges pursuant to 
                this section. The petitioner shall have the burden of 
                establishing by a preponderance of the evidence that 
                such person is not an unlawful Internet gambling 
                enterprise. Only persons designated by the Director for 
                inclusion on the list of unlawful Internet gambling 
                enterprises, and other owners or operators of an 
                enterprise to be so listed, shall have standing to 
                contest the Director's determination. The court may 
                enjoin the Director and the Secretary not to add or 
                remove the petitioner from the list of unlawful 
                Internet gambling enterprises, and no other judicial 
                recourse shall be permitted.
    ``(c) Effect of List.--A financial transaction provider shall be 
deemed to have actual knowledge that a person is an unlawful Internet 
gambling enterprise to the extent that such person is identified on the 
list available to the public, or on a non-public list made available to 
such financial transaction provider, by the Secretary as described in 
subsection (b)(2), provided that the list shall not be deemed to be the 
sole source of actual knowledge.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter 53 is amended by inserting after the item relating to 
section 5367 the following:

``5368. List of unlawful Internet gambling enterprises.''.

SEC. 104. REGULATIONS.

    (a) Licensing of Internet Game-of-skill Facilities.--Not later than 
180 days after the date of the enactment of this Act, the Secretary 
shall--
            (1) prescribe regulations to carry out subchapter V of 
        chapter 53 of title 31, United States Code, as added by section 
        102(a); and
            (2) publish such regulations in final form in the Federal 
        Register.
    (b) Exclusion of Board of Governors of the Federal Reserve System 
From Requirement To Prescribe Regulations Concerning Prevention of 
Restricted Transactions.--Subsection (a) of section 5364 of such title 
is amended by striking ``Before the end of the 270-day period beginning 
on the date of the enactment of this subchapter, the Secretary and the 
Board of Governors of the Federal Reserve System, in consultation with 
the Attorney General, shall prescribe regulations (which the Secretary 
and the Board jointly determine to be appropriate)'' and inserting 
``The Secretary shall prescribe regulations''.
    (c) Modification of Requirements for Policies and Procedures.--
Subsection (b) of such section is amended to read as follows:
    ``(b) Requirements for Policies and Procedures.--In prescribing 
regulations under subsection (a), the Secretary shall--
            ``(1) identify types of policies and procedures, including 
        nonexclusive examples, which would be deemed, as applicable, to 
        be reasonably designed to identify and block or otherwise 
        prevent or prohibit the acceptance of the products or services 
        of the payment system or participant with respect to each type 
        of restricted transaction;
            ``(2) permit any participant in a payment system to rely on 
        the policies and procedures of such payment system if such 
        policies and procedures are reasonably designed to identify and 
        block or otherwise prevent or prohibit a transaction in which 
        any participant in that payment system in such transaction has 
        actual knowledge that the intended recipient is an unlawful 
        Internet gambling enterprise;
            ``(3) exempt certain participants from any requirement 
        imposed under such regulations if the Secretary finds that--
                    ``(A) such requirement is not reasonably practical 
                for such participants; and
                    ``(B) such regulations are reasonably calculated to 
                require at least 1 participant under the jurisdiction 
                of the United States in each designated payment system 
                to identify and block or otherwise prevent or prohibit 
                the acceptance of the products or services of the 
                payment system with respect to each type of restricted 
                transaction; and
            ``(4) ensure that transactions in connection with any 
        activity excluded from the definition of unlawful Internet 
        gambling in subparagraphs (B), (C), (D)(i), or (E) of section 
        5362(10) or that are lawfully conducted pursuant to section 
        5382 are not blocked or otherwise prevented or prohibited by 
        the prescribed regulations.''.
    (d) Temporary Suspension of Certain Regulations.--
            (1) In general.--Subject to paragraph (2), during the 
        period beginning on the date of the enactment of this Act and 
        ending on June 1, 2010, part 233 of title 12, Code of Federal 
        Regulations, and part 132 of title 31, Code of Federal 
        Regulations, shall have no force or effect.
            (2) Previous violation.--Paragraph (1) shall not apply with 
        respect to any violation of a regulation described in such 
        paragraph that occurred before the date of the enactment of 
        this Act.
    (e) Revision of Regulations.--The Secretary of the Treasury shall, 
in consultation with the Attorney General, revise the regulations 
described in subsection (d)(1) in accordance with the amendments made 
to subchapter IV of chapter 53 of title 31, United States Code, by this 
Act.

SEC. 105. ANNUAL REPORT.

    (a) In General.--Not later than 1 year after the date on which the 
Secretary of the Treasury prescribes regulations under section 104(a) 
and annually thereafter, the Secretary shall submit to Congress a 
report on the licensing and regulation of Internet game-of-skill 
facilities (as such term is defined in section 5382 of title 31, United 
States Code, as added by section 102(a)).
    (b) Elements.--Each report submitted under subsection (a) shall 
include the following:
            (1) A description of all notices received by the Secretary 
        of the Treasury under subsections (a) and (b) of section 5385 
        of title 31, United States Code, as added by section 102(a).
            (2) The amount of user fees received under section 5382(e) 
        of such title (as added by section 102(a)), the amount of 
        Federal, State, and tribal licensing fees collected, and an 
        estimate of the amount of income tax revenue that is 
        attributable to the operation of Internet game-of-skill 
        facilities (as such term is defined in section 5381 of such 
        title, as so added) during the period covered by the report.
            (3) A list of the State and tribal regulatory bodies that 
        the Secretary has made an affirmative determination under 
        section 5382(n)(1)(B) of such title, as so added, the number of 
        licensees reviewed by such regulatory bodies, and the outcomes 
        of such reviews.
            (4) A description of the efforts the Secretary has 
        undertaken to ensure that licensees qualified by State and 
        tribal regulatory bodies meet the requirements of subchapter V 
        of chapter 53 of such title, as so added.
            (5) Information on regulatory and enforcement actions 
        undertaken during the period for which the report is submitted 
        with respect to the provisions of such subchapter.
            (6) Data regarding the list required by 5368(b)(1) of such 
        title, as added by section 103(a), including its size, the 
        number of persons and websites added and removed, number and 
        description of challenges to inclusion on the list, and 
        resolution of those challenges.
            (7) Any other information the Secretary determines may be 
        useful to Congress in evaluating the effectiveness of 
        subchapter V of chapter 53 of such title, as added by section 
        102(a), 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. 106. CONFORMING AMENDMENTS.

    (a) Duties and Powers of the Director of the Financial Crimes 
Enforcement Network.--Section 310(b)(2) of title 31, United States 
Code, is amended--
            (1) by redesignating subparagraphs (I) and (J) as 
        subparagraphs (J) and (K), respectively; and
            (2) by inserting after subparagraph (H) the following:
                            ``(i) Administer the requirements of 
                        subchapter V of chapter 53.''.
    (b) Exclusion of Licensed Internet Game-of-skill Facility 
Operations From Definition of Unlawful Internet Gambling.--Section 
5362(10) of such title is amended--
            (1) in subparagraph (D), by striking clause (iii);
            (2) by redesignating subparagraph (E) as subparagraph (F); 
        and
            (3) by inserting after subparagraph (D) the following:
                    ``(E) Licensed internet game-of-skill facilities.--
                The term `unlawful Internet gambling' shall not include 
                an activity carried out by an Internet game-of-skill 
                facility (as such term is defined in section 5382) 
                operated by a person under a license provided under 
                subchapter V in accordance with the provisions of such 
                subchapter.''.

SEC. 107. EFFECTIVE DATE.

    Subchapter V of chapter 53 of title 31, United States Code, and the 
regulations prescribed under section 104(a) shall take effect on the 
date that is 90 days after the date on which the Secretary of the 
Treasury publishes regulations under paragraph (2) of such section.

SEC. 108. APPLICABILITY.

    (a) In General.--Subsection (b)(1) of 5382 of title 31, United 
States Code, as added by section 102(a), shall not apply to a person 
who, not later than 90 days after enactment of this Act, notifies in 
writing the Secretary of the Treasury of their intent to seek a license 
under subchapter V of such chapter, as so added, and who not later than 
90 days after the date on which the Secretary of the Treasury begins 
accepting applications for licenses under subchapter V of such chapter, 
as so added, submits to the Secretary of the Treasury an application 
for a license under such subchapter may operate an Internet game-of-
skill facility in interstate or foreign commerce, in which bets or 
wagers are knowingly initiated, received, or otherwise made by 
individuals located in the United States, without a license issued to 
such person by the Secretary under such subchapter during the period 
beginning on the date of such submittal and ending on the earlier of--
            (1) the date the Secretary grants such license;
            (2) the date that is 2 years after the date of such 
        submittal; or
            (3) the date on which the Secretary denies such 
        application.
    (b) Construction.--Subsection (a) shall not be construed to modify, 
amend, or affect in any way any other provision of law with respect to 
unlawful Internet gambling (as such term is defined in section 5361 of 
such title).
    (c) Previous Operation.--The Secretary of the Treasury may not deny 
an application for a license under subchapter V of such title, as so 
added, that is submitted by an applicant during the 90-day period 
beginning on the date that the Secretary begins accepting applications 
under such subchapter because the applicant operated an Internet game-
of-skill facility, in interstate or foreign commerce, in which bets or 
wagers were knowingly initiated, received, or otherwise made by 
individuals located in the United States, without a license issued to 
such person by the Secretary under such subchapter.
    (d) Definitions.--The terms ``bet or wager'' and ``operate an 
Internet game-of-skill facility'' have the meaning given such terms in 
section 5381 of such title, as added by section 102(a).

            TITLE II--INTERNET GAMES OF SKILL TAX PROVISIONS

SEC. 201. AMENDMENT OF 1986 CODE.

    (a) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this title an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.

SEC. 202. TAX ON INTERNET GAMES OF SKILL; LICENSEE INFORMATION 
              REPORTING.

    (a) In General.--Chapter 36 is amended by adding at the end the 
following new subchapter:

          ``Subchapter E--Internet Gambling and Games of Skill

``SEC. 4491. IMPOSITION OF INTERNET GAMING LICENSE FEE.

    ``(a) Imposition of Fee.--Each person who is a licensee shall be 
required to pay not later than 15 days after the end of each calendar 
month a fee equal to the sum of--
            ``(1) the Federal Internet gaming license fee; and
            ``(2) the State or Indian tribal government gaming license 
        fee.
    ``(b) Amount of Fees.--For purposes of this section--
            ``(1) Federal internet gaming license fee.--The Federal 
        Internet gaming license fee is a fee equal to 5 percent of a 
        licensee's Internet gaming deposited funds for a calendar 
        month.
            ``(2) State or indian tribal government gaming license 
        fee.--The State or Indian tribal government gaming license fee 
        is a fee equal to 5 percent of a licensee's Internet gaming 
        deposited funds for a calendar month.
            ``(3) Internet gaming deposited funds.--The term `Internet 
        gaming deposited funds' means all funds deposited by persons 
        located within the United States into any account maintained by 
        the licensee or any agent of the licensee into which funds are 
        deposited for the purpose of being used to place a bet or wager 
        with respect to an Internet game of skill. Funds received from 
        a customer by an operator of an Internet game-of-skill facility 
        and made available in any form to a customer for the purpose of 
        placing a bet or wager, and funds paid to reimburse an operator 
        of an Internet game-of-skill facility for value previously 
        advanced to the customer for such purpose, shall be regarded as 
        Internet gaming deposited funds unless the funds received or 
        paid were already considered Internet gaming deposited funds 
        prior to their transmittal to the operator of the Internet 
        game-of-skill facility.
            ``(4) Limitation to imposition of one state or indian 
        tribal gaming license fee for any transaction.--In the case of 
        a customer located within the jurisdiction of an Indian tribe 
        at the time of a transaction, only one fee described in 
        paragraph (2) shall be imposed on a licensee's Internet gaming 
        deposited funds in connection with that transaction, and no 
        additional fee shall be collected on behalf of the State in 
        which the customer is located. All of the fee described in 
        paragraph (2) in such case shall be allocated to the Indian 
        tribe in which the customer is located at the time of the 
        transaction, and no portion of the fee shall be allocated to 
        the State.
    ``(c) Unauthorized Gaming.--
            ``(1) Penalty.--Each person who is not a licensee and who 
        operates an Internet game-of-skill facility for which a license 
        is required under section 5390(a)(1) of title 31, United States 
        Code, except as provided in section 108(a) shall be required to 
        pay not later than the end of each calendar month a fee equal 
        to the amount of the Federal Internet gaming license fee that 
        would be applicable to such person for such month if such 
        person were a licensee, determined by substituting `50 percent' 
        for `5 percent' in subsection (b)(1).
            ``(2) Exception.--Paragraph (1) shall not apply to a game 
        described in paragraph (3) of section 5382(b) of title 31, 
        United States Code.
    ``(d) Definitions and Special Rules.--For purposes of this 
subchapter--
            ``(1) In general.--The terms `licensee', `bet or wager', 
        `Internet game of skill', and `Internet game-of-skill facility' 
        have the meaning given such terms by section 5381 of title 31, 
        United States Code.
            ``(2) Deposits.--Deposits made by or on behalf of a 
        licensee of Internet gaming winnings, and returns of funds by 
        or on behalf of a licensee to the account of a customer, shall 
        not be treated as a deposit.
    ``(e) Persons Liable.--
            ``(1) In general.--Each licensee or other person who 
        operates an Internet game-of-skill facility for which a license 
        is required under section 5382(b)(1) of title 31, United States 
        Code, shall be liable for and shall pay the applicable fees 
        under this section with respect to all Internet gaming 
        deposited funds.
            ``(2) Joint and several liability for unauthorized 
        gambling.--In the case of any deposit with respect to which a 
        fee is imposed under subsection (c), the person described in 
        paragraph (1) of such subsection and the person making such 
        deposit for the purposes of placing a bet or wager shall be 
        jointly and severally liable for the fee under such subsection 
        with respect to such deposit.
    ``(f) Administrative Provisions.--Except to the extent the 
Secretary shall by regulations prescribe, the administrative provisions 
of this title applicable to the excise taxes imposed by chapter 35 
shall apply to the fees imposed by this section.

``SEC. 4492. RECORD KEEPING REQUIREMENTS.

    ``(a) In General.--Each licensee who is liable for the fees imposed 
by this subchapter shall keep a daily record showing all deposits to 
which this subchapter applies, in addition to all other records 
required pursuant to section 6001(a).
    ``(b) Records With Respect to State or Indian Tribal Government 
Gaming License Fee.--Each licensee to which subsection (a) applies 
shall keep a record, using methods determined to be satisfactory by the 
Secretary or, in the case of a licensee who is certified by a State or 
tribal regulatory body under section 5382(o) of title 31, United States 
Code, by such State or tribal regulatory body, of the location of each 
person making a deposit to which this subchapter applies, for purposes 
of determining the State or Indian tribal government gaming license fee 
applicable to such deposit for purposes of section 9511.''.
    (b) Information Returns.--Subpart B of part III of subchapter A of 
chapter 61 is amended by adding at the end the following new section:

``SEC. 6050X. RETURNS RELATING TO INTERNET GAMBLING AND GAMES OF SKILL.

    ``(a) Requirement.--Every person described in section 4491(e)(1) 
with respect to any month during a taxable year shall furnish, at such 
time and in such manner as the Secretary shall by regulations 
prescribe, the information described in subsection (b), and such person 
shall maintain (in the location and manner and to the extent prescribed 
in such regulations) such records as may be appropriate with respect to 
such information.
    ``(b) Required Information.--For purposes of subsection (a), the 
information described in this subsection is--
            ``(1) the name, address, and TIN of the person described in 
        subsection (a);
            ``(2) the name, address, and TIN of each person placing a 
        bet or wager (within the meaning of section 4491) with the 
        person described in subsection (a) during the calendar year;
            ``(3) the gross winnings, gross wagers, and gross losses 
        for the calendar year of each person placing a bet or wager as 
        described in paragraph (2);
            ``(4) the net Internet gaming winnings for each such person 
        for the calendar year;
            ``(5) the amount of tax withheld, if any, with respect to 
        each such person by the person described in subsection (a) for 
        the calendar year;
            ``(6) the balance of any account maintained for each person 
        placing a bet or wager as described in paragraph (2) by the 
        person described in subsection (a), at the beginning and the 
        end of the calendar year; and
            ``(7) the amounts of all deposits and withdrawals from each 
        such account during such calendar year.
    ``(c) Statement To Be Furnished to Persons With Respect to Whom 
Information Is Required.--Every person required to make a return under 
subsection (a) shall furnish to each person whose name is required to 
be set forth in such return a written statement showing--
            ``(1) the name, address, and phone number of the 
        information contact of the person required to make such return; 
        and
            ``(2) the information required to be shown on such return 
        with respect to each person whose name is required to be set 
        forth in such return.
The written statement required under the preceding sentence shall be 
furnished to the person on or before January 31 of the year following 
the calendar year for which the return under subsection (a) was 
required to be made.
    ``(d) Net Internet Gaming Winnings.--The term `net Internet gaming 
winnings' means gross winnings from bets or wagers with an Internet 
game-of-skill facility (within the meaning of section 4491) for which a 
license is required under section 5382(b)(1) of title 31, United States 
Code, reduced (but not below zero) by the amounts bet or wagered.''.
    (c) State and Indian Tribal Government Gaming License Fee Trust 
Fund.--Subchapter A of chapter 98 is amended by adding at the end the 
following new section:

``SEC. 9511. STATE AND INDIAN TRIBAL GOVERNMENT GAMING LICENSE FEE 
              TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as the `State and Indian 
Tribal Government Gaming License Fee Trust Fund' (hereafter in this 
section referred to as the `Trust Fund'), consisting of such amounts as 
may be appropriated or credited to such Trust Fund as provided in this 
section and section 9602(b).
    ``(b) Transfers to Fund.--There are hereby appropriated to the 
Trust Fund amounts equivalent to the fees received in the Treasury with 
respect to each calendar month under section 4491 by reason of 
subsection (a)(2) thereof.
    ``(c) Expenditures From Fund.--
            ``(1) In general.--The Secretary shall pay to each 
        qualified State and each qualified Indian tribal government, 
        out of the amounts in the Trust Fund, an amount equal to the 
        monthly pro rata gaming license fee amount.
            ``(2) Monthly pro rata gaming license fee amount.--For 
        purposes of this section, with respect to a qualified State and 
        a qualified Indian tribal government for any calendar month, 
        the monthly pro rata gaming license fee amount is the amount of 
        the fees described in subsection (b) received with respect to 
        such calendar month that are attributable to deposits made by 
        persons located within the jurisdiction of such State or tribal 
        government (determined by the Secretary on the basis of records 
        kept under section 4492(b)).
            ``(3) Qualified state; qualified indian tribal 
        government.--
                    ``(A) In general.--For purposes of this section, 
                the terms `qualified State' and `qualified Indian 
                tribal government' mean a State or an Indian tribal 
                government, respectively, that has not elected (by 
                notice provided by the Governor, principal chief, or 
                other chief executive officer and in such form and 
                manner as the Secretary may prescribe) to be excluded 
                from the receipt of funds under this section.
                    ``(B) State election not to affect tribal 
                election.--An election by a State under subparagraph 
                (A) to be excluded from the receipt of funds under this 
                section shall not constitute an election to be so 
                excluded on behalf of any Indian tribe located within 
                or partially within the geographic boundaries of such 
                State.
                    ``(C) Applicability of election.--An election made 
                under subparagraph (A) shall be effective--
                            ``(i) upon receipt by the Secretary, if 
                        such election is received within 90 days of the 
                        date of the enactment of the Internet Poker and 
                        Game of Skill Regulation, Consumer Protection, 
                        and Enforcement Act of 2009; and
                            ``(ii) in any other case, on the first 
                        January 1 that occurs at least 60 days after 
                        the later of--
                                    ``(I) the receipt of such election 
                                by the Secretary; or
                                    ``(II) the effective date specified 
                                in such election.
                    ``(D) 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.
                    ``(E) Indian tribal government.--The term `Indian 
                tribal government' means the government of an Indian 
                tribe (within the meaning of section 4 of the Indian 
                Gaming Regulatory Act).
            ``(4) Time of payments.--The payment made under this 
        subsection with respect to any calendar month shall be made not 
        later than the 11th day of the succeeding calendar month.''.
    (d) Clerical Amendments.--
            (1) The table of subchapters for chapter 36 is amended by 
        adding at the end the following item:

        ``subchapter e. internet gambling and games of skill.''.

            (2) The table of sections for subpart B of part III of 
        subchapter A of chapter 61 is amended by inserting after the 
        item relating to section 6050W the following new item:

``Sec. 6050X. Returns relating to Internet gambling and games of 
                            skill.''.
            (3) The table of sections for subchapter A of chapter 98 of 
        such Code is amended by adding at the end the following new 
        item:

``Sec. 9511. State and Indian Tribal Government Gaming License Fee 
                            Trust Fund.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to deposits made after the date of the enactment of this Act.

SEC. 203. WITHHOLDING FOR PARIMUTUEL POOL WINNINGS.

    (a) Winnings Subject to Withholding.--Subparagraph (C) of section 
3402(q)(3) is amended to read as follows:
                    ``(C) Sweepstakes, wagering pools, and lotteries.--
                Proceeds of more than $5,000 from a wager placed in a 
                sweepstakes, wagering pool, or lottery.''.
    (b) Exception for Parimutuel Pools.--Paragraph (5) of section 
3402(q) is amended--
            (1) by striking ``shall not apply to'' and all that 
        follows, and inserting ``shall not apply--
                    ``(A) to winnings from a slot machine, keno, or 
                bingo; and
                    ``(B) to proceeds from a wagering transaction in a 
                parimutuel pool with respect to horse races, dog races, 
                or jai alai.''; and
            (2) by inserting ``and certain parimutuel pools'' after 
        ``slot machines'' in the heading.
    (c) Effective Date.--The amendments made by this section shall 
apply to payments made after the date of the enactment of this Act.

SEC. 204. WITHHOLDING FROM CERTAIN GAMING WINNINGS.

    (a) Net Internet Gaming Winnings.--Paragraph (3) of section 3406(b) 
is amended--
            (1) by striking ``or'' at the end of subparagraph (E);
            (2) by striking the period at the end of subparagraph (F) 
        and inserting ``, or''; and
            (3) by adding at the end the following new subparagraph:
                    ``(G) section 6050X(b)(4) (relating to net internet 
                gaming winnings).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to amounts paid after the date of the enactment of this Act.

SEC. 205. WITHHOLDING OF TAX ON NONRESIDENT ALIENS.

    (a) Tax on Nonresident Alien Individuals.--Paragraph (1) of section 
871(a) is amended--
            (1) by striking ``and'' at the end of subparagraph (C);
            (2) by inserting ``and'' at the end of subparagraph (D); 
        and
            (3) by inserting after subparagraph (D) the following new 
        subparagraph--
                    ``(E) the net Internet gaming winnings (as defined 
                in section 6050X(d)),''.
    (b) Exemption for Certain Gaming Winnings.--The first sentence of 
section 871(j) is amended by inserting ``, or to net Internet gaming 
winnings (as defined in section 6050X(d))'' before the period.
    (c) Withholding of Tax on Nonresident Alien Individuals.--The first 
sentence of subsection (b) of section 1441 is amended by inserting 
``amounts described in section 871(a)(1)(E),'' after ``gains subject to 
tax under section 871(a)(1)(D),''.
    (d) Foreign Off-Track Wagers.--Subsection (b)(5) of section 872 is 
amended by inserting ``, including a legal wagering transaction placed 
over the Internet or other remote means from outside the United States. 
Any payment to any person with respect to income derived from a legal 
wagering transaction excluded by this subsection shall not be subject 
to any obligation under section 1441, 1442, 3402(q), or 6041'' before 
the period.
    (e) Source of Internet Gambling Winnings.--Subsection (a) of 
section 861 is amending by adding at the end the following new 
paragraph:
            ``(9) Internet gaming winnings.--Net Internet gaming 
        winnings (as defined in section 6050X(d)).''.
    (f) Effective Date.--The amendments made by this section shall 
apply to payments made after the date of the enactment of this Act.

SEC. 206. INFORMATION AT SOURCE; PARIMUTUEL WAGERS.

    (a) In General.--Section 6041 is amended by adding at the end the 
following new subsection:
    ``(h) Certain Gambling Winnings.--Subsection (a) shall apply to 
payments made as proceeds of a parimutuel wager only if the amount paid 
with respect to such wager is at least $1,200, and if the amount of the 
proceeds of such wager is at least 300 times of the amount wagered.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to payments made after the date of the enactment of this Act.

SEC. 207. EXEMPTION FROM STATE AND INDIAN TRIBAL GOVERNMENT TAXATION.

    (a) Exemption From Tax on Internet Games of Skill.--A State or 
political subdivision thereof, and an Indian tribe or political 
subdivision thereof, shall impose no tax on--
            (1) deposits or bets or wagers placed with a licensee that 
        is subject to the fees under section 4491 of the Internal 
        Revenue Code of 1986; or
            (2) income of a licensee relating to such deposits or bets 
        or wagers, unless such licensee maintains a permanent physical 
        presence in such State or within the area of the jurisdiction 
        of such Indian tribe.
    (b) Exemption Not To Apply to States and Indian Tribes Not 
Receiving Trust Fund Appropriations.--
            (1) In general.--Subsection(a) shall not apply to any State 
        or Indian tribal government with respect to which an election 
        is in effect under section 9511(c)(3) of the Internal Revenue 
        Code of 1986 for such State or Indian tribal government to be 
        excluded from the receipt of funds from the State and Indian 
        Tribal Government Gaming License Fee Trust Fund.
            (2) Activity not exempt from taxation.--A State or Indian 
        tribal government described in paragraph (1) may impose a tax 
        on deposits or bets or wagers only if initiated or otherwise 
        made by a person located within the jurisdiction of that State 
        or Indian tribe at the time of the deposit, bet, or wager and 
        placed with a licensee that is subject to the fees under 
        section 4491 of the Internal Revenue Code of 1986, and on a 
        licensee with respect to income relating to such deposits or 
        bets or wagers in each case (with respect to taxes on deposits, 
        bets, or wagers and income) only if such licensee maintains a 
        permanent physical presence in such State or within the area of 
        the jurisdiction of such Indian tribe.
    (c) Definitions.--For purposes of this section--
            (1) In general.--The terms ``deposit'', ``bet or wager'', 
        and ``licensee'' have the same meaning as when used in section 
        4491 of the Internal Revenue Code of 1986. The terms ``State'' 
        and ``Indian tribal government'' have the same meaning as when 
        used in section 9511 of such Code. The term ``State and Indian 
        Tribal Government Gaming License Fee Trust Fund'' means the 
        Trust Fund established by section 9511(a) of such Code.
            (2) Tax.--The term ``tax'' includes any tax, charge, or fee 
        levied by a taxing jurisdiction, whether such tax, charge, or 
        fee is imposed on a licensee or on a customer of a licensee, 
        and without regard to the terminology used to describe such 
        tax, charge, or fee.
            (3) Permanent physical presence.--
                    (A) In general.--The term ``permanent physical 
                presence'' means a substantial and continuous physical 
                presence for the majority of the applicable taxable 
                year. Such determination shall be made solely by 
                reference to the assets of a licensee and the 
                activities conducted by its employees or agents.
                    (B) Presence in indian tribe not to affect state 
                presence.--If a licensee has permanent physical 
                presence within the area of jurisdiction of an Indian 
                tribal government for purposes of this section, such 
                presence shall not be deemed to constitute permanent 
                physical presence in any State in which such area of 
                jurisdiction is located or partially located.
    (d) Effective Date.--This section shall apply to taxes on deposits 
and bets or wagers after the date of the enactment of this Act.

SEC. 208. TERRITORIAL EXTENT OF WAGERING TAX.

    (a) In General.--Paragraph (2) of section 4404 is amended--
            (1) by striking ``or'' at the end of subparagraph (A);
            (2) by striking the period at the end of subparagraph (B) 
        and inserting ``, or''; and
            (3) by adding at the end the following new subparagraph:
                    ``(C) with a person who is required to be licensed 
                (whether or not such person is so licensed) under 
                section 5382(b)(1) of title 31, United States Code, 
                with respect to such wagers.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to wagers made after the date of the enactment of this Act.

  TITLE III--STUDY AND PREVENTION OF PROBLEM AND PATHOLOGICAL GAMBLING

SEC. 301. AUTHORIZATION OF PROGRAMS FOR IDENTIFICATION, PREVENTION, AND 
              TREATMENT OF PROBLEM AND PATHOLOGICAL GAMBLING.

    Section 501(d) of the Public Health Service Act (42 U.S.C. 
290aa(d)) is amended--
            (1) in paragraph (17), by striking ``and'' at the end;
            (2) in paragraph (18), by striking the period at the end 
        and inserting ``; and''; and
            (3) by adding at the end the following:
            ``(19) establish and implement programs for the 
        identification, prevention, and treatment of problem and 
        pathological gambling.''.

SEC. 302. PUBLIC AWARENESS, RESEARCH, AND TREATMENT.

    Section 501 of the Public Health Service Act (42 U.S.C. 290aa) is 
amended by adding at the end the following:
    ``(p) Public Awareness.--
            ``(1) In general.--The Secretary shall carry out a national 
        campaign to increase knowledge and improve awareness with 
        respect to problem gambling within the general public, 
        including supporting and augmenting existing national 
        campaigns.
            ``(2) Authorization of appropriations.--For the purpose of 
        carrying out this subsection, there is authorized to be 
        appropriated $200,000 for each of fiscal years 2010 through 
        2014.
    ``(q) Research.--
            ``(1) In general.--The President shall establish and 
        implement a national program of research on problem and 
        pathological gambling.
            ``(2) Authorization of appropriations.--For the purpose of 
        carrying out this subsection, there is authorized to be 
        appropriated $4,000,000 for each of fiscal years 2010 through 
        2014.
    ``(r) Treatment.--
            ``(1) Grants.--The Secretary may make grants to States, 
        local governments, and nonprofit agencies to provide 
        comprehensive education, prevention, and treatment services 
        with respect to problem and pathological gambling.
            ``(2) Authorization of appropriations.--For the purpose of 
        carrying out this subsection, there is authorized to be 
        appropriated $10,000,000 for each of fiscal years 2010 through 
        2014.''.
                                 <all>