[Senate Hearing 106-1103]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 106-1103

  S.2340, AMATEUR SPORTS INTEGRITY ACT AND GAMBLING IN AMATEUR SPORTS

=======================================================================

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 29, 2000

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation



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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                     JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana                DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington             JOHN D. ROCKEFELLER IV, West 
TRENT LOTT, Mississippi                  Virginia
KAY BAILEY HUTCHISON, Texas          JOHN F. KERRY, Massachusetts
OLYMPIA J. SNOWE, Maine              JOHN B. BREAUX, Louisiana
JOHN ASHCROFT, Missouri              RICHARD H. BRYAN, Nevada
BILL FRIST, Tennessee                BYRON L. DORGAN, North Dakota
SPENCER ABRAHAM, Michigan            RON WYDEN, Oregon
SAM BROWNBACK, Kansas                MAX CLELAND, Georgia
                  Mark Buse, Republican Staff Director
            Martha P. Allbright, Republican General Counsel
               Kevin D. Kayes, Democratic Staff Director
                  Moses Boyd, Democratic Chief Counsel


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on March 29, 2000...................................     1
Statement of Senator Breaux......................................     8
Statement of Senator Brownback...................................     6
Statement of Senator Bryan.......................................     4
Statement of Senator Edwards.....................................    12
Statement of Senator Hollings....................................     2
Statement of Senator McCain......................................     1
Statement of Senator Stevens.....................................     3
    Prepared statement...........................................     3

                               Witnesses

Berkley, Hon. Shelley, U.S. Representative from Nevada...........    17
Calhoun, Jim, Head Men's Basketball Coach, University of 
  Connecticut, Storrs, CT........................................    29
    Prepared statement...........................................    32
Fahrenkopf, Jr., Frank, President, CEO, American Gaming 
  Association, Washington, DC....................................    43
    Prepared statement...........................................    46
Gibbons, Hon. Jim, U.S. Representative from Nevada...............    14
    Prepared statement...........................................    15
Graham, Hon. Lindsey O., U.S. Representative from South Carolina.    16
Kelly, Dr. Tim, Executive Director, National Gambling Impact 
  Study Commission, Alexandria, VA...............................    33
    Prepared statement...........................................    36
Reid, Hon. Harry, U.S. Senator from Nevada.......................     9
    Prepared statement...........................................    11
Roemer, Hon. Tim, U.S. Representative from Indiana...............    18
    Prepared statement...........................................    20
Sandoval, Brian, Chairman, Nevada Gaming Commission..............    75
    Prepared statement...........................................    78
Siller, Bobby, Nevada Gaming Control Board.......................    84
Wethington, Jr., Dr. Charles T., President, University of 
  Kentucky, Lexington, KY........................................    22
    Prepared statement...........................................    25
Winters, Kenneth, Ph.D., Professor of Psychology, University of 
  Minnesota......................................................    81
    Prepared statement...........................................    83
Yaeger, Don, Senior Writer, Sports Illustrated...................    72

                                Appendix

Dobson, James C., Ph.D., Member, National Gambling Impact Study 
  Commission, President, Focus on the Family, prepared statement.    99
James, Kay Coles, Norfolk, VA, letter dated March 28, 2000, to 
  Hon. John McCain...............................................   100
Joint Prepared Statement by National Gambling Impact Study 
  Commission Members Richard C. Leone, President, The Century 
  Foundation and Leo T. McCarthy, President, The Daniel Group....   101
National Football League, New York, NY, letter dated April 10, 
  2000, to Hon. John McCain, with attachments....................   102

 
  S. 2340, AMATEUR SPORTS INTEGRITY ACT AND GAMBLING IN AMATEUR SPORTS

                              ----------                              


                       WEDNESDAY, MARCH 29, 2000

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:30 a.m. in room 
SR-253, Russell Senate Office Building, Hon. John McCain, 
Chairman of the Committee, presiding.
    Staff members assigned to this hearing: David Crane, 
Republican Professional Staff; and Moses Boyd, Democratic Chief 
Counsel.

            OPENING STATEMENT OF HON. JOHN McCAIN, 
                   U.S. SENATOR FROM ARIZONA

    Senator McCain. Good morning. Gambling on sports is a major 
concern. In recent years, we have seen an alarming escalation 
in the number and complexity of point-shaving schemes in 
college sports. Campus gambling is reaching epidemic 
proportions.
    The study released just yesterday highlights statistics on 
gambling activities among college referees. Out of concern for 
this reality, the National Gambling Impact Study Commission 
recommended, among other things, closing the Las Vegas loophole 
that allows for legalized gambling on amateur athletics. The 
bill I introduced last week, the Amateur Sports Integrity Act, 
would do just that.
    Opponents of this legislation argue that there is a 
distinction between legalized amateur sports gambling and 
illegal sports gambling. The firm distinction they attempt to 
draw is one of convenience rather than reality. The report 
produced by the Treasury Department's financial crimes 
enforcement network entitled, ``Suspicious Activity Reporting 
on Casinos'' discusses various ways in which the Las Vegas 
sports books are used to launder money.
    In several recent college sports point-shaving schemes, the 
Nevada sports books were used as an integral part of overall 
game-fixing operations and, beyond a doubt, the Vegas point 
spreads published Nation-wide in newspapers and on sports radio 
serve to advertise, promote, and to facilitate illegal sports 
gambling.
    The Gambling Commission stated in its final report, and I 
quote, ``legal sports wagering, especially the publication in 
the media of Las Vegas and off-shore-generated point spreads, 
fuels a much larger amount of illegal sports wagering. By 
closing the Vegas loophole and banning college sports gambling 
completely, we will 
end a practice that has turned college athletes into objects to 
be 
bet upon, exposing them to unwarranted pressure, bribery, and 
corruption.''
    Ironically, the degree of this threat of corruption is best 
exemplified in the fact that Nevada, the only state where legal 
gambling on college sports occurs, has banned wagering on 
professional and amateur teams located within the state out of 
concern for the corrupting influence of sports gambling. One 
can go to Vegas and bet on any other team in the country, but 
not on any game where a Nevada team is playing.
    In an increasingly jaded world, legalized gambling on all 
college athletes sends the wrong message to America's youth. 
Collegiate competition serves as a laboratory classroom where 
young student athletes struggle to apply the highest ideals of 
the American character: courage in the face of adversity, 
discipline, team work, and self-sacrifice. These ideals and 
lessons are of particular importance in today's society. They 
should not be reduced to a point spread in a spectacle for 
wagering.
    I want to thank all the witnesses for being here this 
morning, and I would like to turn to Senator Hollings.

             STATEMENT OF HON. ERNEST F. HOLLINGS, 
                U.S. SENATOR FROM SOUTH CAROLINA

    Senator Hollings. Thank you, Mr. Chairman. I wanted to 
particularly commend you for having this bill referred to our 
Committee. Over the years--I have watched more recently the 
preemption of this jurisdiction of our Committee over at 
Judiciary. We would like to work closely with other committees 
of the Senate. This Committee over the years has held a number 
of hearings, as well as acted on legislation concerning amateur 
and professional sports--having worked with other committees 
and representatives of the private sector in doing so.
    Admittedly, with respect to gambling we have had joint 
jurisdiction with the Judiciary, but exclusively we have the 
gambling on horse-racing bill by our distinguished Senator from 
Louisiana, Senator Breaux, in the 101st and 102d Congress.
    The reason I mention this taking over is in respect to the 
FCC--the Kohl-DeWine merger bill that was referred to the 
Judiciary Committee with respect to this merger, the public 
interest analysis of the transfer of these licenses, that is 
exclusively within the jurisdiction of the Federal 
Communications Commission which is, of course, under our 
Committee.
    And then more particularly again a privacy bill, the only 
committee that really had in-depth hearings and action is 
Senator Bryan's bill on privacy with respect to the children, 
and we passed that out, but we see now that the Judiciary 
Committee has tried to take over on the online privacy, 
Children's Online Privacy Protection Act.
    So I really commend you on this particular measure here. I 
had hoped our colleague, the chairman of the Judiciary 
Committee, would have been here this morning. I will 
communicate with him directly, but I wanted to make that 
statement for the record, because you have been busy, and the 
Committee has seen a slight erosion, and incidentally I 
apologize for South Carolina.
    [Laughter.]
    Senator Hollings. In the newspaper this morning, David 
Broder, there was no questions about it. I have been a 
candidate and gotten nowhere, but this gentleman got somewhere, 
and if you are going to run for President you have got to start 
out 2 years ahead of time, start getting your money and your 
organization. Our distinguished Chairman started out only 2 
months ahead of time and got some money and got a heck of a lot 
of support but very little organization, and when he hit my 
State of South Carolina that thing was greased, and then they 
inserted a pun.
    That greasing, Senator Stevens, had tremendous filth that 
finally came out from under the radar. Lee Atwater started that 
nonsense 25 years ago, and Lee Atwater was alive and well in 
the Republican primary in South Carolina, and it was not a 
proud day for our state. The party won, or the Governor won, 
but I wanted to publicly apologize to our Chairman, and as a 
result of your endeavor I am convinced now that we are going to 
begin to clean that up. Thank you a lot.
    Senator McCain. I thank you, Senator Hollings. I thank you 
for your friendship for many, many years, and I thank you for 
your kind comments.
    Senator Stevens.

                STATEMENT OF HON. TED STEVENS, 
                    U.S. SENATOR FROM ALASKA

    Senator Stevens. That is a tough act to follow, Mr. 
Chairman, but I do thank you for introducing this bill also, 
and I am very pleased that this bill will amend the sports Act 
that bears my name. I do think that there is no question that 
we should be dealing with doping and gambling. I would like to 
have my full statement appear in the record.
    Senator McCain. Without objection.
    Senator Stevens. I am concerned about the statistics that 
the American Academy of Pediatrics have provided that more than 
1 million American children are addicted to gambling, addicted 
with a pathological gambling problem. I think that is as 
important as the problem of doping.
    Last year we provided $3 million to start an anti-doping 
campaign through the Olympic Committee, the USOC. There is no 
question that this is something that we should direct our 
attention to, and I share the commitment of Senator Hollings to 
the jurisdiction of this Committee. We never had the Amateur 
Sports Act referred to the Judiciary Committee, and I hope my 
friend will understand that this is an amendment to that Act, 
and it deals with sports.
    Gambling and doping are two of the major problems with it, 
and I am pleased to see you are addressing them in this bill.
    [The prepared statement of Senator Stevens follows:]

    Prepared Statement of Hon. Ted Stevens, U.S. Senator from Alaska

    Thank you, Mr. Chairman. I commend you on the introduction of the 
Amateur Sports Integrity Act, though I am saddened by the need for our 
Committee to address the problems of doping and gambling in high school 
and college sports. Participation in sports should bring out the very 
best in athletes and inspire observers. Doping and gambling undermine 
the integrity of sports and have a corrupting influence on young 
athletes.
    I am hopeful that Title I of the Amateur Sports Integrity Act, 
which creates a grant program for research into the use and detection 
of performance-enhancing drugs, will provide us with information to 
help us further address doping in sport.
    Title II of the Act addresses gambling in high school and college 
athletics. Statistics of the American Academy of Pediatrics indicate 
that more than 1 million American children are addicted to gambling--
that's addicted--with a pathological gambling problem. This problem 
must be addressed.
    I look forward to the testimony of today's witnesses.

    Senator McCain. Thank you, Senator Stevens, and you have 
been the steward of the Olympics and amateur sports on this 
Committee, and I very much appreciate your support for the 
continued oversight jurisdiction by this Committee on those 
issues and your involvement.
    Senator Bryan.

              STATEMENT OF HON. RICHARD H. BRYAN, 
                    U.S. SENATOR FROM NEVADA

    Senator Bryan. Mr. Chairman, thank you very much. Although 
we disagree on this issue, I want to publicly thank you and 
your staff for working with our staff and accommodating my 
request for the witnesses to appear today. I want to say 
publicly that I do appreciate it, particularly our last-minute 
request, which you could very easily have said, look, you have 
had three, you have asked for four, and I very much appreciate 
that, Mr. Chairman.
    Illegal sports wagering is a serious issue on our nation's 
college campuses and a serious problem for many students. On 
that we agree. NCAA officials estimate that every college 
campus has student bookies, and that illegal gambling is a 
growing problem among students and student athletes, and on 
that we agree.
    One study found in a survey of six colleges in five states 
that 23 percent of students gambled at least once a week. The 
same study found that between 6 percent and 8 percent of 
students are probable problem gamblers. Unfortunately, the NCAA 
solution to this problem is the legislative equivalent of an 
air ball. It simply misses the mark.
    The legislation before us today will do nothing to address 
this issue or to solve this problem. The National Gambling 
Impact Study Commission estimated that illegal sports wagering 
in the United States ranged from $80 billion to $380 billion 
annually. By way of contrast, legal sports wagering in the 
State of Nevada last year totaled $2.5 billion, with roughly a 
third of that amount bet on college sporting events.
    Based on these figures, the amount of money wagered legally 
in Nevada on college sports represents somewhere between 1 
percent and a thousandth of 1 percent of the total amount 
wagered on sporting events annually in the United States. The 
NCAA and the supporters of this legislation ask us to believe 
that eliminating this 1 percent of legal wagering in Nevada 
will somehow curb illegal sports betting on our college 
campuses. This presents a classic case of the tail wagging the 
dog.
    The tortured logic advanced by the NCAA in promoting this 
legislation goes something like this. Illegal sports wagering 
across the country depends on the publication of point spreads 
in the newspapers. Newspapers only publish point spreads 
because sports wagering is legal in Nevada. Eliminate legal 
sports wagering in Nevada, and newspapers will no longer have a 
justification for publishing the point spreads. And finally, if 
point spreads are no longer published, illegal sports wagering 
declines.
    The facts: Newspapers are not the only source of betting 
lines. Spend 5 minutes on the Internet and you can find dozens, 
if not hundreds of Web sites with sports betting line 
information. In addition, this information is available from 
dozens of 800 and 900 telephone services.
    Secondly, decisions about whether to publish betting lines 
are made by newspaper editors responding to the interest 
expressed by their readers and I would also suspect that 
newspaper editors would argue vehemently that the First 
Amendment protects their right to publish betting lines 
irrespective of the locality of sports wagering in a particular 
venue. Prohibiting legal wagering on college sports in Nevada 
will not prevent newspapers across the country from publishing 
betting lines as long as newspapers believe their customers 
find this information useful.
    The National Gambling Impact Study Commission invited the 
NCAA to testify on November 10, 1998 at a hearing in Las Vegas 
to provide their perspective on sports gambling and its impact 
on college sports. As a followup to that testimony, the NCAA 
was requested to submit additional information to the 
Commission and in a letter dated January 28, 1999, it outlined 
a number of recommendations aimed at addressing the problems of 
sports gambling on college campuses.
    Included in these recommendations are the following 
gambling education awareness and prevention initiatives:
    1) Industry-imposed curbs on youth exposure to gambling 
advertising. I support this proposal;. 2) Government grants for 
the development of gambling education programs. I support this 
proposal; 3) A Government-funded national summit to examine the 
impact of sports gambling on youth. I support this proposal; 
and 4) training for health care professionals in screening 
gambling disorders among youth. I support this proposal.
    The NCAA also recommended two additional measures: 1) 
greater enforcement of existing sports gambling and consumer 
laws. I support this proposal; and 2) passage of federal 
Internet gambling prohibition legislation. Not only do I 
support this proposal, I have coauthored legislation with 
Senator John Kyl which has already passed the Senate to 
prohibit gambling on the Internet.
    Curiously enough, there is no mention, none, in the NCAA's 
letter of a recommendation to ban legal wagering on college 
sports in Nevada. In fact, in sworn testimony before the Study 
Commission on November 10, 1998, Mr. Bill Saum, the NCAA's 
director of agent and gambling activities, stated, and I quote:
    ``The NCAA is opposed to legal and illegal sports wagering, 
but much like this Commission [referring to the impact Study 
Commission], we have not drawn a moral line in the sand that we 
are going to come out and attempt to change the law.
    Certainly, we would be adamantly opposed to any further 
legalization across the United States. If we are going to have 
sports wagering, let's keep it in Nevada and nowhere else. 
Let's not allow individuals to wager from outside the state 
lines.
    So I do not think you will see the NCAA start a campaign to 
remove sports wagering from the State of Nevada, but you would 
see us jump to our feet if it would expand outside of state.''
    Less than a year after Mr. Saum's testimony was given, NCAA 
began lobbying Congress to ban legal wagering on college sports 
in the State of Nevada, and here we are today with a piece of 
legislation introduced with the full support of the NCAA that 
directly 
contradicts the sworn testimony of the NCAA's presentation on 
gambling.
    Unfortunately, the legislation addresses none of the 
recommendations, not a one, that the NCAA claims are needed to 
support the efforts to curb illegal gaming activity on college 
campuses, each of which, as I have previously indicated, I 
support.
    Mr. Chairman, I would be happy to work with you and NCAA 
and anyone else to develop a thoughtful, common sense approach, 
by way of a legislative proposal or otherwise, that addresses 
in a meaningful way the problems of illegal sports gambling on 
college campuses in America. Unfortunately, in this instance 
this legislation does not accomplish that objective, and I 
oppose the bill.
    Senator McCain. Thank you, Senator Bryan. I would like to 
remind my colleagues we have a number of witnesses, including 
our colleagues, in two panels, so I would appreciate it if you 
would make your opening statement as brief as possible.
    Senator Brownback.

               STATEMENT OF HON. SAM BROWNBACK, 
                    U.S. SENATOR FROM KANSAS

    Senator Brownback. Thank you, Mr. Chairman, and welcome 
back. Glad to have you here chairing the Committee again, and 
on an important topic.
    I introduced bipartisan legislation earlier this year, 
along with Senator Leahy, on sports gambling, intercollegiate 
athletic sports gambling ban. You folded that into this 
legislation, and I think it is an excellent thing to do, and I 
am strongly supportive of this legislation and a proud sponsor 
of the Amateur Sports Integrity Act.
    The legislation I had introduced earlier was in direct 
response to the recommendations made by the National Gambling 
Impact Study Commission that Senator Bryan was commenting on 
earlier, which last year concluded a 2-year study on the impact 
of legalized gambling in the country.
    The recommendation called for a ban on all legalized 
gambling on amateur sports, and is supported by the NCAA, 
which, I might add parenthetically, represents more than a 
thousand colleges and universities nation-wide, coaches, 
teachers, athletic directors, commissioners, university 
presidents, across the board. This bill would prohibit all 
legalized gambling on high school and college sports as well as 
the Summer and Winter Olympics.
    Mr. Chairman, the nation's college and university system is 
really one of our greatest assets. We offer the world the model 
for post-secondary education, and frequently sports are the 
window in which people first see those colleges. But sports 
gambling has become a black eye on too many of our colleges and 
universities.
    Gambling on the outcome of college sporting events 
tarnishes the integrity of the sport and diminishes the esteem 
in which we and the rest of the world hold U.S. post-secondary 
institutions. This legislation will remove the ambiguity that 
surrounds gambling on college sports and make it clearly 
illegal in all 50 states.
    We should not gamble with the integrity of our colleges or 
the future of our college athletics. Our young athletes deserve 
legal protection from the seedy influences of gambling, and the 
fans deserve to know that athletic competitions are honest and 
fair.
    Gambling scandals involving student athletes have become 
all too common over the past 10 years. In fact, there have been 
more point-shaving cases at the college and university level 
over the past 10 years, in the decade of the nineties, than in 
all previous time combined. These scandals are a direct result 
of an increase in gambling on amateur sports.
    It was just 2 years ago, during the Final Four, that we 
learned of the point-shaving scandal at Northwestern University 
involving their men's basketball team. This scandal involved 
both legal and illegal gambling on several Northwestern games.
    Kevin Pendergast was at the press conference when we 
introduced the bill on banning gambling on amateur athletics. 
He was a former Notre Dame place kicker who orchestrated the 
basketball point-shaving scandal at Northwestern University. He 
stated that he would never have been able to pull his scheme 
off without the ability to legally lay a large amount of money 
on the Las Vegas sports books. In fact, the last two major 
point-shaving scandals involved legalized gambling in Las Vegas 
sports books.
    A study just conducted by the University of Michigan--and 
Mr. Chairman, this one really troubled me, and it just came out 
yesterday--found that 84 percent of college referees said they 
had participated in some form of gambling since beginning their 
careers as referees. Nearly 40 percent also admitted placing 
bets on sporting events, and 20 percent said they gambled on 
NCAA basketball tournaments. Two referees said they were aware 
of the spread on a game, and that it affected the way they 
officiated the contest.
    This is just a new study out from the University of 
Michigan. Some reported being asked to fix games they were 
officiating, and others were aware of referees who, ``did not 
call a game fairly because of gambling reasons.'' That is a 
very troubling finding from the University of Michigan.
    Opponents of our legislation have tried to discredit our 
efforts by insisting we should be focusing our efforts on 
curbing illegal gambling, not legal gambling. Now, I agree that 
we should be looking at ways to help law enforcement and 
institutions of higher education combat illegal gambling, and I 
would hope that Senator Bryan and I could cosponsor legislation 
to do that.
    Legislation has been introduced that would create a panel 
to investigate and make recommendations with respect to illegal 
gambling. I am supportive of these efforts, but the fact 
remains that gambling on student athletics, whether legal or 
illegal, threatens the integrity of college sports. Banning 
legalized gambling on amateur sports serves notice that betting 
on college games or student athletes is not only inappropriate 
but can and does result in significant social cost.
    The National Gambling Impact Study Commission recognized 
the potential harm of legalized gambling by stating that sports 
gambling, ``can serve as gateway behavior for adolescent 
gamblers and can devastate individual careers.''
    Now, Mr. Chairman, I want to make one other point that we 
raised at the press conference. I encourage colleges and 
universities from across the country to contact the Nevada 
Gaming Control Board and ask them to do for their colleges what 
they do for Nevada schools. Presently, it is illegal to bet in 
Nevada on a Nevada college team. You cannot go to Vegas and bet 
on UNLV, on their basketball game, because the state 
legislature in Nevada said that that would be unseemly and it 
might have an impact or tarnish the image of UNLV sports.
    Well, what is good for the goose is good for the gander. I 
would like to ask, and did then and ask again now, the Nevada 
Gaming Control Board if the Board of Regents of the University 
of Kansas petitioned them to remove the University of Kansas 
from the sports book, from the line, will you please remove 
them, and will you state here today that yes, you will? If the 
Governing body of that institution of higher learning asks to 
be removed for the same reasons that UNLV was removed, will you 
remove that institution?
    If this is an issue of state's rights, I would hope that my 
State has that right, to be able to be pulled off of the board, 
and I hope that the presenters from the Nevada Gaming Control 
Board will say ``yes'' today, that you will do that, that that 
would be a more preferable way for us to move forward with this 
issue of State's rights.
    Mr. Chairman, we have a number of excellent presenters 
today, and I am looking forward to hearing their testimony, and 
I realize that a ban on collegiate sports gambling will not 
eliminate all gambling on college sports. However, a total ban 
will prevent another avenue for those participating in point-
shaving scandals to spread out their money.
    We have already had people testify that they use the legal 
book to spread out their money. If enacted, there will be no 
ambiguity about whether it is legal or illegal to bet on 
college sports. As part of a broader strategy to resensitize 
the public to the problems associated with college sports 
gambling, it will make a difference. We should not wait for 
another point-shaving scandal in order to act, and we will have 
another one if we do not act.
    Mr. Chairman, thank you very much for holding this hearing 
today. I look forward to the testimony of the witnesses.
    Senator McCain. Thank you very much, and before I recognize 
Senator Breaux, could our first group of witnesses--I notice 
Senator Reid there, and Congressman Gibbons, and any of the 
other congressional Members who are here, please come forward?
    Senator Breaux.

               STATEMENT OF HON. JOHN B. BREAUX, 
                  U.S. SENATOR FROM LOUISIANA

    Senator Breaux. Thank you very much, Mr. Chairman, and I 
also would join our bipartisan welcome back to the Committee. 
We are delighted to see you at the helm of the ship, and look 
forward to working with you.
    With all due respect to three authors of the legislation on 
the Committee, and I have respect for all of them and certainly 
do not question their motivation in offering the legislation, I 
know they are truly motivated and trying to accomplish what 
they want to accomplish with their legislation, but I will give 
you 10 to 1 odds that if legislation was passed that it would 
not affect gambling on amateur sports in America.
    The reason I say that is because gambling on amateur sports 
in America is already illegal. In 49 states it is illegal, and 
the only state where it happens to be legal, which is Nevada, 
is the state where that activity is regulated, where it is 
reported, where taxes are collected on it, where minors are 
banned from participating by law in the process, and yet in the 
other 49 states gambling on amateur sports occurs every day.
    It occurs in Washington. It occurs in our offices. How many 
of our offices have had pools on the Final Four, and football 
pools and everything else? I mean, how many states have illegal 
bookmakers making book and bets on amateur sports all over the 
country? Those activities, which are astronomical in terms of 
the volume, are already illegal activities. They are not 
reported, they are not regulated, taxes are not collected, and 
minors are not banned--in fact they participate on a regular 
basis.
    So it is clear in my opinion what the problem is. The 
problem is, we are not enforcing the laws in the 49 states 
where this activity is already illegal, and the only state 
where it is legal, it is regulated. It is regulated by law, and 
the laws are being enforced.
    So I think that the answer here is clear. Let's enforce the 
laws that are already on the book. Address the problem the way 
it should be addressed. The real problem is that it is not 
regulated in the other 49 states, and I just would suggest, 
with due respect--and again I do not question the motivation of 
the authors of the legislation. They are well-motivated. I just 
would suggest this is certainly not the answer to the problem, 
to the extent that a problem exists.
    Thank you.
    Senator McCain. Thank you. Senator Reid.

                 STATEMENT OF HON. HARRY REID, 
                    U.S. SENATOR FROM NEVADA

    Senator Reid. Mr. Chairman, some of us do question your 
motives. We have felt you have really moved forward on this 
once Arizona lost in the first round of the NCAA tournament.
    [Laughter.]
    Senator McCain. Guilty.
    [Laughter.]
    Senator Reid. Mr. Chairman, I would ask your consent that 
the full statement that I have prepared be made a part of the 
record.
    Senator McCain. Without objection.
    Senator Reid. Mr. Chairman, first of all I say to my friend 
from Kansas it is not true that the nineties has had more 
point-shaving scandals than any other time. The facts are 
clearly opposite that. I do not think we need to get into the 
detail of this. I think the fact of the matter is that we have 
legal gambling going on in the State of Nevada where Congress 
for the last 15 or 20 years, it has really focused on state's 
rights. Let each state do what they feel is best unless there 
is some overriding national problem.
    There is not one here. As Senator Bryan has so aptly 
stated, the State of Nevada's overall gaming on college sports 
is, he said, 1 percent. That is being generous. It is less than 
1 percent of all gambling that takes place. That 1 percent or 
less is legal. Someone comes to the State of Nevada to bet on a 
game, you look, the odds are posted, people know what the odds 
are going to be, if they win, they get paid off, if they lose, 
there is no one going to be out beating them up on some street 
corner because they did not pay off quick enough.
    I think, Mr. Chairman, that knowing how you feel about 
Government, that you should join with us in the legislation we 
have sponsored that says, if we have a problem with illegal 
gambling, which we all acknowledge there is on college sports, 
let us take a look at it, find out where it is taking place, 
and then get the Justice Department to do something about it.
    The problem in Nevada, if you look around the newspapers in 
the country, the odds are not posted from Las Vegas, they are 
posted by newspapers. They have people that earn a living 
posting the odds of these games. They do not come from Nevada.
    So I would hope that you would join with us in our 
legislation. After this legislation is passed and the study is 
completed that there is some finding that Nevada is at fault, 
then come back and look at it again. But I think you are really 
jumping ahead of where you should be.
    In short, Mr. Chairman, I believe that the experience that 
I have had--and I benefit from experience. 4 years I was a 
chief gaming regulator for the State of Nevada. I was chairman 
of the Nevada Gaming Commission, and I know something about 
illegal gambling.
    I think we in Nevada have done a good job of regulating 
gambling. We know what it means. You know, you are dealing with 
cash, and unless you have good regulation and control, problems 
develop. But as good--I know that the intentions of you and 
Senator Brownback are good. You are good people, and you mean 
well, but I would ask that you look at how we should approach 
Government, and the way we are doing it in this instance is 
simply wrong. The current laws, if they are insufficient, do 
something about them. Why pick on the State of Nevada.
    It is easy--the obvious answer is, it is easy because it is 
something that you can pick at, and the NCAA, this has been fun 
for them because it diverts attention from their incompetence. 
The NCAA is incompetent in how they manage amateur athletics, 
as evidenced by the young man at St. John's who traded a used 
car for a used car and they suspended him three games from 
playing basketball, and the numerous other instances of the 
NCAA, how they have been unfair to assistant coaches. It took a 
lawsuit to get assistant coaches so they were paid more than 
minimum wage. So I understand why the NCAA is doing this. It 
diverts attention from their lack of jurisdiction.
    Mr. Chairman, you are a sister state. Arizona is a sister 
state to the State of Nevada. The State of Nevada has bent over 
backward to try to be good neighbors. We do not allow people to 
play slot machines or to even drink alcoholic beverages until 
they are 21 years of age, even though other states allow 
somebody drinking alcoholic beverages when they are 18 years 
old. We have tried to set an example so that Nevada cannot be 
used as an excuse for pointing out how bad Nevada was in what 
they personally have decided should be the law.
    And I would hope that you would give Nevada the fact that 
we have done a good job of regulating gambling. We have done a 
good job of regulating college betting on games, and I would 
hope that you will join us, I repeat, in the legislation that 
we have initiated to take a look at illegal gambling on college 
sports, and do something about it, and not look at the less 
than 1 percent of gambling that goes on in college sports, and 
when and if you are able to accomplish that, everyone raises 
their hand and says, aren't we great, we have done this 
wonderful thing by eliminating betting on college sports, when 
you have eliminated less than 1 percent of it, and the saloons 
and drug stores and service stations where this betting takes 
place goes on as usual.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Reid follows:]

    Prepared Statement of Hon. Harry Reid, U.S. Senator from Nevada
Talking Points:

   First, let me stipulate, that I am opposed to illegal 
        gambling on college sports.
   While I appear before this Committee today as a Senator I 
        want this Committee to understand that my testimony is based, 
        in part, upon my experience as the former Chairman of the 
        Nevada Gaming Commission.
   Gaming is a cash industry that absent meaningful regulation 
        invites mischief.
   Indeed, it works in Nevada because of the effective 
        meaningful regulatory framework that oversees this industry.
   I believe the proposal before this Committee today misses 
        the mark in several key respects.
   Illegal gambling, whether in the dorm rooms of our colleges 
        or the saloons and taverns throughout the country, is wrong and 
        more should be done to crack down on it.
   However, banning lawfully regulated college gambling in 
        Nevada--which represents 1 percent of gambling on college 
        sports--will not address the problem of illegal gambling.
   Where is the evidence that banning the 1 percent of legal 
        college wagering in Nevada will eliminate illegal gambling on 
        colleges?
   Where is the evidence that current laws are insufficient?
   I would suggest such evidence does not exist.
   We do not need new laws--we need better enforcement.
   I've proposed legislation directing the Department of 
        Justice to appoint a special task force to study and report to 
        Congress on the measures that could be taken to curb illegal 
        gambling.
   I appreciate the NCAA's interest in protecting the integrity 
        of college sports.
   But the NCAA's efforts to define this issue as arising out 
        of Nevada and afflicting college campuses is simply a red 
        herring.
   Walk into any local bar or tavern and you're likely to find 
        an illegal bookie.
   Walk into any office today and you're likely to find a pool 
        on the Final Four.
   Will this ban eliminate this?
   Are we going to start referring March Madness office pools 
        down to the Justice Department for prosecution?
   Of course not, and the NCAA should abandon the use of this 
        red herring.
   I believe they are in a position to actually do something to 
        clean up the beleaguered reputation of college sports right 
        now.
   They are reaping millions of dollars in revenues from 
        contracts they're signing with broadcasters to cover these 
        games.
   Perhaps they could be using some of that money to mount 
        educational campaigns not unlike those being done to combat 
        drug and alcohol abuse on our campuses.
   I believe we need to follow the money a little more.
   What is being done with all of this money?
   I believe the NCAA has an obligation to put its money where 
        its mouth is and do something to curb this problem on their 
        member campuses.
   The fault lies not in Nevada and the solution is not a ban.
   I believe the solution involves a better understanding of 
        the illegal gambling, meaningful enforcement of existing laws 
        and greater cooperation from the NCAA.
   That said, I also believe these bans neglect to recognize 
        the good work done by Nevada resorts to work with law 
        enforcement in preventing point shaving scandals on college 
        campuses.
   They realize it is in their best financial interests not to 
        have any scandals.
   That is why they go to such great lengths to provide a safe 
        regulated environment for the operation of their sports books.
   Finally, I wish to say a few words about states rights.
   Since 1994, Nevada, more than any other state in the union, 
        has been targeted for federal initiatives that are anathema to 
        the people of Nevada.
   Whether it's nuclear waste or morality based anti-gambling 
        initiatives--the Republican Congress has sought to subvert and 
        trash the 10th Amendment rights of the state of Nevada.
   It is at best ironic that the party which professes to care 
        most about states rights is again pushing legislation which is 
        clearly so violative of those rights.

    Senator McCain. Thank you, Senator Reid.
    Senator Reid. Mr. Chairman, if you do not have any 
questions for me, could I be excused?
    Senator McCain. Please. Please. I know we have a vote 
coming up. I thank you very much, and I thank the patience of 
all of my colleagues from both sides.
    Senator Edwards.

                STATEMENT OF HON. JOHN EDWARDS, 
                U.S. SENATOR FROM NORTH CAROLINA

    Senator Edwards. Thank you, Mr. Chairman. Mr. Chairman, the 
people of North Carolina are excited about having their state 
represented in the Final Four this coming weekend and, in fact, 
with any luck, I plan to be there on Saturday and hopefully on 
Monday night, and we are excited because of our love for our 
state, our pride in the University of North Carolina, and 
appreciation of the student athletes who have made basketball a 
way of life in our State of North Carolina.
    While the people in North Carolina are excited about the 
Final Four for all of the right reasons, there are people in 
Nevada who are excited for all of the wrong reasons. Bookies in 
Nevada are on the edge of their seats because they stand to 
make hundreds of thousands of dollars this weekend from 
gambling on the Final Four. Instead of rooting for a university 
because of loyalty, bookies in Nevada will root for a team for 
one reason, and only one reason, money.
    Gambling on college sports, which is currently illegal, as 
we all know, in 49 states, has led to numerous point-shaving 
scandals in the 1990's. In fact, there were more point-shaving 
scandals in the nineties than in the previous five decades 
combined. Eight major universities were cited in the nineties 
for point-shaving scandals, and no school is immune, not even 
the most well-respected programs. Something has to be done to 
stop this, and that is why we are proud to cosponsor the 
legislation that we are hearing about today.
    I want to applaud Senator Brownback and Senator McCain, the 
Chairman, for their work in this area as well as the numerous 
other Senators who have been involved in this and have been 
willing to look past partisan politics to what is right for 
thousands of amateur student athletes on our college campuses 
across the country.
    The National Gambling Impact Study Commission, a study 
funded by Congress and released in 1999, recommended that 
betting on collegiate and amateur athletic events that is 
currently legal be banned altogether. This report goes on to 
say of sports wagering, it puts student athletes in a 
vulnerable position it can serve as gateway behavior for 
adolescent gamblers, and it can devastate individuals and 
careers.
    This ban has the support of Coach Dean Smith, Coach Herb 
Sendek of North Carolina State University, Coach Krzyzewski of 
Duke, and Coach Bill Guthridge of the University of North 
Carolina, as well as more than 60 other coaches across the 
country.
    In addition, I have heard from school administrators from 
all across North Carolina, from students who have been involved 
in point-shaving schemes, and from the commissioners of the Big 
South and Atlantic Coast Conference who support this ban. The 
support of these groups is a clear indication that there is a 
real and legitimate concern over the impact of legalized 
gambling on college games. Student athletes should go to 
college to receive an education, not to be involved in point-
shaving scandals. They should go to college to learn invaluable 
lessons, not to make money from the gaming industry in Nevada.
    This bill is not intended to solve all of the gambling 
problems in America. It will not stop the millions of dollars 
that are gambled illegally in office pools or over the 
Internet. It will, however, start to restore some of the 
integrity that college athletics has lost due to recent point-
shaving scandals, and it will prevent casinos in Nevada from 
raking in close to $1 billion annually on amateur athletics. It 
sends a clear and unmistakable signal that we believe gambling 
on college sports is wrong.
    When I watch the University of North Carolina play on the 
hardwood in Indianapolis this weekend, I want to be reminded of 
Michael Jordan hitting the game-winning shot against Georgetown 
in 1982 in the national finals, and Grant Hill leading Duke to 
victory over UNLV in 1991 in the national semifinals. I do not 
want to think about the reasons why, if these games were played 
this weekend, that the UNC-Georgetown game could be wagered on 
but not the Duke-UNLV game.
    Politicians in Nevada have outlawed betting on universities 
in their very own state. They recognize the potential for 
corruption that can be caused by gambling on college athletics. 
If gambling is so bad that they do not allow wagering on their 
own schools, why do they have the right to gamble on our 
schools? I believe I speak for the majority of North 
Carolinians when I say the casinos in Nevada should leave our 
college athletes and institutions alone.
    Now, we will hear today from folks in Nevada about how 
well-regulated the gaming industry is, and how they helped 
discover the point-shaving scandals. We will not hear much, 
though, about the millions of dollars they give annually to 
politicians. You will not hear them talk about the influence 
their money has here in Washington, and you will not hear them 
talk about the billions and billions of dollars their casinos 
make by other means.
    If the gaming industry truly wants to be a part of the 
solution and not part of the problem, they will do away with 
legal gambling on college sports. I support this ban not to 
cripple the gaming industry. I will guarantee you that the 
lights in Las Vegas will not go out if college sports gambling 
stops. I support this ban because it is the right thing to do. 
Student athletes should not be money-making magnets for casinos 
in Nevada. They are students first and athletes second, and it 
is about time we all started treating them that way.
    Thank you, Mr. Chairman.
    Senator Brownback. (presiding) Thank you, Senator. We are 
going to call a vote now on the bill on the Committee.
    [Laughter.]
    All those in favor.
    [Laughter.]
    We have a vote on the floor, but we will keep this going 
and Senator McCain and others will be back shortly.
    Congressman Gibbons, we will go with you next.

                STATEMENT OF HON. JIM GIBBONS, 
                U.S. REPRESENTATIVE FROM NEVADA

    Mr. Gibbons. Thank you very much, Senator Brownback, and to 
the Committee. I want to thank you and the members of the 
Commerce Committee for allowing me an opportunity to express my 
strong opposition to Senate bill 2267.
    As the senior Congressman from Nevada, the only state where 
sports wagering is legal, it is my pleasure to have the 
opportunity to share my thoughts with you on this issue, and I 
dare say in rebuttal to some of the accusations that have been 
presented so far, that the point-shaving scandals have neither 
been supported nor started by any of the legal gaming 
institutions in the State of Nevada, and I think it would be an 
error for anyone to associate or to ally the legal, highly 
regulated sports betting industry in Nevada with the issues of 
those illegal sports betting problems that were raised so far.
    And like this Committee, and like you, Senator Brownback, I 
firmly agree, and I join you in the commitment that maintaining 
the integrity of our collegiate athletics is an important goal. 
However, this bill misses that goal by a mile.
    Considering the fact that there is absolutely no plausible 
evidence to suggest that legal betting in Nevada in any way is 
responsible for the illegal sports wagering occurring in, 
around, and on our Nation's college campuses, also legal 
wagering on sports in Nevada makes up only 1 to 3 percent 
maximum, as you heard earlier, and that no one in the State of 
Nevada under the age of 21, no one who is not an adult and 
responsible for their own actions, is allowed to gamble in our 
state. The other 99 to 97 percent of the illegal betting occurs 
under existing federal and state laws in every of the 49 other 
states in this Union.
    By banning legal sports betting in Nevada, you will 
actually eliminate a tool used by law enforcement to detect 
unusual betting patterns leading to illegal activity such as 
the point-shaving scandal involving Arizona state university 
basketball players in 1994. Consequently, law enforcement 
experts, including a former FBI official who you will hear from 
today, have stated that a ban as proposed in S. 2267 will not 
make a dent in illegal gaming.
    So what would be the effects and, indeed, the unfortunate 
consequences of this misguided legislation? Well, first, Senate 
bill 2267 would create an unfortunate and undue economic burden 
on the thousands of Nevada families whose livelihood depends 
upon this industry. Second, Senate bill 2267 is an illegal 
bookie's dream, as it would not in any way assist with the 
enforcement of our current laws limiting sports gaming. Even 
the NCAA director of agent and gambling activities has stated 
on national television that when it comes to law enforcement 
the NCAA has, and I quote, ``a good relationship with the 
sports books in Nevada.''
    Later today you will have the opportunity to learn more 
about Nevada's tightly regulated and well-respected gaming 
industry from the Nevada Gaming Commission chairman, Brian 
Sandoval. Mr. Sandoval is a highly regarded regulator and will 
detail the success Nevada has had in enforcing its gaming laws, 
which include taking bets from only individuals who are 
physically present in the state, and at least 21 years of age.
    We need to support effective law enforcement measures which 
reduce the pervasiveness of illegal sports betting on and off 
our Nation's college campuses. Perhaps the NCAA should look in 
the mirror and reconsider the numerous Final Four sweepstakes 
which the NCAA and its corporate sponsors promote during March 
Madness.
    In closing, Mr. Chairman, it is my hope that this Committee 
will not miss the opportunity to address the real problems of 
illegal sports betting, rather than focusing on Nevada's highly 
regulated industry in an attempt to remedy the social problems 
of illegal sports wagering on college campuses.
    I want to thank you and this Committee for the opportunity 
to share my thoughts on this important issue, and I welcome 
your questions.
    [The prepared statement of Mr. Gibbons follows:]

Prepared Statement of Hon. Jim Gibbons, U.S. Representative from Nevada
Mr. Chairman:

    I would like to thank you and the members of the Commerce 
Committee, for allowing me the opportunity to express my strong 
opposition to S. 2267, the Amateur Sports Integrity Act.
    As the senior Congressman from the State of Nevada, the only state 
where sports wagering is legal, it is my pleasure to share my thoughts 
on this issue.
    Like you, I firmly agree that maintaining the integrity of college 
athletics is an important goal.
    However, there is absolutely no plausible evidence to suggest that 
the legal sports betting in Nevada is responsible for the illegal 
sports wagering occurring mostly on our nation's college campuses.
    Legal wagering on sports in Nevada makes up only one to three 
percent of all sports bets nationwide. The other 97 to 99% occurs 
illegally under existing federal and state laws.
    By banning legal college sports betting in Nevada, you will 
actually eliminate a tool used by law enforcement to detect unusual 
betting patterns leading to illegal activity, such as the point shaving 
scandal involving some Arizona State University basketball players in 
1994.
    Consequently, law enforcement experts, including a former FBI 
official who you will hear from later today, have stated that a ban as 
proposed in S. 2267 would not make a dent in illegal gambling.
    So, what would be the effects of this misguided legislation?
    First, S. 2267 would create an undue economic burden on thousands 
of Nevadans, whose livelihoods depend on the upstanding reputation of 
the casino-entertainment industry.
    Second, S. 2267 would not, in any way, assist with the enforcement 
of our current laws limiting sports gambling. Even the NCAA Director of 
Agent and Gambling Activities has stated on national television that 
when it comes to law enforcement, the NCAA has ``had a good 
relationship with the sports books in (Nevada).''
    Later today, you will have the opportunity to learn more about 
Nevada's tightly regulated and well-respected gaming industry from the 
Nevada Gaming Commission Chairman, Brian Sandoval. A highly regarded 
regulator, Mr. Sandoval will detail the success Nevada has had in 
enforcing its gaming laws, which include taking bets only from 
individuals who are physically present and at least 21 years of age.
    We need to support effective law enforcement measures which reduce 
the pervasiveness of illegal sports betting on and off of our college 
campuses.
    And perhaps the NCAA should look in the mirror and reconsider the 
numerous ``Final Four'' sweepstakes which the NCAA and its corporate 
sponsors promote during ``March Madness.''
    In closing, I would like to echo the concern recently expressed by 
Washington Post columnist George Will on this issue. In his March 12th 
column, he stated that this measure ``sets some sort of indoor record 
for missing the point.''
    It is my hope that this Committee will not miss the point, and that 
it will not go forward with this legislation.
    Banning a legal and well-regulated sports betting industry is a 
misguided attempt to remedy the societal problem of illegal sports 
wagering on college campuses.
    Thank you for this opportunity to share my thoughts on this 
important issue, and I welcome your questions or comments.

    Senator Brownback. Thank you, Congressman Gibbons.
    Congressman Graham, welcome.

             STATEMENT OF HON. LINDSEY O. GRAHAM, 
            U.S. REPRESENTATIVE FROM SOUTH CAROLINA

    Mr. Graham. Thank you very much. I do not know what more to 
add, but let me just kind of give you a brief overview of how I 
came to the issue.
    I did not wake up one day thinking about this. The NCAA 
contacted our office and we talked with Congressman Roemer and 
Congressman Wolf, and it was in response to a perceived need, 
if nothing else, by the NCAA that college sports betting has 
gotten to be a problem and will continue to be, and there is 
some objective evidence from the National Gambling Impact Study 
Commission to suggest that we need to ban gambling on college 
and amateur athletics, and I looked at the study, and it really 
makes sense to me, and I would like to address a couple of 
issues brought up by our friends from Nevada.
    If I were in Nevada I would probably be doing what they are 
doing, because it is an important issue in their state and 
there is a lot of money involved, but this is not a state's 
rights issue to me, Senator Brownback, and I appreciate the 
chairman for having this hearing now, because we know what is 
going on this weekend. There will be a lot of attention focused 
on college athletics in a positive way.
    In 1992 there was a national solution to a national problem 
called the Professional and Amateur Sports Protection Act, and 
within that Act Congress grandfathered certain states to allow 
continued betting--Nevada, Oregon, Montana, and Delaware--and 
we are just honestly dealing with Nevada.
    I would argue that there is no state's rights issue here 
because the legislation in 1992 prohibited any state from 
starting legal betting, or engaging in legal betting on college 
or amateur athletics. What we are having to do is revisit a 
national solution and see if we need to close the loophole 
created in 1992, and unfortunately I think the answer is yes.
    Now, each member of the Committee, Mr. Chairman, can decide 
on their own whether or not in the nineties college sports was 
adversely affected by a billion-dollar industry in Nevada, and 
you can make that decision without my input, but I would 
suggest to you it is not a great leap in logic to suggest that 
$1 billion on the line, some kid who is 18 years old, comes 
from a poverty situation, may miss a foul shot, may drop the 
ball when he could have caught the ball. It does not take much 
reasoning, I think, to understand that $1 billion on the line 
every year is going to affect the game adversely.
    In 1992, we took a national approach to this problem. We 
banned the future of legal betting on college and amateur 
sports except in some states. Now it is time to revisit whether 
or not that grandfather clause is serving the country well. I 
would suggest to you from the NCAA's point of view and other 
people involved within this issue, we need to revisit this 
national solution again and close this loophole, because a $1 
billion bet every year on college sports will eventually hurt 
college sports if it has already not done so. That is why I am 
here today, Mr. Chairman, for the love of the game.
    Thank you.
    Senator McCain. Thanks very much, Congressman Graham. 
Congresswoman Berkley, welcome.

              STATEMENT OF HON. SHELLEY BERKLEY, 
                U.S. REPRESENTATIVE FROM NEVADA

    Ms. Berkley. Thank you, Mr. Chairman, Committee members, 
for allowing me to testify before you today. March Madness is 
upon us, and illegal gambling on basketball is sweeping the 
country. I am sure that you are shocked, too, but I have 
learned that illegal office pools are operating right under our 
noses here on Capitol Hill.
    Senator McCain. Congressman Berkley, let me point out 
something to you. As long as the person who is running the pool 
does not take part of the gambling, that it is not illegal in 
America, so let us try to make that clear.
    Mr. Graham. May I be excused, Mr. Chairman?
    Senator McCain. Yes.
    Ms. Berkley. Now, office pools are regarded as harmless 
pastimes, but there is illegal gambling going on, and we should 
be fighting against it. Organized on-campus and off-campus 
betting operations will rake in massive profits, ruining lives 
on and off campus. Unfortunately, some Members of Congress and 
the NCAA think the best way to combat the menace of illegal 
sports bookmaking--and this is shocking to me--is to outlaw 
legal sports betting in Nevada.
    Never mind that Nevada's legal sports betting is strictly 
regulated, taxed, and available only to persons over 21 who are 
physically present in Nevada, the NCAA still wants to outlaw 
it, and the NCAA persists in pushing illogical legislation that 
will do nothing to eliminate illegal sports betting in this 
country.
    This legislation takes the upside-down position that the 
Nation's $380-billion-a-year illegal sports gambling problem 
will go away if Congress outlaws legal wagering in Nevada, a 
regulated business that generates far less than 1 percent of 
the illegal action in the other 49 states. It does nothing to 
fight illegal gambling.
    The sponsors of this legislation fail to answer the 
threshold question of how closing legal sports books in one 
state will do anything about illegal wagering by college 
students and others in the other 49 states.
    The sponsors claim that it will send a message to young 
people, but with all due respect to my colleagues in Congress, 
I sincerely doubt that young people know or care whether 
gambling is legal in Nevada, much less whether Congress has 
acted, and I listened with great interest when Senator Edwards 
spoke of the bookies in Nevada making hundreds of thousands of 
dollars this past week for the NCAA tournament. I would say to 
Senator Edwards that he look to the illegal bookies in North 
Carolina and investigate how much money they will be making 
while the Senator is sitting home cheering for his team.
    We need better education and law enforcement, not a 
punitive measure against one state's primary industry. Closing 
our sports books to send this message is like closing 
restaurants to send a message to young people about alcohol. We 
need legislation that will attack illegal sports betting head-
on, and that is why I am introducing the Illegal Sports Betting 
Enforcement Act that I hope you will take time to review and 
support, and I would like to briefly compare the legislation.
    My bill boosts law enforcement's efforts to crack down on 
illegal betting operations, hitting hard at illegal book-making 
rings. The NCAA bill does absolutely nothing to help law 
enforcement. My bill would investigate the scope and uncover 
the causes of illegal campus betting. The NCAA bill does 
nothing, no studies, no investigations, no public service 
statements, nothing. My bill calls on the NCAA to step up 
gambling prevention programs on campuses. The NCAA proposed 
bill takes no responsibility.
    Mr. Chairman, Nevada is not the problem. Please look at the 
Illegal Sports Betting Enforcement Act I am proposing. It is 
clearly the better choice, and I want to thank you very much 
for giving me the opportunity to share my thoughts with you. I 
have long been an admirer of yours, never more so than over the 
last several months.
    Senator McCain. Thank you very much, Congresswoman Berkley.
    Congressman Roemer, welcome.

                 STATEMENT OF HON. TIM ROEMER, 
                U.S. REPRESENTATIVE FROM INDIANA

    Mr. Roemer. I would ask unanimous consent for my entire 
statement to be entered into the record.
    Senator McCain. Without objection.
    Mr. Roemer. Thank you, Mr. Chairman. I first of all want to 
thank you for holding this hearing, and I hope that the House 
side will also hold a hearing so that the Members of Congress 
can get the relevant and important and necessary information on 
this act so that we can learn about it and we can vote it up or 
down and not have people downtown or uptown, or people from one 
side or the other in Washington, D.C. saying that this is dead 
legislation. Let the Members of Congress decide whether or not 
this legislation will pass.
    I want to thank Mr. Brownback and Mr. Leahy, who I have 
joined on cosponsoring this, and Mr. Graham for his support on 
the House side.
    You know, Mr. Chairman, we came just recently through the 
Oscars, and we had Oscars awarded to different movie stars in 
this country who are good at following direction, following 
script and getting an Oscar for doing precisely that. It is 
tough to get a ticket to an Indiana high school basketball game 
or a Notre Dame football game on a Saturday because of the 
magic and the uncertainty of the outcome of sports. It is not 
scripted.
    Nobody knows on a given day who might defeat whom on the 
playing field. When a 17-year-old or an 18-year-old throws a 
pass or steps to the free throw line, that magic and that 
purity in this country is not questioned as to whether or not 
that person is going to make it or miss it determined by the 
sports betting line. If it is, then the integrity of our 
amateur athletics are severely questioned, and we probably lose 
support and audience for sports across the board. I am here 
today because I believe in the magic of that competition and 
the uncertainty of the outcome.
    Now, I think the threshold questions to ask, Mr. Chairman, 
are first, who knows the most about the threat to college 
athletics today? Is it us, sitting in this room? Is it the 
people downtown in Washington, D.C.? Or are they the college 
presidents? Are they the college coaches? Are they the college 
athletes?
    Those three groups of people: coaches, presidents, and 
athletes support our bill as one of the highest priorities for 
them in this session of Congress. We have university presidents 
writing to us. We have coaches, and you will hear from the 
distinguished coach from Connecticut, a champion coach from 
last year, Jim Calhoun, talk about this problem. We have Dean 
Smith and Joe Paterno and Bob Davie and Matt Doherty on our 
side on this issue.
    Secondly, what is the value of this legislation? The value 
is to protect the magic of sports and the integrity of 
teenagers. Now, we can bet almost on anything in this country, 
in America. They allow betting on Super Bowls, on horses, on 
cock-fighting. They allow betting on all kinds of pro events.
    All we are asking, Mr. Chairman, is to finish the job we 
started in 1992, where 46 states were banned and now only one 
is left, to finish the job that the National Gambling Impact 
Study Commission asked us to do, and to protect our teenagers 
and protect college, high school, and amateur sports.
    I would conclude, Mr. Chairman, on two notes. One is a 
quote from the president of the University of Notre Dame, 
Father Monk Malloy, who when asked about what kind of priority 
this is for him, he said the following, and I quote ``the 
president of Notre Dame: ``nothing scares me more than the 
potential harm unfettered gambling creates. Scandals erode 
confidence that what is taking place is a real event. If people 
begin to believe college athletics are scripted, then why 
should anybody come to the games, and how is that in any way 
consistent with what we stand for as an academic institution''.
    Now, I am a big sports fan, as you are, Mr. Chairman, and 
in Indiana, when the tiny, tiny school, Milan High School in 
1954 defeated South Bend Central, and is the whole genesis of 
the movie Hoosiers, that is the beauty of sport, the little guy 
taking on the big guy, kind of like you did, the little guy 
taking on the big guy.
    [Laughter.]
    The Russians thought they had us in 1980, and in hockey we 
came back and we beat them, the hockey shots heard around the 
world, and Kerri Strug, who hit that celebrated vault, won our 
Olympic gold medal for the women's team. Nobody predicted that, 
with a broken ankle. That is the beauty of what we are trying 
to do.
    We are not trying to eliminate sports betting. We are not 
trying to eliminate all gambling. Protect as a value our 
teenagers, and the integrity, the magic, the purity of college 
athletics.
    And finally, Mr. Chairman, we have heard a lot about what 
will this do between the competition, what will do between our 
emphasis that we want to put on going after maybe illegal 
sports betting? It is awfully difficult for us to work 
effectively to go after illegal gambling when the Government 
sanctions legal gambling.
    So with that, thank you again for holding this hearing.
    [The prepared statement of Mr. Roemer follows:]

Prepared Statement of Hon. Tim Roemer, U.S. Representative from Indiana
    Thank you very much, Mr. Chairman and members of the Committee. I 
appreciate the opportunity to testify today in support of legislation 
which Senators Sam Brownback and Pat Leahy, and Rep. Lindsey Graham and 
I have introduced, to prohibit legal gambling on high school, 
collegiate and Olympic sporting events.
    In my home state of Indiana, we take our high school and college 
sports very seriously. You can't get a ticket to a high school 
basketball game in my district on a Friday night, or to a Notre Dame 
football game on a Saturday afternoon. They are sold out for months and 
even years in advance.
    Why is that? What's the magic of high school and collegiate sports 
that attracts so many student-athletes to compete, and draws so many 
fans to watch?
    To me, it's the purity and uncertainty of amateur sports. In an era 
of movies and computer games, where the outcomes are scripted in 
advance, you just don't know what's going to happen when a 17-year old 
boy or girl steps to the line to attempt a game-winning foul shot or to 
kick a field goal. Your home team may win, they may lose, but at least 
you know the players tried their best in the pure spirit of 
competition.
    Today, that purity is being threatened by the growing influence of 
gambling. Not by small-time office betting pools or parking lot wagers, 
but by high-stakes, legal, government-sanctioned gambling: some $1 
billion worth last year alone on college sports.
    As long as that kind of big money is out there, and sports betting 
is both legal and indeed encouraged by the government, the temptation 
to shave points or throw a game will always be there. We will no longer 
know if a player misses a layup, or drops a pass deliberately, or if he 
just plain misses. And once we lose that certainty, we will no longer 
know if amateur sports are still an act of competition, or just another 
act that has been scripted not in Hollywood, but in the back rooms of 
the legal betting parlors.
    We are not proposing to ban gambling or even to ban all sports 
betting. If this bill passes, there will still be plenty of venues 
available for people to gamble, including the entire range of 
professional sports. We are simply trying to put the segment of amateur 
athletics that is played predominantly by teenagers off-limits when it 
comes to government-sanctioned gambling.
    This is the responsible thing to do. It will help protect the 
integrity of amateur sports from the growing and increasingly negative 
influence of sports betting. Just as importantly, it will send a strong 
signal to the American public that we will not tolerate betting on 
teenagers.
    I understand that illegal sports betting is a serious concern, and 
I agree that we need to do more to address this problem. But the fact 
remains that gambling on student-athletes, whether legal or illegal, 
threatens the integrity of college sports. You can't wage an effective 
campaign against illegal sports betting, or even expect people to take 
this problem seriously, as long as the government continues to sanction 
legal sports betting.
    When you talk to the people who are most affected by sports 
betting, you find that coaches, student-athletes and university 
presidents all support a ban on legal sports betting. They know 
firsthand how pervasive the sports betting problem has become, and the 
threat it poses to the integrity of their athletic programs and the 
student-athletes who participate in them.
    That's why our bill is the number one priority of the National 
Collegiate Athletic Association and the nearly 1,000 colleges and 
universities it represents. It is supported by our nation's most 
respected college football and basketball coaches, 65 of whom recently 
signed a letter to Congress urging passage of our bill.
    It is supported by the Division I, II and III student athlete 
advisory councils, which represent most of our nation's college 
athletes, and by 33 other major organizations representing coaches, 
athletes, athletic administrators, teachers, and presidents at the 
university, college, junior college and high school levels.
    Moreover, the National Gambling Impact Study Commission spent two 
years studying the effects of legalized gambling, and recommended that 
``the betting on collegiate and amateur athletic events that is 
currently legal be banned altogether.'' Our bill is in response to the 
Commission's recommendations.
    As Fr. Edward Malloy, President of the University of Notre Dame, 
recently observed: ``Nothing scares me more than the potential harm 
unfettered gambling creates. Scandals erode confidence that what's 
taking place is a `real' event. If people begin to believe college 
athletics are scripted, then why should anybody come to the games? And 
how is that in any way consistent with what we stand for as an academic 
institution?''
    Congress took the first step in 1992 by voting to prohibit legal 
sports betting in 46 states. It's time now to finish the job. Let's end 
legal sports betting and put the emphasis back where it belongs: on 
athletes playing their best, not placing their bets. On beating the 
competition, not beating the spread.
    Think back for a moment on some of the greatest moments in our 
nation's sporting history: tiny Milan High's remarkable triumph in the 
Indiana state basketball championship, the U.S. men's hockey team's 
improbable victory over the Russians, Kerri Strug's courageous vault to 
win the Olympic gold medal. These events captivated our imagination 
because they were real and unexpected.
    If we allow amateur sports to become scripted, that magic will be 
gone. Let's pass this legislation and keep high school and collegiate 
sports as an institution, which all Americans--coaches, players and 
fans alike--can value and trust. Thank you.

    Senator McCain. Thank you, Congressman Roemer. Thank you 
for your kind remarks. Thank you for being here. I would point 
out it has been since 1963, when Roger Staubach was at the 
Naval Academy, which was the last time Navy beat Notre Dame, so 
not all is well in the world.
    [Laughter.]
    Mr. Roemer. I hate to disagree with you, but I hope that 
string continues.
    Senator McCain. Thank you very much.
    I appreciate the patience of our panel members, President 
Charles Wethington, president, University of Kentucky, Mr. Jim 
Calhoun, the head men's basketball coach at the University of 
Connecticut, Dr. Tim Kelly, executive director, National 
Gambling Impact Study Commission, and Mr. Frank Fahrenkopf, who 
is president and CEO of the American Gaming Association.
    As you take your places, I would like to quote from an 
article that was in Sports Illustrated but also carried in this 
NCAA fact book. Steven Hedake Smith sunk himself more than 
$10,000 in debt to a student bookie. To wash the debt, Smith 
agreed to shave points off games. Smith then enlisted the help 
of a team-mate to shave points off three more games when more 
then $1 million in bets was placed on the games in Las Vegas.
    Before he was sentenced, Smith told Sports Illustrated, 
having been there, ``I can tell you how easily players can be 
drawn into fixing games. Poor, naive teenagers plus rich, 
greedy gamblers equal disaster.''
    President Wethington, I thank you and the rest of the panel 
for your patience. We thank you for being here on this very 
important issue. Please proceed.

    STATEMENT OF DR. CHARLES T. WETHINGTON, JR., PRESIDENT, 
             UNIVERSITY OF KENTUCKY, LEXINGTON, KY

    Dr. Wethington. Senator McCain, thank you very much, and 
thank you for inviting me to testify today on a matter of 
concern to the NCAA and to the larger higher education 
community, and that is gambling on college sports, and I would 
ask my written statement in its entirety be included as a part 
of the hearing record.
    Senator McCain. Without objection.
    Dr. Wethington. The excitement of college sports does not 
get any better, as you have heard this morning, than during the 
road to the Final Four and Mr. Chairman, I know that your 
institution, like the University of Kentucky, we get excited 
when our teams win and we get disappointed when our teams do 
not advance, and so we are both in the same boat this year, I 
believe. Our emotions are all tied up in the hopes and dreams 
of these young players and the pride and respect we feel for 
our institutions. We do not need anything more to enjoy these 
games.
    Gambling on the outcome of these games is not only 
unnecessary, it sells short the talent and hard work that the 
student athletes bring to the games, and has the potential to 
jeopardize the integrity of this American tradition. In my 10 
years as president, I have yet to hear genuine fans of 
intercollegiate athletics suggest that they support collegiate 
contests because they can bet on the outcome of the games.
    Gambling on college student athletes and the games they 
play, whether done legally in the sports books of Nevada or 
illegally in any other state, or on the Internet, is a problem 
for colleges and universities. Gambling on high school, 
college, and Olympic sporting events we believe should be 
prohibited in all states, and greater effort should be taken to 
enforce existing laws that ban gambling on the athletic success 
of our young people.
    The Amateur Sports Integrity Protection Act will, we think, 
eliminate the use of Nevada sports books in college point-
shaving scandals, eliminate the legitimacy of publishing point 
spreads for college sports, and advertising for college spots 
tout services. We sensitize young people in the public to the 
illegal nature of gambling on college sports and inevitably 
reduce the numbers of people who are introduced to sports 
gambling.
    When it comes to college sports gambling, whether a wager 
is placed on the Internet, with a neighborhood bookie, or in 
the most highly regulated casino in the world, the result is 
the same. That remains the potential for the integrity of the 
contest to be jeopardized.
    Opponents of this legislation say that the problem is not 
with legal sports gambling, but with illegal sports gambling. 
We say there is a problem with both. For 4 years, the NCAA has 
been battling to reduce illegal gambling on college sports. 
NCAA staff worked with the FBI, local college law enforcement 
and campus officials to address the illegal side of the 
business, but it is hard when gambling on college sports is 
legal in one place and not legal in another. It puts us at a 
real disadvantage fighting illegal sports gambling, when legal 
sports gambling is so glamorized. This not only sends a mixed 
message to the other 49 states, it gives gambling on college 
sports a celebrity status.
    We must tackle this problem on multiple fronts. We cannot 
stand by while this inappropriate activity threatens the 
integrity of college games, places college student athletes in 
a vulnerable position, destroys lives, and impacts campuses.
    The Nevada gambling industry says they have helped us 
identify gambling irregularities that have resulted in 
prosecutions. They are right. They helped us convict the 
Arizona state basketball players who agreed to shave points. 
But they did not detect the Northwestern game-fixing scheme, 
which also utilized the legal Nevada sports books, and more 
important, we do not believe they have ever helped us prevent a 
scandal. This action has taken place after the fact.
    At a press conference in January to introduce Senator 
Brownback's legislation, and Senator Brownback referred to this 
earlier, the young man who master-minded the Northwestern 
gambling scandal told the press, ``without the option of 
betting money in Nevada the scheme would not have occurred''. 
He cited two reasons. ``My local bookie could not have covered 
a $20,000 bet on a game that was fixed, and conscience would 
not let me cheat someone I know''.
    Opponents of the pending legislation will also criticize 
the NCAA for not doing enough. Our number one priority will 
always be the support of colleges and universities in providing 
participation opportunities for the 335,000 student athletes 
who play intercollegiate athletics. We also provide 81 
championships in 22 sports that gave more than 40,000 student 
athletes last year the opportunity to say they were the best of 
the best. The bulk of NCAA resources go, and will continue to 
go, toward these two goals.
    The two most important tools we have in fighting sports 
waging are campus education and cooperation with law 
enforcement. We have made significant progress in both of these 
areas in the last 4 years. We have conducted countless seminars 
around the country, including presentations by the FBI. We have 
produced PSA's, posters and brochures annually, made awareness 
presentations to coaches, student athletes, and officials at 
our highest profile championships.
    We have participated in hundreds of newspaper, television, 
and radio interviews to raise awareness. We have passed 
association-wide bylaws, put real teeth in our antisports 
gambling campaign, and most importantly, engaged our 1,074 
member colleges and universities in conducting local efforts to 
raise campus and community awareness to the dangers of betting 
on college sports.
    This is tough trenchwork, and the job is made tougher by 
the existence of a perfectly legal, deceptively glamorous open 
sports book on intercollegiate athletics in Nevada. The 
elimination of legalized college betting in Nevada will make 
the task of waging war on illegal sports gambling an infinitely 
fair fight.
    We have established policies to prohibit all sports 
gambling by campus athletics personnel, student athletes, and 
NCAA employees. We conduct background checks on gaming 
officials. We sponsor educational programs for student 
athletes. We work with campus administrators to conduct sports 
wagering workshops. We broadcast antisports gambling public 
service announcements during our championships.
    We have published a guide for students on the possible 
negative effects of sports gambling and principles of good 
financial management, and we are currently working with the 
higher end community to develop research on college sports 
gambling. Since being enacted in 1992, the Professional and 
Amateur Sports Protection Act has been successful in holding 
the growth of state-sponsored amateur sports gambling, but the 
beachhead of legalized amateur sports wagering continues to 
hold in Nevada casinos blunts efforts of the NCAA and higher 
education to combat college sports gambling.
    The insidious effects of legalized wagering on college 
sports has been recognized by Nevada, as evidenced by the 
state's own laws that prohibit betting on any Nevada team. The 
effects go far beyond the Nevada state's line. Other states' 
colleges and universities should be given the same protection, 
and you have heard that referred to on more than one occasion 
this morning.
    Even though sports gambling is illegal in nearly every 
state, point spreads on college games are published in 
newspapers across the country, bookies are common fixtures on 
college campuses, and new technologies allow bets on college 
games to be placed over the Internet. The dollars involved are 
big, and they are escalating every year. By clearly making 
gambling on college sports illegal everywhere all the time, we 
will strike a significant blow against an activity that 
threatens the integrity of college sport.
    This Nation's college and university system is one of our 
greatest assets. We offer the world a model for post secondary 
education. Betting on the outcome of college sporting events 
tarnishes the integrity of sport and diminishes the esteem in 
which we and the rest of the world hold U.S. colleges and 
universities. For these reasons, the NCAA and its member 
institutions respectfully seeks your help in eliminating from 
the Professional and Amateur Sports Protection Act the 
exemption that allows the Nevada casino industry to operate 
collegiate sports betting schemes and thereby to jeopardize the 
integrity of sport in America.
    While we recognize that a ban on collegiate sports gambling 
will not eliminate all gambling on college sports, it is a 
significant start. Coupled with passage of legislation to ban 
betting over the Internet, and more vigorous enforcement of 
existing state and federal laws, we have a shot at curbing this 
detrimental activity. If we miss this legislative opportunity, 
the job of fighting illegal sports wagering elsewhere will be 
infinitely more difficult.
    NCAA and the colleges and universities that support this 
legislation, along with the leaders of the high school 
community, higher education and the U.S. Olympic Committee, 
have no monetary interest in the outcome of this legislation. 
Our goal is to protect student athletes and remove the unseemly 
influences of sports gambling on our amateur athletes and the 
games they play. We look forward to working with you to close 
the gap that has not only allowed legal betting on college 
sports to continue, but also fuels illegal betting on college 
games.
    Now, if you would, gentlemen, please turn your attention to 
the television monitors to see the gambling PSA the NCAA is 
running during the Final Four championship games on CBS and 
ESPN, if I might do so, Mr. Chairman.
    [The prepared statement of Dr. Wethington follows:]

   Prepared Statement of Dr. Charles T. Wethington, Jr., President, 
                 University of Kentucky, Lexington, KY

    Chairman McCain, Senators Hollings, Brownback and other 
distinguished members of the Committee, thank you for inviting me to 
testify before you today on a matter of concern to the NCAA and the 
larger higher education community--gambling on college sports.
    The last two weekends have provided a wonderful opportunity for 
sports fans to watch college basketball at its finest. The excitement 
of college sports doesn't get any better than during the road to the 
Final Four. Mr. Chairman and Senator Brownback, I am sure you felt the 
same exhilaration I did when your home team played and won earlier in 
the tournament; I am also confident that you shared the same feeling of 
disappointment when your team played and lost two days later. Our 
emotions are all tied up in the hopes and dreams of these young players 
and the pride and respect we feel for our institutions. We don't need 
anything more to enjoy these games--gambling on the outcome of these 
games is not only unnecessary, it sells short the talent and hard work 
that the student-athletes bring to the games and has the potential to 
jeopardize the integrity of this American tradition. In my 10 years as 
president, I have yet to hear genuine fans of intercollegiate athletics 
suggest that they support collegiate contests because they can bet on 
the outcome of the games.
    Gambling on college student-athletes and the games they play, 
whether done legally in the sports books of Nevada or illegally in any 
other state, or on the Internet is a problem. Gambling on high school, 
college and Olympic sporting events should be prohibited in all states 
and greater efforts should be taken to enforce existing laws that ban 
gambling on the athletics success of our young people. On behalf of 
NCAA colleges and universities, athletics conferences and affiliated 
athletics organizations, I ask for the Committee's help in achieving 
these priorities.
Background--Congress Enacts Law to Prohibit Gambling on Amateur and 
        Professional Sports
    In 1992, the Professional and Amateur Sports Protection Act (PASPA) 
was signed into law by President Bush to prohibit gambling on most 
sporting events. PASPA exempted four states that already conducted, or 
had enacted legislation that permitted them to conduct, sports gambling 
within their jurisdiction. Nevada was the only state at the time and, 
continues to be the only state, where legal gambling on college and 
Olympic sporting events is conducted. Our collective instincts were 
right in 1992 and we should have completed the job then. We should have 
made sports wagering illegal in all 50 states. Now, eight years later, 
there has been a blurring of the line between legal and illegal sports 
gambling in this country. Sports gambling has become such a part of the 
glamour of Las Vegas that it is fairly safe to conclude that many do 
not know that gambling on college sports is an illegal activity in 
virtually every state in the U.S.

National Gambling Impact Study Commission--Recommends Exemption be 
        Eliminated
    In June 1999, the National Gambling Impact Study Commission, 
comprised of bipartisan members appointed by the President and the 
leadership of the U.S. House of Representatives and U.S. Senate, issued 
their recommendations to Congress. Among the recommendations put 
forward by the Commission was that ``betting on collegiate and amateur 
athletic events that is currently legal be banned altogether.'' In 
making this recommendation the Commission stated,

        ``Sports wagering threatens the integrity of sports, it puts 
        student athletes in a vulnerable position, it can devastate 
        individuals and careers.''

    We agree with the Gambling Impact Study Commission that legal 
gambling on college sports fuels the larger illegal sports gambling 
industry and should be discontinued.

Pending Legislation Closes a Loophole in 1992 PASPA Law--Helps Protect 
        the Integrity of College Sporting Events
    S. 2021 the pending legislation will remove any ambiguity 
associated with betting on college sports by making it clearly illegal 
to gamble on college games in every state. This will help curb the 
destructive and unseemly practice of gambling on the athletics success 
of our nation's young student-athletes. Nearly a billion dollars was 
bet legally in Nevada on college games last year. Although rare, the 
NCAA has experienced several high profile gambling related incidents 
involving student-athletes in the last decade. The most significant of 
these scandals involved money wagered legally in Nevada casinos. As the 
amount of money legally wagered on college sports escalates, the 
pressures on student-athletes to provide inside information on the team 
for gambling purposes or to ``shave'' points and fix games is bound to 
increase as well. The pending legislation will close the loophole of 
the 1992 legislation, aid in preserving the integrity of college 
sporting events, and assist in protecting student-athletes from 
pressures to influence the outcome of a game or contest.
    While it is true that Nevada casinos have been helpful in 
monitoring unusual shifts in wagering on college games, this hardly 
ensures protection from point shaving scandals. In fact, recent point 
shaving scandals have utilized Nevada sports books without being 
detected; the Northwestern University case is a prime example. A 
blanket prohibition on collegiate sports betting will reduce 
significantly the outlets available for placing wagers and, in doing 
so, will undoubtedly have an impact on the number of individuals 
gambling on the games. The fact is, even when the Nevada casinos helped 
identify the point shaving activity, it was after the fact. We are 
fearful that the scandals identified by the Nevada sports books are 
only representative of a larger problem of legal wagers on ``fixed'' 
games that largely goes undetected. We are not aware of the Nevada 
sports books ever having prevented a college gambling scandal from 
occurring.

Publication of Point Spreads in Most Newspapers Contributes to Illegal 
        Sports Wagering
    According to the National Gambling Impact Study Commission report:

        ``One reason Americans may not be aware of the illegality of 
        sports wagering is that the Las Vegas `line,' or point spread, 
        is published in most of the 48 states where sports wagering is 
        illegal.''

    The pending legislation will eliminate any justification for the 
publishing of point spreads (betting odds) on college games in our 
nation's newspapers. In addition, a ban on all collegiate sports 
gambling may help curtail the widespread advertising of sports 
handicappers' services (associated with college football and 
basketball) in newspapers, magazines and on television. Point spreads 
contribute to the popularity of sports wagering. In short, a uniform 
prohibition will re-sensitize the public to the corrupting nature of 
this activity and encourage newspapers to follow the lead of the 
Washington Post, which voluntarily refuses to publish the betting line 
on college games. Furthermore, the gambling industry points to Internet 
gambling as the future source of point spreads. Congress' passage of 
the Internet Gambling Prohibition Act would have a significant impact 
on U.S. access to online sports gambling sites.

Nevada Prohibits Betting on Any of Nevada's Own Teams to Protect the 
        Integrity of those Events
    Nevada is currently the only state where collegiate sports gambling 
occurs. Proponents of Nevada sports books argue that regulated sports 
books pose little threat to the integrity of sports contests and that 
illegal sports gambling is the culprit. However, Nevada gaming 
regulations clearly recognize the potential danger that legal sports 
gambling presents. The regulations not only prohibit Nevada sports 
books from accepting bets on college athletics events that occur in the 
state, but they also prohibit gambling on any games of Nevada 
institutions played outside the state's borders. Inexplicably, this 
protection does not extend to any of the institutions located in the 
other 49 states. On February 11, the NCAA wrote to Steve DuCharme, 
Chairman of the Nevada Gaming Control Board. The letter specifically 
asked the Nevada Gaming Control Board to grant a request by a NCAA 
member college or university to have the institution's name removed 
from the betting boards at the Nevada sports books in much the same way 
the Nevada institutions were removed. In a March 20 response, the NCAA 
request was not granted. DuCharme merely said other institutions are 
afforded the same protections as Nevada's institutions because their 
home states don't allow betting on their own home teams. However, the 
letter failed to point out that other states, unlike Nevada, don't 
allow betting on any other states' teams either. With the ease of 
travel, the proximity of bettors to teams doesn't stop at a state line. 
For example, nothing prohibits someone from placing a $9,500 bet on a 
college game outside Nevada and then attempting to pressure a student-
athlete to influence the outcome of the contest. The same protections 
afforded Nevada teams should be provided to the teams of all states.

Legal College Sports Gambling Operations Provide Avenue for Illegal 
        Sports Gambling Money Laundering
    The legally and illegally wagered dollars on college sporting 
events are thought to be in the billions but no accurate data on the 
exact amount of illegal gaming on college sports is available. 
Complicating the matter is the money laundering of illegal sports book 
dollars through legitimate sports books. Steve DuCharme, Chairman of 
the Nevada Gaming Control Board, is quoted in a February 1999, Sports 
Business Journal article as saying:

        ``We've taken steps to crack down on the amount of illegal 
        money being laundered through legitimate sports books. We 
        really have no way of knowing [how much is laundered through 
        the legal sports books]. Based on transcriptions of wiretaps, 
        it is millions of dollars.''

    These are federal law enforcement issues, meriting a federal 
solution.

Discontinuation of College Sports Gambling Would Not Result in a 
        Serious Threat to the Nevada Economy
    Fears that this legislation will be a ``serious threat'' to the 
Nevada economy are not supported by the facts. In 1999, approximately 
$2.3 billion dollars was wagered in Nevada sports books. Casinos 
retained $99 million, a little more than 3.5 percent of the total 
amount wagered on sports. According to Steve DuCharme, chairman of the 
Nevada State Gaming Control Board, the amount kept by casinos on sports 
gambling is ``very small'' compared to other casino games. Furthermore, 
the amount wagered on college sports is only a little more then a third 
of the total. In an industry driven by billions of dollars, (1999 total 
casino revenues were $10.1 billion) the elimination of collegiate 
sports gambling will have little impact on state revenues or on the 
casinos' bottom line. The amount bet on college sports is only \3/10\ 
of one percent of overall casino revenues. In the midst of record 
growth in the Nevada casino industry, the proposed legislation will 
have virtually no impact on jobs.
    The existence of legal sports gambling in Nevada is actually 
limiting the growth of the Nevada economy in some areas. Most amateur 
and professional sports leagues have policies against franchise 
location and events staged in Nevada because of the presence of sports 
gambling.

College Sports Gambling Serves as a Gateway for Youth to Addictive 
        Gambling Behavior--Youth Gambling Problem is a Concern
    We are concerned that legal collegiate sports gambling fuels a much 
larger illegal collegiate sports gambling trade--impacting America's 
youth at an alarming rate. Sports gambling is a serious problem among 
teenagers under the age of 18. A recent Gallup Poll reports that 
teenagers say they start betting on college sports at age 10 and bet on 
college sports at twice the rate of adults. Called ``the addiction of 
the 90's'' by the American Academy of Pediatrics--their research 
indicates that there are over one million U.S. teens that are addicted 
to gambling. A recent Harvard School of Medicine report estimates that 
6 percent of teenagers under 18 have serious gambling problems. In a 
June of 1999 Gallup Poll, 18 percent of teenage respondents said they 
had bet on college sports, contrasted with 9 percent of adults who 
wagered on college games. The National Gambling Impact Study Commission 
report calls sports wagering ``a gateway behavior for adolescent 
gamblers.'' Prohibiting college sports gambling everywhere in the U.S. 
would send a clear signal that the activity is illegal. In addition, a 
federal prohibition would put an end to the mixed message to our young 
people, limit exposure and reduce the numbers of people who are 
introduced to sports gambling.

NCAA takes Concrete Steps to Address College Sports Gambling--Adopts 
        No-
        nonsense Policies and Education Outreach Programs
    The NCAA has not been sitting on the sidelines in confronting the 
sports gambling issue and has taken significant steps to address the 
very real problems associated with betting on college sports. The NCAA 
has established policies that prohibit all sports gambling by campus 
athletics personnel, student-athletes and NCAA employees. Student-
athletes are not eligible to compete if they knowingly provide 
information to individuals involved in organized gambling activities 
concerning intercollegiate athletics competition; solicit a bet on any 
intercollegiate team; accept a bet on any intercollegiate team; accept 
a bet on any team representing the institution or participate in any 
gambling activity that involves intercollegiate athletics through a 
bookmaker, parlay card or any other method employed by organized 
gambling. Similar expectations apply to coaches, athletic directors, 
and NCAA staff. Recently, the NCAA instituted background checks on 
men's and women's basketball game officials. This was done to insure 
that the game officials have not been involved in sports wagering 
issues. In addition, the NCAA sponsors: educational programs; works 
with campus administrators to conduct sports wagering workshops; 
broadcasts anti-sports-gambling public service announcements during our 
championship games aired by CBS and ESPN; has entered a partnership 
with the National Endowment for Financial Education, to produce a 
booklet entitled, ``Don't Bet On It,'' to educate students about the 
dangers of sports gambling and to acquaint them with good financial 
management strategies and is working to develop research in the area of 
youth gambling and campus gambling.

The NCAA and its Membership Are Committed To Improving Student-Athlete 
        Experience
    Opponents of the pending legislation to prohibit gambling on 
college sports in all states criticize the NCAA for reaping profits 
from college sports while not investing more in gambling prevention 
programs. As mentioned above, the NCAA does support a number of 
programs that address the sports gambling issue. In addition, a portion 
of the NCAA's revenues fund programs such as the student-athlete 
assistance fund, graduate assistance fellowships, life skills 
education, clinics for disadvantaged youth and many other programs 
designed to support and enrich the college experience for student-
athletes. The NCAA's 81 championship events for men and women at the 
Divisions I, II and III level are funded through the television rights 
revenues. However, the vast majority of NCAA revenues are returned to 
NCAA Divisions I, II and III member colleges and universities to help 
support their athletics programs. It costs $3.4 billion every year for 
our member schools to provide the more than 335,000 student-athletes 
with opportunities to play college sports. Even with the money 
generated by television and marketing rights fees, there still isn't 
enough money to pay the bill out of more than 970 programs, the number 
of athletics programs not being subsidized is smaller than 70. That 
said, the NCAA and its member schools continue to examine ways to 
provide student-athletes with more support and enrichment 
opportunities, including gambling related education, research and 
outreach activities.

States' Rights Concerns
    Sports gambling already is a recognized federal issue with federal 
jurisdiction. In 1992, President Bush signed the Professional and 
Amateur Sports Protection Act (PASPA) (28 USC Section 3701 et seq.). 
PASPA prohibits the expansion of state-sanctioned, authorized or 
licensed gambling on amateur sports. In addition, because college 
sports gambling clearly has a substantial effect on interstate 
commerce, Congress has the authority to legislate in this area. 
Unfortunately, the 1992 PASPA legislation ``grandfathered'' (i.e., 
exempted) several states (Nevada, Oregon, Montana and Delaware) that 
already conducted, or were contemplating, some form of amateur sports 
gambling within their respective jurisdictions. While PASPA created a 
federal law prohibiting states from sponsoring, operating, licensing, 
advertising or promoting college sports gambling activities, the 
``grandfathered'' states were allowed to continue to permit such 
gambling within their borders. The proposed federal legislation would 
eliminate the exemption for the above states as it relates to high 
school, collegiate and Olympic sports gambling. Furthermore, the 
position held by the gambling industry that one can bet on games of 
other states but protects their own state tramples on the rights of 
other states.

Conclusion
    Since being enacted in 1992, the Professional and Amateur Sports 
Protection Act has been successful in halting the growth of state-
sponsored amateur sports gambling. But the beachhead that legalized 
amateur sports wagering continues to hold in Nevada casinos blunts 
efforts of the NCAA and higher education to combat college sports 
gambling. The insidious effect of legalized wagering on college sports 
has crept far beyond the Nevada state line. Even though sports gambling 
is illegal in nearly every state, point spreads on college games are 
published in newspapers across the country, bookies are common fixtures 
on college campuses and new technologies allow bets on college games to 
be placed over the Internet or in a casino in innovative ways. The 
dollars involved are big and escalating every year. By clearly making 
gambling on college sports illegal everywhere and all the time, we will 
strike a significant blow against an activity that threatens the 
integrity of college sport.
    This nation's college and university system is one of our greatest 
assets. We offer the world the model for postsecondary education. 
Betting on the outcome of college sporting events tarnishes the 
integrity of sport and diminishes the esteem in which we, and the rest 
of the world, hold U.S. colleges and universities. For these reasons, 
the NCAA respectfully seeks your help in eliminating from the 
Professional and Amateur Sports Protection Act the exemption that 
allows the Nevada casino industry to operate collegiate sports-betting 
schemes and thereby to jeopardize the integrity of sport in America. 
While we recognize that a ban on collegiate sports gambling will not 
eliminate all gambling on college sports, it is a significant start. If 
we miss this legislative opportunity, the job of fighting illegal 
sports wagering elsewhere will be infinitely more difficult. The NCAA, 
and the colleges and universities that support this legislation, along 
with the leaders of the high school community, higher education, and 
the U.S. Olympic Committee have no monetary interest in the outcome of 
this legislation. Our goal is to protect student-athletes and remove 
the unseemly influences of sports gambling on our amateur athletes and 
the games they play. We look forward to working with you to close the 
gap that has not only allowed legal betting on college sports to 
continue but also fuels illegal betting on college games.

    [A television public service announcement was shown.]
    Dr. Wethington. Thank you, Mr. Chairman.
    Senator McCain. Thank you, Mr. President. Thank you for 
being here and thank you for your leadership on this issue.
    Coach Calhoun, I know you would rather be somewhere else.

    STATEMENT OF JIM CALHOUN, HEAD MEN'S BASKETBALL COACH, 
             UNIVERSITY OF CONNECTICUT, STORRS, CT

    Mr. Calhoun. Mr. Chairman, I really am happy to be here, 
and there is only one other place I would rather be. I was 
looking for a good physical therapist about a week ago and 
could not find one, and could not cure the ills of an ankle 
injury, but I am happy to be here, and Mr. Chairman and members 
of the Committee----
    Senator McCain. We thank you, and we congratulate you on 
your many successes.
    Mr. Calhoun. Thank you very much. As a coach and educator 
for the past 32 years--and by the way, I see that Senator Kerry 
is not here. If there is any interpretation of the Bostonian 
accent, he will be able to help later on.
    [Laughter.]
    As a coach and educator for the past 32 years, as a head 
basketball coach at collegiate institutions for 28 of them, I 
have great concerns about gambling on college athletics. This 
is not a new problem. We have had these point-shaving scandals 
for the past 50 years.
    At the University of Connecticut, legendary coach Hugh 
Greer, who was considered to be the coach at Connecticut for 
almost 30 years, died at age 54 after three of his players in 
the early sixties were found to point-shave. One of those 
players was incredibly close to Hugh, and his wife claims to 
this day that the heart attack by which he died at age 53 was 
caused by his grief over his beloved players, and the integrity 
of the game that he loved, so this is not a new problem.
    But as we reach the year 2000 and we were in the decade of 
the nineties, more gambling scandals have occurred than in the 
previous history of college athletics. The amount of money 
being bet is starting to become beyond belief. Social 
acceptance of gambling, and the fact that gambling has become 
an integral part of the university culture, makes it imperative 
that we extend the ban on betting on college games in all 
states.
    This, I realize, will not stop gambling, illegal or 
otherwise, but I think it will greatly reduce the impact on our 
student athletes and certainly on our game. Our game must 
maintain its integrity. This is not a point-the-finger 
attitude. It is merely a starting point. There is something 
legal being done that, if stopped, will be a starting point for 
us to attack illegal activities.
    To me personally, and I know to many other coaches, and I 
am speaking on behalf of them in many ways, the publishing of 
point spreads and the legalized gambling on college games in 
Nevada protects and legitimizes an illegal activity. Las Vegas 
is a great entertainment city. I enjoy it. I realize at this 
moment I probably will not be coaching the Rebels some day, but 
the threat of the scandal to our game and our kids must be 
reduced and hopefully stopped. I see this not as a panacea. I 
see it as a beginning. This is something we can control. The 
illegal activities is something we hopefully will control.
    As a coach and mentor, and this is something I really want 
to address myself to since so many other issues have been 
raised today, and rightfully so, certainly, but as a coach and 
mentor to my players, I have great concerns for them, concerns 
that the university culture has built into its very fabric now 
that gambling is an every-day activity. It exists in dormitory 
life, it exists in fraternities every single day, and the fact 
that many of our student athletes, all of our student athletes 
live in this culture, our university culture, and they in fact 
become the focal point of this billions of dollars being 
wagered, is a very, very dangerous situation.
    I am concerned that many of our kids come from modest 
economic backgrounds, and this even places greater pressure 
upon them to make a mistake in judgment which could ruin their 
lives and certainly put a mark on them, the university, and 
athletics in general. I am concerned that major college 
athletics is highly pressured enough without additional burdens 
of worrying about gambling activities. I see it from a personal 
nature our kids being attacked from all sides. As money 
increases, so does other types of activities.
    I am greatly concerned that our kids are getting mixed 
signals when they get up in the morning and read in the 
newspaper what the, quote, betting line or spread is on a game 
they are going to participate in that night. What kind of 
signal are we telling our kid? We are telling them it is 
legitimate.
    I just note, I was going to take a job one time at a place 
in Arizona a number of years ago--and I was not going to take 
the job. I wanted to stay in New England, and I took over in 
Connecticut, but anyways, I always remember my sister saying to 
me, you're going to Arizona state and taking the job there, and 
I said, no, I am not, and she says, yes, you are. Don't lie to 
me. I said, what do you mean, lie to you, and she said, I read 
it in the newspaper. You're going to Arizona state. With that--
--
    Senator McCain. I'm sorry your sister was not correct.
    [Laughter.]
    Mr. Calhoun. Thank you. With that, our kids believe if it 
is in the paper, it is true, and when it is seen every day and 
every morning that Connecticut, although heavily favored last 
night, only won by 7 points, there is a message going there. It 
is a message that scares me.
    And last concern, these are 18 to 20-year-old kids--and 
trust me, I coach them, and they are kids. That I can guarantee 
you, and they make the same judgments. Many times I tell 
people, when they ask me to describe my job and I say simply, 
if you can imagine yourself with your teenage children, and 
have kids run up and down the court with shorts on, with your 
paycheck in their mouth, what a comforting feeling that must 
be.
    They are kids, and that is what they are, and yet they are 
in college, as many of us were, struggling to find their own 
self-identity, and should not be the focal point of billions of 
dollars of wagering. This is too much to ask of them. It is too 
much to ask of any athlete.
    At U Conn we still have, and will still have informational 
seminars. We will bring the FBI in every year. We will bring 
Bill Saum and the NCAA in. We do institutional daily reminders. 
But if we can show the wisdom of the state of Nevada by banning 
betting on our institutions, our collegiate institutions, with 
the passage of this bill, I believe it will greatly reduce the 
risk from gambling that we now face. It will not eliminate, but 
it will be a great starting point.
    And just on a personal note, I find the acceptance of 
gambling by people in general is phenomenal. No one ever has a 
problem saying to me, coach, you did not cover. They may say 
any other thing, but there is such a great acceptance, and I 
think a great deal of that has to do with the fact that there 
is legalized gambling on college athletics, and there is a 
point spread published every single day. It is a great danger 
to our sport.
    It is something that scares me every single day, and I know 
it scares every other single coach who coaches kids, and when 
you think it is coaching kids, much as many of us, all of us 
here were at one point in time, it is an issue we must come to 
wrestle with.
    I want to thank you very much for having me here today, and 
hopefully I gave you at least an insight as to how I feel about 
our university kids. Thank you very much.
    Senator McCain. Thank you very much, coach. I think it is 
important to point out for the record a letter that was sent to 
Senator Brownback that an overwhelming majority of your 
colleagues in the coaching profession also support the very 
articulate statement that you just made concerning the 
importance of this issue. I think Americans look to you and to 
them, and to people like Dean Smith and others, for guidance on 
this issue, and I am very grateful that you would be involved, 
and I know that coaches understandably are not generally 
involved in issues of legislation. I am very pleased that you 
would step forward, you and your colleagues in your profession, 
and speak out so strongly on this very important issue, and I 
thank you for taking the time to be here.
    Mr. Calhoun. Thank you, Mr. Chairman.
    Senator Brownback. Mr. Chairman, can we have that letter 
put into the record at this point, and one from Dean Smith that 
was on the same point? He has been very concerned about this 
for a long period of time.
    Senator McCain. Without objection.*
---------------------------------------------------------------------------
    * The information was not available at the time the hearing went to 
press.
---------------------------------------------------------------------------
    [The prepared statement of Mr. Calhuon follows:]

    Prepared Statement of Jim Calhoun, Head Men's Basketball Coach, 
                 University of Connecticut, Storrs, CT

    Mr. Chairman, I really am happy to be here, and there is only one 
other place I would rather be. I was looking for a good physical 
therapist about a week ago and could not find one, and could not cure 
the ills of an ankle injury, but I am happy to be here, and Mr. 
Chairman and members of the Committee, thank you very much. As a coach 
and educator for the past 32 years--and by the way, I see that Senator 
Kerry is not here. If there is any interpretation of the Bostonian 
accent, he will be able to help later on.
    As a coach and educator for the past 32 years, as a head basketball 
coach at collegiate institutions for 28 of them, I have great concerns 
about gambling on college athletics. This is not a new problem. We have 
had these point-shaving scandals for the past 50 years.
    At the University of Connecticut, legendary coach Hugh Greer, who 
was considered to be the coach at Connecticut for almost 30 years, died 
at age 54 after three of his players in the early sixties were found to 
point-shave. One of those players was incredibly close to Hugh, and his 
wife claims to this day that the heart attack by which he died at age 
53 was caused by his grief over his beloved players, and the integrity 
of the game that he loved, so this is not a new problem.
    But as we reach the year 2000 and we were in the decade of the 
nineties, more gambling scandals have occurred than in the previous 
history of college athletics. The amount of money being bet is starting 
to become beyond belief. Social acceptance of gambling, and the fact 
that gambling has become an integral part of the university culture, 
makes it imperative that we extend the ban on betting on college games 
in all states.
    This, I realize, will not stop gambling, illegal or otherwise, but 
I think it will greatly reduce the impact on our student athletes and 
certainly on our game. Our game must maintain its integrity. This is 
not a point-the-finger attitude. It is merely a starting point. There 
is something legal being done that, if stopped, will be a starting 
point for us to attack illegal activities.
    To me personally, and I know to many other coaches, and I am 
speaking on behalf of them in many ways, the publishing of point 
spreads and the legalized gambling on college games in Nevada protects 
and legitimizes an illegal activity. Las Vegas is a great entertainment 
city. I enjoy it. I realize at this moment I probably will not be 
coaching the Revels some day, but the threat of the scandal to our game 
and our kids must be reduced and hopefully stopped. I see this not as a 
panacea. I see it as a beginning. This is something we can control. The 
illegal activities are something we hopefully will control.
    As a coach and mentor, and this is something I really want to 
address myself to since so many other issues have been raised today, 
and rightfully so, certainly, but as a coach and mentor to my players, 
I have great concerns for them, concerns that the university culture 
has built into its very fabric now that gambling is an every-day 
activity. It exists in dormitory life, it exists in fraternities every 
single day, and the fact that many of our student athletes, all of our 
student athletes live in this culture, our university culture, and they 
in fact become the focal point of this billions of dollars being 
wagered, is a very, very dangerous situation.
    I am concerned that many of our kids come from modest economic 
backgrounds, and this even places greater pressure upon them to make a 
mistake in judgment which could ruin their lives and certainly put a 
mark on them, the university, and athletics in general. I am concerned 
that major college athletics is highly pressured enough without 
additional burdens of worrying about gambling activities. I see it from 
a personal nature our kids being attacked from all sides. As money 
increases, so does other types of activities.
    I am greatly concerned that our kids are getting mixed signals when 
they get up in the morning and read in the newspaper what the, quote, 
betting line or spread is on a game they are going to participate in 
that night. What kind of signal are we telling our kid? We are telling 
them it is legitimate.
    I just note, I was going to take a job one time at a place in 
Arizona a number of years ago--and I was not going to take the job. I 
wanted to stay in New England, and I took over in Connecticut, but 
anyway, I always remember my sister saying to me, you're going to 
Arizona state and taking the job there, and I said, no, I am not, and 
she says, yes, you are. Don't lie to me. I said, what do you mean, lie 
to you, and she said, I read it in the newspaper. You're going to 
Arizona state. With that--our kids believe if it is in the paper, it is 
true, and when it is seen every day and every morning that Connecticut, 
although heavily favored last night, only won by 7 points, there is a 
message going there. It is a message that scares me.
    And last concern, these are 18 to 20-year-old kids--and trust me, I 
coach them, and they are kids. That I can guarantee you, and they make 
the same judgments. Many times I tell people, when they ask me to 
describe my job and I say simply, if you can imagine yourself with your 
teenage children, and have kids run up and down the court with shorts 
on, with your paycheck in their mouth, what a comforting feeling that 
must be.
    They are kids, and that is what they are, and yet they are in 
college, as many of us were, struggling to find their own self-
identity, and should not be the focal point of billions of dollars of 
wagering. This is too much to ask of them. It is to much to ask of any 
athlete.
    At U Conn we still have, and will still have, informational 
seminars. We will bring the FBI in every year. We will bring Bill Saum 
and the NCAA in. We do institutional daily reminders. But if we can 
show the wisdom of the State of Nevada by banning betting on our 
institutions, our collegiate institutions, with the passage of this 
bill, I believe it will greatly reduce the risk from gambling that we 
now face. It will not eliminate, but it will be a great starting point.
    And just on a personal note, I find the acceptance of gambling by 
people in general is phenomenal. No one ever has a problem saying to 
me, coach, you did not cover. They may say any other thing, but there 
is such a great acceptance, and I think a great deal of that has to do 
with the fact that there is legalized gambling on college athletics, 
and there is a point spread published every single day. It is a great 
danger to our sport.
    It is something that scares me every single day, and I know it 
scares every other single coach who coaches kids, and when you think it 
is coaching kids, much as many of us, all of us here were at one point 
in time, it is an issue we must come to wrestle with.
    I want to thank you very much for having me here today, and 
hopefully I gave you at least an insight as to how I feel about our 
university kids. Thank you very much.

    Senator McCain. Dr. Kelly.

        STATEMENT OF DR. TIM KELLY, EXECUTIVE DIRECTOR, 
   NATIONAL GAMBLING IMPACT STUDY COMMISSION, ALEXANDRIA, VA

    Dr. Kelly. Thank you, Mr. Chairman. I am Tim Kelly, 
executive director of the National Gambling Impact Study 
Commission, and I do appreciate this opportunity to be here to 
give testimony on sports gambling and its effects.
    Before I get started, I do also have copies of two letters 
which I believe the Committee has already received, one from 
the chair of the commission, Kay James, the other from two of 
the commissioners, Richard Leone and Leo McCarthy, all of them 
strongly in support of the legislation that you have put 
forward, and we ask that they be entered into the record.
    Senator McCain. Without objection.
    Dr. Kelly. I also have submitted an attachment to my 
remarks. Only 30 years ago gambling was illegal in most states 
and generally considered to be contrary to the American worth 
ethic. Serious gamblers had to travel to Nevada for casino 
play, and the states had not yet plunged into lottery mania. 
Today, however, there are over 800 casinos operating in 28 
states. The lottery is played in 37 states plus the District of 
Columbia, and all but three states have legalized some form of 
gambling.
    Gambling expansion has swept the Nation, and that is why 
our commission was called into being. With revenues jumping 
from about $1 billion in 1970 to over $50 billion today, the 
National Gambling Impact Study Commission was charged with 
conducting a comprehensive legal and factual study of the 
social and economic impacts of legalized gambling.
    Last year, the commission completed its unanimously adopted 
final report, which can be found on the Web at www.ngisc.gov. 
The report contains 77 far-reaching recommendations for state 
and federal legislators, and calls for a national moratorium on 
gambling expansion. The recommendation that addresses sports 
gambling reads as follows:
    The commission recommends that betting on collegiate and 
amateur athletic events that is currently legal be banned 
altogether.
    This recommendation is especially noteworthy in light of 
the fact that four of the nine commissioners represented or 
endorsed gambling industry interests. Let me review the facts 
that led to its adoption.
    As you know, and as has been mentioned here, the 
Professional and Amateur Sports Protection Act of 1992 made it 
illegal for anyone to operate a gambling scheme based on 
competitive games in which amateur or professional athletes 
participated. It was intended to ensure the integrity of 
athletic events, as has been pointed out this morning.
    Congress was concerned that gambling potentially threatens 
sports by providing tremendous incentive for point-shaving and 
game-fixing, and thus puts players at risk. As Senator Bradley 
stated at that time, interestingly, state-sanctioned sports 
betting conveys the message that sports are more about money 
than personal achievement and sportsmanship.
    But the act did not apply, as we have heard, to states with 
preexisting statutes providing for sports gambling, notably, 
Nevada. Consequently, Nevada runs 142 legal sports books that 
generate over $2.3 billion in revenue, including over $77 
million from collegiate and amateur sports.
    The commission heard testimony that sports gambling has 
devastated families and careers and most alarmingly that it is, 
indeed, rampant on college campuses, as has been stated. Cedric 
Dempsey, executive director of the NCAA, stated that every 
campus has student bookies, and we are also seeing an increase 
in the involvement of organized crime with its wagering. 
Gambling rings have been uncovered at Michigan State, 
University of Maine, Rhode Island, Bryant, Northwestern, and 
Boston College, among others. A University of Michigan survey 
found that 5 percent of male student athletes provided inside 
information for gambling purposes, bet on a game in which they 
participated, or accepted money for performing poorly in a 
game.
    Although Nevada state-sanctioned sports betting is well-
regulated, it likely contributes to collegiate sports gambling 
in two ways. First, it provides a ready resource for students, 
student athletes, and student bookies looking for betting 
information and/or an opportunity to place bets via the phone 
or the Internet. Second, it provides the Los Vegas line or 
point spread, which has been mentioned regularly this morning, 
which is published throughout the country. The line provides 
betting parameters and does tend to fuel illegal sports 
wagering.
    According to a recent Harvard study, an estimated 15.4 
million Americans suffer from problem or pathological gambling, 
often referred to as gambling addiction. Over half that number 
are adolescents, 7.9 million. Gambling addiction can be 
particularly devastating to the individual, his family, his 
employer, or his school. The National Academies of Science that 
we contracted with found that, and I quote, ``pathological 
gamblers engage in destructive behaviors. They commit crimes, 
they run up large debts, they damage relationships with family 
and friends, and they kill themselves.''
    The commission found that students who gamble on sports can 
be at risk for gambling problems later in life. Sports wagering 
can indeed act as a gateway to other forms of gambling, as has 
been mentioned, and to gambling addiction. This is cause for 
alarm, especially since the same Harvard study that I just 
referenced found that, quote, ``compared to adults, youth have 
had more exposure to gambling during an age when vulnerability 
is high and risk-taking behavior is a norm. Consequently, these 
young people have higher rates of disorder gambling than their 
more mature and less vulnerable counterparts.''
    The commission heard heartbreaking testimony from many 
pathological gamblers, including a young man named Scott from 
New York. Scott placed his first bet with a bookie his freshman 
year in college. He found himself in debt within weeks. Later, 
he stole $600 from his first employer, a supermarket, to cover 
gambling debts. At age 24, Scott made the first of many trips 
to Atlantic City, sometimes gambling as many as 50 hours 
straight. His relationship with parents, friends, and even 
girlfriends crumbled as his gambling addiction grew, and his 
savings accounts dwindled to nothing. He ended up by embezzling 
$96,000 from the stock brokerage where he was working, and then 
wrote $100,000 in bad checks. Arrest, jail, and subsequent 
house arrest did not deter him. ``I still went to Atlantic City 
with an ankle bracelet on,'' he said from an in-patient 
treatment center where he was being treated for gambling 
addiction. ``Nothing mattered to me but gambling.''
    Scott and others like him would have been better off if he 
had not had to deal with sports gambling at age 18. The 
commission recognized that there is much that the NCAA and 
other youth school and college collegiate athletic 
organizations can do to help prevent such tragedies. This 
includes public service announcements during tournaments such 
as the clip we just saw, better enforcement of existing law on 
campus, and full NCAA clout brought to bear against 
universities that tolerate gambling violations.
    But the problem also requires dealing with the loophole 
built into the sports protection act, which has been noted 
several times this morning. Unless amateur sports gambling is 
banned altogether, there will always be the resource of 142 
sports books in the Las Vegas line for those wanting to gamble 
on collegiate and amateur sports. Their misuse threatens the 
integrity of collegiate and amateur athletics, puts student 
athletes at risk, and makes it very easy for kids like Scott to 
start a lifetime of gambling addiction.
    Thank you, Mr. Chairman.
    [The prepared statement of Dr. Kelly follows:]

       Prepared Statement of Dr. Tim Kelly, Executive Director, 

       National Gambling Impact Study Commission, Alexandria, VA

    Good morning Mr. Chairman and Members of the Committee. I am Tim 
Kelly, Executive Director of the National Gambling Impact Study 
Commission. I appreciate this opportunity to give testimony on Sports 
Gambling and its effects.
    Only thirty years ago, gambling was illegal in most states and was 
generally considered to be a vice contrary to the American work ethic. 
Serious gamblers had to travel to Nevada for casino play, and the 
states had not yet plunged into lottery mania. Today, however, there 
are over 800 casinos operating in 28 states, the lottery is played in 
37 states plus the District of Columbia, and all but three states have 
legalized some form of gambling. Gambling expansion has swept the 
nation, with revenues jumping from about $1 billion in 1980 to well 
over $50 billion today.
    The National Gambling Impact Study Commission was charged with 
conducting a comprehensive legal and factual study of the social and 
economic impacts of legalized gambling. Last year the Commission 
completed its unanimously-adopted final report, which can be found on 
the web at www.ngisc.gov. The report contains 77 far-reaching 
recommendations for state and federal legislators, and calls for a 
national moratorium on gambling expansion. The recommendation that 
addresses Sports Gambling reads as follows:

        ``The Commission recommends that betting on collegiate and 
        amateur athletic events that is currently legal be banned 
        altogether.''

    This recommendation is especially noteworthy in light of the fact 
that four of the nine commissioners represented or endorsed gambling 
industry interests. Let me review the facts that led to its adoption.

Sports Gambling Nevada
    As you know, the Professional and Amateur Sports Protection Act of 
1992 made it illegal for anyone to operate a gambling scheme based on 
competitive games in which amateur or professional athletes 
participate. It was intended to ensure the integrity of athletic 
events. Congress was concerned that gambling potentially threatens 
sports by providing tremendous incentive for point shaving and game-
fixing, and thus puts players at risk. As Senator Bradley stated at the 
time, ``state-sanctioned sports betting conveys the message that sports 
are more about money than personal achievement and sportsmanship.'' But 
the act did not apply to states with pre-existing statutes providing 
for sports gambling--notably Nevada. Consequently, Nevada runs 142 
legal sports books that generate over $2.3 billion in revenue, 
including over $77 million from collegiate and amateur sports.
    The Commission heard testimony that sports gambling has devastated 
families and careers and, most alarmingly, that it is rampant on 
college campuses. Cedric Dempsey, executive director of the NCAA, 
stated that ``every campus has student bookies, (and) we are also 
seeing an increase in the involvement of organized crime on sports 
wagering.'' Gambling rings have been uncovered at Michigan State, 
University of Maine, Rhode Island, Bryant, Northwestern, and Boston 
College, among others. A University of Michigan survey found that 5% of 
male student-athletes provided inside information for gambling 
purposes, bet on a game in which they participated, or accepted money 
for performing poorly in a game.
    Although Nevada's state-sanctioned sports betting is well 
regulated, it likely contributes to collegiate sports gambling in two 
ways. First, it provides a ready resource for students, student-
athletes, and student bookies looking for betting information and/or an 
opportunity to place bets via phone or internet. Second, it provides 
the Las Vegas ``line,'' or point spread, which is published throughout 
the country. The line provides betting parameters and tends to fuel 
illegal sports wagering.

Sports Gambling as a Gateway
    According to a recent Harvard study, an estimated 15.4 million 
Americans suffer from problem or pathological gambling, often referred 
to as gambling addiction. Over half that number are adolescents. 
Gambling addiction can be particularly devastating to the individual, 
his family, and his employer or school. The National Academies of 
Science found that ``pathological gamblers engage in destructive 
behaviors: they commit crimes, they run up large debts, they damage 
relationships with family and friends, and they kill themselves.''
    The Commission found that students who gamble on sports can be at 
risk for gambling problems later in life. Sports wagering can act as a 
gateway to other forms of gambling, and to gambling addiction. This is 
cause for alarm, especially since the same Harvard study found that 
``compared to adults, youth have had more exposure to gambling during 
an age when vulnerability is high and risk-taking behavior is a norm; 
consequently, these young people have higher rates of disordered 
gambling than their more mature and less vulnerable counterparts.''
    The Commission heard heart-breaking testimony from many 
pathological gamblers, including a young man named Scott, a New York 
native. Scott placed his first bet with a bookie his freshman year of 
college. He found himself in debt within weeks. Later, he stole $600 
from his first employer, a supermarket, to cover gambling debts. At age 
24, Scott made his first of many trips to Atlantic city, sometimes 
gambling as many as 50 hours straight. His relationship with parents, 
friends, and even girlfriends crumbled as his gambling addiction grew, 
and his savings account dwindled to nothing. He embezzled $96,000 from 
the stock brokerage where he worked, then wrote $100,000 in bad checks. 
Arrest, jail, and subsequent house arrest did not deter him. ``I still 
went to Atlantic City with ankle bracelet on,'' he said from the 
inpatient treatment center where he was being treated for his gambling 
addiction. ``Nothing mattered to me but gambling.''

Conclusion: Ban Sports Gambling
    Scott and others like him would have been better off if he had not 
had to deal with sports gambling at age 18. The Commission recognized 
there is much that the NCAA and other youth, school, and collegiate 
athletic organizations can do to help prevent such tragedies. This 
includes public service announcements during tournaments, better 
enforcement of existing laws on campus, and full NCAA clout brought to 
bear against universities tolerating gambling violations. But the 
problem also requires dealing with the loophole built into the Sports 
Protection Act. Unless sports gambling is banned altogether, there will 
always be the resource of 142 sports books and the Las Vegas line for 
those wanting to gamble on collegiate and amateur sports. Their misuse 
threatens the integrity of collegiate and amateur athletics, puts 
student-athletes at risk, and makes it very easy for kids like Scott to 
begin a lifetime of gambling addiction.
    Thank you, Mr. Chairman.
                                                         Attachment
                           GAMBLING BACKLASH:
         TIME FOR A MORATORIUM ON CASINO AND LOTTERY EXPANSION

    Thirty years ago, gambling was illegal in most states and was 
generally considered to be a vice contrary to the American work ethic. 
Serious gamblers had to travel to Nevada for casino play; states had 
not yet plunged into lottery mania. Today, however, 29 casinos operate 
in Mississippi, 14 in New Jersey, and 429 in Nevada; another 260 
casinos operate on Indian reservations; and nearly 100 riverboat 
casinos are chartered in six states.\1\ All but three states have 
legalized some form of gambling. Pari-mutuel gambling, primarily 
horseracing, is legal in 42 states; \2\ casinos are licensed in 28 
states; \3\ and the lottery is played in 37 states plus the District of 
Columbia.\4\
---------------------------------------------------------------------------
    \1\ Final Report, National Gambling Impact Study Commission, 1999, 
p. 2-6.
    \2\ Ibid., p. 2-11.
    \3\ Ibid., p. 2-6.
    \4\ Ibid., p. 2-1.
---------------------------------------------------------------------------
    Far from discouraging citizens from risking their hard-earned money 
on gambling, states spend more than $400 million annually promoting 
their lotteries with often misleading and deceptive advertising.\5\ In 
fact, more dollars are spent encouraging citizens to gamble than are 
spent for any other single state message.
---------------------------------------------------------------------------
    \5\ Ibid., p. 3-15.
---------------------------------------------------------------------------
    Gambling expansion has swept the nation, with 68 percent of the 
population reporting they have gambled in the past year. They lost an 
astonishing $50 billion in 1998, and there is ``no end in sight: every 
prediction that the gambling market was becoming saturated has proven 
to be premature.'' \6\ This explosion of gambling has produced enticing 
benefits for some. A new casino brings new jobs and can be very 
profitable, and most forms of gambling add significant revenue to the 
public treasury. The revenue can be used to meet community needs such 
as education or infrastructure development.
---------------------------------------------------------------------------
    \6\ Ibid., p. 1-1.
---------------------------------------------------------------------------
    But the expansion of gambling carries a high cost. Today, an 
estimated 15.4 million Americans suffer from problem or pathological 
gambling, often referred to as gambling addiction.\7\ Gambling 
addiction can be particularly devastating to the individual, his 
family, and his employer. The National Academies of Science found that 
``pathological gamblers engage in destructive behaviors: they commit 
crimes, they run up large debts, they damage relationships with family 
and friends, and they kill themselves.'' \8\
---------------------------------------------------------------------------
    \7\ Ibid., p. 4-1.
    \8\ Pathological Gambling: A Critical Review, National Academy of 
Science/National Research Council, 1999, p. 3.
---------------------------------------------------------------------------
    Furthermore, the National Gambling Impact Study Commission found 
that state lotteries function as a regressive tax that preys on the 
poor. Those who can afford it least tend to play the most, while 
benefits go to those who are better off.\9\ Gambling is capable of 
addicting and impoverishing those who play.
---------------------------------------------------------------------------
    \9\ Final Report, p. 7-10.
---------------------------------------------------------------------------
    Perhaps most alarmingly, research shows that increasing numbers of 
children and adolescents are gambling; they are more likely than adults 
to become problem or pathological gamblers. For instance, a Louisiana 
survey of 12,000 adolescents found that 10 percent had bet on 
horseracing, 17 percent had gambled on slot machines, and 25 percent 
had played video poker.\10\ The Gambling Commission found that 
adolescent gambling is ``associated with alcohol and drug use, truancy, 
low grades, problematic gambling in parents, and illegal activities to 
finance gambling.'' \11\
---------------------------------------------------------------------------
    \10\ Ibid., p. 7-20.
    \11\ Ibid., p. 7-23.
---------------------------------------------------------------------------
    That gambling expansion has exposed children and adolescents to 
many forms of gambling is particularly disturbing in light of a recent 
Harvard study that found that ``compared to adults, youth have had more 
exposure to gambling during an age when vulnerability is high and risk-
taking behavior is a norm; consequently, these young people have higher 
rates of disordered gambling than their more mature and less vulnerable 
counterparts.'' \12\ The Gambling Commission learned that such 
vulnerability could lead to tragic outcomes; one 16-year-old boy 
attempted suicide after losing $6,000 on lottery tickets.\13\
---------------------------------------------------------------------------
    \12\ Howard Shaffer, et al., ``Estimating the Prevalence of 
Disordered Gambling Behavior in the United States and Canada: A Meta-
Analysis,'' 1997, p. 5.
    \13\ Ibid., p. 7-25.
---------------------------------------------------------------------------
    How did America become so addicted to gambling? Several factors are 
clear. First, the lottery states have given a powerfully motivating 
message to their citizens by declaring that gambling is not only 
acceptable, but actually the right thing to do because it increases 
state revenue for good causes. Second, the Indian Gaming Regulatory Act 
of 1988 opened the floodgate for Native American casinos, which are 
expanding more rapidly now than any other form of gambling. Third, 
legislators at the state and federal levels have acted without the 
benefit of objective information on the full costs and benefits of 
gambling operations, since nearly all of the previous impact studies 
have been sponsored by the gambling industry. The Gambling Commission 
report provides the most comprehensive and objective evaluation of 
gambling impacts to date. But more research is needed if policymakers 
are to understand fully the likely consequences before moving ahead 
with gambling expansion initiatives.
    The Gambling Commission report, which was unanimously adopted, 
calls for a moratorium on gambling expansion.\14\ This is especially 
noteworthy because four of the nine commissioners represented or 
endorsed gambling industry interests. The purpose of the moratorium: to 
allow policymakers to review what has already been approved and to 
demand better cost/benefit analyses before moving ahead with any new 
initiatives.
---------------------------------------------------------------------------
    \14\ Ibid., p. 1-8.
---------------------------------------------------------------------------
    More than a moratorium, however, will be needed if America is going 
to manage gambling for the public good as opposed to the public 
treasury. The Gambling Commission report included 77 far-reaching 
recommendations, all of which are worthy of consideration. Eight policy 
recommendations, based upon but not identical to the Commission's 
recommendations, should constitute a priority for federal and state/
tribal legislators. Legislative action based on these recommendations 
would jump-start America's recovery from its addiction to gambling. 
Before discussing these recommendations in detail, however, a review of 
the seven major types of legalized gambling reveals the gravity of the 
current problem.
Legalized Gambling in America \15\
---------------------------------------------------------------------------
    \15\ Much of this section is derived from chapter two of the 
Gambling Commission Final Report, titled ``Gambling in the United 
States.''
---------------------------------------------------------------------------
    Seven major forms of gambling are legal in America today, each 
presenting a different array of costs and benefits, and each raising a 
unique set of issues that must be addressed by policymakers.

Commercial Casinos. Commercial casinos (land casinos not owned by 
Native Americans)--with their table games and slot machines--symbolize 
the gambling industry for most Americans. Until this decade, casinos 
were legal only in Nevada and Atlantic City, but during the past 10 
years they have expanded into 28 states. In 1997, commercial casinos 
took in $26.3 billion in revenue. Destination casinos (those with large 
hotels) provide an important source of jobs, tax revenue, and 
entertainment for their localities. Many customers enjoy the associated 
food, entertainment, and conference facilities.
    At the same time, there are costs associated with commercial 
casinos. The 15.4 million pathological and problem gamblers account for 
a significant portion of gambling revenues. They often end up hurting 
not only themselves but also family, friends, and business partners. 
Direct costs from their bankruptcies, arrests, imprisonments, legal 
fees for divorce, and so on come to more than $5 billion each year. Who 
should be responsible for these costs and liabilities?
    A less visible but perhaps more insidious cost involves the 
political clout that commercial casino interests inevitably develop. 
Given the vast revenue generated by successful casinos, it becomes 
increasingly difficult for other voices to be heard in the political 
process. For instance, non-gambling retailers and restaurant owners may 
find that their customer base dwindles after the introduction of 
casinos and that local government turns a deaf ear to their complaints. 
In fact, once gambling enters a community, local government tends to 
become ``a dependent partner in the business of gambling.'' \16\
---------------------------------------------------------------------------
    \16\ Ibid., p. 7-18.

Native American Casinos. Large-scale Indian casino gambling began in 
the late 1980s. In 1988, Congress passed the Indian Gaming Regulatory 
Act (IGRA), which set the stage for a rapid expansion of Native 
American casinos--now numbering about 260. IGRA called for the states 
and tribes to enter into compacts allowing casinos on Indian 
reservations to offer whatever form of gambling is legal in the state. 
It also called for gambling revenue to be used to promote the economic 
development and welfare of the tribe. Thus, revenues are not subject to 
state or federal taxation, but are to be used as an economic engine to 
address tribal needs. In 1997, Indian casinos generated $6.7 billion in 
revenue from gambling, much of which went to improve the health, 
education, and welfare of the casino tribes.
    Problem and pathological gambling among tribal members and their 
customers is, of course, as much a concern here as it is for non-tribal 
casinos. Concerns also have been raised about the adequacy of Indian 
casino regulations and the distribution of funds among the tribes that 
own casinos versus the majority that do not. Furthermore, some states 
and tribes have not been able to agree on compacts that suit both 
sides. All of these issues need to be resolved, perhaps within the 
context of IGRA revisions and amendments.

Riverboat Casinos. Riverboat casinos are a new phenomenon, having begun 
in Iowa in 1991 as a means for tourism and economic development. Most 
of these casinos do not actually sail out on the rivers, but are simply 
built over water as part of zoning requirements. In 1997, riverboat 
casinos brought in $6.1 billion in revenue from gambling.
    Often built deliberately on the borders shared with other states, 
these casinos initially brought significant additional tax revenues 
from the citizens of neighboring states. Eventually, however, the 
adjoining states ended up building their own casinos to recapture the 
lost revenue. Once the saturation point has been reached by neighboring 
states, whether the economic benefits outweigh the social costs is not 
clear. However, for this reason Iowa recently legislated a five-year 
moratorium on casino expansion in order to better assess the full 
impacts of gambling.

State Lotteries. Colonial America used lotteries to help fund public 
works such as paving streets; since that time, there has been a 
cyclical aspect to their usage. In the 1870s, gambling scandals 
involving the bribery of state and federal officials led to lotteries 
being outlawed altogether, along with most forms of gambling. The 
current lottery revival began in 1964 with the New Hampshire lottery; 
today, 37 states and the District of Columbia have lotteries.
    Modern lotteries offer an array of products, including instant 
scratch-off tickets, daily numbers drawings, weekly Lotto and Powerball 
drawings, and video keno, which involves multiple drawings per hour. In 
1997, U.S. lotteries produced $16.5 billion in revenue from tickets and 
other sales. This revenue is used to add to the public treasury to 
address education and/or other needs.
    The Gambling Commission contracted with national lottery experts, 
Drs. Cook and Clotfelter from Duke University, to research the impacts 
of state-sponsored lottery gambling. They documented conclusively that 
lotteries function as a regressive tax, taking from the poor and giving 
to those better off. As Cook stated, ``It's astonishingly regressive. 
The tax that is built into the lottery is the most regressive tax we 
know.'' \17\ Those making less than $10,000 per year spend more than 
any other income group, averaging $597 per year. Furthermore, the top 5 
percent of lottery players account for over 50 percent of lottery 
sales, spending on average $3,870 per year.
---------------------------------------------------------------------------
    \17\ Ibid., p. 7-10.
---------------------------------------------------------------------------
    A review of marketing strategies revealed that states advertise in 
low-income neighborhoods, which tend to be saturated with lottery 
outlets. They use ads that are ``misleading, even deceptive.'' \18\ 
Such ads are exempt from the Federal Trade Commission's truth-in-
advertising standards since they come from state governments.
---------------------------------------------------------------------------
    \18\ Ibid., p. 3-15.
---------------------------------------------------------------------------
    Another concern is the ease with which minors can participate in 
lottery gambling, despite legal restrictions. For instance, a 
Massachusetts survey found that minors as young as nine years of age 
were able to purchase lottery tickets on 80 percent of their attempts, 
and that 75 percent of the high school seniors reported playing the 
lottery.\19\ Such experiences can function as a gateway to more 
intensive gambling and to pathological gambling.
---------------------------------------------------------------------------
    \19\ Ibid., pp. 3-14, 3-15.
---------------------------------------------------------------------------
    All of this raises the fundamental question of whether states 
should even be in the lottery business in the first place, spending 
hundreds of millions of dollars each year encouraging citizens--
including those who can least afford it--to gamble their money away in 
order to feed the state treasury. A growing number of people, such as 
those citizens who recently rejected a lottery referendum in Alabama, 
answer ``no.'' The role of the state is to provide for the public good, 
not to feed the public treasury at any cost.

Pari-Mutuel Wagering. Pari-mutuel gambling consists primarily of 
horseracing, but includes greyhound racing and jai alai. The term pari-
mutuel connotes the fact that wagers are put into a common pool, with 
the odds dependent on the total amount bet on any given horse. Legal in 
43 states, several of the major racetracks have been in operation since 
the 1800s. Total revenue in 1997 amounted to $3.25 billion. Unique to 
this form of gambling, the horseracing industry supports a thriving 
agro-industrial economic sector of trainers, owners, breeders, and 
stable owners. Although more than 150 racetracks are licensed, most 
betting takes place through off-track sites or, more recently, through 
cable and Internet broadcasts directly into the home.
    A major policy issue has been raised by those tracks that have 
attempted to add casino-like gambling devices such as slot machines to 
their facilities in order to increase revenue. This, in effect, creates 
a ``mini-casino'' in an area that was not necessarily zoned for 
casinos. Additionally, concerns have been raised about the advisability 
of beaming pari-mutuel gambling into homes via cable and Internet, 
where children may participate.

Sports Wagering. Sports wagering is illegal in all but two states, 
Nevada and Oregon, but is nonetheless popular in homes and offices. 
Oregon only allows lottery players to include a wager on pro football 
games. Nevada, on the other hand, has 142 legal sports books for 
wagering on just about any prediction for professional or amateur 
sports events. These books took in $77.4 million in 1997. However, 
Americans wager an estimated $80 billion each year on illegal sports 
betting, usually without realizing its illegality.
    One reason that sports wagering is so widespread is the easy 
availability of the Las Vegas ``line,'' or point spread, published in 
newspapers across the country. Although some claim that the line 
increases sports interest, it more likely simply increases sports 
wagering.
    Perhaps the worst effect of sports wagering is its impact on youth 
and college students. The National College Athletics Association points 
out that sports wagering seriously threatens the integrity of college 
sports and puts student-athletes at considerable risk. There are 
student bookies on most campuses, organized crime is often involved, 
and consequences can be tragic--including suicide over an unpaid 
gambling debt. A recent study found that more than 5 percent of male 
student-athletes had provided inside information for gambling purposes, 
bet on a game in which they participated, or accepted money for 
performing poorly in a game.\20\ Furthermore, sports wagering can 
function as a gateway to other forms of gambling and to pathological 
gambling.
---------------------------------------------------------------------------
    \20\ Ibid., p. 3-10.

Internet Gambling. First appearing in 1995, Internet gambling is the 
newest form of gambling. Today hundreds of on-line casinos, lotteries, 
and sports books advertised on mainline Web sites. With a credit card 
number, customers can play a video version of blackjack, slot machines, 
poker, roulette, or other games. One study showed that Internet 
gambling revenues doubled in only one year, from $445.4 million in 1997 
to $919.1 million in 1998.\21\ Some countries, such as Australia and 
Antigua, have licensed Internet gambling operators within their 
borders. Their products are, of course, accessible by anyone, anytime, 
anywhere, via the Internet.
---------------------------------------------------------------------------
    \21\ Ibid., p. 2-16.
---------------------------------------------------------------------------
    Internet gambling, like Internet pornography, has been perceived as 
a threat to children and adolescents precisely because it is so easily 
available in the home and in college dorms. No one uses the Internet 
more than America's youth, and no one is more vulnerable to its 
temptations. Now, every parent has to reckon with the fact that 
commercial gambling is available in the dens and bedrooms of their 
homes via the Internet.
    Internet gambling can be especially destructive for those who are 
vulnerable to addictions, since it provides high-speed instant 
gratification together with the anonymity of the home setting. A 
Harvard researcher stated, ``As smoking crack cocaine changed the 
cocaine experience, I think electronics is going to change the way 
gambling is experienced.'' \22\ In other words, electronic gambling is 
all the more destructive and addictive.
---------------------------------------------------------------------------
    \22\ Ibid., p. 5-5.
---------------------------------------------------------------------------
    For these and other reasons, including crime and fraud potential, 
many policymakers are calling for the outright prohibition of Internet 
gambling. Several states have passed legislation to that effect, and 
Congress is considering a bill, introduced by Sen. Jon Kyl (R-Ariz.), 
titled ``The Internet Gambling Prohibition Act.'' Furthermore, the 
National Association of Attorneys General has called for the federal 
government to prohibit Internet gambling, recognizing that the issue 
cannot be resolved on the state level. The Gambling Commission, as 
well, recommended prohibiting Internet gambling outright. However, 
given the difficulty inherent in restricting commerce of any kind, 
whether Internet gambling will be stopped is not clear.

Convenience Gambling. Convenience gambling refers to gambling machines 
that have proliferated in communities and neighborhood areas such as 
convenience stores, truck stops, and bars. These stand-alone machines, 
which include video poker, video keno, and slot machines, are known as 
Electronic Gambling Devices, or EGDs. Some states, such as South 
Carolina, allow EGDs to operate just about anywhere on a 24-hour basis. 
In other states, EGDs are run by the state lottery. In Nevada, EGDs can 
be found in the airport, in supermarkets, in sandwich shops, and 
elsewhere. Many states also have quasi-legal EGDs known as ``gray 
machines'' that are not licensed to pay out winnings and are, 
supposedly, for amusement only. In reality, winnings are often paid out 
surreptitiously.
    Convenience gambling in some ways represents gambling at its worst. 
Since EGDs can be almost anywhere, avoiding them is difficult. In some 
Las Vegas neighborhoods, for instance, a resident cannot even buy a 
gallon of milk without walking past rows of gambling machines. This 
makes it much more difficult for those who are vulnerable to addictions 
to avoid playing and significantly increases the incidence of problem 
and pathological gambling. For instance, South Carolina, with over 
34,000 EGDs, is experiencing a surge of problem and pathological 
gambling.
    Furthermore, this is one more form of gambling that is particularly 
detrimental to children and adolescents, as it presents them with 
numerous opportunities to become introduced to gambling experiences at 
an early age. Many of them will develop into problem and pathological 
gamblers, having been put at risk for the sake of America's appetite 
for gambling.
    At the same time, economic benefits to the public treasury are 
minimized since it is usually the local owner--not the state--collects 
the lion's share of profits. For these reasons, the Gambling Commission 
recommended not only that states no longer approve convenience 
gambling, but also that they roll back existing operations. This is 
precisely what happened in South Carolina, where a recent court 
decision will likely lead to the removal of that state's 34,000 EGDs.
Federal Policy Recommendations
    Since most gambling laws and regulations are established at the 
state or tribal level, it is primarily up to policymakers at these 
levels to take the lead in responding to the tough issues raised by 
gambling expansion. However, a few areas require federal action. Policy 
recommendations for the 106th Congress that, if enacted, would greatly 
support state and tribal efforts to control gambling expansion, include 
the following:

        1. Ban betting on collegiate and amateur athletic events 
        altogether, and prohibit media from advertising the line on 
        those events. Sports wagering, especially on collegiate and 
        other amateur events, undermines the integrity of sports and 
        puts students and athletes at risk. It should be prohibited 
        where currently legal; where illegal, regulations should be 
        more rigorously enforced. Newspapers should be prohibited from 
        printing point spreads for athletic contests in areas where 
        sports wagering is illegal.

        2. Amend truth-in-advertising laws to apply to Native American 
        and state lottery gambling ads. Many lottery ads have been 
        found to be misleading or deceptive; truth-in-advertising laws 
        currently do not apply to states or tribal entities.

        3. Prohibit Internet gambling not already authorized and 
        develop enforcement strategies. Help foreign governments to 
        prohibit Internet gambling that preys on U.S. citizens. Because 
        of the dangers posed by Internet gambling--especially to 
        America's families and their children and adolescents who are 
        put at risk--Internet gambling sites should be prohibited.

State/Tribal Policy Recommendations
    Because state and tribal policymakers set most of the nation's 
gambling laws and regulations, they carry the heaviest burden for 
assuring that those laws are crafted in the interest of the public 
good. Following are policy recommendations for state and tribal leaders 
that would not only go a long way towards reigning in uncontrolled 
gambling expansion, but also would begin to address costs associated 
with it:

        1. Restrict contributions to state and local campaigns from 
        corporate, private, or tribal entities operating gambling 
        facilities in that state. Because campaign contributions by 
        gambling interests may unduly influence the political process 
        and because local government tends to become a dependent 
        partner in the business of gambling, states should adopt tight 
        restrictions on contributions to state and local campaigns by 
        entities--corporate, private, or tribal-that have applied for, 
        or have been granted, the privilege of operating gambling 
        facilities.

        2. Prohibit convenience gambling (casino-like machines and 
        games) in neighborhoods, pari-mutuel facilities, and lottery 
        terminals. Convenience gambling, such as EGDs in neighborhood 
        outlets, has been shown to provide little to no social or 
        economic benefit, and to contribute to significant negative 
        costs.

        3. Detach state government from the operation and promotion of 
        lotteries. Lottery states cannot avoid a conflict of interest 
        between the public good and the public treasury. They are 
        actively promoting an addictive product that functions like a 
        regressive tax and that is essentially contrary to the work 
        ethic on which viable democracy is based.

        4. Enact and enforce harsh penalties for any gambling outlet 
        that allows underage gambling. America's growing addiction to 
        gambling puts children and adolescents at considerable risk for 
        gambling addiction through early and repeated exposure. State 
        and tribal leaders should enact and enforce harsh penalties for 
        any abuses regarding allowing or encouraging underage gambling. 
        Penalties and enforcement efforts should be greatly increased.

        5. Establish a 1 percent gambling addiction tax on all gambling 
        operations dedicated to providing for research, prevention, 
        education, and treatment for problem and pathological gamblers. 
        The social costs inherent in legalized gambling, including 
        problem and pathological gambling and its consequences, have 
        not been adequately addressed.

Conclusion
    The Gambling Commission report stated:

        Gambling, like any other viable business, creates both profits 
        and jobs. But the real question--the reason gambling is in need 
        of substantially more study--is not simply how many people work 
        in the industry, nor how much they earn, nor even what tax 
        revenues flow from gambling. The central issue is whether the 
        net increases in income and well-being are worth the 
        acknowledged social costs of gambling.\23\
---------------------------------------------------------------------------
    \23\ Ibid., p. 7-29.

    Because the costs are high, especially for America's youth, a 
moratorium on gambling expansion is needed now.
    Some might argue that trying to stop gambling expansion is like 
trying to stop a train barreling down the tracks--an exercise in 
futility. The recent defeat of anti-gambling governors by pro-gambling 
gubernatorial challengers in South Carolina and Alabama has often been 
cited as a case in point. Indeed it is, but not in the way expected. 
Consider the surprising outcome in those two states:

   In South Carolina, where 34,000 video poker machines have 
        sprung up in convenience stores since they were surreptitiously 
        legalized in 1991, Governor Hodges was elected promising to 
        hold a statewide referendum to make video poker regulated, 
        taxed, and permanent. Common wisdom expected Hodges's 
        referendum to pass easily. Instead, concern over the soaring 
        cases of gambling addiction and minimal economic benefits from 
        convenience gambling carried the day. Even as Hodges's 
        referendum was unexpectedly heading for defeat, the South 
        Carolina Supreme Court invalidated the referendum as 
        unconstitutional. This will likely lead to the abolishment of 
        video poker throughout the state.

   In Alabama, where Governor Siegelman was elected promising a 
        new state ``education lottery,'' the governor spent a great 
        deal of time and money promoting the lottery referendum to 
        ensure overwhelming approval. Instead, citizen concerns over 
        the regressive taxation inherent in the lottery, as well as 
        over having the government promote get-rich-quick schemes, 
        turned the debate around. The referendum was unexpectedly but 
        soundly defeated.

    As the Weekly Standard stated in an article about these surprising 
outcomes, ``It turns out voters needn't share the `private moral views' 
of a religious conservative before they will reject the public morality 
of state-sanctioned gambling. It turns out they need only be asked to 
think about and directly act on the matter.'' \24\ The gambling tide 
may be turning, simply by involving the voters in informed public 
deliberation--the core of the democratic process.
---------------------------------------------------------------------------
    \24\ David Tell, ``A Gambling Backlash?'' The Weekly Standard, 
November 15, 1999.
---------------------------------------------------------------------------
    It is time for policymakers to recognize that the rapid expansion 
of gambling is putting children and adolescents increasingly at risk 
and has led to a host of other negative social consequences that have 
yet to be adequately addressed. Legislators should declare a moratorium 
on gambling expansion and enact policies to break America's growing 
addiction to gambling. They must reach out to the many broken lives 
that have resulted from gambling addiction on a personal level and take 
action to prevent America's youth from falling prey to gambling's 
destructive potential. The above policy recommendations will jump-start 
that process, but the Gambling Commission's Final Report should also be 
consulted for additional resource data and information.
    The question is not so much what can be done--there are many ways 
to begin, as these recommendations illustrate. The real question is: Do 
policymakers have the courage to act on behalf of the public good, as 
opposed to the public treasury?

    Senator McCain. Thank you very much, Dr. Kelly. Thank you 
for your service on the commission. We appreciate it very much.
    Mr. Fahrenkopf.

 STATEMENT OF FRANK FAHRENKOPF, JR., PRESIDENT, CEO, AMERICAN 
               GAMING ASSOCIATION, WASHINGTON, DC

    Mr. Fahrenkopf. Thank you, Mr. Chairman.
    Mr. Chairman, you have just completed a campaign in which 
straight talk was your mantra. In that spirit, let's hear 
straight talk from all of us on this issue. Unfortunately, in 
my view the NCAA and its supporters base their case before this 
Committee on myths, not facts. They have not given the Congress 
the straight talk you so highly value and the American people 
so richly deserve. Let us examine just a few of these myths and 
the actual facts.
    Myth number 1, that Nevada sports books are somehow an 
integral part of the problem of widespread campus gambling. If 
that were true, the NCAA would have said so to the federal 
commission, but they did not. The commission did find that 
illegal sports gambling is as high as $380 billion annually, 
making Nevada's wagering only 1 percent of the total. Nevada's 
wagering, as Senator Bryan earlier indicated, is limited to 
people 21 years of age and physically present in the state. By 
contrast, illegal gambling is rampant on and off campus, even 
though it is by definition illegal.
    This month, around $70 million will be wagered in Nevada on 
March Madness, while several billion--the NCAA itself says it 
could be as high as $4 billion--will be wagered illegally 
outside of Nevada.
    Myth number 2. If Nevada sports books do not take college 
wagers, point spreads will not be published in the newspaper. 
Fact: newspapers acquire this information from noncasino 
sources that are also available over the Internet. For example, 
USA Today and many other papers print the line from a man named 
Danny Sheridan, who is based in Mobile, Alabama, not the State 
of Nevada.
    I think this Committee ought to demand that the NCAA 
provide a credible legal analysis that concludes that 
newspapers in this country somehow are not going to assert 
their First Amendment rights on this issue. I have talked to 
some newspaper people, and I would hope that this Committee 
would, also.
    Myth number 3, that there have been more scandals in the 
1990's than in previous decades. Senator Brownback, the NCAA 
has not given you straight talk on this. There were many, many 
scandals in the 1950's and 1960's involving many more players 
and many more games, well before modern Nevada sports books 
even existed, and they have been in places like Columbia 
University, Manhattan College, City College of New York, 
Bradley University and, Dr. Wethington, at the University of 
Kentucky.
    Myth number 4, that the Nevada sports books are somehow 
involved in recent point-shaving scandals. To say Nevada sports 
books were involved when a handful of people tried to make 
money at the sports books' expense is like saying the victim of 
a robbery is involved in the commission of a crime. The facts 
are that these scandals originated with illegal student bookies 
on campus that were found criminally responsible for these 
scandals. But for Nevada's watch-dog role, the scandals might 
not have come to light.
    And not one single of these point-shaving scandals 
originated in the State of Nevada. I want to make that very, 
very clear, because there have been comments otherwise, and I 
would recommend that this Committee, Mr. Chairman, talk to the 
prosecutors. Talk to the prosecutors who were involved in the 
Northwestern case. Talk to the prosecutors and law enforcement 
in the ASU case. They will tell you a different story and give 
you a different impression.
    With regard to the Northwestern case, Senator Brownback, 
those individuals were making bets in other states with illegal 
bookies long before they ever came to the State of Nevada, and 
were involved in point-shaving cases with those bookies.
    Myth number 5, the NCAA is doing all it can to address 
gambling problems. Well, the University of Michigan found that 
nearly half of the Nation's male student athletes are gambling 
even though such behavior is against NCAA rules. More 
importantly, listen to the NCAA's own words. Under oath, they 
told the federal commission that they were only taking ``baby 
steps'' and not spending ``substantial sums of money'' to 
address illegal gambling.
    Last year they wrote the commission that the NCAA is only 
scratching the surface in addressing the disturbing pattern of 
gambling among college students. Now, this is the case despite 
the fact that 5 years ago Sports Illustrated ran a three-part 
investigative series whose summary is still a fact today, Mr. 
Chairman, and I will just quote one part of that.
    As I said, gambling is the dirty little secret on college 
campuses, where it is rampant and prospering. This SI special 
report reveals how easy it is for students to bet with a 
bookie, become consumed with wagering, and get over their heads 
in debt.
    Just the TV revenues alone this weekend in Indianapolis, 
with their new contract with CBS for $6 billion for just the 
men's basketball tournament over the next 11 years will bring 
in five times more in just one month to the NCAA as all of 
Nevada's sports books will make on professional and college 
sports wagering in an entire year.
    I do have to commend, however, Coach Calhoun, who is here. 
The State of Connecticut and his university have probably done 
more than any other university in this country to deal with the 
problem on their own initiative, and let me also talk for just 
a moment about the NGISC report.
    Let's get very clear, and I hope the Committee would look 
very carefully at the National Gambling Impact Study Commission 
report, because what that study report recommended was that 
states--states, not the federal government--do something about 
legal sports wagering.
    The recommendation was to states. There were two exceptions 
where that commission found that there was federal 
jurisdiction. It had to do with Internet gambling, and Native 
American gambling. All other matters having to do with gambling 
the commission felt belonged with the jurisdiction of the 
states under the Tenth Amendment to the Constitution, and in 
fact the motion to deal with legal sports wagering says that 
states should be the ones who handle this, not the federal 
government.
    Mr. Chairman, this is a problem that exists on NCAA member 
campuses, with NCAA member students. Students are betting with 
other students on the outcome of these games. They are doing so 
over the Internet with illegal off-shore cyber bookies. Who 
better than the NCAA to take the lead in all of this?
    To ban college sports betting in Nevada to address this 
problem is a lot like shutting down the Napa Valley to curb 
binge drinking on campus. It has no relationship, and we are 
not alone in this view.
    The message was made, or a statement was made about mixed 
messages being sent. I would hope that all of you would tap 
into the NCAA's Web site this week. You want to talk about 
mixed messages, they there promote sweepstakes with their major 
sponsors, their major corporate sponsors, and Mr. Chairman, if 
you dial in there, for $40 you can buy from the NCAA a bracket, 
and you can remove from the bracket, something you can wipe 
off, what is happening in the NCAA tournament, and they say in 
their own Web site, suitable for office use, suitable for home 
use.
    So the question of whether or not the NCAA is living up to 
their responsibilities, again, the NGISC recommended very 
harshly that the National Collegiate Athletic Association do 
something. They have tremendous power over their member 
institutions, and they recommended that the NCAA require their 
member institutions to have in place education programs dealing 
with student athletes and nonathletes, telling them that gaming 
is illegal in the United States on college campuses whether or 
not you are talking about professional athletics or college 
athletics. None of that, as far as we know, has been 
instituted.
    Let me conclude, Mr. Chairman, by saying we are not alone 
in this. It is not just Nevada. I would hope that you would 
look at the people who know and follow college sports in the 
NCAA on a daily basis, and I am talking about sports reporters, 
I am talking about columnists, people who follow it, whether or 
not you are talking about Sports Illustrated, the Sporting 
News, the Raleigh News & Observer, Chicago Sun-Times, Austin 
American Statesman. You go through it. These are the people who 
follow the NCAA and what is going on, and what the problems 
are.
    And I will conclude if I can, Mr. Chairman, by reading to 
you what the NCAA, under oath, testified to the relationship 
with Nevada at the commission hearings of the NGISC. Quote:
    The relationship we have with Las Vegas is one that we talk 
about openly. If we are going to battle this problem, we need 
everyone's assistance. We help Las Vegas. Las Vegas helps us. 
We have relationships with sports book directors that we can 
call and make contacts with. I care not to share who these 
folks are, but yes, we do have relationships, and we are not 
afraid to say that we do, and we again are in this to protect 
the safety and integrity of our kids and the integrity of the 
contests, and when needed we will use that.
    Mr. Chairman, we welcome straight talk on this issue, and 
we would ask for you to get straight talk. Talk to law 
enforcement. Talk to the prosecutors who have really been where 
the rubber meets the road on this issue, and I think they will 
tell you that Nevada sports books and their millions of law-
abiding customers are part of the solution, not part of the 
problem.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Fahrenkopf follows:]

     Prepared Statement of Frank Fahrenkopf, Jr., President, CEO, 
              American Gaming Association, Washington, DC

 THE FUNDAMENTAL DIFFERENCES BETWEEN LEGAL AND ILLEGAL SPORTS WAGERING

I. Introduction
Mr. Chairman and other distinguished members of the Committee:

    I am pleased to be here today on behalf of the American Gaming 
Association to discuss legal and illegal sports wagering and their 
separate effects. We welcome this opportunity to set the record 
straight about the fundamental differences between the legal sports 
wagering that takes place on a relatively limited basis in my home 
state of Nevada and the massive illegal gambling that flourishes in the 
other 49 states, particularly on and around college campuses.
    The American Gaming Association is the national trade association 
for U.S. commercial hotel-casino companies and casino operators, gaming 
equipment manufacturers, and vendor-suppliers of goods and services to 
the commercial gaming industry. Our members are primarily comprised of 
publicly traded companies that are carefully licensed and closely 
supervised by state regulators. These companies are also subject to 
federal supervision by the Securities and Exchange Commission on 
general corporate matters as well as by other federal agencies on 
specific gaming-related issues (e.g., taxation and money handling).
    The U.S. commercial casino industry directly employs hundreds of 
thousands of people and indirectly employs many hundreds of thousands 
more in each of the 11 states that permit commercial casino gaming. Our 
industry has invested billions of dollars in those 11 states on behalf 
of its tens of millions of direct and indirect shareholders, including 
several states represented on this Committee: Nevada, Michigan, 
Missouri, Louisiana and Mississippi.
    Our members are major sources of state and local tax revenues in 
these 11 states and outstanding corporate citizens with stellar records 
of commitment to the communities in which they operate. Just last 
month, the gaming industry was singled out for recognition at a Capitol 
Hill luncheon by local United Way organizations in the nation's major 
commercial gaming markets for their charitable contributions and those 
of their employees. In addition, commercial gaming companies purchase 
billions of dollars of goods and services from virtually every state in 
the country in order to serve our tens of millions of customers.
    The American Gaming Association's Nevada members operate legal race 
and sports books in their Nevada hotel-casino-resorts. For all 
practical purposes, Nevada is the only state in which legal sports 
wagering is permitted, by acts of Congress and the Nevada legislature, 
on college and professional sports. (The Oregon lottery has a weekly 
state lottery game based on professional football games during the NFL 
season.)

II. Summary
    We agree that rampant illegal gambling on sports, including among 
college students, is a very serious national problem. We also share the 
goal of protecting the integrity of amateur athletics. For these 
reasons, Nevada's legal sports books are part of the solution, not part 
of the problem. This is particularly true when the volume of legal 
sports wagering is small relative to massive illegal gambling.
    Nevada's limited legal sports wagering is easily distinguished from 
the illegal sports gambling that should be of concern to this 
Committee. There is no factual basis on which to lump them together, 
nor is there any connection between the two. The argument that the one-
percent of sports wagering in Nevada somehow ``fuels'' the 99 percent 
out-of-state that is illegal is absurd on its face. The NCAA knows 
better because it did not seek to ban Nevada's sports wagering when it 
made detailed recommendations to the National Gambling Impact Study 
Commission (NGISC) just last year. In fact, the NCAA said it would not 
do so.
    The Committee does not need to merely take our word that, as 
laudable as it is to reduce illegal sports gambling and protect amateur 
athletics, the pending bills to ban legal sports wagering in Nevada 
will not accomplish either objective. Instead, the Committee should 
consider the independent views of commentators, editorial writers, 
respected sports analysts, a sampling of which follows:

   George F. Will--``Congress now is contemplating a measure 
        that sets some sort of indoor record for missing the point.'' 
        The Washington Post, March 12, 2000.

   FBI Special Agent Michael Welch--``The mob will always be 
        involved in sports bookmaking, whether it's legal in Las Vegas 
        or not.'' The New York Daily News, March 12, 2000.

   Columnist Rick Reilly--``In fact, passing the bill would be 
        like trying to stop a statewide flood in Oklahoma by fixing a 
        leaky faucet in Enid. Nevada handles only about 1% of the 
        action on college sports. Not that bookies and the mob wouldn't 
        very much like to get their hands on that 1%.'' Sports 
        Illustrated, March 22, 2000.

   Chicago Sun-Times--``A Nevada ban is more likely to push 
        wagers underground or onto the Internet . . . A ban will do 
        little to stop betting on college games.'' Editorial of 
        February 3, 2000.

   Columnist Mike DeCourcy--``The NCAA has put no thought 
        whatsoever into its push . . . This is strictly a public 
        relations move that offers no tangible benefit.'' Column in The 
        Sporting News of January 19, 2000.

   Business Week--``Now (the NCAA) is looking to fix its image 
        with a bill only a bookie could love'' (January 31, 2000).

   USA Today Founder Al Neuharth--``University and college 
        presidents and coaches properly are concerned about the 
        integrity of campus sports. But the solution to the problem is 
        getting their own houses in order.'' USA Today column of March 
        17, 2000.

III. The Importance of Integrity to Nevada's Gaming Industry
    The gaming industry, including those who operate Nevada's legal 
sports books, share the goal of this Committee that the integrity of 
amateur sports be protected for the following simple reasons.
    First, many of us are former high school and college athletes and 
have strong memories of our own experiences playing various sports.
    Second, our Nevada members have legal duties as state-licensed, 
regulated entities to follow, and moral obligations as good corporate 
citizens to uphold.
    Third, and too often overlooked, is that commercial gaming 
companies have an overwhelming financial interest in maintaining the 
integrity of all games that are offered to the public, particularly 
those of our members who operate Nevada's sports books within their 
resorts.
    Our industry will rightfully lose public confidence, and with it 
the customers on whom our employees and we depend, if the gaming 
offered, including sports wagers, is not conducted fairly and honestly. 
Furthermore, Nevada's legal sports books can lose money if a customer 
places a sports wager when someone is attempting to manipulate the 
outcome through point shaving.
    It is for these reasons that legal sports books take elaborate 
security measures and cooperate fully and regularly with federal and 
state law enforcement agencies as well as with the professional sports 
leagues and the NCAA. To their credit, the NCAA has acknowledged the 
value of that assistance (see below). Thus, Nevada's sports books are 
part of the solution, not part of the problem.

IV. Key Aspects Of Nevada's State-Regulated Sports Books

A. Overview
    Legal sports wagering in Nevada is relatively small in volume, 
accessible only by adults who are Nevada residents or visitors to the 
state, strictly regulated, closely-supervised, subject to taxation, and 
part of a broader entertainment experience that drives the industry 
that is the backbone of Nevada's economy.
    As with gaming and gambling generally, there are fundamental 
distinctions between legal and illegal sports wagering. It is simply 
wrong to lump them together or to manufacture connections between them 
where none exist. These distinctions are not just of degree or shades 
of gray, but bold differences that make them separate types of 
activities that should be viewed accordingly by this Committee when 
examining various types of sports wagering and their effects.

B. High School and Olympic Wagering Are ``Red Herrings''
    At the outset, I would like to emphatically dispense with two ``red 
herrings'' that the NCAA has thrown into this debate to divert 
attention from the real issues.
    First, there is no legal wagering on high school sports in Nevada 
and representatives of national high school associations have 
acknowledged that fact. By contrast, there no doubt is a serious 
problem on high school campuses with students betting on sports and 
otherwise gambling with other high school students.
    Nevada's state-regulated sports books have nothing to do with what 
happens in high school hallways across the country. Instead of being 
allowed to get away with this maneuver, those high school groups that 
have weighed in on the issue of Nevada's legal sports books should be 
called to account for what they are or are not doing about the serious 
problem of illegal gambling in their own schools. To do anything less 
is to miss an opportunity to raise student awareness and thus affect 
student behavior in a positive direction.
    Second, when it comes to the Olympics, there has been only minimal 
legal wagering on selected events such as the men's basketball ``Dream 
Team'' several years ago. The wagering volumes on these events have 
been very small. It is important to point out that a representative of 
the U.S. Olympic Committee recently told the Associated Press that this 
virtually nonexistent legal wagering has caused no problems. 
Nonetheless, Nevada gaming regulators will have to determine on a case-
by-case basis whether any Olympic wagering is ever appropriate in the 
future.

C. State Regulation of Legal Sports Books
    Legal wagering on professional and college sports in Nevada is 
subject to careful regulation by the Nevada Gaming Commission and the 
Nevada Gaming Control Board. Only adults who are at least 21 years of 
age and physically present may place a legal wager with a Nevada sports 
book. Out-of-state wagering is strictly prohibited. Nevada's regulators 
have taken steps in recent years to strengthen this and related 
prohibitions. There is no suggestion, much less any evidence, that 
Nevada's legal sports books are anything but well regulated and well 
run.
    Nevada's gaming regulators, including Gaming Commission Chairman 
Brian Sandoval and Gaming Control Board Chairman Steve DuCharme, their 
commission and board colleagues, and their staffs, can provide 
additional information to the Committee on Nevada's strict regulatory 
regime. You will find that there are sound reasons why Nevada's gaming 
regulatory system is used as a model by other jurisdictions, not only 
in the United States, but also around the world.
    When it comes to the regulation of sports wagering, Bobby Siller, 
the former Special Agent in Charge of the Las Vegas office of the FBI, 
and currently a member of the Nevada Gaming Control Board told the Las 
Vegas Review-Journal: ``From what I understand of this legislation (to 
ban legal college wagers), it defeats the one system, the Nevada 
system, which has the ability to detect illegal gambling'' (February 6, 
2000).

D. Federal Law, Gaming Policy and Sports Wagering

1. The Professional & Amateur Sports Protection Act (PASPA)
    Congress explicitly recognized the importance of legal gaming, 
including sports wagering, to Nevada and its economy when the 
Professional and Amateur Sports Protection Act (PASPA) was enacted in 
1992. Far from being a ``loophole,'' as some now erroneously claim, 
PASPA's ``grandfather clause'' was included by Congress to defer to all 
states, including Nevada, with pre-existing sports-wagering statutes. 
This was done to protect legitimate economic interests and legal 
principles. Senate Report 102-248 reads in pertinent part as follows:

        Neither has the Committee any desire to threaten the economy of 
        Nevada, which over many decades has come to depend on legalized 
        private gambling, including sports gambling, as an essential 
        industry, or to prohibit lawful sports gambling schemes in 
        other states that were in operation when the legislation was 
        introduced. (. . .)

        Under paragraph (2) [of S. 474], casino gambling on sports 
        events may continue in Nevada, to the extent authorized by 
        state law, because sports gambling actually was conducted in 
        Nevada between September 1, 1989, and August 31, 1990, pursuant 
        to state law. Paragraph (2) is not intended to prevent Nevada 
        from expanding its sports betting schemes into other sports as 
        long as it was authorized by state law prior to the enactment 
        of this Act. Furthermore, sports gambling covered by paragraph 
        (2) can be conducted in any part of the state in any facility 
        in that state, whether such facility currently is in existence.

    PASPA's preservation of previously enacted state statutes is 
consistent with the fact that since the founding of our country, 
states, not the federal government, have determined what gambling 
should be permitted in each state, if any, and how any lawful wagering 
is regulated. The principle of federalism underlying this division of 
authority is enshrined in the Tenth Amendment to the U.S. Constitution. 
A unanimous National Gambling Impact Study Commission, a majority of 
whose members were self-described as ``anti-gambling,'' reaffirmed this 
approach. (See Recommendation 3.1 in the NGISC's June 1999 Final 
Report.) The primacy of state gaming regulation continues to enjoy 
broad public support (75 percent in an American Viewpoint survey last 
year).
    Furthermore, the ``grandfather clause'' in PASPA is consistent with 
the legislative purpose of that statute. The statute's legislative 
history clearly reflects that PASPA's primary purpose is to prevent the 
expansion of sports wagering as a state-sponsored activity via state 
lottery games.

2. Nevada Has Relied On Current Federal Law For A Decade
    Nothing has changed since 1992 to alter the legal and economic 
basis for PASPA's prospective application. If anything, the passage of 
almost a decade of time strengthens the case for not re-opening (much 
less arbitrarily overturning) that ``grandfather clause.'' Until only 
recently, there has not been a single complaint about it from the NCAA 
or any other interested party, including when the NCAA testified on 
several occasions before the National Gambling Impact Study Commission 
just last year (see below).
    In reliance on PASPA's ``grandfather clause,'' Nevada's casino-
hotel industry has invested tens of millions of dollars in state-of-
the-art race and sports books that are very popular with millions of 
their adult patrons each year. This is particularly true in each of the 
major ``mega-resorts'' that have opened on the Las Vegas Strip in the 
past few years as well as sports books in resorts of longer standing. 
The overall investment in each of the ``mega-resorts'' nearly exceeds 
or does exceed one billion dollars apiece.
    Furthermore, now that commercial casino gaming has spread to ten 
other states, and Native American casinos have spread to about half the 
states, mainly since PASPA's enactment, Nevada's ``grandfather clause'' 
has taken on even greater economic significance. Legal sports wagering 
is one of the characteristics of Nevada's resort experience that 
distinguishes it from that offered in other states.

E. Sports Wagering and Nevada's Destination Resorts Today

1. Overview
    Legal sports wagering is enjoyed by many of Nevada's nearly 40 
million visitors each year, nearly 34 million of which visit Las Vegas. 
These visitors come from all 50 states and dozens of foreign countries. 
For those who do so, placing a legal sports wager in a closely 
supervised setting is just part of the broader entertainment experience 
that destination resorts provide. The race and sports books offer a 
safe and comfortable surrounding to view sporting contests on large 
screen systems that in part duplicate the fun of seeing a game in 
person.
    Visitors no longer come to Nevada solely or even primarily for 
casino gambling. Visitors increasingly spend their precious leisure 
time and hard-earned vacation dollar on fine dining, viewing fine art, 
playing golf and pursuing other recreational activities, and seeing 
spectacular headliners and production shows, in addition to taking part 
in exciting casino gaming. In addition, there are now many unique 
retail outlets and national chains whose Las Vegas stores are among 
their highest-grossing locations. Nevada is still the home for 
professional boxing championships and other bouts, while more recently 
it has become the home for professional golf tournaments, rodeo events 
and NASCAR races.
    When coming to Nevada, visitors to our state also frequently make 
side trips to experience the great natural wonders of our region, from 
the heights of the Sierra Nevada mountains near Lake Tahoe to the 
depths of the Grand Canyon in our neighboring state of Arizona.

2. The Economic Significance Of Nevada's Sports Books
    While race and sports book revenue is a small percentage of the 
total gaming and non-gaming revenue in Nevada each year, this 
comparison vastly understates the importance of legal sports wagering 
to Nevada's tourism industry and the jobs that are dependent on it. For 
example, this past January, an estimated 250,000 visitors came to Las 
Vegas for Super Bowl Weekend when the hotel occupancy rate was 
essentially 100 percent. The Las Vegas Convention & Visitors Authority 
estimated that the non-gaming economic impact of these visitors was $80 
million over that single weekend.
    A similar economic impact is occurring this month during the NCAA 
basketball tournament and will occur again this fall during football 
season. The jobs generated are not only those in the race and sports 
books, but extend throughout each of the hotel-casino-resort complexes 
to maids, valet parking attendants, food and beverage servers, and 
casino floor personnel. This job creation also includes those employed 
by the airlines, rental car agencies and taxi services that transport 
visitors to and around the fastest-growing major metropolitan area in 
the country. These jobs, as well as general and tourist-specific 
federal, state, and local tax levies, help generate billions of dollars 
in federal, state and local government revenues annually.

F. The History of Nevada's Legal Sports Wagering
    To understand legal sports wagering in Nevada, and the fundamental 
differences between legal sports wagering and illegal sports gambling, 
it is important to understand a little bit of history.
    While legal race and sports wagering in Nevada dates back to the 
1930s and 1940s, the modern race and sports books at hotel-casino-
resorts only go back to about the late 1970s and early 1980s. In the 
earlier years, the legal wagering facilities were known as ``turf 
clubs'' that were separate from hotel-casinos and largely offered 
horseracing bets, with only small amounts of wagering on team sports. 
This changed as a regulatory regime was put in place that allowed 
hotel-casinos to operate legal race and sports books, as the popularity 
of team sports increased, and as team sports became more widely 
distributed over a wider variety of cable and non-cable TV channels 
(many devoted exclusively to sports). The expansion of television 
coverage allowed fans from the around the country to follow and develop 
a loyalty to teams outside of their traditional ``home'' areas.

G. Legal Sports Wagering Is Dwarfed By Illegal Sports Gambling
    A critical point to make about legal sports wagering in Nevada is 
that it is relatively small, in fact almost infinitesimal, in 
comparison to the various forms of illegal sports gambling.
    According to the National Gambling Impact Study Commission's Final 
Report, the ``guesstimates'' of illegal sports gambling range as high 
as $380 billion each year (Final Report at page 2-14). By contrast, the 
total legal sports wagering in Nevada is less than one percent of that 
amount. The Final Report concluded that ``sports betting [is] the most 
widespread and popular form of gambling in America'' (Final Report at 
page 2-14).
    This month's NCAA men's basketball tournament is a case in point. 
The total amount wagered legally in Nevada will run between $60 and $80 
million. (As with all legal sports wagering, the net revenue to the 
sports books is less than five percent of the total amount wagered.) By 
contrast, published reports indicate that in 1995 the FBI estimated 
that the amount wagered illegally was $2.5 billion. That amount has no 
doubt grown with the NCAA's marketing efforts and the growing 
popularity of the tournament. NCAA president Cedric Dempsey was quoted 
in the news media last year as estimating that illegal wagers on the 
tournament would be closer to $4 billion that year. An article in The 
Cincinnati Post (March 18, 2000) stated that $3 billion would be bet 
illegally this month. The Christian Science Monitor (March 22, 2000) 
said that, ``An estimated 10 million fans will go online to get odds or 
more information on teams, often to place wagers.''

V. Illegal Sports Gambling Is A Serious National Problem

A. Overview
    Distinct from legal sports wagering, illegal sports gambling takes 
many forms. At one end of the spectrum are office pools and other 
casual betting among friends that many argue is harmless. While in most 
states this gambling technically violates the law, as the NGISC found 
it is not prosecuted. On the other end of the spectrum is the dark 
underworld of professional and amateur bookies in many communities and 
on too many college campuses. These bookies often have direct or 
indirect links to organized crime, as the NGISC learned in testimony 
from a New York City Police Detective who has done undercover work in 
this area (See NGISC hearing on September 11, 1998). This organized 
crime connection extends, at least indirectly, to student bookies on 
many college campuses (NGISC Final Report at page 3-10).

B. Illegal Sports Gambling Over the Internet
    The most dangerous development in the growth of illegal sports 
gambling is the Internet, whose illegal operators stand to benefit if 
Nevada's legal sports wagers are banned. Given widespread access to the 
Internet, including by minors, and the fact that persons operating 
Internet gambling sites are unregulated and offshore, the negative 
effects of this form of illegal gambling will only grow.
    According to a recent in-depth report by Bear, Stearns & Co., there 
are now more than 650 Internet gambling sites, including many that take 
sports wagers. The growth in Internet gambling was 80 percent from 1998 
to 1999. Thus, every home with a personal computer is a portal for 
young and old alike to wager on sports and otherwise, illegally, with 
unregulated cyber-casinos and cyber-sports books that lack the legal 
protections that apply to Nevada's state-regulated sports books. 
Internet gambling will be unaffected by a ban on Nevada's sports books 
taking college sports wagers.

C. Illegal Sports Gambling Is Already Illegal
    Illegal sports wagering thrives despite the fact that federal and 
state law already prohibits it. For example, as a general rule, every 
state prohibits all forms of gambling that are not expressly approved 
by law, and then, only by state-licensed enterprises. This is equally 
true for sports gambling. In addition, PASPA prevents additional states 
from sponsoring sports wagering via state lotteries and from 
authorizing it via private entities within their states. Use of the 
telephone or the wires to transmit wagers across state lines has been 
against federal law since the early 1960s. Sports bribery is a serious 
federal crime. Other federal statutes prohibit the interstate shipment 
of certain gambling paraphernalia and the transport of unregulated 
wagering devices.
    Thus, if merely enacting prohibitory laws were enough to deter this 
activity, the problem would not be as severe as all concede it is 
today. The solution, then, is not a matter of having more laws on the 
books to prohibit illegal sports gambling or banning the very small 
amount that takes places in Nevada. Rather, the solutions lie in 
properly enforcing existing laws and making certain that the penalties 
are adequate to deter violations. Congress should hear directly from 
federal, state and campus law enforcement officials before deciding 
whether to proceed with the pending legislation to ban college sports 
wagering in Nevada to the exclusion of concrete steps to address 
illegal sports gambling.

D. Illegal Sports Gambling on College Campuses is Out of Hand
    The problems created by the various forms of illegal sports 
gambling are compounded many times over on our nation's college 
campuses. The NGISC concluded that, ``There is considerable evidence 
that sports wagering is widespread on America's college campuses'' 
(Final Report at page 3-10).
    First, given the extent to which our nation's colleges and their 
students are wired to the Internet, a lone laptop in a single dorm room 
on any campus in the country has more access to sports gambling sites 
than there are legal sports books in Nevada. That access by underage 
students will continue uninterrupted if Nevada's adult visitors and 
residents are denied access to legal sports books. College 
administrators should do something directly about access to Internet 
gambling on their campuses, like installing appropriate filtering 
software on campus-owned computers and limiting credit card marketing 
to their students.
    Second, according to no less a source than the NCAA, there are 
illegal student bookies on virtually every college campus in the 
country, including some with links to organized crime (as noted above). 
This burgeoning phenomenon was well-documented as far back as 1995 when 
Sports Illustrated published a three-part investigative series aptly 
called ``Bettor Education'' that began with this ominous warning:

        Gambling is the dirty little secret on college campuses, where 
        it's rampant and prospering. This SI special report reveals how 
        easy it is for students to bet with a bookie, become consumed 
        with wagering and get over their heads in debt.

    The student-run illegal bookmaking operations described by Sports 
Illustrated are so prevalent and profitable that fraternities 
reportedly pass them on from graduating seniors to ``deserving'' 
underclassmen. If a January 12, 2000, article in the student newspaper 
of the University of Pittsburgh is any indication, the description in 
the Sports Illustrated article remains accurate today. (See, ``Gambling 
teaches students painful life lessons,'' The Pitt News, and ``College 
betting rampant'' in The Cincinnati Post of March 18, 2000.)
    Students gambling with student bookies and students gambling 
informally with friends are commonplace despite the fact that this is 
blatantly illegal activity. By their own admission, the NCAA and its 
member institutions have been unable or unwilling to contain that 
activity. This phenomenon even extends to a large percentage of the 
student-athletes over whom the NCAA has the most control, despite the 
fact that any sports gambling (on professional or college games) is a 
violation of existing NCAA rules.
    The NGISC Final Report cites a University of Michigan survey of 
NCAA Division I athletes published last year. The survey found that 45 
percent of male student athletes gambled on sports (college or 
professional). The mean amount wagered through an illegal bookmaker was 
$57.25, or an average of $225 each month. Most alarming, four percent 
reported having provided inside information, two percent bet on games 
in which they played, and almost one-half of one percent (2 of the 460 
male respondents) indicated they had received money for not playing 
well in a game.
    Despite the publication of the Sports Illustrated warning four 
years earlier, the NCAA's staff painted a dismal picture of its efforts 
at the NGISC's February 1999 hearings. William Saum, the NCAA's 
Director of Agent and Gambling Activities, and David Nestel, the NCAA's 
Assistant Director of Federal Relations, gave the following testimony 
(according to the published hearing transcripts).

        MR. SAUM: We are starting to make baby steps forward by merely 
        talking about it. (. . .) We have a major problem on our 
        campuses, we can remove the--if we can take action with the 
        student bookies on our campus, if we can convince our students 
        and our student athletes that the activity is illegal, and that 
        they should not accept it, we can convince our college 
        presidents, convince our student affairs officers, I believe 
        that that is a first step forward. (. . .)

        I would say to you that three, four, five years ago, because we 
        weren't doing our part, that possibly our student athletes 
        didn't even know that laying a 20 dollar wager with a student 
        bookie in the frat house was a violation of rule, or illegal. 
        (. . .) (emphasis added).

        MR. NESTEL: And that we have found that our administrators, not 
        just athletic administrators, but the college administrators on 
        campus don't recognize this as a problem, it doesn't smell, it 
        doesn't--a lot of this now with Internet gambling can go down 
        privately behind closed doors. And it is hard to recognize. And 
        so the message that can be sent here is that we need to raise 
        awareness. (emphasis added)

        MR. SAUM: The NCAA, for the past 50, 55 years, has always cared 
        about the issue of gambling, but in September of '96 they 
        created the position which I'm fortunate enough to sit in. In 
        November they promoted that position to a mid-management level 
        position within the association. (. . .) We are also proposing 
        to add staff to the issue of gambling. We are willing to step 
        up to the plate with money. It will not be substantial sums of 
        money, it will be more money than we have ever spent in the 
        past. (. . .)

        I'm not saying they are enough, they are not. Are we behind, 
        yes. But I think we are doing something. (. . .)

        But certainly our institutions' feet must be held to the fire. 
        (emphasis added)

E. Conclusion
    Mr. Chairman, with all due respect, diverting attention from the 
serious problem on college campuses by concentrating solely on the 
limited legal college sports wagering by adults in a controlled-setting 
in Nevada, in the face of the spreading cancer on college campuses, is 
not holding their feet to the fire as independent analysts have 
recommended and the NCAA's testimony supports.

VI. The NCAA's Position On Legal Sports Books Is Not Factual

A. Overview
    If legal sports wagering in Nevada were relevant to illegal sports 
gambling, or threatened a matter as paramount as the integrity of 
amateur athletics, the NCAA would have sought repeal of PASPA's 
``grandfather clause'' long before now. Similarly, the NCAA would have 
made a recommendation to the National Gambling Impact Study Commission 
to repeal Nevada's ``grandfathered'' PASPA status. It did not do so.

B. The NCAA's Presentations to the NGISC Are Being Ignored
    In its presentations to the NGISC, the NCAA concentrated almost 
exclusively on illegal sports gambling without any claim of a 
connection between legal wagering in Nevada and illegal gambling. The 
most illuminating evidence is found in the November 10, 1998, hearing 
in, ironically, Las Vegas. At that hearing, Mr. Saum concentrated on 
the dangers and causes of illegal sports gambling without reference to 
Nevada. The following exchange occurred with Commissioner James Dobson 
(no friend of the gaming industry, to be sure):

        DR. DOBSON: Mr. Saum, you addressed most of your comments to 
        illegal sports gambling. You didn't have much to say about 
        legalized gambling on sporting activities. Would you like to 
        comment on that?

        MR. SAUM: Commissioner Dobson, Madam Chair and the rest of the 
        commissioners, we--fundamentally the NCAA is opposed to legal 
        and illegal sports wagering, but much like this Commission, we 
        have not drawn a moral line in the sand that we are going to 
        come out and attempt to change the law. Certainly, we would be 
        adamantly opposed to any further legalization across the United 
        States. If we're going to have sports wagering, let's keep it 
        in Nevada and nowhere else. Let's not allow individuals to 
        wager from outside the state lines. (. . .)

        So I don't think you will see the NCAA start a campaign to 
        remove sports wagering from the State of Nevada, but you would 
        see us jump to our feet if it would expand outside of state 
        (sic). (emphasis added)

    Later in the hearing, Mr. Saum was asked by Commissioner Leo 
McCarthy to provide the commission with the NCAA's detailed sports 
wagering recommendations. Those recommendations were furnished to the 
commission in a six-page, single-spaced letter from NCAA president 
Cedric Dempsey dated January 28, 1999.
    First, the opening page of Mr. Dempsey's letter contains a 
startling admission:

        Despite our increased efforts in the area of sports gambling 
        education, the NCAA is only scratching the surface in 
        addressing the disturbing pattern of gambling behavior among 
        college students and youth. It is our hope that targeted 
        recommendations contained in the Commission's final report will 
        provide the impetus for much needed action while also bringing 
        focus to a problem that has long been overlooked.

    The letter makes no mention of Nevada's legal wagering as a source 
of the illegal gambling problem or as a threat to the integrity of 
amateur athletics. There is likewise no request that Nevada's legal 
wagering be banned.
    Only several weeks after the NCAA's recommendation letter was sent 
to the NGISC, the commission met for what was styled as a ``retreat'' 
in Virginia Beach, Virginia, on February 9 and 10, 1999. The transcript 
of that hearing verifies that commissioners of all views on gambling, 
pro and con, were unanimous in what can only be described as skepticism 
bordering on incredulity about the NCAA's proposals that were linked to 
them receiving federal funding. Several commissioners noted that the 
NCAA receives hefty television rights fees and other revenues from the 
uncompensated toil of college athletes. Commissioners suggested several 
ways in which the NCAA could be more active in combating illegal 
gambling on the sports events it sponsors.
    For example, one commissioner suggested that NCAA membership 
criteria include requirements that members have programs to adequately 
address campus sports gambling problems, including mandatory codes of 
conduct. Several commissioners strongly recommended that the NCAA run 
more Public Service Announcements (PSAs) on gambling education during 
major bowl games and tournaments and that these obligations be 
incorporated in the NCAA's network television contracts. In response to 
the NCAA's testimony that there was an absence of sufficient scientific 
research to get beyond anecdotal evidence and supposition about what 
needed to be done, several commissioners suggested that the NCAA take a 
leading role since its members include leading research universities.
    While these ideas were included in the NGISC Final Report as part 
of Recommendation 3.13, it is unclear the extent to which the NCAA has 
implemented them to date. For example, during the February 10, 1999, 
NGISC meeting, the AGA suggested that the NCAA put the use of PSAs on 
gambling education in its TV contracts. In response, Mr. Saum said that 
the NCAA spent a paltry $25,000 on a video for men's basketball 
programs that was turned into a PSA during the tournament in 1998. Mr. 
Saum also said:

        ``So your point is well made. Can we do more? Absolutely, we 
        can do more. Can we be more creative? Yes. This is a journey we 
        are on, and a journey never ends, and we are not even at the 
        mid-point of this journey, so we will continue to take those 
        ideas, and yes, we need to do that.''

    NGISC Chair Kay James specifically asked Mr. Saum if the NCAA would 
do so with respect to PSAs in its TV contracts. Later last year, the 
NCAA announced an unprecedented $6 billion contract with CBS just to 
televise the March basketball tournament over an 11-year period. This 
is up from $1.7 billion over eight years. While I have heard second-
hand that at least some PSAs on gambling education have been sighted in 
the dozens of hours of network air time this month, there do not appear 
to have been many on the air with much frequency. Not doing so on 
``Selection Sunday'' earlier this month when millions of fans, 
including students, started to fill out their bracket sheets was a lost 
opportunity.

C. The NGISC's Final Report As It Relates to Sports Wagering
    Given the self-evident differences between legal and illegal sports 
wagering, and the NCAA's own testimony before the NGISC that it would 
not start a campaign to change PASPA, the question of the hour is why 
the NCAA is now on a singular mission to end college sports wagering 
only in Nevada, the one place where it is regulated and above board.
    Based on a meeting with NCAA representatives on October 5, 1999, 
and on their subsequent public statements, their dramatic change in 
course is at least rhetorically based on the NCAA's interpretation of 
the NGISC Final Report. Congressional sponsors of legislation to 
prohibit Nevada's legal sports wagering in the name of doing something 
about illegal sports gambling have echoed the refrain that their 
legislation ``merely implements'' an NGISC recommendation.
    First, the NGISC Final Report should be read in its entirety when 
it comes to sports gambling. In doing so, Congress should keep in mind 
that sports gambling was not a central focus of the commission's 
inquiry, in large part because the commission's charter limited it to 
legal wagering while about 99 percent of sports gambling is already 
illegal, yet remains wildly popular. Furthermore, the commission had 
other priorities and areas of interest. Nonetheless, it did take 
testimony from persons with a range of views on sports gambling, legal 
and illegal, and the panel did make a series of unanimous 
recommendations and one recommendation on which it was badly divided.
    Second, when it comes to the NGISC recommendation to ban the very 
small amount of legal sports wagering that is currently legal, several 
important points must be kept in mind. Unlike the other recommendations 
on sports and other topics, most of which were adopted unanimously, 
only a bare majority of the nine commissioners approved Recommendation 
3.7 to ban legal sports wagering.
    There is no request in the wording of Recommendation 3.7 that 
Congress re-open PASPA to repeal the Nevada grandfather clause. Thus, 
this recommendation must be read in light of Recommendation 3.1, which 
was adopted unanimously as the overarching principle of gaming 
regulation:

        The Commission recommends to state governments and the federal 
        government that states are best equipped to regulate gambling 
        within their own borders with two exceptions--tribal and 
        Internet gambling.

    It is critical to note that there is no exception for sports 
wagering when it comes to the level of government most suited to 
determine whether a particular form of wagering should be legal within 
a state. When the NGISC wished to recommend that Congress act in a 
given area, it did so explicitly, not only by carving out two express 
exceptions to the primacy of state regulation, but in the wording of 
recommendations that expressly call for congressional action.
    The correct interpretation of Recommendation 3.7 as being directed 
to state policymakers and not to Congress to re-open PASPA is supported 
by the ``legislative history'' of its consideration. Its author, 
Commissioner James Dobson, first discussed the recommendation on April 
7, 1999, at an NGISC meeting in Washington, D.C. The transcript of that 
hearing includes the following statement by Dr. Dobson on the intent of 
his recommendation: ``And I would like to recommend that we recommend 
to the states that they ban legal betting on collegiate athletic 
contests.'' (April 7, 1999 transcript at 136) (emphasis added).

D. Betting Lines In Out-of-State Newspapers
    When AGA representatives met with NCAA staff on October 5, 1999, we 
were told that ending point spreads in newspapers to put a dent in 
illegal gambling was the primary reason for their proposal to repeal 
the Nevada ``grandfather clause.'' There is considerable 
misunderstanding about who creates betting lines published by 
newspapers. Similarly, there is no factual foundation for the 
assumption that terminating legal sports wagers in Nevada will affect 
the availability of betting lines in the newspaper or otherwise, much 
less that the lack of betting lines in newspapers, even if 
accomplished, would have a material affect on illegal sports gambling.
    We informed the NCAA in person on October 5, 1999, and in writing 
on October 22, 1999, that initial betting lines are generated for legal 
sports books by independent sports odds-making services. Decisions 
about whether to publish betting lines from these and other services 
are made by newspaper editors unconnected to Nevada's legal sports 
books that enjoy First Amendment protections and respond to reader 
interest.
    For example, NCAA president Cedric Dempsey had explained in our 
October 5 meeting that his organization had been unsuccessful in 
persuading newspapers to stop publishing point spreads. He specifically 
mentioned USA Today as an example. The fact is that the point spreads 
published in that newspaper are provided by noted analyst Danny 
Sheridan, as the sports section of that paper clearly states. Mr. 
Sheridan is based in Mobile, Alabama, not in Nevada.
    Even if Mr. Sheridan's line and other point spreads were to be 
removed from newspapers, he and many others have Internet sites where 
such information is readily available to the public. The same 
information is also available from ``800'' and ``900'' telephone 
services (some of which also take sports wagers illegally and even 
advertise their services in major newspapers and magazines, including 
campus publications.)
    Several years ago, the NCAA tried to withhold tournament press 
credentials for sports reporters from newspapers that publish point 
spreads. The NCAA was forced to abandon that effort in the face of 
First Amendment and other objections. There is no basis to conclude 
that the NCAA would be any more successful just because legal wagering 
is banned. To date, the NCAA has not provided any legal analysis to 
support its assertion that banning Nevada's sports books from accepting 
legal college wagers would remove the basis on which newspapers publish 
this information. Since legal sports books are not responsible for 
publishing this information, it would be a travesty to retroactively 
terminate Nevada's limited legal college sports wagering on that basis, 
particularly without ascertaining the position of the nation's 
newspapers and receiving a legal opinion.

E. The Facts Behind Recent Point-Shaving Incidents On Campuses
    In what appears to be a desperate attempt to generate support for 
their legislative proposal, the NCAA has taken to rewriting the history 
of recent point-shaving and other campus gambling scandals. While the 
NCAA's rhetoric sometimes makes it sound as if campus scandals are 
zooming into the stratosphere, other communications with Congress have 
more accurately admitted that such events are ``rare'' (see NCAA letter 
to Congress dated February 1, 2000).
    The NCAA would have Congress believe that there is a cause-and-
effect correlation between the number of point-shaving scandals in the 
1970s, 1980s, and 1990s, and the legal sports wagering in Nevada during 
those decades.
    At the February 1, 2000, press conference held in this very hearing 
room at which the NCAA and congressional sponsors announced support for 
their bill, the NCAA brandished a chart purporting to show such a 
linkage. Literally ``off the chart'' were both the numerous pre-1970s 
point-shaving scandals that occurred prior to Nevada's modern sports 
books, and any mention of massive illegal sports gambling outside 
Nevada, either before or after the 1970s. These glaring omissions 
included no mention of the illegal sports gambling at the heart of each 
of the point-shaving scandals in those decades.
    The fact is that there were numerous point-shaving scandals, such 
as those at the University of Kentucky and at several New York City 
area colleges in the early 1950s, well before the modern legal sports 
books. Sadly, the likelihood of more point-shaving scandals will be 
unaffected by whether legal sports wagering is permitted in Nevada (and 
it may actually increase without Nevada as a watchdog).
    For example, there were eight point-shaving scandals in the 1990s, 
according to the NCAA's chart. While eight is eight too many, such a 
small number is the proverbial drop in the bucket when one considers 
that tens of thousands of games were played in that decade without any 
trace of undue influence.
    Despite the relatively small number of these incidents, the NCAA 
and its allies have attempted to recast how and why they occurred. Some 
statements have used clever, loaded words like ``involved'' to describe 
the relationship between the legal sports books in Nevada and those 
persons on and off campus who were found legally responsible for these 
scandals. When confronted, the NCAA has been forced to concede as 
recently as two weeks ago on national television that our Nevada 
members and Nevada's regulators helped uncover the scandal that rocked 
Arizona state in the early 1990s. The NCAA's Mr. Saum also acknowledged 
this assistance before the NGISC last year:

        The relationship that we have with Las Vegas is one that we 
        talk about openly. If we are going to battle this problem we 
        need everyone's assistance. We help Las Vegas, Las Vegas helps 
        us. We have a computer right in my office that monitors the 
        line, and you know better than the rest of us how we can work 
        through that if the line changes.

        We have relationships with Vice Presidents of--and sports book 
        directors that we can call and make contacts with. I care not 
        to share who those folks are. But, yes, we do have 
        relationships and we are not afraid to say that we do. And we, 
        again, are in this to protect the safety and integrity of our 
        kids, and the integrity of the contest, and when needed we will 
        use that.

        (NGISC hearing transcript of February 10, 1999, at pages 39-
        40).

    Mr. Chairman, the computer line that Mr. Saum testified about will 
go blank and those relationships will cease if Nevada's legal sports 
books are prohibited from continuing to accept the limited college 
sports wagers now taken.
    The NCAA even went so far as to bring to its February 1, 2000, 
press conference the former Notre Dame place kicker who was among those 
convicted in connection with the point-shaving at Northwestern 
University. Left out of the NCAA's summary of that case were several 
critical facts. What the Committee will find if it consults the public 
court records and those who handled these cases, or even the newspaper 
articles printed at the time, is a story far different from that 
implied at the NCAA's February 1 press conference.
    Specifically, in both the Northwestern and Arizona state cases the 
web of illegality began with student bookies that were allowed to 
flourish on these campuses and infiltrate student-athletes as bettors 
and sources of information. There is no suggestion in either of these 
cases that legal sports books in Nevada were responsible for the 
illegal student bookie operations. Also in each case, athletes got into 
debt with student bookies and sought to wipe out those debts by 
committing the reprehensible act of betraying their team mates and 
besmirching the reputations of their own schools.
    Mr. Dan K. Webb, a former U.S. attorney in Chicago who represented 
one of the convicted campus bookies told the court at the sentencing 
hearing that Northwestern was ``a haven for gambling'' and that the 
atmosphere on campus ``nurtured'' his client's gambling addiction. (See 
University of Cincinnati student newspaper, The News Record, April 7, 
1999.)
    Again in both cases, those involved attempted to ``fix'' more than 
one game by influencing the final score and thus the point spread. 
Illegal wagers with bookies were placed on earlier games and on later 
games involved in each scandal. It was only when those committing these 
illegal acts outside Nevada tried to make money at the expense of 
Nevada's legal sports books on the later games in each scandal were 
those sports books somehow ``involved'' in what transpired.
    The role of Nevada's legal sports books was not as perpetrator or 
witness with knowledge of what was happening back on campus illegally, 
as the NCAA would have you believe. Just ask those who prosecuted these 
cases. Instead, this so-called ``involvement'' was as a potential 
victim, just as the victim of a street mugging is ``involved'' in the 
incident. To close Nevada's sports books to college sports wagers on 
this basis would be like closing banks to prevent bank robberies or 
closing the New York Stock Exchange to stop insider trading.
    Two simple facts betray the revisionist history of the Arizona 
state and Northwestern cases that the NCAA would now have you believe 
as they advocate their punitive legislation. First, when asked by a 
reporter at the February 1, 2000, news conference, the former kicker 
who was in part responsible for this sports bribery case admitted that 
he went to Nevada to ``con'' the legal sports books and ``pull one over 
on them.''
    Second, the NCAA issued a statement when that scandal broke and 
indictments were issued on December 5, 1997. There is no mention in 
that statement of any role or ``involvement'' by legal sports books as 
they now imply. This is true for a very simple reason: there was none. 
The lack of ``involvement'' by Nevada's legal sports books is true in 
this and other cases for a very compelling reason: as noted earlier, 
legal sports books have a strong financial interest in the integrity of 
the games and the accuracy of the betting lines on which wagers are 
taken.
    The NCAA and its supporters have tried to cheapen the role of legal 
sports books in uncovering the Arizona state incident and helping with 
other matters by saying that they ``only'' stopped them after the fact. 
That is true for the obvious reason that they were not ``involved'' as 
the NCAA now suggests and could not possibly have known about these 
illegal arrangements ``before the fact.'' Finally, it takes 
considerable hubris to blame our members hundreds of miles away in the 
middle of the Nevada desert for not being so clairvoyant as to pick up 
in advance what illegal activities were taking place on the distant 
college campuses.
    The NCAA also claims that there were more scandals in the 1990s 
than in the previous decades combined. This accusation flies in the 
face of the historical record as set forth in last year's University of 
Michigan study that the NCAA otherwise often cites. The study outlines 
a laundry list of serious scandals in the 1950s and 1960s that pre-
dated Nevada's modern sports books and make the incidents in the 1990s 
look tame by comparison.

F. The NCAA's Other Arguments Are Misplaced
    Equally disturbing has been a statement that a federal ban on 
Nevada's legal sports books is justified because college athletes are 
under financial pressure. First, a recent New York Times column 
correctly points out that much of this pressure is a function of the 
NCAA's rules and regulations. (``NCAA Tournament Highlights the 
Carnival and the Cesspool,'' March 26, 2000, ``Millions are made while 
the athletes are punished over pennies.'') Second, we appear to have 
much more faith in the integrity of our college athletes than the NCAA. 
The extremely small number of sports bribery cases indicates that our 
student athletes are not succumbing to financial pressure as the NCAA 
contends.
    There have also been statements that the existence of college 
sports wagering in Nevada amounts to commercial exploitation of 
``teenagers.'' The NCAA certainly does not come to any such discussion 
with clean hands, not with a $6 billion multi-year TV contract and a 
list of blue-chip corporate sponsors that use college basketball 
players to sell everything from pizza to motor oil.
    In the same vein, we have also heard the NCAA speak about the ills 
of sending ``mixed messages'' when their own corporate and network 
sponsors have sweepstakes and contests on their respective web sites, 
including via the NCAA's own official web site. This is taking place 
even though current law and the pending legislation they support 
expressly include ``sweepstakes'' among the activities that are not to 
be linked to college sporting events.

VII. A Comprehensive Review And National Solutions Are Needed
    Mr. Chairman, a very fair question of us is what should be done, in 
the alternative, since we strongly believe that eliminating Nevada's 
long-standing legal sports wagering is nothing more than empty 
sensational symbolism, at best.
    The answer lies in methodically going back to the NGISC Final 
Report and the NCAA's recommendations to that panel, the breadth of 
which are not reflected in the pending legislation the NCAA supports.
    A case in point is the creation of a Justice Department study panel 
as Senators Reid and Bryan, among others, have put forward in S. 2050. 
The NCAA's January 28, 1999, letter to the NGISC contains compelling 
reasons why such a panel is essential. Congress should have the benefit 
of the informed views of such a panel before Congress considers 
reversing a statute of long-standing to terminate a legal business only 
to find out after the fact that doing so was unnecessary or perhaps 
even counter-productive.
    The NGISC Final Report also contains recommendations applicable 
beyond the sports gambling context that are relevant to this subject, 
such as federal Internet gambling legislation (on which we and the NCAA 
are in agreement) and a minimum national legal gambling age of 21 (to 
be implemented by the states).

VIII. Conclusion
    In conclusion, Mr. Chairman, please permit me to express my very 
deep regret that over the last several months we have been forced into 
a pitched battle with the NCAA that was not of our choosing.
    As our October 22, 1999, letter to NCAA president Cedric Dempsey 
clearly shows, the AGA tried to find ways for our two organizations to 
work together to reduce illegal sports gambling and to protect the 
integrity of amateur athletics. While the NCAA never responded to that 
letter (other than by coming to Congress to shut down Nevada's sports 
books when it comes to college wagering), we have gone ahead without 
them. For example, we are working with the Harvard Medical School 
Division on Addictions on a national model program to address a variety 
of potentially addictive behaviors that our young people need to avoid, 
including illegal gambling. The NCAA has been AWOL on this project 
despite being asked to participate.
    The American Gaming Association has a proud record on key issues 
just in the short time since we were created in 1995. We have partnered 
with the National Center for Missing and Exploited Children on how to 
handle guests who bring children to our hotels and casinos. We have 
conducted training on this topic and implemented other ways to prevent 
access by minors and to enforce the minimum casino playing age of 21. 
We have also established voluntary advertising and marketing guidelines 
to target these activities only at adults.
    When it comes to pathological gambling and other responsible gaming 
issues, the commercial casino industry's funding of cutting-edge 
research through the National Center for Responsible Gaming was 
commended by the National Gambling Impact Study Commission in its Final 
Report. Much of this research is directed at how to understand and 
reduce youth gambling problems.
    The narrow legal issue of Nevada's status under PASPA is of direct 
concern to only one out of the fifty states, even though we submit that 
each of the other 46 states with various forms of legal gaming should 
be very concerned about retroactive federal preemption of state gaming 
decisions, as S. 2021 and S. 2267 propose.
    Should the NCAA prevail in their crusade against legal sports 
wagering, there will be millions of disappointed customers and many 
displaced employees in Nevada, at least in the short term. If nothing 
else, Nevadans have displayed their resiliency in recent years, first 
as our state lost its long-held monopoly over commercial casinos and 
then as the market absorbed thousands of new hotel rooms faster than 
most expected.
    Nevada will survive. We will find other ways to market the rooms of 
those filled this month by sports fans who asked nothing more than to 
be able to make a legal sports wager while enjoying everything else our 
destination resorts offer.
    However, passing S. 2021 or S. 2267 will do nothing to change the 
atmosphere on our nation's campuses, where the problem clearly 
originates when it comes to illegal sports gambling on campuses. The 
NCAA and its members, who commendably acknowledged their shortcomings 
as recently as last year, will have little additional incentive to act 
more forcefully than they have to date. Similarly, nothing will have 
been done to improve law enforcement on and off campus, increase 
research, or bring treatment and prevention programs into wider use.
    The conclusion of the University of Michigan study on the wider 
extent of gambling problems on campus, particularly among student 
athletes, said it best: ``The great American institution of 
intercollegiate sports depends on a comprehensive response to this 
problem'' (emphasis added).
    We strongly urge you to reject the NCAA's well-meaning but 
misguided proposal to ban Nevada's legal college sports wagers, and as 
an alternative, convene a panel of experts from relevant fields in 
keeping with what the NCAA once sought and with what the NGISC 
recommended to Congress last year. The charge to this panel should be 
to knock heads and develop a comprehensive set of measures for all 
relevant parties, in and out of government, to implement.
    Thank you for the opportunity to present our views on these 
important issues. I would be pleased to answer your questions and be of 
whatever other assistance the Committee deems appropriate.

    Senator McCain. Thank you very much, Mr. Fahrenkopf. I 
believe that if college sports gambling were made illegal, that 
the newspapers would have no reason to publish the point 
spreads, and I think if it was made illegal we would be able to 
persuade newspapers not to publish point spreads on something 
that has been declared illegal.
    Mr. Fahrenkopf, Nevada does not allow gambling on the teams 
that are based in Nevada. The University of Nevada, Las Vegas, 
University of Nevada, et cetera. Is that not a bit of hypocrisy 
there? They want gambling on the University of Connecticut's 
point spread, but not on the institutions that reside within 
their own state.
    Mr. Fahrenkopf. Mr. Chairman, I think that is a fair 
question, and despite the fact that Mr. Sandoval and Mr. 
Siller, who will represent the regulatory agencies who are 
going to be here, I think on the next panel, let me tell you 
what my understanding is. It is a rule that has been on the 
books for over 50 years, long even before the present 
institution of modern sports books in our state, but the reason 
goes something like this.
    There is legal betting in Nevada, so these young student 
athletes who attend those campuses are in an atmosphere, a 
milieu where legal betting is going on. Can you imagine, if we 
did not outlaw it in the State of Nevada, what the criticism 
would be upon us?
    But whether we are talking about Arizona, or North 
Carolina, or Connecticut, there it is supposedly against the 
law. Those students are not supposed to be around a gaming 
milieu, but as we now know, that is not the case. What happens 
is that the major sports betting in this country, the major 
temptation of point-shaving and bookies takes place outside the 
State of Nevada, Mr. Chairman.
    Senator McCain. Well, I find your argument somewhat 
unpersuasive, given that Laughlin, Nevada, is across the 
Colorado River from the State of Arizona, a very short, 30-
second ride, and yet it is perfectly legal for gambling to take 
place in Laughlin, Nevada, concerning an Arizona sporting 
event, but not that of a Nevada-based institution.
    Mr. Fahrenkopf. But, of course, there is a state line there 
you mentioned Nevada has, and I think you know our industry as 
well as any Member of this Congress, other than Senator Reid 
and Senator Bryan, that we do a very good job of regulating----
    Senator McCain. I am talking about an atmosphere that 
prevails in crossing of a river to me is sort of an artificial 
boundary.
    At a January press conference, Kevin Prendergast, a sports 
bookie and master mind of the Northwestern University 
basketball point-shaving scandal told the press that he 
traveled to Nevada and placed significant wagers on fixed games 
at Reno casinos. Mr. Prendergast admitted that placing bets in 
Nevada casinos was much easier than trying to con a bookie. He 
went on to say, and I quote, ``without the option of betting 
money in Nevada the scandal would not have occurred.''
    Do you have a response?
    Mr. Fahrenkopf. When I was commenting a few minutes ago in 
response to some comments Mr. Brownback had made, talk to the 
prosecutors in that case, Senator. Talk to law enforcement who 
was involved.
    You will find if you look at the record of that case that 
Mr. Pendergast was involved in point-shaving cases and betting 
long before they came out, at the final end, and they were 
caught laying off money in Nevada. They were involved in cases 
in four states, with illegal student bookies, long before that 
came down the pike, and I think when you hear from Nevada 
regulators, also the laws have been dramatically changed in 
Nevada, the regulations, since that happened.
    Senator McCain. Well, Mr. ``Hedake'' Smith and his friends 
were able to place more than $1 million on the games in Las 
Vegas. Again, I talk about the geographic proximity.
    Mr. Fahrenkopf. I think they were caught, were they not, 
Senator?
    Senator McCain. They were caught, and in the 1999 issue of 
Street & Smith's business journals, Steve Du Charme, head of 
the Nevada Gaming Control Board, was asked the following 
question: ``How much money is laundered through legal sports 
books?'' The answer by Mr. Du Charme, ``we really have no way 
of knowing. Based on transcripts of wire taps, it is millions 
of dollars.''
    I assume that some of those millions of dollars--and some 
estimate a lot more of that money laundered--was through 
scandals, which have been uncovered. To assume that the only 
crimes that have been committed have been uncovered I think 
flies in the face of the view of most observers.
    Mr. Fahrenkopf. Well, I will tell you, I hope some of the 
observers you talk to are the federal regulators who deal with 
money laundering, and I hope you talk to them about the 
cooperation that they get from Nevada casinos on this issue, 
and you can ask again Mr. Sandoval concerning this. There is no 
money laundering going on in Nevada, as that article implies.
    Senator McCain. There is no money laundering going on in 
Nevada?
    Mr. Fahrenkopf. Well, how do I know? You are correct. You 
correct me properly. I do not know. There is probably money 
laundering going on every place in the United States at any 
given time, but I think if you talk to federal regulators who 
are charged with overseeing the money laundering activity in 
this country, they will tell you probably Nevada does a better 
job than most other places.
    Senator McCain. I would hope so.
    President Wethington, would you like to make any comments 
in response to the other testimony that was presented here?
    Dr. Wethington. Mr. Chairman, if I might make a couple of 
comments, and to reiterate a couple of things that I had said 
earlier.
    1) of course we are concerned about illegal gambling, and 
the NCAA has put most of its attention on that during these 
last few years, and 2) we in the NCAA and on the college and 
university campuses believe that gambling on young people, 
legal gambling on young people is an issue, and it is one of 
the issues we ought to be concerned about, and that we are 
concerned about on our campuses, and we are trying in every way 
we can to try to do something about that through education. 
Through all of the efforts that both the universities and the 
NCAA are making, we are trying to make a dent in gambling on 
campus.
    We believe that putting a ban on legal gambling on college 
sports, on gambling on young people, is another weapon in our 
arsenal. We would like to have that legislation to help us with 
our overall thrust against gambling on college sports.
    I would like to make one other point, and I had a note from 
an NCAA staffer that says that it is incorrect that you can 
connect to an NCAA Web site for a $40 sweepstakes, and so I 
certainly would like to have the record indicate that there is 
some question about whether the NCAA Web site has a connection 
that enters a $40 sweepstakes.
    Senator McCain. We will have our crack staff check that out 
sometime within the next 6 months.
    [Laughter.]
    Coach Calhoun.
    Mr. Calhoun. Well, once again, it is not a case of finger-
pointing, and it is not a case of a panacea. I do not think 
anybody has brought that forward.
    I think what we are bringing forward simply is, this is 
something that is legal in one state and illegal in every other 
state. It is a matter of attitude and perception that it is OK.
    It is a starting point for us. No one here from the NCAA or 
member institutions or college coaches are saying this will end 
what has become a great problem. What I think it will do, 
though, it will stop the perception that it is OK, that--and I 
agree with you, Senator, certainly, that I think you can 
persuade newspapers if something is illegal in every state in 
America, they will not publish point spreads. I truly believe 
that, by the way.
    And I do think, as we stop that perception, we work from 
there. As a starting point, I think a ban on gambling on 
college athletics would be the first step, and hopefully we 
would take it farther from there.
    Senator McCain. A study was released yesterday on wagering 
by college referees. Do you believe there may be college 
officials betting on games, and do you believe that officials 
might act to influence the outcome of games they are calling?
    Mr. Calhoun. No. You know, I kiddingly said in the car 
incompetence sometimes gets in the way. At least that is what I 
have told them during the games.
    [Laughter.]
    But on a more serious note, I was astounded when I read the 
report. I do not believe that any official has ever set forward 
in a game to try to, quote, fix the basketball game.
    Has it happened? I am sure it probably has, but I do not 
believe that. I cannot see someone with the integrity of the 
people that we work with--and I think on this point, by the 
way, the NCAA has started a year ago, long before this came 
out, in questioning and background checks on NCAA officials.
    Senator McCain. Senator Bryan--and I want to thank the 
witnesses. I thank you very much for taking the time to be 
here.
    Senator Bryan.
    Senator Bryan. Thank you very much, Mr. Chairman.
    Dr. Kelly, let me ask you a couple of questions here before 
turning to the other members of the panel.
    The number that has been bandied around here is that sports 
wager in Nevada would constitute roughly 1 to 2 percent of all 
of the sports gambling in America. Let me just make sure that 
we have that as part of the record.
    That is something that came from the Commission's own 
report. Do you agree with that number?
    Dr. Kelly. With one minor exception. I notice the figure 
that has been bandied about is a $380-billion estimate. 
Actually it was a range of $80 billion to $380 billion.
    Senator Bryan. And I said that, but again, so that we 
understand the premise here, we are talking about sports 
gambling in America, $80 billion to $380 billion, Nevada sports 
gambling would represent about, say 1 percent of that, and that 
includes not only betting on college sports but also betting on 
professional sports as well.
    Dr. Kelly. That is correct.
    Senator Bryan. So we are talking about something in the 
range of 1 percent. I think the record is helpful on that.
    Now, it has been asserted here by a number of witnesses 
that, indeed, if we made sports betting illegal in Nevada on 
college games that the line posted by many, many newspapers--
USA Today has been mentioned, and many others as well--would 
simply disappear, and I guess my question is, in the course of 
the Commission's examination of gambling, did you bring any 
witnesses before the Commission from any of the major news 
organizations, or the organizations that represent newspapers 
in the country?
    Dr. Kelly. I do not believe so, Senator.
    Senator Bryan. So no testimony was offered or requested by 
the Commission to indicate, in effect, look what would happen 
if sports college betting were made illegal in Nevada?
    Dr. Kelly. I believe we had testimony primarily from the 
NCAA on these matters.
    Senator Bryan. I am asking the people that are publishing 
these lines, and a number of witnesses made this point, Dr. 
Kelly, that if we made college betting in Nevada illegal, that 
the newspapers would stop publishing the line, and I believe 
you are telling me--I want to give you a chance to clarify the 
record if I am misstating it--is that no witness was called 
before the Commission to offer an opinion on that position from 
either the newspapers themselves or organizations representing 
the newspapers.
    Dr. Kelly. Just to make sure I am hearing you, do you mean 
did we have testimony from the media themselves as to whether 
that would affect their publishing of the line?
    Senator Bryan. Right.
    Dr. Kelly. No, we did not.
    Senator Bryan. Nor did you request any testimony from 
organizations representing the newspapers--I mean, the 
Publishers Guild, or the various national organizations?
    Dr. Kelly. No. Again, it was primarily the NCAA.
    Senator Bryan. Now, one of the statements that has been 
made here is that the Commission--I believe Mr. Fahrenkopf made 
this point, that the Commission recommended to state 
governments and the federal government that states are best 
equipped to regulate gambling within their own borders with two 
exceptions, tribal and Internet gambling.
    I believe Mr. Fahrenkopf was quoting from the 
recommendation of the Commission itself--so that the record is 
clear, that was recommendation 3.1 in the Commission's report--
that whatever one's view is of gambling, that essentially, 
except for Indian gaming and Internet gambling, that that 
should be an issue left to the states.
    Dr. Kelly. That is correct, Senator. If I could just make 
the point that the letters, nonetheless, that came from the 
chair and to the commissioners were in support of this federal 
legislation. However, you are correct.
    Senator Bryan. I understand that, but even under both the 
new math and the old math, those three letters would not 
constitute a majority of the Commission.
    [Laughter.]
    Dr. Kelly. That is correct, Senator.
    Senator Bryan. Now, Coach Calhoun, you have got a great 
program. I have to say in recent years we have been somewhat 
envious in Nevada with the great success that University of 
Connecticut has had, a wonderful program, and let me just say I 
do not think any of us would disagree with how serious illegal 
gambling is on college campuses in America. It is a major 
problem. Your point, you are talking about very young men 
involved in your program, 18 or 19, and I quite agree. I do not 
think anybody would quarrel with that proposition.
    Let me ask you, though, is it not fair to say that part of 
the problem is that many of these young people come from 
backgrounds in which they have really have little or no money? 
I mean, oftentimes some of these youngsters come from some of 
the poorest neighborhoods in your own state, in my own state, 
and in America.
    To what extent, in your opinion, does the NCAA rule which 
limits the ability of these athletes to earn outside income 
have an impact on the temptations that they might have to talk 
with an illegal bookie?
    Mr. Calhoun. Well, first of all you are making some 
stereotypes which are inaccurate. We have a mix.
    Senator Bryan. I am not saying all, but some.
    Mr. Calhoun. Clearly some, and I stated that previous to 
that. Second, I think the greatest misnomer that I hear all the 
time--and I have seen it, as a matter of fact, by student 
athletes who have been involved in taking things, not 
necessarily in gambling situations, but in others where--I 
couldn't afford to buy a hamburger, and therefore I was 
destitute.
    The NCAA provides to a student athlete the right to get a 
full scholarship, which is room, board, tuition, books, and 
fees, so all his costs at the university are covered.
    Senator Bryan. Those do not include his living expenses.
    Mr. Calhoun. Well, it does include living--he has----
    Senator Bryan. I am not trying to be contentious, but you 
certainly have to have money to eat, and--you have to have some 
money.
    Mr. Calhoun. Room, board, which is food, fees, housing, et 
cetera, books, all academic other----
    Senator Bryan. Which we are fully supportive of.
    Mr. Calhoun. And from that, based on economic need, a young 
man can apply for a Pell grant, which is worth up to, I believe 
at this point, $2,800. If he so qualifies he would receive all 
$2,800 for, quote, spending money, so he would have a normal 
college experience. I think this is what you were alluding to. 
Other than actual housing and meals he also has the opportunity 
for special assistance, which can range between, I believe, 
$500 and $700, so a kid that is really needy, without even 
working, can receive $3,500 of aid during a 9-month academic 
year.
    Now, whatever math we are doing, you can break it down that 
you could probably afford a hamburger or go to the movies, do 
some of those things, because I get very upset--now, I am not 
saying we are doing enough. Clearly there are other situations 
that I have a lot of feelings about that we need to do more for 
these student athletes, but we have a tremendous problem at the 
University of Connecticut if we are going to just cover men's 
basketball or women's basketball. We have 600 other athletes. 
What about them?
    So the issue being simply--and the NCAA has gone forward to 
allow kids to work during semester break now. Now, some of that 
is not feasible, as you would understand, because you miss the 
seasons, et cetera, but for some other sports, and many other 
sports, it is, and there is something during the summer that 
some of us might have done, and we at Connecticut have really 
pushed our kids to do this. It is called work. It is a great 
new experience.
    Senator Bryan. I appreciate it. Your view is essential, you 
do not believe it is a major problem.
    Mr. Calhoun. No. No, I am not saying that at all. I say 
there are certain problems, but I think the misnomer that these 
kids come to an institution--and it is a misnomer--with room, 
board, tuition, books, and fees, and all other academic-related 
matters, and then are not allowed to seek any other financial 
aid, is just not true.
    We encourage all of our kids--we have a freshman class 
coming in. They are being encouraged to make their Pell grant 
forms out now by their families, special assistance forms, so 
we encourage that. There are other things, and I am sure the 
people in the NCAA know I feel very strongly, and a lot of the 
coaches do, about other ways in which we can help these kids 
who many times are on college campuses.
    I did say in my statement that many of our kids do come 
from modest backgrounds and could be more tempted, or make 
misjudgments, and I truly believe that, but I think the idea 
that kids do not have anything, once again, is totally 
inaccurate.
    Senator Bryan. I appreciate your comments.
    Dr. Wethington, let me ask you a couple of questions, if I 
may, and I think you are kind of appearing here on behalf of 
the NCAA, and so some of these questions may be more broadly 
focused.
    Let me say that my daughter-in-law is from Lexington, 
Kentucky. She lives in Nevada, and on her personalized plate 
she has proudly emblazoned, Kentucky Cats.
    Dr. Wethington. Tell her we very much appreciate that.
    Senator Bryan. So we do have some family tie to the 
University and the great program you have.
    Let me ask you, are there any illegal bookies on the 
University of Kentucky's campus?
    Dr. Wethington. Mr. Chairman, I do not know any personally, 
but I am certain that there probably are.
    Senator Bryan. I am certainly not suggesting, Dr. 
Wethington, that you would personally----
    [Laughter.]
    Dr. Wethington. If you ask me for an opinion, my opinion is 
that there are.
    Senator Bryan. And how many have been prosecuted since you 
have been President of the University?
    Dr. Wethington. I am not aware of any that have been 
prosecuted since I have been president.
    Senator Bryan. And what efforts do you as a university--I 
am asking just to you, sir, because you are here. I am not 
suggesting the University of Kentucky is probably different 
from any other university in America, but what efforts, what 
kind of commitment do you have in terms of your own law 
enforcement efforts to locate these bookies?
    Dr. Wethington. We have a considerable commitment to trying 
to avoid the pitfalls that we believe that are there both for 
legal and illegal gambling, and of course legal, there is not 
an option for legal gambling on college sports in Kentucky, but 
we have done it primarily through educational efforts, through 
the bringing in of outside speakers, NCAA staff, FBI agents, 
and former individuals who have been convicted of being 
involved in college betting schemes in the past to try to get 
our students, both our student athletes and the rest of the 
students on campus acquainted with the issues.
    Obviously, our law enforcement on campus police are always 
looking for any activity that is illegal, whether that be 
gambling or otherwise.
    Senator Bryan. But your point, and you have been very 
candid, and I appreciate that, in the years you have been 
President no prosecution has been undertaken, to the best of 
your knowledge?
    Dr. Wethington. Not that I am aware of, to the best of my 
knowledge.
    Senator Bryan. Now, Mr. Fahrenkopf made reference to the $6 
billion contract that the NCAA recently signed with CBS. How 
much money is the NCAA as part of its budget dedicating or 
devoting to this issue of trying to deal with this illegal 
gambling on college campuses.
    Dr. Wethington. Well, remember, Mr. Chairman, that the NCAA 
is a collection of the member institutions.
    Senator Bryan. Right.
    Dr. Wethington. And we believe, at last account, as much as 

94 percent of the revenue coming to the NCAA goes back to the 
member institutions, either directly to the institution to 
support 
scholarships or to championships, which involve all of the 
member institutions.
    Senator Bryan. Let me accept your conclusion here. I think 
the question is how much is being spent by the NCAA and the 
reason why I ask that is because before the Commission they 
testified they spent $25,000 on a video and that they would 
like to be spending a lot more, but it would not be a 
substantial sum of money. If that is correct, would you not 
agree that it is somewhat hypocritical to come before us and 
talk about how serious illegal betting on college campuses is, 
something I happen to agree with, and yet spending a minimal 
amount of resources to devote to that issue.
    Dr. Wethington. I think all of us, Mr. Chairman, could 
question the priorities of any organization or institution in 
terms of its spending, but I can assure you that the vast 
amounts of these moneys, the vast majority of the money goes 
back to the member institutions. We then set the priorities for 
the expenditure of those funds and in the case of the 
University of Kentucky, I don't know what amount we are 
spending, but a considerable part of the time and effort of all 
of our staff are involved in anti-gambling activities. I don't 
know how to put a dollar amount on it.
    Senator Bryan. Well, maybe you could do so and get this 
information from the NCAA. Another question along that line, 
how many staff members at the NCAA national level are assigned 
as their primary responsibility dealing with this issue of 
illegal gambling on college campuses?
    Dr. Wethington. I believe at this point there are three.
    Senator Bryan. And how many member institutions do we have?
    Dr. Wethington. 1,074, I believe at last count.
    Senator Bryan. And three are assigned to this problem?
    Dr. Wethington. That is correct.
    Senator Bryan. Maybe you answer this question and if you 
cannot, maybe you can provide the information. As I pointed out 
in my opening statement that the NCAA testified before the 
Impact Study Commission in November, I believe, of 1998 and 
then they were asked to submit a followup letter in terms of 
things that ought to be done. At no time during that testimony 
did they indicate that the answer would be to eliminate legal 
sports betting on college games in Nevada.
    Dr. Wethington. Well, Mr. Chairman, I obviously was not a 
part of that, but my sense of that is that this issue has been 
one that has been continuing to escalate and that the farther 
along we go, the member institutions are getting more and more 
concerned about the overall impacts of gambling, both legal and 
illegal, and that obviously the NCAA staff are there to 
represent the opinions of the member institutions and I can 
tell you now that the college and university presidents are 
concerned about legal gambling, as they are about illegal 
gambling.
    Senator Bryan. Are you satisfied that out of a $6 billion 
contract and making whatever priorities the NCAA wants to in 
terms of remitting some of that money to college campuses, that 
having three investigators or three people assigned to illegal 
gambling is, in your judgment, is that a proper priority?
    Dr. Wethington. I think it is a proper priority at this 
point, Mr. Chairman. I don't pretend to believe that the member 
institutions and the NCAA are devoting in every way the 
resources that could be devoted to addressing this problem 
because we have many other problems we are trying to address at 
the same time, so again, it is a matter of priority. Clearly, I 
believe that now the NCAA has got gambling high enough on its 
agenda that sufficient resources and staff will be devoted to 
the issue. I have no question about that.
    Senator Bryan. Well, it just strikes me that three people 
hardly represents the kind of priority that I think ought to be 
devoted to this, but I respect the right of others to have a 
different opinion. Let me just say that I thought the video was 
quite good. Would you provide us some information? How often 
did that video run? I have talked to people who watched a lot 
of the recent tournament games. I have watched some myself. I 
have not talked to anybody that saw it run more than once. Now, 
this is not a comprehensive study, but if you happen to know 
how many times did it run?
    Dr. Wethington. I am informed that that video ran 18 times, 
Mr. Chairman.
    Senator Bryan. I thank you, and the last question before 
yielding to my colleague here who I know has a lot of 
questions. The National Impact Study Commission recommended 
that the NCAA adopt mandatory codes of conduct on sports 
gambling education. Has that been done at the University of 
Kentucky?
    Dr. Wethington. There is no university-wide policy. There 
is under consideration this very semester, and in my opinion 
there will be a recommendation from our athletics director, Mr. 
C. M. Newton, and our vice-chancellor that there be a 
university-wide regulation that deals with sports gambling. 
Currently, the only regulation we have is the NCAA regulation 
that does impact our student athletes and our athletics 
personnel.
    Senator Bryan. Mr. President, you have a provision in your 
code of student conduct. Let us suppose I am a student at the 
University of Kentucky. I am not an athlete, but I have been 
caught involved in illegal gambling, not necessarily as a 
bookie. Let's put that in once instance, I am a bookie; the 
other instance, that I am just a student that placed a wager 
through a bookie. What kind of disciplinary action, if any, 
have you taken in those circumstances?
    Dr. Wethington. We have not, Mr. Chairman, but that is part 
of the regulation that we are proposing to put in place this 
semester. Currently, we do not have any such.
    Senator Bryan. And let me say, Mr. President, it may be 
unfair of me to ask this of you at the University of Kentucky. 
You are the witness before us. I do not mean to in any way 
imply that your institution probably treats this differently, 
but I think the point needs to be made. The NCAA assigns three 
investigators or three people nationally and that many campuses 
have not yet adopted these student codes of conduct, although I 
commend your campus for being about to do so. No prosecutions 
have taken place. Has any student ever been expelled, to the 
best of your knowledge, from the University of Kentucky because 
he or she has been involved in illegal gambling?
    Dr. Wethington. Well, if there had been, Mr. Chairman, I 
certainly couldn't reveal his or her name.
    Senator Bryan. I am not asking the name. Anyone you know 
of, sir?
    Dr. Wethington. No, I do not.
    Senator Bryan. I thank you.
    Senator Brownback. This has been an excellent panel. I have 
got a few questions that I would like to put forward. First, 
maybe just to make sure the record is clear on this, 
Recommendation 3-7 of the National Gambling Impact Study 
Commission states ``the Commission recommends that betting on 
collegiate and amateur athletic events that is currently legal 
be banned altogether.'' That is from the Commission report. 
There was some question about whether these two letters 
constituted a majority or not. That is within the 
recommendations. Am I reading that correctly, Dr. Kelly?
    Dr. Kelly. That is the recommendation. I think the 
counterpoint being made is that the first recommendation in 
Chapter 3 was, and I would read it, ``the Commission recommends 
to state governments and the federal government that states are 
best equipped to regulate gambling within their own borders 
with the two exceptions of tribal land Internet gambling.'' I 
guess the hope here was that Nevada would take the lead on her 
own.
    Senator Brownback. But nonetheless, it is a recommendation 
of the overall Gambling Impact Study Commission?
    Dr. Kelly. Yes.
    Senator Brownback. And then passed by a majority vote.
    Dr. Kelly. It passed by a majority and the report in its 
entirety was unanimously adopted.
    Senator Brownback. So this is part of a unanimously adopted 
report from that gambling impact study, is that correct?
    Dr. Kelly. The entire report was unanimously adopted. That 
particular recommendation passed by a majority.
    Senator Brownback. The overall report is unanimous; this 
one by a majority?
    Dr. Kelly. Yes.
    Senator Brownback. Thank you. I wanted to be clear on that. 
If I could, Dr. Wethington, and thanks for really all of your 
candid comments. I suppose if you are in a court of law, your 
lawyer would be jumping up saying I object and not wanting all 
of these answers to be put forward, but I appreciate and I am 
glad you are doing it this way. That is the way you should be. 
How many total employees does the NCAA have, do you know?
    Dr. Wethington. I had better turn to the NCAA staff to get 
the latest update. Approximately 320.
    Senator Brownback. And then you have the three that are 
currently dedicated at the NCAA for this issue probably going 
to be jumping because of the impact. How many people on the 
campuses around the country are involved in gambling? You 
mentioned a number of people at the University of Kentucky as a 
part of your thousand institutions. Do you have any idea how 
many across the country are focusing any portion of their time 
on gambling problems?
    Dr. Wethington. I know of no way to put a number on that, 
but I can tell you that my hope is, as it is in my institution, 
that all of us involved in the administration of athletics 
programs, including coaching personnel, are spending a part of 
their time on anti-gambling measures.
    So I believe you will find that virtually all of the 
administration of our colleges and universities of their 
athletics programs now consider it as a serious enough issue 
that a portion of the time of these individuals are all being 
spent on this issue and I like that much better than dedicating 
full time people to that issue, since compliance with various 
rules and regulations and otherwise is much broader than 
gambling.
    Senator Brownback. And so you are saying you have higher 
level personnel but several FTEs, full-time equivalents per 
college campus that are involved?
    Dr. Wethington. Yes, in the large institutions, Senator 
Brownback. In the large institutions. That would not be true, 
undoubtedly, in the smaller institutions that are a part of our 
organization.
    Senator Brownback. And you are going to be stepping it up 
further apparently too, because of the nature of the problem, 
Dr. Wethington? We have had a lot of critics of the legislation 
claim that if the NCAA were so serious about this ban, why 
didn't they submit it as a recommendation to the Commission. 
Could you address that issue directly to the Committee?
    Dr. Wethington. I have addressed that in some fashion, but 
could address it again and in that, I believe that this is 
being, this is an issue that is getting of increasing concern 
to all of the member institutions, to the colleges and 
university presidents, the NCAA staff. Perhaps some of these 
incidents in the nineties have caused us to put more time and 
effort and attention on the matter than we might have 
otherwise.
    But in short, I simply believe that this is an issue whose 
time has come, that we look back now at the action taken 
earlier in the nineties, find a loophole here that we on the 
colleges and universities and NCAA simply feel needs to be 
closed for us to be able to address the overall issue of 
gambling on college sports.
    Senator Brownback. I have a couple of questions, if I 
could, for Mr. Fahrenkopf. I appreciate your passion for your 
industry, which is large. How big is the gaming industry in the 
country?
    Mr. Fahrenkopf. Well, you have got some form of legalized 
gambling in 47 of the 50 states. There are three states that 
have no form of legal gambling.
    Senator Brownback. The total dollar amount of the gambling 
industry in the U.S.?
    Mr. Fahrenkopf. I forget who testified. Someone testified 
that the gross revenue was around $80 billion for the entire 
industry, but that includes lotteries, state lotteries that 
exist in 37 states, plus the District of Columbia, horse 
racing, et cetera.
    Senator Brownback. Now, I take it you don't have much 
dispute with Coach Calhoun on the problems that they are having 
on college campuses?
    Mr. Fahrenkopf. Absolutely, we agree, Senator.
    Senator Brownback. You don't have a problem with him that 
it is not a panacea, what we are proposing in this legislation?
    Mr. Fahrenkopf. I will stipulate to that.
    Senator Brownback. But it is a start.
    Mr. Fahrenkopf. Well, I am not sure it is a start. I think 
our position is this and that is why I urged during my formal 
testimony that this Committee talk to law enforcement because 
they will tell you that the fact that there is now legal 
betting in Nevada and people out there who work with law 
enforcement, that all of this they will tell you is going to go 
underground. It is not going to disappear. We are not going to 
stop gambling.
    Senator Brownback. But if I could build on that question, I 
take it from that logic that really we should have more legal 
sports gambling across the country would be your answer, that 
that would be the way for us to catch it in Kansas if we would 
just make it legal, then we would have it investigated then.
    Mr. Fahrenkopf. I would not advocate that position, 
although to be kind to them, I think Dr. Kelly will tell you 
there was some discussion. There were advocates of that during 
the National Gambling Impact Study Commission that trying to 
prohibit anything of this nature, you are going to have an 
opposite result than what you seek, but I don't take that 
position.
    Senator Brownback. I am glad you don't take that position, 
although the argument you put forward seems to be that would be 
the best way to handle it. Do you, Mr. Fahrenkopf, I would like 
to know whether you believe gambling on student athletes is 
unseemly.
    Mr. Fahrenkopf. That is a fair question. I think we, 
however, live in a society today where, as we have indicated, 
and I think the witnesses before this Committee have indicated, 
since 1992 it has been against the law in 49 states to bet on 
student athletes in 49 states. That is the law in this country 
and what is happening is the law is not being enforced and the 
American people are not following the law.
    Senator Brownback. Well, I am just curious if you think it 
is unseemly to bet on student athletes?
    Mr. Fahrenkopf. Well, Senator, I heard you on C-span this 
morning. I understand you said in that interview that you 
placed a bet in a pool having to do with basketball, and I have 
done the same.
    Senator Brownback. I am asking you, do you think it is 
unseemly to bet on student athletes?
    Mr. Fahrenkopf. I do not.
    Senator Brownback. You do not think it is unseemly?
    Mr. Fahrenkopf. I do not. If it is illegal I do, but if it 
is in a legal setting where it is tightly regulated and where 
it is controlled and where the individuals involved in the 
business are cooperating with law enforcement to try to solve 
the illegal problem, I don't think it is.
    Senator Brownback. And even if we had sports gaming cases 
and ones that involved illegal betting, and even if it has an 
impact on those and even if referees are involved in legal 
ones, you don't find that unseemly?
    Mr. Fahrenkopf. Well, the news that referees are involved, 
that the Chairman mentioned, that is really, really a tough one 
and, of course, I would agree with anyone who would condemn 
that type of activity.
    Senator Brownback. Well, I hope you would. One final point 
that I would like to raise and we have other panelists, but we 
would like to get the University of Kansas off of the betting 
line in Vegas. If we got the board of regents or if you wanted 
the Kansas legislature because I like states rights issues as 
well, for them to directly petition the Nevada Gaming 
Commission to remove the University of Kansas, actually to 
remove all colleges in Kansas and maybe, I don't know, Arizona 
might want to join in too, but have the state do it, would you 
join us in pushing that they be removed from the board in Las 
Vegas in Nevada?
    Mr. Fahrenkopf. I would not personally. I represent the 
industry that is involved, but you have a marvelous opportunity 
in the next panel to ask the officials of the State of Nevada 
who are charged with the legal responsibility.
    Senator Brownback. I would hope as one who is such a great 
advocate of states' rights and so passionate and clear on that, 
that you would allow these institutions that are pleading for 
some help and a start, not a panacea but a start, to say yes, 
you are right, that is legitimate. If the University of North 
Carolina wants off, I will work with you through this 
association and will pull them off.
    Mr. Fahrenkopf. Well, you know what, I work for people, I 
have a board of directors. I couldn't make that commitment to 
you.
    Senator Brownback. Well, I would like for you and I think 
that you could. I have other questions, Mr. Chairman, but we 
have other panel members.
    Mr. Fahrenkopf. Can I add one thing to the question you 
asked, Senator Brownback? If you go back and look at the record 
of the National Gambling Impact Study Commission, the motion 
with regard to the sports betting says as follows: ``I would 
like to recommend that we recommend to the states that they ban 
legal betting on collegiate contests.''
    Senator Brownback. I am asking you if you will allow the 
states to say we don't want the University of Kansas, Kansas 
State University or any other on your board in Vegas on your 
betting line, then take us off and we pass it through the board 
of regents in Kansas, we pass it through the state legislature. 
You give us the body you want us to take it through, we will do 
it. We want off. Then you guys should step forward and say OK, 
that state has spoken and they are very clear in their speak  I 
mean, we will get the Governor to come and present it directly, 
if you would like for us to, but get us off that betting line. 
That is what we want off.
    Mr. Fahrenkopf. One of things anyone who is familiar with 
the industry in our state is that we are very, very tightly 
regulated and controlled, anybody in our business, and as I 
said, you are going to have an opportunity to talk to the 
regulators who control our industry.
    Senator Brownback. I would hope that you as an industry 
would carry this on forward for our state and for many others. 
Thank you, Mr. Chairman.
    Senator McCain. Thank you very much. I want to thank the 
panel for their patience and their time. It is not nearly noon 
and we started this at 9:30 and I very much appreciate your 
patience and that of the following panel. Thank you very much 
for your contributions to this, what is obviously a very 
important issue and I thank you very much.
    Our next panel is Mr. Don Yaeger, Senior Writer, Sports 
Illustrated, Mr. Brian Sandoval, Chairman, the Nevada Gaming 
Commission, Dr. Kenneth Winters, Professor of Psychology, 
University of Minnesota.
    Mr. Yaeger, welcome. I am a long time reader of the things 
you have written and we appreciate very much that you would 
take the time to present your views to the Committee on this 
very important issue. I appreciate the coverage that your 
magazine has extended to this important issue in the past, 
including the tragedy that took place in my home state of 
Arizona.

            STATEMENT OF DON YAEGER, SENIOR WRITER, 
                       SPORTS ILLUSTRATED

    Mr. Yaeger. I do appreciate the opportunity to have a 
chance to chat with you on this subject. I am at Sports 
Illustrated one of two investigative reporters at the magazine 
and as a result, we have the opportunity to maintain I guess 
you could talk about boxing as well.
    [Laughter.]
    But to hear and talk about gambling related issues, point 
shaving allegations, rumors, the kinds of things that float 
through the college sports world on a pretty regular basis. In 
fact, we probably could dedicate one of the two of us full time 
to just chasing these rumors, it happens so frequently and as 
the discussion has come today, more frequently today than ever 
before.
    I wanted to just talk about a couple of stories that we 
have done at Sports Illustrated, one of which, you stole my 
thunder slightly, Senator, talking about Hedake Smith at 
Arizona state. That's a story that we worked on for months and 
months and we were fortunate enough to have Hedake actually 
tell us and come clean with what it was led him to shave points 
and how he did it, the whole process of how he did it, because 
that is an important point here.
    When Chairman Fahrenkopf said right here that he was in 
fact, that Hedake Smith was caught by the system, I think a 
real important point here is that yes, Hedake Smith is today in 
a federal prison. I did speak with him this weekend because I 
wanted to talk to him about this visit here. But Hedake Smith 
wasn't caught by the system. They suspected that they had 
committed, because of an overwhelming number of bets and the 
bozos he was hanging out with, that that is what led to the 
suspicion.
    Hedake Smith was ultimately caught and convicted because 
one of the people that was involved in his enterprise got 
arrested on another charge and chose to trade Hedake Smith for 
a lighter sentence on another issue, so it wasn't necessarily 
that Hedake Smith was caught by the system of regulation in 
Nevada. Hedake Smith was caught later when prosecutors were 
able to get someone else to get Hedake Smith to talk to them.
    Senator McCain. Even though there was a swirl of 
allegations?
    Mr. Yaeger. There was a swirl of allegations to the point 
that in fact if I could just tell the story for a second 
because I do think it is an important story for those of you 
who don't know it to have.
    This is a guy who was a definite NBA player, an incredible 
talent. He got caught up in betting with bookies, got behind, 
had to figure out a way to get out. The bookie presented him 
with an opportunity that was to shave points. He did so on 
several games. The amazing part is that on one of the games in 
which he shaved points, he sat a Pac 10 record, hitting ten 
three-pointers in a game. Everybody was amazed. How could a guy 
be the Pac 10 conference player of the week and be shaving 
points at the same time?
    Well, Hedake Smith figured it out. I score a lot of points, 
but I let the guy I'm guarding score points, too. Pretty soon, 
it's all even, and so Hedake Smith's experience and what it 
showed me when I was talking to him, it was just how basic, how 
simple. He and I watched a bunch of games together because it 
just so happened the story I was working on, we were working on 
it during a basketball season. We watched a lot of games at his 
home in Dallas.
    I was amazed. I mean, he would point out, he said, you 
know, isn't that slightly suspicious. His experience made me 
suspicious of a lot of things, because again, no one suspected 
when a guy hit ten three-pointers in a game that he was shaving 
points. No one, not the FBI, not Las Vegas. It just so happened 
that at the end of that season there was one game left. They 
were all trying to make a ton of money.
    Hedake Smith had told a couple of friends. They all rolled 
up to Vegas and started spreading money all over casinos all 
over town. They reached the plateau that actually sent all of 
the regulators scrambling and that became such an issue in fact 
that, and when you mention the swirl of allegations, that the 
head coach of Arizona state actually discussed at half time 
during his half time speech with the team the fact that there 
were rumors out here that someone in this game is in on a fix.
    Senator McCain. Mr. Sandoval, you never had any information 
about this, did you?
    Mr. Sandoval. Thank you, Mr. Chairman. This is an honor to 
be before you. This occurred before I took the chairmanship.
    Senator McCain. But the Nevada Gaming Commission did not 
know anything about this, right?
    Mr. Sandoval. The Gaming Control Board knew about it when 
the bets were being made because the licensees told them.
    Senator McCain. Did they investigate?
    Mr. Sandoval. The Gaming Control Board did investigate.
    Senator McCain. How come they didn't find anything out?
    Mr. Sandoval. They did find something out, Mr. Chairman, 
and it's my information they advised the Pac 10 and they 
advised the Arizona State University.
    Senator McCain. Why didn't they advise the law enforcement 
agencies, since it was clearly a violation of the law?
    Mr. Sandoval. We are a law enforcement agency.
    Senator McCain. Why weren't charges brought? Why wasn't, I 
mean, come on, Mr. Sandoval. If you knew a crime was committed 
by notifying the Pac 10, is it exactly what we would expect of 
a regulatory commission?
    Mr. Sandoval. Mr. Chairman, I didn't say we knew a crime 
was committed. We were suspicious of it.
    Senator McCain. So the answer to my question is you didn't 
know a crime was committed?
    Mr. Sandoval. We were suspicious of one.
    Senator McCain. But the answer, Mr. Sandoval, we like to 
have people answer questions in this Committee, and my question 
to you is, did the Nevada Gaming Regulatory Commission know 
that a crime was committed?
    Mr. Sandoval. No, we did not at the time.
    Senator McCain. Thank you. Please proceed, Mr. Yaeger.
    Mr. Yaeger. But I do think an important here in answer to 
the discussion is that the bottom like is if one of Hedake 
Smith's greedy friends hadn't been arrested on a theft charge, 
all the suspicion in the world would have done no good. The 
crime, Hedake Smith would have just been a man under a cloud. 
He wouldn't be where he is today.
    It happens that it happened a different way and I will tell 
you just from my time covering college sports traveling with 
players and meeting and spending time in dorm rooms and houses 
with athletes, that there are a lot of people out there that 
wonder, for every Stevan Smith who did get caught because of 
the way he did get caught, how many out there aren't getting 
caught. How many out there really are involved in some kind of 
an enterprise to either profit or dig themselves out of a hole 
as a result of their time and using their athletic talent to do 
so.
    A second story that we did at Sports Illustrated on a 
similar subject is related to a bill that your colleague, 
Senator Kyle also has on Internet gambling and I chose that 
assignment because it got me to Antigua for awhile, but while 
in Antigua, I did have the chance to sit in. This is the very 
infancy of that industry at the time, nevertheless, in thirty 
of these little Internet gambling sites. I sat in those 
gambling sites and I had the chance on one day to actually talk 
to a dozen of the people who were calling in to try to figure 
out how do I set up an account with you, how do I begin betting 
of the Internet.
    Of the dozen, half were college students. I asked those 
college students in conversation well, do you know athletes? 
Oh, yeah. And one was from the University of Wisconsin. He told 
me he hung out with several players on occasion, that at the 
time, again, the whole Internet gambling thing was kind of an 
early frenzy. None of us understood what it would become. I 
mean, I heard just last week the number is up over 400 now, 
Internet gambling sites where you can bet on college sports.
    And I do understand you all are trying to regulate that, 
but that Internet gambling issue, you combine that with the 
whole, with the Hedake Smiths of the world, and I started to 
realize those college kids, what they told me when I talked to 
them on the phone from Antigua was that what they liked about 
it was the Internet gambling allowed them to, they could bet on 
their college sports, it would be great, and they could do it 
with practical anonymity they didn't have to worry about. They 
registered a credit card. They didn't have to worry about 
having to really deal with a bookie. They didn't have to fly to 
Vegas.
    So I started to wonder and I started to talk to NCAA 
officials. I started talking to coaches who really do have 
their thumb or their finger on the pulse of this issue and I 
really do think that if we had a few Hedake Smiths in the early 
1990's, you throw the Internet in, you throw that anonymity, I 
mean, who knows if the quarterback of the University of 
Florida, when they open their season next fall against my alma 
mater, Ball State, who knows if he spent that afternoon on the 
Internet trying to figure out exactly what its going to take 
and who would know. How would we know? Las Vegas is not going 
to be able to prove it one way or the other.
    There are other issues that I know you all have to take up 
in a separate bill, but I think that you mix those two, the 
Internet gambling issue and you mix the point shaving and you 
really do have a recipe for disaster.
    The bottom line is I do think that if you do eliminate 
legal gambling in Las Vegas as a member of the media, I can't 
speak for Ruppert Murdoch or I can't speak for the New York 
Times. I would be shocked if anyone in our profession would 
continue to run the betting line if you did, if you eliminated 
illegal gambling. But I will tell you that by having Roxie 
Roxborough in Nevada, you have someone out there that's deemed 
immediately credible. Yes, you would still have betting. There 
is no question you would still have betting if you had it, but 
it would all be underground, but you would have less confidence 
in it because the people out there betting in Cleveland, Ohio 
wouldn't know what the line is in Dallas, Texas. Today they all 
do. Why? Because you have legalized betting in Nevada. That 
line that is drawn in Nevada allows people throughout the 
country to feel some confidence, even if they are betting with 
a bookie, that they are betting on something that is 
legitimate.
    Senator McCain. Mr. Yaeger, I thank you very much. And I 
thank you for the continued efforts that you and your colleague 
make on investigating a lot of things that unfortunately need 
to be investigated in American sports. And I thank you.
    Mr. Yaeger. Do not eliminate all this stuff too quickly or 
I will be out of a job.
    [Laughter.]
    Senator McCain. Right. I think that there is enough in 
boxing for you and I both to be employed for a long time.
    Mr. Yaeger. Yes, sir.
    Senator McCain. Thank you, Mr. Sandoval. Thank you for 
being here. And thank you for the outstanding job that you and 
your Commission does. I have urged on many, many occasions that 
our Native Americans who engage in gaming model their 
regulatory schemes and apparatus on what you do in Nevada. And 
I thank you for the outstanding job that you and the Commission 
in the State of Nevada does.

            STATEMENT OF BRIAN SANDOVAL, CHAIRMAN, 
                    NEVADA GAMING COMMISSION

    Mr. Sandoval. Thank you, Mr. Chairman. And we are proud 
indeed of what we do. I know there are several pending 
questions. I would be happy to answer those right away or I 
have a brief statement to make to the Committee.
    Senator McCain. Please proceed with your statement, Mr. 
Sandoval.
    Mr. Sandoval. Thank you, Mr. Chairman.
    I am Brian Sandoval, of Reno, Nevada. I serve as the 
Chairman of the Nevada Gaming Commission. I am here at the 
request of U.S. Senator Richard Bryan and Nevada's Governor 
Kenny Guinn. They have asked that I assist this Committee, as 
the representative of our state's gaming control system. I am 
not here as a defender of Nevada's gaming industry. I am here, 
however, as the chief gaming regulator in our state. I come 
before you to present the facts about a gaming control system 
that has evolved over more than half a century, to become the 
model for jurisdictions in this country, as well as the world.
    The Nevada gaming industry is subject to more extensive 
controls than any nongaming industry anywhere in the world. 
Sports wagers are taken in Nevada under the strictest 
governmental controls possible. Integrity is the watchword, 
beginning with the quality of the companies that are licensed 
to accept those wagers. The investigations necessary to qualify 
a company and its executives for licensing by our Commission 
may cost it more than $1 million and take more than a year to 
complete.
    After our Commission licenses a sports book, we subject it 
to the most vigorous enforcement standards and auditing 
procedures. First and foremost, a patron must be 21 years of 
age and physically present in the State of Nevada to place a 
bet at a sports book. Sports books must guarantee payment in 
full of all wagers. Any dispute over a wager between a patron 
and a sports book is subject to immediate investigation and a 
full adjudication process at no cost to the patron.
    We require sports books to conduct business with a 
computerized system that is inspected and approved. This system 
must document every wager received, every win paid out, the 
result of each sporting event, and every change in odds. The 
wagering areas are under constant video surveillance. Sports 
books employees must subject themselves to extensive background 
checks, and management is put through an even more rigorous 
licensing process.
    In 1998, before the issues associated with this hearing 
were publicized, the Nevada Gaming Commission significantly 
revised and strengthened the regulations governing our sports 
books. We adopted regulations that prohibit messenger betting. 
It is illegal in Nevada for a person to place a bet for another 
at a sports book for compensation. This was done to further 
ensure that our sports books are not unwittingly used by 
illegal bookies to hedge their bets.
    Sports books are also required to obtain the name, address, 
telephone number, social security, and driver's license number 
of any patron who bets more than $10,000 on a single sporting 
event, or an aggregate of $10,000 within a 24-hour period on 
several events. This requirement discourages illegal bookmakers 
and fixers from placing bets at Nevada casinos. We also 
prohibit the use of any communication device by a patron within 
a sports book. This is another tool to prevent unsavory persons 
from using a Nevada sports book.
    The ultimate tool at our disposal is the so-called black 
book, or the list of excluded persons. Once a person is placed 
in the black book, they are banned from Nevada's casinos for 
life. After placement in the black book, it is a felony for a 
person who is in the black book to enter into a licensed 
establishment.
    In fact, our black book's most recent entry was placed 
there for attempting to place bets at Nevada sports books 
related to his illegal bookmaking operation in California. And 
I can assure you, Mr. Chairman, we stand ready to include more 
people like him in our black book, and will cooperate with 
anybody to do so.
    This has only been a summary of the comprehensive 
regulatory system in our state upon which we rely to ensure 
integrity in the Nevada wagering system. A related goal of that 
system is to identify any irregularity that may indicate a 
breakdown in the integrity of athletic contests outside the 
state. Nevada sports books closely monitor fluctuations in 
betting activity as a possible indication of problems with a 
sports event. If someone is attempting a fix, Nevada's books 
may likely be the target. It is self-evident that failure to 
detect a fix could cost a casino millions of dollars.
    In addition, sports books set limits on the amount they 
will accept on a bet on a game. A series of unusual bets will 
cause a book to take that game off the board until the reasons 
for such wagers can be investigated. As an added measure, 
sports books continuously monitor point spreads at other sports 
books by computer to ensure the integrity of the games.
    And as we have discussed, without the vigilance of the 
Nevada sports books and Nevada regulators, college point 
shaving incidents may not have been brought to the attention of 
the NCAA and law enforcement agencies. We believe the NCAA 
staff will confirm the high degree of assistance they have 
received from Nevada. For example, NCAA enforcement authorities 
have a computer that receives the latest information from 
Nevada on sports wagering activity.
    It is undisputed that Nevada sports books are the first 
line of defense against unlawful interference in college sports 
events. If this bill becomes law, this protection would be lost 
and illegal bookmakers would have fewer obstacles to attempt to 
fix a game and perhaps cause an explosion in Internet or 
illegal gaming.
    As a final note, I know there has been criticism--and this 
is to respond to Senator Brownback's concern--because Nevada's 
gaming regulations prohibit wagers on our colleges for any 
college game played inside our state, but allow wagers on games 
involving other colleges outside the state.
    Senator Brownback. Mr. Chairman, if I could.
    I do not object to your limiting it to Nevada. That is 
wonderful. Go ahead and do it. God bless you. I want Kansas off 
of it.
    Mr. Sandoval. Well, I will get there, Senator.
    That provision was first adopted prior to the creation of 
Nevada's present system of gaming control in 1959, which marked 
a historical acceleration in the state's effort to eliminate 
any underworld influence in Nevada casinos. The best 
explanation for the provision is that it was created to combat 
the perception from out-of-state bettors that Nevada residents, 
because of their proximity to college athletes, could 
potentially have information that allows them an advantage 
concerning the outcome of a game. Due to this perception, and 
not reality, the regulation has been retained.
    The best analogy that I can think of is large corporations 
which have a sweepstakes. Typically, the employees and their 
families of that corporation are prohibited from participating 
in the sweepstakes because, if they won the grand prize, there 
may be a suspicion that something went wrong.
    And on a personal note, as a graduate of the University of 
Nevada, I am a big football fan as well. Each week, the Monday 
after the game, there is a meeting of the boosters with the 
coach. People ask questions: Who has been injured? How are we 
going to do against Oregon? Et cetera. There is information 
that is exchanged. And, again, I think that would create a 
perception, if it were legal to bet on Nevada teams, that 
Nevada residents who have close proximity to the athletes would 
have an unfair advantage.
    Mr. Chairman, on behalf of Governor Guinn and all the 
residents of the State of Nevada, I appreciate the opportunity 
to present a successful system of regulation that protects the 
citizens of our great country and the integrity of amateur 
sporting events. And, finally, on a personal note, I will be 
traveling to your great State of Arizona to watch the Ohio 
State Buckeyes, my other alma mater, play the Arizona Wildcats.
    And if I ever thought for a moment that what we do in the 
State of Nevada would have an effect on the magic, as a former 
witness discussed, or the integrity of that game, I could not 
sit before you today and give you the testimony that I am 
giving. On the contrary, I feel what we do in the State of 
Nevada helps preserve that, and I am proud of the system that 
we have. Thank you very much, Mr. Chairman.
    [The prepared statement of Mr. Sandoval follows:]

            Prepared Statement of Brian Sandoval, Chairman, 
                        Nevada Gaming Commission

    I am Brian Sandoval of Reno, Nevada. I serve as the Chairman of the 
Nevada Gaming Commission. I am here at the request of U.S. Senator 
Richard Bryan and Nevada's Governor, Kenny Guinn, a former university 
president. Governor Guinn asked that I assist this Committee as the 
representative of our state's gaming control system.
    I am aware of the various allegations that have been lodged against 
Nevada casinos and their sports books. I respectfully suggest those 
allegations have a basis more in myth than in fact. There is nothing in 
the record that indicates legalized sports wagering in Nevada has 
compromised the integrity of any athletic contest at any time or at any 
place. Not one college sports scandal is the result of legal sports 
wagering.
    Legal sports wagering in Nevada is dwarfed by illegal sports 
wagering outside the state. Some sources estimate illegal sports wagers 
exceed $350 billion a year. By comparison, Nevada sports books annually 
accept about $2.5 billion in wagers. This means Nevada sports books 
account for less than 1% of the total amount wagered on sports events 
in the U.S. annually.
    These figures also speak to the American appetite for, and 
acceptance of, sports wagering. We should not kid ourselves: whether 
legal or illegal, the American public will continue to bet on the 
outcome of sporting events, and we will not change this behavior 
through legislation. Instead, we will simply drive the betting activity 
underground in the one place where it is currently taxed, strictly 
regulated, and purged of the credit and collection excesses of illegal 
bookmaking operations.
    I am not here as a defender of Nevada's gaming industry. I am here, 
however, as the chief gaming regulator in our state. I come before you 
to present the facts about a gaming control system that has evolved 
over more than 50 years to become the model for jurisdictions around 
the world.
    Mr. Chairman, I and all the other members of the Nevada gaming 
control system applaud your mission to protect our country and its 
citizens against the harm caused by illegal gambling. It is a goal 
toward which we continuously dedicate our efforts in Nevada and we 
believe we have come closer to reaching it than any other state. I am 
unaware of any evidence that there is any organized crime influence in 
Nevada sports wagering or that Nevada college campuses have any of the 
illegal bookmaking activities that apparently are prevalent on other 
college campuses throughout the United States.
    Our gaming control system not only is free of criminal involvement; 
it is insulated from politics. Sen. Richard Bryan, who had an 
illustrious record as Governor of Nevada, can testify how careful a 
succession of governors have been to keep the gaming control system 
independent from the Governor's Office and free of political influence 
from any one.
    The first appointment made by Governor Guinn to the State Gaming 
Control Board was a decorated career agent of the FBI. When I was 
appointed Chairman of the Gaming Commission, I was a member of a 
successful law firm. The first action I took was to resign from my firm 
and become a sole practitioner to minimize any possibility of conflicts 
of interest that could interfere with the performance of my official 
duties.
    We in Nevada concur with the National Gambling Impact Study 
Commission view that states are best equipped to regulate casino 
gambling within their own borders and we take that responsibility 
seriously.
    The Nevada gaming industry is subject to more extensive controls 
than any non-gaming industry anywhere in the world. And the gaming 
industry has a record of adherence to those controls. The major 
companies in Nevada gaming have billions of dollars invested in their 
operations. The most recent example is the approximately $6.5 billion 
that the MGM Grand proposes to pay for Mirage Resorts. Such an 
investment can be jeopardized by any violation of Nevada gaming law, 
whether in the operation of sports books or anywhere else.
    Sports wagers are taken in Nevada under the strictest governmental 
controls possible. Integrity is the watchword, beginning with the 
quality of the companies that are licensed to accept those wagers. The 
investigations necessary to qualify a company and its executives for 
licensing by our Commission may cost more than one million dollars in 
investigative and related expenses and may take more than a year to 
complete.
    After our Commission licenses a sports book, we and the Nevada 
State Gaming Control Board subject it to the most vigorous enforcement 
standards and auditing procedures.
    Patrons are protected. Sports books must maintain a bond under the 
control of state regulators that guarantees payment of wagers. Any 
dispute over a wager between a patron and a sports book is subject to 
immediate state investigation and a full adjudication process, without 
any cost to the patron.
    Our control system requires sports books to conduct business with a 
computerized bookmaking system that we have approved. This system must 
document every wager received, every win paid out, the result of each 
sporting event, and every change in odds. The wagering areas are under 
video surveillance. Adherence to a strict control system is required at 
all times.
    Nevada books must decline any bet attempted by someone who has been 
paid by another person to do so, and it is a violation of our criminal 
code for an individual to place wagers for compensation. In 1998, 
before the issues giving rise to this hearing were ever brought up, the 
Nevada Gaming Commission significantly revised and tightened up the 
regulations governing our sports books. This was done to further insure 
that our sports books are not unwittingly used by illegal bookies to 
hedge their bets. In addition, books set limits on the amount they will 
accept on a game. A series of unusual wagers will cause a book to take 
that game off the board until the reasons for such wagers can be 
investigated. Sports books continuously monitor point spreads at other 
sports books by computer.
    Nevada casinos are also subject to cash transaction reporting laws 
that your own financial watchdogs--the GAO--have found to be more 
demanding than those of the federal government. Nevada enforces these 
casino cash transaction regulations evenly and strictly. Our Commission 
has imposed fines of hundreds of thousands of dollars on Nevada casinos 
for acts that are illegal under Nevada law but legal under comparable 
federal law for casinos in other states. The toughest anti-money 
laundering regulations in the world are those we impose on our sports 
books.
    This has been only a summary of the comprehensive regulatory system 
in our state, upon which we rely to ensure integrity in the Nevada 
wagering system. A related goal of that system is to identify any 
irregularity that may indicate a breakdown in the integrity of athletic 
contests outside the state. Nevada's books closely monitor any 
fluctuation in betting activity as a possible indication of problems 
with a sports event. If someone is attempting a ``fix,'' Nevada's books 
may likely be the targets.
    Without the vigilance of Nevada sports books, college point-shaving 
incidents may not have been brought to the attention of the NCAA and 
law enforcement agencies at all and certainly would not have been 
discovered as quickly as they were. Nevada's sports books have been the 
first to identify suspicious betting activity and to bring it to the 
attention of law enforcement agencies and the NCAA. Before the National 
Gambling Impact Study Commission, NCAA staff confirmed the high degree 
of assistance they have received from Nevada and the value of that 
assistance. For example, NCAA enforcement authorities have a computer 
that receives the latest information from Nevada on sports wagering 
activity.
    Without Nevada's sports books, this first line of defense against 
unlawful interference in college sports would be lost.
    I acknowledge the good motives of those who believe that the 
elimination of Nevada's sports books will eliminate the biggest cause 
of illegal sports wagering. However, I respectfully suggest that a 
close examination of the facts will not support that conclusion.
    It also has been suggested that the point spreads published in the 
nation's newspapers are a root of illegal wagering and that those point 
spreads will disappear if Nevada's sports books are closed. In my view, 
there is no factual basis for this view.
    For example, persons who do not live in Nevada and who have no 
relationships with Nevada casinos develop the USA Today and other 
widely disseminated point spreads. Point spreads are readily available 
from the great number of sports books operating elsewhere in the world, 
many of them over the internet, which take bets on college sports in 
the U.S. and which together far exceed the amount wagered in Nevada.
    But more importantly, Nevada regulators have long recognized the 
importance of point spread, or line, information to wagering activity 
and have taken steps to maintain the integrity of this information. 
Three companies, called line information services, are currently active 
in providing point spread information services to Nevada sport books. 
These companies are investigated and held to the same high standards as 
the operators of gaming establishments and sports books. If they were 
to somehow manipulate the line information, or supply it to illegal 
bookies, their license to engage in business in Nevada would be in 
instant jeopardy.
    As a final note, I know there has been criticism because Nevada's 
regulations prohibit wagers on our colleges or any college game played 
inside our state but allow wagers on games involving other colleges 
outside the state. That provision was first adopted prior to the 
creation of Nevada's present system of gaming control in 1959, which 
marked a historical acceleration in the state's efforts to eliminate 
any underworld influence in Nevada casinos. I have been unable to 
locate the record of why that provision was adopted some 50 years ago, 
before the creation of the Nevada Gaming Commission and the 
comprehensive system of regulation we have today. The best explanation 
for the provision is that it was created to combat the perception from 
out of state bettors that Nevada residents, because of their proximity 
to college athletes, could potentially have information which allows 
them an advantage concerning the outcome of a game. Due to the 
perception, and not reality, the regulation has been retained.
    Mr. Chairman, on behalf of Governor Guinn and the Nevada gaming 
control regulators, I thank you for allowing me time to present facts 
today. I hope they will help dispel the myths.
    I spent some of my earlier years as a member of a Nevada 
legislative committee with jurisdiction over gaming laws. Our approach 
in fashioning solutions was to first establish the problem and the 
reasons for it. I am sure each of you takes this same approach.
    Therefore, I endorse the view that--without infringing on the 
constitutional right of states to make their own decisions about legal 
gambling--the Congress should make resources available for a meaningful 
study of illegal wagering on college sports, including whether Nevada 
sports books have any effect on it; the effectiveness of present 
countermeasures; and the need for new countermeasures. I can assure you 
of the full cooperation of Nevada's gaming regulators in that process.

    Senator McCain. Thank you very much, Mr. Sandoval. And I 
repeat my praise for the job that you and your Commission does. 
And as I say, I have often urged my Native American friends to 
enact your apparatus as their model, which, unfortunately, I 
have not been able to succeed in doing. And when we get into 
the Q&A, however, I think Mr. Yaeger's points are well made, 
and I would be glad to hear your response to them.
    Dr. Winters, welcome.

 STATEMENT OF KENNETH WINTERS, PH.D., PROFESSOR OF PSYCHOLOGY, 
                    UNIVERSITY OF MINNESOTA

    Dr. Winters. Good afternoon. Thank you, Mr. Chairman and 
other esteemed members of the Senate.
    As a researcher in the field of youth problem gambling, I 
appreciate this opportunity to offer my points of view. 
Briefly, just a little bit about my background. I have been 
studying this topic for about 10 years. I have been fortunate 
to be funded by the National Center for Responsible Gaming, a 
foundation that funds research projects. I was also a member of 
the National Research Council's Committee on the Social and 
Economic Impact of Pathological Gambling. As you know, this 
Committee was commissioned to prepare the research report for 
Congress and for the National Gambling Impact Study Commission.
    Furthermore, I am also assisting the National Association 
of Student Personnel Administrators in their efforts to 
organize a national survey of gambling on college campuses. I 
wanted to raise this to let you know there are other 
organizations outside the NCAA who are looking at this issue 
and trying to get a handle on the extent of the problem and the 
kinds of things that could be done to prevent it.
    I recognize that gambling is a legitimate form or 
recreation. However, I am dismayed by the fact that gambling 
has expanded so fast in our country in the past decade that 
health officials and lawmakers have not been able to adequately 
respond to the fact that some individuals fall victim to the 
lure of gambling. Furthermore, it has been very difficult for 
the experts to provide a reliable estimate of the expected 
social and health impacts of this expansion or to evaluate even 
the short-term costs that may or may not have already occurred.
    Nevertheless, in the brief time I have I would like to just 
briefly summarize three main points from research literature 
concerning gambling by college students. This is not just 
student athlete gambling, but gambling in general on college 
campuses. Hopefully, you will find that this research knowledge 
base will be important in the context of our discussion on the 
proposed bill.
    The first point, placing bets for money, particularly 
social and informal betting, is very common on college 
campuses. I know that this issue has been discussed a lot 
today. I would like to emphasize, though, that a lot of college 
gambling appears to be a very benign form of recreation by 
students, with low amounts of money being wagered and at low 
levels of activity.
    However, a small but appreciable percent of college 
students overindulge at a serious level. And these students can 
be legitimately diagnosed or classified as problem or 
pathological gamblers. The best estimate of the rate of problem 
gambling among college students is somewhere in the range of 3 
to 5 percent. In the context of what we know about adults, the 
rate of problem gambling is about 1 to 2 percent. So we can say 
that among college students, the rate of problem gambling is 
threefold or more than among adult populations in our country.
    The characteristics that are often associated with problem 
gambling status among college students are being a male, having 
a history of heavy alcohol use or use of other drugs, being an 
average or below average student, and having at least one 
parent with a current or past gambling problem. Being a college 
student athlete does not statistically increase one's risk at 
this point of our knowledge base.
    Point number two: Research indicates that the games most 
often played by college students are informal ones that do not 
involve the provision of any sanctioned or legal venue. These 
games typically include playing cards with friends, betting on 
games of personal skill and sports betting. And those students 
that get in trouble with gambling typically engage in these 
three activities, as well.
    Thus, placing a bet on the outcome of a sporting event by a 
typical college student most often is a very social phenomenon 
that does not involve any kind of activity with Nevada or legal 
venue. Also, it is likely that the pattern of sports betting by 
college students mirrors the pattern found among adults. That 
is, it increases during the time of high-profile sporting 
events, such as the Super Bowl and the NCAA Basketball 
Tournament.
    An important unknown to this issue of game preference is 
Internet gambling by college students. I am glad that one of 
the previous speakers noted this. We may be just seeing the tip 
of the iceberg with this new form of gambling. Clearly, college 
students with an interest in sports betting may readily 
gravitate to the Internet to satisfy their habit.
    The third point: There is a great need to increase the 
awareness among college administrators about the potential 
effects of gambling on the health and well-being of college 
students. As a researcher, it is obvious that more data is 
still needed. We know very little about the reliable extent of 
problem gambling and the factors that lead a young person to 
progress down a path of pathology. We also know very little 
about to what extent specific games, including sports betting, 
contributes to the development of problem gambling.
    A related topic is to convince student health clinics to 
regularly screen for gambling problems among students who 
present for mental health or chemical dependency problems. One 
of the most reliable findings from the National Research 
Council's report was that problem gambling is highly associated 
with other behavioral disorders, particularly depression, 
alcoholism and drug addiction.
    For example, the elevated risk for problem gambling is 
about fivefold among those with already a substance use 
disorder, compared to those who do not have a substance use 
disorder. It is likely that problem gambling goes undetected in 
the majority of these co-disorder cases, because screening for 
gambling problems is not yet a routine part of student health 
clinics. A related issue would be for colleges to develop and 
implement expanded health awareness campaigns.
    I will conclude with the point that I began with the issue 
that the country is not directing a sufficient share of health 
care spotlight on the incredible expansion of gambling. It is 
my hope that this Committee will take a leadership role to 
increase the country's sensitivity to the many health issues 
surrounding problem and pathological gambling among our young 
people.
    If legislation is to be advanced to address this problem, I 
encourage you to go down the path of legislation that has a lot 
of teeth to it. This is needed to get the attention of young 
people. Young people are rarely impressed by legislation from 
Washington about their personal behavior. And it behooves us, 
if we want to change human behavior, particularly among young 
people, to make sure that the legislation matches our intended 
goal.
    Thank you, Mr. Chairman.
    [The prepared statement of Dr. Winters follows:]

Prepared Statement of Kenneth Winters, Ph.D., Professor of Psychology, 
                        University of Minnesota

    Good morning esteemed members of the Senate. As a researcher in the 
field of youth problem gambling, I appreciate having this opportunity 
to offer my points of view. My background includes a 10-year history of 
actively researching youth gambling, including a recent study funded by 
the National Center for Responsible Gaming. I was a member of the 
National Research Council's Committee on the Social and Economic Impact 
of Pathological Gambling. This Committee was commissioned to prepare 
the research report for Congress and the National Gambling Impact Study 
Commission. Also, I am assisting the National Association of Student 
Personnel Administrators in their efforts to organize a national survey 
of gambling on college campuses.
    First, I want to clarify my position on gambling. I am not anti-
gambling. I recognize this industry as a legitimate form of recreation. 
However, I am dismayed by the fact that gambling has expanded so fast 
in the past decade that health officials and law makers have not been 
able to adequately respond to the fact that some individuals fall 
victim to the lure of gambling. Also, it has been very difficult for 
the experts to provide a reliable estimate of the expected social and 
health impacts of this expansion, or to evaluate the short-term costs 
that may or may not have already occurred.
    Nevertheless, in the brief time that I have today, I wish to 
briefly summarize three main findings from the research literature 
concerning gambling by college students. It is important to place this 
research knowledge base in the context of the debate on banning amateur 
sports betting.
    Issue Number One: Placing bets for money, particularly social and 
informal betting, is common on college campuses. It appears that the 
extent of gambling involvement by most students is probably quite 
benign. However, a small, but appreciable, percent of college students 
over-indulge at a serious level. These students can be legitimately 
classified as problem or pathological gamblers.
    The best estimate of the rate of problem gambling among college 
students is between 3 and 5%. The characteristics that are often 
associated with problem gambling status are 1) being a male, 2) being a 
heavy alcohol user or a user of other drugs, 3) having average to below 
average grades, and 4) having at least one parent with a current or 
past gambling problem.
    Issue Number Two: Research indicates that the games most often 
played by college students are informal games that do not involve the 
provision of any sanctioned or legal venue. These games include playing 
cards with friends, betting on games of personal skill, and sports 
betting. Students who are problem gamblers typically participate in 
these games as well.
    Thus, placing a bet on the outcome of a sporting event by a typical 
college student most often is a very social phenomenon that occurs 
without placing a legal bet in Nevada. Also, it is likely that the 
pattern of sports betting by college students mirrors the pattern found 
among adults: That is, it increases during the time of high-profile 
sporting events, such as the Super Bowl and the NCAA basketball 
tournament.
    An important unknown to this issue of game preference is Internet 
gambling by college students. We may be seeing just the tip of the 
iceberg with this new form of gambling. Clearly, college students with 
an interest in sports betting may readily gravitate to the Internet to 
satisfy their habit.
    Issue Number Three: There is a great need to increase the awareness 
among college administrators about the potential effects of gambling on 
the health and well being of college students.
    More data are still needed from campuses across the country 
regarding the extent and nature of problem gambling. We still do not 
have an adequate understanding as to the onset and course of gambling 
in general, and the development of problem gambling, in particular. 
Also, we know so little as to how involvement in specific games, such 
as sports betting, contributes to problem gambling.
    A related topic is to convince student health clinics to regularly 
screen for gambling problems among students who present for mental 
health or chemical dependency problems. One of the most reliable 
findings from the National Research Council's report was that problem 
gambling is highly associated with other behavioral disorders, 
particularly depression, alcoholism, and drug addition. For example, 
the elevated risk for problem gambling is about five-fold among those 
with a substance-use disorder compared to those without a substance use 
disorder. But it is likely that problem gambling goes undetected in the 
majority of these co-disordered cases because screening for gambling 
problems is not yet a routine part of student health clinics. A related 
issue is for colleges to develop and implement health awareness 
campaigns.
    Final Comments: I began by raising the question that this country 
is not directing a sufficient share of the health care spotlight on the 
incredible expansion of gambling. It is my hope that this Committee 
will take a leadership role to increase the country's sensitivity to 
the many health issues surrounding problem and pathological gambling 
among our young people. Thank you.

    Senator McCain. Thank you very much, Dr. Winters.
    Mr. Siller, I understand that the tragedy of the tornadoes 
impeded your progress here. And I am glad you were able to be 
here. And thank you for going to all the trouble. Thank you for 
being here.

                  STATEMENT OF BOBBY SILLER, 
                  NEVADA GAMING CONTROL BOARD

    Mr. Siller. Thank you, sir. And I appreciate the 
opportunity to be here.
    Life is choices, and yesterday I had a choice of having a 
connecting flight in Arizona, and I chose Texas.
    [Laughter.]
    Senator McCain. Too many people chose that recently.
    [Laughter.]
    Mr. Siller. Obviously I did not mean it that way, Senator.
    [Laughter.]
    Senator McCain. Thank you for going to the trouble to be 
here, sir.
    Mr. Siller. But I am about as disappointed as you are about 
that.
    Senator McCain. Thank you.
    Mr. Siller. Again, thank you for allowing me to speak to 
you. I hope you will be patient with me. I found out yesterday 
I was coming here, and spent all night, as you know, on 
different flights in different cities trying to get here. And I 
took down some notes and tried to get my thoughts together.
    I welcome any questions after I give a brief presentation, 
but I would like to start out by just telling you my name is 
Bobby Siller. And I recently retired from the FBI, after 25 
years with that wonderful agency. After my retirement in 
January 1999, I was appointed to the Nevada Gaming Control 
Board by the current Governor, Kenny Guinn. I must tell you 
that I am not a gambler. And the most I have ever waged in my 
life is about $10. And again, Senator, it was on the Texas 
lottery, and I did not win.
    However, I have investigated illegal gambling as an FBI 
agent, as a field supervisor, as an FBI Headquarters supervisor 
in the Organized Crime Section, and as the Special Agent in 
Charge of the FBI in the Law Vegas Division. I am familiar with 
illegal bookies and the influence organized crime has over 
them. I have reviewed Senator Brownback's proposed bill and 
legislation, and I do not believe that this bill will eliminate 
or significantly reduce betting on college sports.
    In my opinion, it would drive sports wagering further 
underground, and create a greater possibility of organized 
crime influence over sports wagering. There are already 
significant laws on the books to address illegal college sports 
wagering. There are 10 federal laws that I am personally aware 
of that, either directly or indirectly, address itself to 
illegal sports betting. And there are countless local laws in 
cities and towns to address illegal wagering.
    I would like to just illustrate for a very brief time 
during my experience how law enforcement agencies and obviously 
local governments prioritize their particular crime problem 
and, based on budget and resources, how they address those 
problems. I do not believe I have lived in a city or have been 
assigned to a city where targeting bookies have been high on 
the investigative or crime list of wanting to do something 
about that problem.
    I believe we all agree that illegal betting on collegiate 
sports is a problem that must be addressed. I would like to 
suggest an alternative to the legislation and an alternative or 
suggestion that I believe addresses the problem. I spent many 
years formulating strategy on the Safe Streets Initiative, on 
Weed and Seed programs, on organized crime initiatives that 
attack organized crime throughout the United States, and even 
on our drug strategy.
    I saw the drug strategy go from a local to an international 
and back to a local, and user and distributors and various ways 
of approaching that problem. But I do not believe I ever 
participated in a strategy that really addressed illegal 
bookmaking. And I have lived in cities where bookies, pretty 
much everybody knows who they are and what they are doing--and 
that is illegal bookmaking.
    My suggestion is in three parts. The first part is that, 
with the assistance of federal funding, we develop an 
aggressive strategy that emphasizes zero, zero tolerance, 
toward illegal bookmaking. I see illegal bookmaking as being 
one of the major problems facing other communities, outside of 
Nevada, regarding illegal bookmaker college wagering.
    The strategy should be designed around targeting illegal 
bookmakers across the country at peak college wagering times. 
Now, what is unique about this, unlike the war against drugs, 
Safe Streets and some of the other programs, is that it is not 
necessary to have a sustained law enforcement initiative. We 
can create and motivate local law enforcement and governments 
to target with zero tolerance illegal bookmakers around March 
Madness and the bowl games.
    By doing that, illegal bookies, you take away all of their 
options. You may not capture all of them, but you will create 
an environment that is so difficult for them to profit that 
eventually you will hit the heart of the problem. And the heart 
of the problem, the way I understand what we are talking about 
here, is college wagering. By having zero tolerance, with 
support from the federal government on a collective strategy to 
zero tolerance, just during that time period.
    It does not have to be a sustained effort. And again, I 
emphasize March Madness and the bowl games. Obviously the 
federal funding would encourage local governments to devote the 
resources and the funds to that problem.
    The second part of my suggestion, and you probably already 
have heard some of the things that I am going to talk about, is 
to increase our efforts to educate college students regarding 
gambling and illegal sports wagering. I believe that examples 
are programs like when I was with the FBI, we had programs that 
specifically targeted the athletes. We would send FBI agents 
out to the various universities and colleges, and we even did 
this with pro sports.
    And we would sit down with those athletes and we would talk 
about the vices that support prostitution and that support 
gambling and what they may or may not be faced with. We gave 
them examples of how they could be approached by organized 
crime for point shaving, a classic case of what happened at 
Arizona state at that particular game.
    In essence, what I am saying is better educate our students 
and our athletes regarding the pitfalls of sports wagering. In 
Nevada, one of the first things I did when I became SAC of that 
office is I got together with the athletic department. In that 
particular case, the current Athletic Director Charlie 
Cavanaugh. He and I talked about these issue. We talked about 
the fact that there were a lot of young athletes coming in and 
Las Vegas is a very fast-moving town, and they may not be 
familiar with some of the fast life and the things that they 
may be faced with.
    We came to an agreement where I sent out FBI agents to sit 
down with all of their athletes. We showed them a training film 
that identified what they would be facing, how they should 
behave. We were attempting to educate them. After being 
appointed to the Board, I talked to the current SAC in Nevada 
and personally sat down with him and, again, Charlie Cavanaugh, 
and got the Board more involved in this. In brief, what I am 
saying is an educational program that really gets to the heart 
of some of the problems on the campuses as far as their being 
vulnerable to organized crime's influence.
    My third suggestion, and I strongly encourage you to resist 
any temptation or resist any argument to support Internet 
gaming. I think there should be an all-out ban on Internet 
gaming. It may have already been mentioned to you by my 
distinguished colleague, but there are more sports betting 
sites available on a single campus computer than there are 
sports books in Nevada. Any student can go on the Internet and 
be exposed to more sports betting and other types of wagering 
than we have in all of Nevada.
    In summary, it is my position that this bill does not 
address the issues. And I suggest that we target the real cause 
of the problem, and that is illegal bookmakers, Internet 
gambling, and that we do a better job of educating our college 
students to resist sports wagering and educate them on gaming.
    Thank you very much.
    Senator McCain. Thank you very much.
    Mr. Sandoval, do you agree with Mr. Siller that there 
should be a ban on Internet gambling?
    Mr. Sandoval. I do.
    Senator McCain. Dr. Winters?
    Dr. Winters. Yes. It is just, how are you going to do it?
    Senator McCain. Because of offshore Internet sites?
    Dr. Winters. Yes, the regulation. It sounds like a 
nightmare. Some people say it is the gambling form of crack 
cocaine, because of the ease and the ability to do it 
privately, the kind of reward system that it can set up. It can 
really hook people.
    Senator McCain. How do we do it, Mr. Yaeger?
    Mr. Yaeger. I do not know how you do it. I do know, from 
having been down there, and I know that there is a case present 
in New York right now, where I believe the U.S. Attorney from 
New York--has that case been resolved? I know they were trying 
one of the Internet gambling site founders up in New York. I 
assume they probably found him guilty. Several others have 
pled. But I think their issue is they would like to be 
regulated. They would like to be regulated like Nevada. And 
they are willing to move onshore.
    This is what they tell me anyway. Most of them are willing 
to move onshore and be regulated and taxed. But, again, the 
problem becomes access to kids and how you figure out who is 
doing that.
    Senator McCain. Both Mr. Sandoval and Mr. Siller believe 
that this legislation is not necessary. Do you agree with that, 
Mr. Yaeger?
    Mr. Yaeger. From what I have seen of it--and again, I got a 
copy yesterday--I think that it is your first shot across the 
bow. Again, like everybody else, if there was a silver bullet 
out there, if there was an answer to it, I think all of you 
would have taken it. I do not know. Does it completely 
eliminate betting on college sports? No. But I do not think the 
crafters of this legislation believe that that is true. But I 
do think it would make a significant dent.
    Again, talking to Hedake Smith this weekend, I asked him, 
what if they outlawed college sports betting? And like Kevin 
Pendergast, whose comments you heard when you introduced your 
bill, he said, if there was not a legal venue, it certainly 
would have been a lot harder. If there was not a point spread 
that they could have signaled to me right before the game 
started, that I knew that that was the point spread we had to 
hit, it certainly would have been a lot harder. I know Hedake 
Smith was not quite available to you, but he does believe that 
this was a good piece of legislation, from my discussion with 
him.
    Senator McCain. Well, I thank you, Mr. Yaeger. And I will 
continue to read with interest your journalistic efforts. I do 
not think there is anyone who believes that this is the only 
solution, but I do believe that for us to do nothing and rely 
on educational programs is an evasion of our responsibilities.
    I also think that Senator Brownback brings in a very 
important kind of aspect to this, and that is states' rights. 
Do not states have the right to not have to be subjected to 
this? I think they do. I think they do.
    Go ahead, Mr. Yaeger.
    Mr. Yaeger. I am sorry to interrupt you. But if your State 
Legislature had done, as Mr. Brownback is talking about, and 
Arizona state was not on the board, Hedake Smith could not have 
shaved points.
    Senator McCain. I think you are right.
    Dr. Winters, did you want to comment?
    Dr. Winters. Well, he could not have done it through a 
legal bookie. That does not mean the event could not have 
happened.
    Senator McCain. I want to thank the witnesses. I know the 
hour grows late. And I know both Senator Bryan and Senator 
Brownback have questions. I do want to thank you all for being 
here, and I appreciate your patience. And again, I do believe 
that this is an important issue, and I thank you for your 
participation.
    Senator Bryan.
    Senator Bryan. Thank you very much, Mr. Chairman.
    And I thank each of the distinguished members of the panel 
for their very thoughtful comments.
    Mr. Yaeger, I read the Sports Illustrated story on Hedake 
Smith. That is pretty riveting stuff. I mean it was a real 
tragedy what happened to that young man, and I do not think 
anybody who has read that story does not have a lot of empathy 
for him. But to put this in some context, long before the 
Nevada sports books were involved, he had been participating in 
a series of illegal bet transactions and point shavings; is 
that not correct?
    Mr. Yaeger. No, that is not correct. He had played dice in 
high school, but he had not been betting. He had been betting--
if your question is, had he betting with an illegal bookie 
before he agreed to shave points, yes. But then those bookies 
were laying off in Vegas.
    Senator Bryan. In other words, he was participating with an 
illegal bookie before he himself began shaving points.
    Mr. Yaeger. Absolutely.
    Senator Bryan. And then, at least, as I read your article, 
and correct me if I am wrong, even after he began shaving 
points, there was no involvement with the Las Vegas sports 
book? This came at a later point after this got much more 
intense and much more involved, when they were talking about 
much more money?
    Mr. Yaeger. No.
    Senator Bryan. That is not accurate?
    Mr. Yaeger. From the very first game of the four games they 
bet that he arranged to have points shaved on, all four were 
laid off in Vegas.
    Senator Bryan. Then I misread your article. I think your 
underlying premise here is you do not think that the line would 
be posted if indeed it were not legal to bet on college sports 
in Nevada; was that not your testimony, sir?
    Mr. Yaeger. I do not think it would be in USA Today.
    Senator Bryan. It would not be in USA Today. Would you 
agree, Mr. Yaeger, that indeed the Internet has hundreds of 
sites?
    Mr. Yaeger. Sure. And I said there was a secondary issue 
here. I do not think solving one issue without trying to 
address the other really does much good.
    Senator Bryan. Well, I guess the point I am trying to make 
is that I completely agree with you on the ban on Internet 
gambling. In fact, the Chairman's colleague, Senator Kyl and I, 
have cosponsored the legislation. As I said in my opening 
statement, it has passed the Senate. I am hopeful that we can 
get it passed in this Congress, because it seeks to address 
this issue through the Internet service provider.
    And I do not want to waste my time on the question going 
into that, but I completely agree with you. But even if we are 
successful in banning Internet gambling, there is nothing in 
that legislation--nothing that I am aware of--that would 
prevent the Internet having, as it does today, what the line is 
on various college games.
    Mr. Yaeger. I think the point I was trying to make is that 
the advantage of having a legalized gambling capital like Las 
Vegas, or like Nevada, is that you have a recognized and 
respected line that people can look at and check in the daily 
newspaper and make sure, if they are betting illegally, that 
they are getting a point spread that is not outrageous. I think 
my point was, if you eliminate that, and it is not out of the 
newspaper, how does the guy in Cleveland know he is getting the 
same line that somebody in Dallas is? What does it do to 
underground gambling? I do think there are many questions 
there.
    Senator Bryan. But I guess my point, Mr. Yaeger, is that 
there are 800 and 900 phone numbers where you can get this 
information. There are Internet sites that would not be--even 
if we are successful in this legislation, they would still be 
able to post the line. And the point I am asking you, even if 
the publishers agreed not to post the line in newspapers--which 
they may or may not do; we have not had that testimony yet--
there would be other sources that these bookies would be able 
to get the line, and people generally.
    Mr. Yaeger. No question. And again, when I was asked to 
come speak before you, I told the staff that I did not know 
that there was a single answer, and I do not think there is. 
And I hope that nothing I said today makes you think that I 
believe there is.
    Senator Bryan. And my point, Mr. Yaeger--and I am not 
trying to give you a hard time--I understand that you believe 
that if this bill is passed, that there will not be newspapers 
publishing the line. That may or may not be correct; I do not 
know. But the point I am trying to make is that it is available 
through the Internet and 800 and 900 numbers. That would not 
disappear.
    Mr. Yaeger. Correct.
    Senator Bryan. One of the things that surprised me is that 
Dr. Wethington, the University of Kentucky President, speaking 
on behalf of the NCAA, $6 billion is that new contract they 
have entered into, and he said that 94 percent of that money 
went back to the member institutions. Accepting those numbers, 
and I am sure that that is probably accurate, that would still 
leave $360 million that the NCAA, over the course of this 
thing, would retain. And yet we are told that they hired three 
people to address the issue.
    You have watched sports; you have written about sports; you 
are distinguished--how serious has the NCAA been, in your 
judgment, about the illegal college betting on college 
campuses?
    Mr. Yaeger. I think they are more serious today than ever. 
I think your points were well taken. I noticed that there was 
not a lot of jumping up to their defense. And as you know, I 
have been a critic of the NCAA in the past, Senator Bryan.
    Senator Bryan. I know you have. And we happen to agree with 
you on that criticism.
    Mr. Yaeger. We have been there together.
    Senator Bryan. Yes, we have seen that.
    Mr. Yaeger. And so I do think that there are issues there. 
The NCAA can do more.
    Senator Bryan. Again, because you have followed this so 
closely. I asked Coach Calhoun about this. But it strikes me 
that a lot of these young people--not all--come from very 
modest backgrounds. But I think the reality, if you look at 
college basketball players and other college athletes, many of 
them, not all, come from backgrounds in which there is not a 
whole lot of money. Oftentimes, but not all, they may be 
single-parent homes, and when they come to college, they do not 
have anything.
    And yet the colleges benefit enormously in terms of 
publicity and the money from the talents that these young 
people display. A young person walks down the street, and in a 
sports store, sees his jersey, and it costs 70 bucks. And he 
says, I cannot even afford to buy that jersey. To what extent 
do you think that the way in which the rules currently exist 
with respect to the limitations on what athletes can earn and 
that sort of thing, to what extent do you think that creates an 
environment for temptation for these college athletes?
    Mr. Yaeger. I do not think there is any question that that 
is part of it. And it is not just about gambling; it is about 
money from agents, as well. I think those are the two major 
fears that the NCAA and most colleges have, is that the current 
economic structure of college sports does lead many of those 
athletes to say, why does Jim Calhoun make $400,000, for me to 
wear a pair of shoes that I am not getting paid for?
    And, in fact, and this is not new; N.C. state had this 
issue years ago when Jim Valvano was there, and players said 
it. Players said, yes, I could not believe the amount of money 
my coach was making for shoes I was not wearing. Was I going to 
take money? Sure.
    So, yes, I think there is a relationship between those 
issues. What is the number? What do you pay an athlete that 
makes him not do it? I do not know. Those are issues for people 
with a much better education that I got at Ball State.
    [Laughter.]
    Senator Bryan. Mr. Yaeger, Mr. Siller offered some 
suggestions here which I thought were helpful, his three 
points. Any comment with respect to those three points that he 
made? Which, as I recall was, in effect, providing more federal 
money to local law enforcement agencies, working with their 
state counterparts, to target this illegal bookmaking, and 
specifically during times of the year.
    I think he talked about March Madness; that may not have 
been his term, but mine. And the various Bowl games, as well. 
He also talked about the need for intensified education of 
these young people and colleges in terms of what the risks are 
involved. And the third thing, I think, that he recommended was 
the banning of Internet gambling. And I think you have already 
answered that question.
    Mr. Yaeger. Far be it from me to ever argue with an FBI 
agent while he is sitting this close.
    [Laughter.]
    Senator Bryan. He is retired, so you can speak candidly.
    Mr. Yaeger. Clearly, issue three, I think you know how I 
feel about it.
    The issue of trying to figure out how to put more federal 
funds into enforcement of those laws that already exist 
certainly makes a lot of sense.
    But on education, I will tell you, the PSA is wonderful. I 
have been with enough college athletes that you can run those 
all day long and, with all due respect to the people who 
appeared in it, it would not surprise me if one day we are all 
here to regret the fact that maybe one of those guys did 
something wrong.
    So the truth is that all the education in the world does 
not help, because the temptations are enormous. The dollar 
figures are outrageous. And the economics, as you pointed out--
hey, I came from a different household than what you are 
talking about, but I would tell you, I might have been tempted, 
too, when I was in college. So we have to be real about what is 
going on in college sports, too. So I do think some of those 
things are absolutely problems.
    Senator Bryan. Dr. Winters, I will ask this question to 
you. As you studied this issue, you used the words ``socially 
benign,'' I think, with respect to some gambling that occurs. 
Again, putting this in context, I suppose--and I am not going 
to ask this question, Mr. Chairman--but I suppose if we asked 
the question, how many folks in the room today have 
participated at one time or another in an office pool--and I 
freely acknowledge that I have for a couple of bucks, 3 or 4 
bucks--I suspect that most, not all, would have done so.
    And I think what you are telling us is that you do not find 
that type of gambling, although technically illegal----
    Senator McCain. No, not so.
    Senator Bryan. A lot of social gambling going on.
    Senator McCain. As long as a pool, that person who runs it, 
does not take a percentage of that pool, it is legal.
    Senator Bryan. You think it is legal, then?
    Dr. Winters. Betting on a golf game between two people, a 
wager, informal, social, that would not be illegal. So a lot of 
gaming, gambling, betting, is friendship stuff, social, benign, 
as I have termed it. Some people say in Minnesota, we took a 
gamble by voting in Jesse Ventura.
    [Laughter.]
    So there is even political gambling that is part of the lay 
of the land. And kids do it. It starts early. At the grade 
school level, you are getting plenty of people saying there is 
a little bit of this and that. There are the Pokeman cards now 
which is the latest.
    Senator Bryan. Did any of your research focus on what the 
colleges themselves are doing to zero in on that hardcore, I 
think you said 3 to 5 percent, the number that you gave, which 
may be triple what the adult, non-college counterpart problem 
gamers, I guess--is that an acceptable term, problem gamblers?
    Dr. Winters. Problem gamblers.
    Senator Bryan. Problem gambling. What are the colleges 
doing? I was struck, and Mr. Wethington happened to be our 
witness today, so I do not want to pick on the University of 
Kentucky.
    Senator McCain. Could I mention to my friend and colleague 
that Senator Brownback is also waiting.
    Senator Bryan. He has been very patient. This will be my 
last question.
    Senator McCain. Thank you very much.
    Senator Bryan. And that is a yes/no answer.
    Senator McCain. I thank you, Senator Bryan. I know this is 
a very important issue to you.
    Senator Bryan. And I appreciate it, Mr. Chairman.
    Do you believe there is not enough being done?
    Dr. Winters. The radar screen for health problems among 
colleges places gambling pretty low. You have got alcohol 
abuse. You have got drug abuse. You have got many other things. 
It is difficult to get that issue percolating to the top. But I 
think there are some organizations besides the NCAA--I already 
mentioned, the Student Personnel Administrators Association--
trying to get that moved forward.
    Senator Bryan. I thank you.
    And that is my last question. The only point I was trying 
to make, Mr. Chairman, is here the NCAA comes in, Mr. 
Wethington, a wonderful institution, the University of 
Kentucky--no evidence of anybody ever being prosecuted for 
illegal bookmaking. No evidence of any student being 
disciplined for participating in this activity. I suggest that 
that probably represent, across the country, in general, what 
occurs. And now we are asking for federal legislation. It seems 
to me that we ought to be looking at our own house first.
    And I thank the chairman. And I apologize to my friend and 
colleague from Kansas.
    Senator McCain. I thank you, Senator Bryan. And I know that 
this is a very important issue to you and your state. And I 
appreciate that.
    Senator Brownback.
    Senator Brownback. And I know it is an important issue to 
you and your state. That is why I came over and talked with you 
ahead of putting the bill in. Because I think it is an 
important issue.
    I would think, Dr. Winters, we are probably going to be 
back at a number of these hearings in the future, from what I 
hear you describe, if we are talking about gambling and its 
impact across the country. It just keeps growing. And you would 
anticipate this is going to be ever-increasing, with the trend 
lines we are on right now, an increasing problem we are going 
to be facing; is that correct?
    Dr. Winters. Yes. In fact, there has been enough data to 
try to look at that. And the trend side looks, unfortunately, 
on the up, in all populations, including young people. And not 
only do most states have gambling, if you just start to tally 
up how much gambling each state has, I think almost every 
American is within about a 4-hour drive of high-stakes 
gambling, and not just the lottery down the street. And the 
high-stakes stuff is what of course gets people in trouble. And 
then you throw in the Internet mix.
    Senator Brownback. So we will be back here probably on 
another topic, some other time, looking at this I would guess.
    Mr. Sandoval, I appreciate your coming and I appreciate, 
really, your making it in. And, Mr. Yaeger, I appreciate your 
comments, too.
    I just have one line of questioning. Mr. Sandoval, Nevada 
has the right, as a state, to ban gambling on UNLV; is that 
correct?
    Mr. Sandoval. There is a gaming regulation, yes, Senator.
    Senator Brownback. And in Nevada, the State of Nevada has 
that right?
    Mr. Sandoval. The current regulation reads that it 
prohibits betting on University of Nevada, Reno, and University 
of Nevada, Las Vegas, sports.
    Senator Brownback. And Nevada has that right?
    Mr. Sandoval. Yes.
    Senator Brownback. Could you take me through the steps of 
what Kansas needs to do to get our colleges off of the legal 
sports book in Nevada? Take me through the steps of what we 
need to do to get the University of Kansas, Kansas State 
University, and others off the legal sports book in Nevada.
    Mr. Sandoval. The only process that I am aware of, Senator, 
is there is what is called the Gaming Policy Committee in the 
State of Nevada, which is chaired by the Governor of the State 
of Nevada, which has the Chairman of the Gaming Commission, the 
Chairman of the Gaming Control Board, a member of the state 
Senate, a member of the State Assembly, two members of the 
public, and a member of an Indian tribe. And that is 
essentially what I would see the vehicle to discuss this issue.
    I guess, as an afterthought, I heard you state at the first 
part of the meeting that this regulation that we are referring 
to is for the protection of the Nevada schools. We do not see 
it that way. We see it as a protection for the integrity of the 
sporting events.
    Senator Brownback. That is what this bill is about, the 
integrity of the sporting events. So if we petitioned that 
group, we have the possibility we can be taken off of the legal 
sports book in Nevada? What do we have to do, do we have to get 
a majority vote of that group? My state does not have the 
right. You possess it in Nevada. Those are all Nevada citizens, 
I understand, that you listed.
    Mr. Sandoval. Yes.
    Senator Brownback. But a majority vote of that group?
    Mr. Sandoval. Well, Senator, it is an unprecedented 
question. What I can assure you is that I would return to the 
state and speak with Governor Guinn on that issue. And I am 
sure there is a procedure to do that. But I think that is the 
proper forum to discuss the very issue that you brought up.
    Senator Brownback. But a majority vote of the list you gave 
could get the University of Kansas off the legal sports book in 
Nevada?
    Mr. Sandoval. That would be my assumption as well. I can 
tell you as a certainty today that that committee, if brought 
together, sets policy for the gaming industry in the State of 
Nevada.
    Senator Brownback. Now, you are a member of that committee?
    Mr. Sandoval. I am.
    Senator Brownback. Would you vote for removal of the 
University of Kansas from the legal sports book in Nevada?
    Mr. Sandoval. I would not. And the reason for that is, as I 
said before, I see what we do in the State of Nevada as a 
protection for the integrity of the college game, to assure 
that there are no improprieties in that game. And I think we 
assist in that goal.
    Senator Brownback. But you also mentioned earlier, I think, 
that you were concerned about the perception for Nevada gaming 
on Nevada schools. Is that correct? I believe that was the term 
you used. You were dealing with the perception problem.
    Mr. Sandoval. Thank you, Senator. The perception I am 
referring to is that out-of-state bettors may perceive that in-
state bettors, because of their proximity to Nevada athletes, 
may have an advantage in betting on the local teams.
    Senator Brownback. Well, we believe we have a perception 
problem, that there is a perception that there are more and 
more problems with college athletics, more and more impact of 
money, more and more impact in gambling. And we would like to 
deal with the perception. If you do not believe that it is 
truly a problem or that it is not unseemly to bet on college 
athletes, we would like to deal with the perception. And we 
seek a vehicle to deal with that.
    You can provide us one through that means, although I think 
that is pretty flawed. It still is all Nevadans determining the 
impact on Kansas and on a Kansas school. I would certainly hope 
that you would give extra weight to the desire of the state 
that you are impacting and the schools and the institutions, 
which we put in millions of dollars a year to our colleges, and 
we are proud to do so, happy to do so, but sports is still that 
front window through which much of it is viewed. That is the 
gateway of viewership that it is seen. And you are having an 
impact on the perception here.
    I would really hope that that group would meet and would 
provide a means, a legitimate means, not too difficult or 
offensive, that a school could petition. That the Board of 
Regents of Arizona State University could petition Nevada, and 
that they would give extra weight to the desires of the legal 
body governing that school to remove themselves from the legal 
sports book in Nevada.
    Mr. Siller, will you sit on this body, as well?
    Mr. Siller. I do not sit on that body.
    Senator Brownback. May I finish and get an answer from Mr. 
Sandoval. I hope you will do that for us.
    Mr. Sandoval. You have my commitment, Senator, that I will 
go back to the State of Nevada and speak with Governor Guinn 
about this issue. I will do that immediately upon my return.
    Senator Brownback. Because we may have a way that we can 
start to deal with some of these perception problems here, if 
you will provide us that means, flawed as it is.
    Mr. Siller?
    Mr. Siller. My comment, Senator, if I may, just to support 
my suggestions of zero tolerance to illegal bookmaking. I would 
venture to say that--and I am taking an educated guess here--is 
somewhere in the 90 percentile of all the bets in Kansas on 
college wagering of sporting events are done by Kansans. And in 
Nevada, it is just the same there. And I am not going to say 
there is not the possibility that there could not be any link 
between the two.
    Senator Brownback. Are any of the bets laid off in Vegas?
    Mr. Siller. Or bets laid off.
    Senator Brownback. My Yaeger was testified to that.
    Mr. Siller. I am saying that there is an extensive effort 
to identify that. And I can tell you, as the board member in 
charge of enforcement, that is a very high priority. And I 
think that is where my experience, what I bring to that Board, 
a high experience in identifying that. And I personally made 
connections with my former agencies, with the United States 
Attorney's Office, and other venues.
    Senator McCain. Well, have you identified any of them?
    Mr. Siller. Senator, I have only been on the Board a year. 
And some of these investigations are ongoing. And I would love 
to talk about them----
    Senator McCain. Well, I would think that, as important as 
your presence is, it has been going on for many years. And we 
know that it has been going on. Everybody knows it. And yet, so 
far, it has not been identified by either you or Mr. Sandoval's 
organization. And that is not comforting.
    Mr. Siller. Senator, I am probably not sure on what you 
mean by ``identifying.''
    Senator McCain. Well, has there been any charges brought 
against people who were laying off bets in Las Vegas?
    Mr. Siller. There have been investigations. There has been 
coordination with other----
    Senator McCain. Have there been any charges brought?
    Mr. Siller. Yes, there have.
    Senator McCain. There have been charges brought?
    Mr. Siller. I would think that the Arizona case would be a 
classic example of that, where it was Nevada who identified the 
problem.
    Senator McCain. It was Nevada that identified the problem?
    Mr. Siller. It was.
    Senator McCain. That is not according to Mr. Yaeger's 
testimony, Mr. Siller.
    Mr. Siller. If we are talking about the same case, and this 
is the point shaving----
    Mr. Yaeger. Nevada identified the problem. It was because 
of a separate case.
    Senator McCain. I was going to say, it may have identified 
the problem, Mr. Siller, but nothing was done.
    Mr. Siller. Nevada gaming identified the problem, reported 
that violation to the Nevada Gaming and Control Board and to 
the FBI. And as a result of that, that was the predicate to 
initiating an investigation that eventually led to the 
conviction of several individuals.
    Senator McCain. In all due respect, what led to the 
conviction was the arrest of one of his accomplices on a 
separate offense that had nothing to do with your investigation 
or anybody else's. The guy decided to come clean by turning in 
Mr. Smith. That is the facts of the case. Is that not right, 
Mr. Yaeger?
    Mr. Yaeger. That is correct.
    Senator McCain. So it has really nothing to do with what 
you or Mr. Sandoval's organization did. It had to do with a 
random arrest, where the guy was willing to turn in his friend. 
My point is that you have not really done anything, and the 
problem is well-known. And you have been there a year. And the 
Commission has been in there for many years. And nothing has 
been done. That is my point.
    Mr. Siller. And I respect that. May I continue?
    Senator McCain. Yes, please.
    Mr. Siller. I would be interested to know how many cases or 
violations that are being investigated or charges within 
various states are on illegal bookmaking operations. And I do 
not say that to challenge anyone, I say that to support my 
position that the heart of this issue is illegal bookmakers. 
And I think that each state should look at its current laws, 
its current priorities, to addressing crime, and it self-
evaluate what have I done, how many convictions do I have. In 
the case of Kansas City, all of the municipalities, how 
important is it to and where is the priority as far as 
enforcement to addressing illegal bookmaking operations?
    And if you were to emphasize or create a zero tolerance 
toward illegal bookmaking operations within the individual 
states, you would be making a statement of zero tolerance, 
eliminating the perception, ensuring that we all are concerned 
about it.
    Senator Brownback. And I have no problem with doing that.
    Senator McCain. Can I just say that I think your point is 
very well made. I thank you.
    Senator Brownback. Yes, I think the point is well made, and 
I agree. But I would hope you would also see the rest of this 
problem, which either you seem to either be blind to or not 
willing to particularly look at or consider. We all have quite 
a bit at stake here of what is taking place. And I would hope 
the Nevada Gaming Board would step up and work with the 
colleges, that we would try to find some solutions that are 
acceptable to them.
    You make good money off of these college sporting events. 
It is not big, apparently, from what you are saying of the 
numbers. It is not a significant amount of money that is bet on 
college sports relative to the entire industry. It is really 
insignificant. You have got the group feeling like they have 
got a clear problem with it. And the response back is to attack 
the NCAA and say they are not doing enough. And I think they 
agree and are saying, we are going to have to step up and do 
more. But it is not a response on your part to say, well, maybe 
we can do something, as well, in dealing with this.
    And Nevada is clearly the center of gravity of the gambling 
industry in the country. It needs to step up. And I would hope 
to start working with people on these issues. Or, as Dr. 
Winters is saying, we are going to be back more and more. And 
there are other things, like Internet gambling. I agree that we 
need to deal with that, as well.
    You have not said much of anything that I disagree with in 
your proposals. I happen to think, along with Mr. Yaeger, that 
even if you put a lot of PSA's on, I am not sure it is really 
going to change that much in attitudes. But we are trying to 
reach out here and say, let us get something moving forward. 
And I would really hope that, instead of just being very 
defensive and attacking the NCAA, that we would say, OK, here 
is what we can do, here is an avenue we will provide you in 
North Carolina, in Indiana, Kansas, Arizona, to deal with what 
we do not think is a problem but you think it is a perception. 
We will handle it.
    Mr. Chairman, thanks for a great hearing. And I want to 
thank the panelists for being subject to our inquiry. It is not 
a pleasant day to be subject to a Senate panel. It is probably 
easier going to a dentist.
    [Laughter.]
    Senator McCain. Senator Bryan would like to have the next 
and final word. And Mr. Yaeger needs to go.
    Senator Bryan. Please, go right ahead. Thank you very much, 
gentlemen for being here.
    Mr. Chairman, I think it is a very fair and a balanced 
hearing. I was struck by my friend from Kansas and his 
exposition of states' rights. And I have a proposition to lay 
off on him, if I may, to use a metaphor that has been cast 
about here a good bit. His state wishes to send high-level 
nuclear waste to Nevada.
    [Laughter.]
    We oppose that. Would he be willing to consider a petition 
from our state, asking his state to forebear in sending this 
lethal product to our state?
    Senator McCain. May I say the Senator from Nevada strikes a 
telling blow.
    [Laughter.]
    Senator Brownback. I will consider it as much as it looks 
like I am going to get considered on mine.
    [Laughter.]
    Senator McCain. Dr. Winters, thank you for your very 
insightful testimony.
    Mr. Sandoval and Mr. Siller, I want to just say that I 
appreciate what you do. I have the greatest respect and regard 
for you both. I hope that we can work together to work through 
what is clearly a problem. And I thank you for taking your time 
to be here, especially you, Mr. Siller. I know that you had one 
of the more interesting trips.
    Mr. Sandoval, thank you for all that you do. And I 
appreciate the back-and-forth in these hearings. I think it is 
very important that we have spirited exchanges. Because, that 
way, I think we can get more information out of these hearings. 
And I hope that you are not reluctant to fire right back at a 
anybody who fires at you.
    I thank you all very much.
    [Whereupon, at 12:55 p.m., the hearing was adjourned.]

                            A P P E N D I X

Prepared Statement of James C. Dobson, Ph.D., Member, National Gambling 
        Impact Study Commission, President, Focus on the Family
    Gambling poses a grave threat to the integrity of college sports, 
the welfare and well-being of the student-athletes involved, and the 
reputation and credibility of our academic institutions. That is why I 
and fellow members of the National Gambling Impact Study Commission 
recommended a complete prohibition on gambling on collegiate and 
amateur athletic contests.
    Our recommendation came in response to the unprecedented rash of 
college sports betting scandals in recent years, involving athletes 
from some of our nation's most prestigious institutions. In addition, 
our Commission found an epidemic of sports gambling on college 
campuses, as well as an alarming rate of gambling addiction among 
college students.
    Gambling proponents attempt to tell us that there is no link 
between legal and illegal gambling on college sports, that the problem 
lies entirely with illegal betting. They are wrong. The two are 
inextricably intertwined. The legalization of this type of gambling in 
Nevada conveys a false sense of legality to persons--especially youth--
across the nation. In addition, most major newspapers publish the point 
spreads issued by Nevada casinos, further heightening both the sense of 
legitimacy and the interest in college sports gambling nationwide.
    Some of the recent collegiate betting scandals have directly 
involved gambling at legal operations in Nevada. The former Notre Dame 
University place kicker involved in the Northwestern basketball betting 
scandal stated flatly, ``Without the option of betting money in Nevada, 
the Northwestern basketball point-shaving scandal would not have 
occurred.''
    Those whose job it is to protect the student-athletes fully 
recognize the threat posed by legal gambling on college sports. That is 
why more than 60 of the most recognized football and basketball coaches 
in the National Collegiate Athletic Association support this ban.
    Even the gambling regulators in Nevada understand the dangers of 
allowing gambling on college athletics, which is why they have wisely 
prohibited betting on games involving institutions from that state. Yet 
they are unwilling to extend those same vital protections to college 
student-athletes from the other 49 states.
    Unless Congress acts to amend this loophole in the law, more 
scandals are almost certain to follow. Indeed, the incidents that have 
come to our attention may only represent the tip of the iceberg. A 1999 
University of Michigan survey of male college athletes revealed that 5 
percent had either gambled on a game in which they played, provided 
inside information for gambling purposes, or accepted money for 
performing poorly in a game. These statistics, if accurate, mean that 
the performance of four or five players on every Division I college 
football team in America may be susceptible to gambling influences.
    There is only one reason to allow this exploitation to continue. 
That is so that Nevada casino operators can continue to line their 
pockets with the estimated $800 million legally gambled on college 
sporting events each year. That is hardly sufficient reason to continue 
to jeopardize the future of thousands of our most promising young 
people.
    No one is naive enough to suggest that this proposal would 
eliminate all gambling on college sports. But it represents the most 
important first step that can be taken to significantly reduce this 
scourge that threatens so many institutions and careers.
    I applaud this Committee's willingness to tackle this politically 
charged issue. I urge each member of this Committee, and the rest of 
your colleagues in Congress, to place the welfare of college student-
athletes, the integrity of collegiate sports, and the reputation of our 
academic institutions ahead of the financial interests of a handful of 
casino operators.
    This is a tremendous opportunity for Congress to demonstrate its 
willingness to stand for principle in the face of the full-court press 
being applied by powerful gambling industry lobbyists. Passage of this 
legislation would be a major step in increasing the faith of American 
citizens in this body of government. I would be pleased to use the 
reach of my daily radio broadcast to inform our constituents about such 
courageous efforts.
                                 ______
                                 
                                           Kay Coles James,
                                       Norfolk, VA, March 28, 2000.
Hon. John McCain,
Chairman,
Committee on Commerce, Science, and Technology,
United States Senate,
Washington, DC.

Dear Chairman McCain:

    Thank you for the invitation to testify before the Senate Commerce, 
Science, and Transportation Committee on Wednesday, regarding sports 
gambling. I regret that previous commitments prevent me from being with 
you in person, but hope that you will include my comments in your 
deliberations.
    As you know, I was privileged to serve as the Chairman of the 
National Gambling Impact Study Commission, a nine-member bipartisan 
body created by Congress to ``conduct a comprehensive examination of 
the social and economic impacts of gambling on communities, businesses 
and individuals.'' Over a two-year period, the eight Commissioners and 
I heard hundreds of hours of testimony, traveled across the country to 
see the impacts and practices of gambling firsthand, and spoke to 
thousands of individuals whose lives have been impacted by gambling. In 
addition, we commissioned our own research and reviewed numerous other 
studies and articles.
    The subject of sport wagering was discussed during a site visit to 
Las Vegas, Nevada on November 10-11, 1998, as well as during 
subcommittee meetings later in the Commission's work. Our final 
report--which was approved unanimously by the nine commissioners--was 
submitted on June 18, 1999. In the chapter on Gambling Regulation, the 
Commission recommended that ``the betting on collegiate and amateur 
athletic events that is currently legal be banned altogether.''
    I applaud the efforts of Senators Brownback and Leahy and yourself, 
as well as those of Representative Lindsay Graham in the House, for 
responding to the Commission's recommendation and for your efforts to 
address this important issue.
    There are those who argue that gambling is an activity that has 
historically had both benefits and costs associated with it. One of the 
most difficult tasks confronting the Commission was trying to develop a 
method by which the social costs and benefits and the economic costs 
and benefits could first be credibly ascertained and then weighed 
against one another to determine the overall net impact of gambling. 
This is, after all, the difficult task facing policy-makers considering 
the expansion or limitation of gambling in their communities.
    For instance, the Commission witnessed the economic benefits 
brought to a community by the development of certain destination resort 
casinos. Less evident but certainly present were the social costs and 
benefits associated with an increased level of gambling. In other 
states, the net economic costs and the net social costs of an activity 
like video poker were quite evident.
    Regarding sports wagering, the Commission found that:

        Because sports wagering is illegal in most states, it does not 
        provide many of the positive impacts of other forms of 
        gambling. In particular, sports wagering does not contribute to 
        local economies or produce many jobs. Unlike casinos or other 
        destination resorts, sports wagering does not create other 
        economic sectors.

        However, sports wagering does have social costs. Sports 
        wagering threatens the integrity of sports, it puts student 
        athletes in a vulnerable position, it can serve as gateway 
        behavior for adolescent gamblers, and it can devastate 
        individuals and careers.

        NGISC Report, 3-10

    Some of the data that most concerned us as a Commission regarded 
the attitudes and involvement of young people with gambling. It is 
important to remember that for minors, gambling is always illegal. But, 
more importantly, the overwhelming societal exposure to gambling for 
today's young people creates dangerous opportunities for abuse and 
pathological behavior.
    When interjected into the ideal of amateur athletics, gambling 
creates potential abuses involving point-shaving, illegal behavior and 
lasting damage to institutions and individuals and the destruction of 
potential professional careers. In an ironic twist, the State of Nevada 
prohibits betting on its own teams to protect any potential abuse and 
illegal behavior at its colleges.
    The National Collegiate Athletic Association has long recognized 
the danger of this exception. Along with universities across the 
country, they have done an admirable job in attempting to combat sports 
betting at the college level. The Las Vegas loophole, however, 
undermines the message of the integrity of amateur sports and 
responsible, adult behavior.
    Closing this loophole represents a common sense and reasonable step 
and I commend your efforts to do so.
    I would be pleased to provide you with any additional information 
you might need or answer any questions.
    Thank you.
        Sincerely,
                                               Kay C. James
                                 ______
                                 
 Joint Prepared Statement by National Gambling Impact Study Commission 
Members Richard C. Leone, President, The Century Foundation and Leo T. 
                 McCarthy, President, The Daniel Group
    We thank you, Senators Leahy and Brownback and other colleagues who 
join you in proposing to ban legal gambling on high school, collegiate 
or Olympic competitive athletic events.
    Four years ago, with Public Law 104-169, Congress created the 
National Gambling Impact Study Commission and mandated its nine 
appointees, including us, to analyze the social and economic impacts of 
legal gambling in America. After receiving over 140 hours of testimony 
and initiating independent research on adult and juvenile gambling in 
America, we sent you our 76 recommendations on June 20, 1999. These 
recommendations address findings in six areas: regulation of gambling; 
problem and pathological gambling; Native American gambling; technology 
and the future of gambling; gambling's impact on people and places; and 
future research needs.
    One of those recommendations was to do specifically what you now 
propose in this bill. Recommendation number 7 clearly states: ``The 
Commission recommends that betting on collegiate and amateur athletic 
events that is currently legal be banned altogether.''
    The Commission's majority vote was based on at least four 
convictions:
    First, that juvenile problem and pathological gambling in our 
country has increased to an alarming level. A meta-analysis completed 
by the Harvard Medical School Division of Addictions estimated in 1997 
that there were 7.9 million juvenile gamblers who were problem or 
pathological.
    Second, that betting on collegiate sports events by our youth was a 
significant contributing factor to that population, with bookies 
available on hundreds of college and university campuses in the nation.
    Third, the ideals of amateur and collegiate sports are undermined 
by a federal law that sanctioned bets on these events that originate 
throughout the nation, yet are received and placed only in Nevada.
    Fourth, that legal sports betting and the publishing of point 
spreads in many mainstream news publications set a dangerous 
precedent--in fact, act as a springboard to further propel the enormous 
illegal sports gaming industry in this country.
    Sports betting is legitimized by those who seek to profit from 
public interest in betting and by those who consider it a harmless 
pastime. But, what is a harmless ``vice'' for some is a life-altering 
catastrophe for many others. Moreover, the corrosive impact on sports 
is only hinted at by the occasional story of ruined athletes and ruined 
lives that comes to light. It is one of the worst aspects of the 
spreading culture of gambling in this country. Betting on school 
games--at whatever level--is one place, at least, where people of good 
will should be able to draw the line. It is no coincidence, for 
example, that even Nevada prohibits bets on games between schools in 
their state.
    The Commission majority weighed the aspirations we have for 
children and the efforts of parents and school officials who seek to 
inculcate strong character traits and self-respect in millions of young 
Americans against the $2.3 billion in profits for Nevada casinos. And 
our decision was easy.
    It was easy then and it is easy now. College sports coaches rarely 
take public positions on legislation such as this. The fact that dozens 
of the best known coaches of this nation are asking Congress to ban 
betting on amateur and collegiate sports competition is a profound 
statement--one deserving of not only our ears, but our action.
    We join them today in respectfully asking the members of this 
Committee and the entire Congress to protect what has been one of the 
strongest examples of American idealism--amateur and collegiate sports.
                                 ______
                                 
                                  National Football League,
                                      New York, NY, April 10, 2000.
Hon. John McCain,
Chairman,
Committee on Commerce, Science, and Transportation,
Washington, DC.

Dear Senator McCain:

    I write on behalf of the National Football League to comment on S. 
2340, the ``Amateur Sports Integrity Act.'' We understand that the 
Commerce Committee will shortly move to mark up S. 2340, and 
respectfully request that this submission be incorporated into the 
hearing record. Specifically, we write to urge in the strongest 
possible terms that Title II of the bill be expanded to prohibit 
gambling not only on amateur sports, but on professional sports as 
well. Congress has not previously distinguished between gambling on 
amateur and professional games, and Congress should not do so now.
    Title II would add a new section to the Ted Stevens Olympic and 
Amateur Sports Act (36 U.S.C. 220501 et seq.) to prohibit gambling on 
amateur athletic games. The Professional and Amateur Sports Protection 
Act of 1992 (28 U.S.C. 3701-3704) (``PASPA'') generally prohibited the 
states from legalizing gambling on professional and amateur sports, but 
it also grandfathered certain gambling that was authorized by state law 
at the time of enactment. The effect of Title II of S. 2340 would be to 
repeal this grandfather provision so far as gambling on amateur 
athletic games is concerned, and to prohibit gambling on amateur games 
as a matter of federal law. But Title II does not prohibit gambling on 
professional games and instead allows such gambling to continue to the 
extent grandfathered by PASPA. We respectfully disagree with the narrow 
scope of Title II.
    The National Football League strongly supported enactment of PASPA 
in 1992. As Commissioner Tagliabue testified at the time, ``we do not 
want our games used as bait to sell gambling. Sports gambling should 
not be used as a cure for the sagging fortunes of Atlantic City casinos 
or to boost public interest in state lotteries. We should not gamble 
with our children's heroes.'' In his testimony, Commissioner Tagliabue 
documented the efforts taken by the League to prevent sports gambling 
or involvement with sports gambling by club owners, players, and anyone 
else connected with our games. These efforts continue. Moreover, the 
League currently supports, and is promoting the passage of, S. 692, the 
Internet Gambling Prohibition Act of 1999, sponsored by Senator Kyl, 
which would end the plague of Internet sports gambling that seeks to 
evade the prohibitions of PASPA and the Wire Act. Copies of our 
testimony in support of PASPA and S. 692 are enclosed.
    During the floor debate on PASPA, Senator Bradley spoke eloquently 
of the harms gambling inflicts on sports. Tellingly, he invoked his 
experiences as a professional player as well as invoking the college 
sports scandals of his younger days:

        ``Mr. President, where sports gambling occurs, I think fans 
        cannot help but wonder if a missed free throw, or a dropped 
        flyball, or a missed extra point was part of a player's scheme 
        to fix the game. If sports betting spreads, more and more fans 
        will question every coaching decision and every official's 
        call. All of this puts undue pressure on players, coaches, and 
        officials . . . [If sports gambling is legalized,] [s]ports 
        would become the gamblers' game and not the fans' game, and 
        athletes would become roulette chips. . . .

        ``I remember one game in Madison Square Garden. Toward the end 
        of the game, one of my teammates happened to throw the ball up. 
        We were ahead 6 or 8 points, I forget which. He threw the ball 
        up at the other end of the court and the ball went in the 
        basket. The next week the press speculated about whether it was 
        timed to beat the line on the game. . . . Earlier in my life, 
        when I was in high school and college, there were major sports 
        scandals. Sports-fixing scandals. But the state came in and 
        said this is wrong, and vigorously prosecuted.'' 138 Cong. Rec. 
        12989-90 (1992).

    When Congress enacted PASPA, it made the judgment that the 
prohibition should not be applied retroactively to sports gambling 
operations that were already permitted by, and conducted pursuant to, 
state law. See S. Rep. No. 248, 102d Cong., 1st Sess. 8, 9-10 (1991). 
As the Judiciary Committee emphasized, however, ``all such sports 
gambling is harmful.'' Id. at 8. The decision to grandfather certain 
sports gambling from the prohibitions of the bill was based on other 
considerations. The League accepted that judgment at the time with 
great reluctance. As Commissioner Tagliabue stated:

        ``We have made it clear that we would support legislation that 
        prohibited any and all forms of gambling. We also recognize 
        that we live in a country, a great one, which operates by 
        consensus, and that in order to take a step forward, we have to 
        accept this form of legislation which contains a very narrow 
        grandfather provision.'' \1\
---------------------------------------------------------------------------
    \1\ Prohibiting State-Sanctioned Sports Gambling: Hearing on S. 473 
and S. 474 before the Subcomm. on Patents, Copyrights and Trademarks of 
the Senate Comm. on the Judiciary, 102d Cong., 1st Sess. 64 (1991).

    If Congress is prepared to reconsider the judgment it made in 1992, 
that existing legal sports gambling should not be prohibited, there is 
no justification--moral, legal, or otherwise--for limiting such 
reconsideration to gambling on amateur sports. The harms that sports 
gambling inflicts, as detailed in the enclosed League testimony, impact 
professional sports no less than amateur sports. The harms it inflicts 
are just as real, and the cost to the integrity and reputation of our 
games, and to our values as a nation, are just as great. If anything, 
the harms inflicted on professional sports by gambling may be even 
greater than the harms inflicted on amateur sports because gambling on 
our games is more widespread.
    We have been fortunate during the last eight years that the NFL has 
not been scarred by the type of gambling scandals that have occurred in 
college sports. We have worked hard to educate and counsel our players, 
coaches and game officials regarding the dangers of sports gambling, 
and to take security measures to protect our employees from gambling 
influences. The NFL and other professional sports leagues should not 
now be denied the benefits of legislative action simply because we 
cannot point to any gambling incidents but college sports can. The ill 
effects of gambling apply equally to both college and pro sports.
    For all of these reasons, if Congress is now prepared to revisit 
the judgment it made in 1992, the NFL strongly urges that Title II be 
amended to extend its prohibition (and its repeal of PASPA's 
grandfather provision) to include gambling on professional sports.
        Sincerely,
                                              Jeffrey Pash,
                                          Executive Vice President.

                                                       Attachment 1
  statement of paul tagliabue, commissioner, national football league
    before the subcommittee on patents, copyrights and trademarks, 
                       senate judiciary committee
June 26, 1991

    Mr. Chairman and distinguished members of the Subcommittee. I am 
pleased to appear before you today to urge in the strongest possible 
terms your adoption of the Professional and Amateur Sports Protection 
Act (S. 474).
    This important legislation builds on bills passed last year by the 
House and the Senate--though not by both--to prevent the spread of 
sports gambling. Like last year's bills, S. 474 would prohibit the 
states from establishing sports lotteries. Going beyond those bills, S. 
474 would prohibit any other form of sports gambling authorized by 
state law based on professional or amateur games.
    Mr. Chairman, we do not want our games used as bait to sell 
gambling. Sports gambling should not be used as a cure for the sagging 
fortunes of Atlantic City casinos or to boost public interest in state 
lotteries. We should not gamble with our children's heroes.
    As I mentioned in my testimony before this Subcommittee last 
summer, I have been privileged to serve the National Football League 
for more than 20 years--first as outside counsel and now as 
Commissioner. In all this time, the League has vigorously protected its 
reputation for integrity and the wholesome character of its games.
    As the late Senator Kenneth B. Keating of New York said nearly 30 
years ago in introducing the legislation codified in Title 18 that 
makes it a federal crime to fix or attempt to fix sporting contests:

          ``Thousands of Americans earn a legitimate livelihood in 
        professional sports. Tens of thousands of others participate in 
        college sports as part of the physical fitness and character 
        building programs of their schools. Tens of millions of 
        Americans find sports a favorite form of recreation. We must do 
        everything we can to keep sports clean so that the fans, and 
        especially young people, can continue to have complete 
        confidence in the honesty of the players and the contests. 
        Scandals in the sporting world are big news and can have a 
        devastating effect on the outlook of our youth to whom sports 
        figures are heroes and idols.'' 109 Cong. Rec. 2,016 (1963).

    Thus, we strictly prohibit NFL club owners, coaches, players and 
anyone else connected with the NFL from gambling on NFL games or 
associating with persons involved in gambling. Anyone who does so faces 
severe disciplinary action by the Commissioner, up to lifetime 
suspension. Our League's Constitution also prohibits any NFL 
involvement with state lotteries. Our clubs cannot accept advertising 
revenue from lotteries, and coaches and players cannot appear in 
lottery ads or promotional events. We have advised the television 
networks that neither gambling-related commercials nor the 
dissemination of point-spread information are acceptable on NFL game 
broadcasts.
    Legalized sports gambling threatens all that we have worked for in 
this respect--and more. We oppose the spread of legalized sports 
gambling for four basic reasons.
    First, sports gambling threatens the character of team sports. Our 
games embody our very finest traditions and values. They stand for 
clean, healthy competition. They stand for teamwork. And they stand for 
success through preparation and honest effort. With legalized sports 
gambling, our games instead will come to represent the fast buck, the 
quick fix, the desire to get something for nothing. The spread of 
legalized sports gambling would change forever--and for the worse--what 
our games stand for and the way they are perceived.
    Second, sports gambling threatens the integrity of, and public 
confidence in, team sports. Sports lotteries inevitably foster a 
climate of suspicion about controversial plays and intensify cynicism 
with respect to player performances, coaching decisions, officiating 
calls and game results. Cynical or disappointed fans would come to 
assume ``the fix was in'' whenever the team they bet on failed to beat 
the point spread. And legalized sports gambling involving head-to-head 
betting threatens more than just public confidence in the integrity of 
our games. Its proliferation would appear to athletes to give official 
sanction to sports gambling and could threaten actual corruption of the 
games by undermining the ability of professional and amateur sports 
organizations to police themselves.
    Third, legalized sports gambling sends a terrible message to youth. 
Sports are very important to millions of our young people. Youth look 
up to athletes. Our players cannot be expected to serve as healthy role 
models for youth if they are made to function as participants in 
gambling enterprises. Legalized sports gambling also sends a 
regrettable message to our young people about government--that 
``anything goes'' when it comes to raising revenues or bolstering local 
economies, and that we might as well legalize, sponsor and promote any 
activity so that the state can get its ``cut.'' This is a message we 
can ill afford to send.
    Finally--and perhaps worst of all--legalized sports gambling would 
promote gambling among young people. Dr. Valerie Lorenz of the National 
Center for Pathological Gambling recently told Time (Feb. 25) that the 
rise in teenage gambling is linked to the spread of state lotteries 
generally: ``The message they're conveying is that gambling is not a 
vice but a normal form of entertainment.'' That negative message would 
certainly be sent by a state lottery based on team sports. And, as Dr. 
Lorenz has written, a sports lottery ``not only teaches youngsters how 
to bet on football pools, but also encourages them to do so.'' \1\ What 
is true in this regard for sports lotteries would be even truer for 
casino-style sports gambling.\2\
---------------------------------------------------------------------------
    \1\ Lorenz, ``State Lotteries and Compulsive Gambling,'' Journal of 
Gambling Studies, vol. 6, p. 392-93 (1990).
    \2\ For the reasons discussed by Professor Arthur R. Miller of the 
Harvard Law School in his testimony last summer, state-sponsored sports 
betting also misappropriates the goodwill and popularity of 
professional sports and amateur sports organizations and dilutes and 
tarnishes the service marks of such organizations. See Legislation 
Prohibiting Sports Lotteries from Misappropriating Professional Sports 
Service Marks: Hearing on S. 1772 before the Subcomm. on Patents, 
Copyrights and Trademarks of the Senate Comm. on the the Judiciary, 
101st Cong., 2d Sess. 251 (1990). It bears repeating that the NFL has 
no desire to license or conduct our own gambling operations. In any 
event, S. 474 would invalidate any state law that purportedly 
authorized us to conduct such operations.
---------------------------------------------------------------------------
    Mr. Chairman, no one opposes your legislation on the ground that 
sports gambling is socially beneficial and should be encouraged. The 
principal argument advanced in opposition to the legislation is that 
federal action in this area is inappropriate and that the states should 
be left to decide for themselves whether to sponsor or allow sports 
gambling. Whatever superficial appeal it may have, this federalism 
argument is without substance.
    Team sports are a national pastime. Sports gambling is a national 
problem and demands a national solution. The harms it inflicts are felt 
beyond the borders of those states that sanction it. The moral erosion 
it produces cannot be limited geographically. Once a state legalizes 
sports gambling, it will be extremely difficult for other states to 
resist the lure. The current pressures in such places as California and 
New Jersey to institute casino-style sports gambling illustrate the 
point. Since Oregon instituted its sports lottery two years ago, 
proposals for similar lotteries have surfaced in a number of other 
states.
    We are not unsympathetic to the fiscal concerns that have motivated 
sports lottery and casino-style sports gambling proposals in some 
places. But those concerns cannot justify the great long-range harm to 
our sport and others such proposals would entail--and to a generation 
of young people whose attitudes toward team sports would be distorted 
and diminished by perpetuating a gambling-oriented outlook. Nor should 
Congress be misled by claims that legalization of sports gambling would 
reduce illegal sports gambling in a state. According to the Director of 
New Jersey's Division of Gaming Enforcement, ``most law enforcement 
professionals agree that legalization has a negligible impact on, and 
in some ways enhances, illegal markets.'' \3\ Illegal entrepreneurs can 
always ``outmarket'' their legitimate counterparts, offering better 
odds and, most important, tax-free winnings.
---------------------------------------------------------------------------
    \3\Anthony J. Parillo, Proposal To Consolidate All Legalized Gaming 
Enforcement Functions within a Single Agency of the Department of Law & 
Safety, June 20, 1988, p. 188.
---------------------------------------------------------------------------
    S. 474 breaks no new philosophical ground. It presents no new issue 
of state prerogatives. Congress has previously recognized on several 
occasions that gambling has no place in sports, professional or 
amateur. Title 18 of the United States Code contains a specific federal 
policy against state sports gambling. When Congress acted in 1974 to 
exempt state lotteries from the prohibitions of the federal lottery and 
gambling laws generally, it specified that those prohibitions would 
continue to apply to state sports lotteries--i.e., lotteries that 
involve ``the placing or accepting of bets or wagers on sporting events 
or contests.'' 18 U.S.C. Sec. 1307(d). As the House Judiciary Committee 
explained, the exemptions of Sec. 1307 were not intended to apply 
indiscriminately to all ``gambling activities conducted by [a] state.'' 
H.R. Rep. No. 1517, 93d Cong., 2d Sess. 6-7 (1974).
    Beyond the federal lottery and gambling laws, Congress has 
legislated to protect the integrity of professional sports contests. In 
1964, Congress made it a federal crime under Title 18 to influence or 
attempt to influence by bribery any sporting contest. 18 U.S.C. 
Sec. 224. The offense is punishable by a fine of up to $10,000 or 
imprisonment of up to five years, or both. This is not merely an 
``assimilative offense''--conduct that is criminal under federal law 
because it is criminal under state law. Congress has recognized a 
distinct federal interest in protecting sports from corruption. The 
House Judiciary Committee called such corruption ``a challenge to an 
important aspect of American life--honestly competitive sports.'' \4\
---------------------------------------------------------------------------
    \4\ H.R. Rep. No. 1053, 88th Cong., 1st Sess. 2 (1963) (also noting 
federal interest in ensuring the integrity of sporting contests even 
where states decline to act); S. Rep. No. 593, 88th Cong., 1st Sess. 3-
4 (1963) (same).
---------------------------------------------------------------------------
    In addition, Congress and the courts have recognized the need for 
uniform national rules in dealing with professional and intercollegiate 
sports. Congress, for example, has enacted legislation that, among 
other things, limits the extent to which the NFL can televise games in 
conflict with high school and college sporting events. 15 U.S.C. 
Sec. Sec. 1291-1294. And numerous courts have held that it is 
inappropriate to apply varying state laws and regulations to the 
nationwide business of professional sports. See, e.g., Flood v. Kuhn, 
407 U.S. 258, 284-85 (1972); Partee v. San Diego Chargers, 34 Cal. 3d 
378 (1983). This same interest in national uniformity supports 
congressional action with respect to the current issue.
    The alternatives to congressional action are unattractive and 
uncertain--and there is no reason why professional or amateur sports 
organizations should be forced to resort to them in view of the federal 
and nationwide interests at stake here and the interstate character of 
the affected sports organizations.
    Congress cannot afford to delay dealing with the problem of state-
sanctioned sports gambling. At the moment, the problem is basically 
confined to Oregon and Nevada. If any significant number of other 
states should follow their example, it will be far more difficult for 
Congress to remedy the problem.
    The NFL applauds you, Mr. Chairman, and Senators Hatch, Bradley, 
Specter and the other co-sponsors of this bill, for assuming leadership 
in Congress on this issue of great public importance. We hope that S. 
474 will proceed promptly to markup and be sent to the floor for an 
early vote.
    I would be glad to answer any questions.

                                                       Attachment 2
  statement of jeff pash, executive vice president, national football 
                                 league
    before the subcommittee on technology, terrorism and government 
             information, senate committee on the judiciary
March 23, 1999

    Mr. Chairman and members of the Subcommittee. My name is Jeff Pash. 
I am the Executive Vice-President and General Counsel of the National 
Football League. I appreciate the opportunity appear before you today 
to express the NFL's strong support for the Internet Gambling 
Prohibition Act of 1999. We strongly support this bill because it would 
strengthen and extend existing prohibitions on gambling, including 
gambling on sports events, and provide enhanced enforcement tools 
tailored to the unique issues presented by Internet gambling. We join 
the State Attorneys General who testified earlier and other sports 
leagues in urging adoption of this important legislation.
    Simply put, gambling and sports do not mix. Sports gambling 
threatens the integrity of our games and all the values our games 
represent--especially to young people. For this reason, the NFL has 
established strict policies relative to gambling in general and sports 
betting in particular. The League prohibits NFL club owners, coaches, 
players and anyone else connected with the NFL from gambling on NFL 
games or associating in any way with persons involved in gambling. 
Anyone who does so faces severe disciplinary action by the 
Commissioner, including lifetime suspension. We have posted our anti-
gambling rules in every stadium locker room and have shared those rules 
with every player and every other individual associated with the NFL.
    The League has also sought to limit references to sports betting or 
gambling that in any way are connected to our games. For example, we 
have informed the major television networks that we regard sports 
gambling commercials and the dissemination of wagering information as 
inappropriate and unacceptable during football game telecasts
    Commissioner Tagliabue reemphasized this January that gambling and 
participation in the NFL are incompatible. In a restatement of our 
policies, the Commissioner reiterated that no NFL club owner, officer 
or employee may own any interest in any gambling casino, whether or not 
the casino operates a ``sports book'' or otherwise accepts wagering on 
sports. The Commissioner specifically stated that no club owner, 
officer or employee may own, directly or indirectly, or operate any 
`on-line,' computer-based, telephone, or Internet gambling service, 
whether or not such a service accepts wagering on sports. (Ex. A).*
---------------------------------------------------------------------------
    * For Exhibits A-E, see Senate Hearing 106-170, Hearing on Internet 
Gambling, Senate Judiciary Committee, March 23, 1999; pp. 27-53.
---------------------------------------------------------------------------
    The League has been a strong proponent of federal efforts to combat 
sports gambling. We strongly supported the passage of the Professional 
and Amateur Sports Protection Act of 1992 (28 U.S.C. 3701 et seq.). 
This 1992 legislation, known as PASPA, prohibits the states from 
legalizing sports betting. The League also worked to promote the 
passage of the Chairman's Internet gambling legislation in the last 
Congress. Like PASPA, the proposed legislation is a logical and 
appropriate extension of existing federal law and policy. The 
precedents for federal action in this area were well canvassed by the 
full Judiciary Committee in its report accompanying the 1992 
legislation (S. Rep. No. 248, 102d Cong., 1st Sess. 5-8 (1991)).
    The Internet Gambling Prohibition Act of 1999 is a necessary and 
appropriate federal response to a growing problem that, as the States 
Attorneys General have testified, no collection of states can 
adequately address on an individual basis. Ten years ago, a gambler 
might have used the telephone to call his bookie. Today, he simply logs 
on. Gambling businesses around the country--and around the world--have 
turned to the Internet in an obvious attempt to circumvent the existing 
prohibitions on gambling contained in the Wire Act and PASPA. Many 
offshore gambling businesses provide betting opportunities over the 
Internet, effectively beyond the reach of federal and state law 
enforcement authorities.
    The bill is needed because it updates our laws to reflect new 
technology. In its report accompanying the PASPA legislation eight 
years ago, the Judiciary Committee noted the growth of ``new 
technologies'' facilitating gambling, including the use of automatic 
teller machines to sell lottery tickets, and proposals to allow ``video 
gambling'' at home. S. Rep. No. 248, supra, at 5. It was, in 
significant part, the specter or expanded gambling raised by those 
``new technologies'' that spurred Congress to enact PASPA. In those 
days, the ``new technologies'' did not yet include the Internet. That 
day, however, has now come.
    The problem of Internet gambling is significant--and growing. 
According to recent publications, the Justice Department has estimated 
that Internet gambling generated $600 million in revenue in 1997 alone. 
(Ex. B).* A recent cover story in USA Today predicts that Internet 
betting will grow to $2.3 billion by 2001. (Ex. C).* And an article by 
Professor Goldsmith in The International Lawyer reports that some 
experts expect Internet gambling revenue to grow even faster, up to $10 
billion by the year 2000. (Ex. D).*
    Internet gambling is so successful largely because so little effort 
is required to participate. Unlike traditional casinos, which require 
gamblers to travel to the casino and place their bets on-site, Internet 
gambling allows bettors to access on-line wagering facilities twenty-
four hours per day, seven days a week. Gamblers can avoid the hassle 
and expense of traveling to a casino, which in many parts of the 
country requires out-of-state travel. Internet gamblers also can avoid 
the stigma that may be attached to gambling in public on a regular 
basis.
    Internet gambling sites are easily accessible and offer a wide 
range of gambling opportunities from all over the world. Any personal 
computer can be turned into an unregulated casino where Americans can 
lose their life savings with the mere click of a mouse. Many of these 
gambling web sites have been designed to resemble video games, and 
therefore are especially attractive to children. But gambling--even on 
the Internet--is not a game. Studies have shown that sports betting is 
a growing problem for high school and college students, who develop 
serious addictions to other forms of gambling as a result of being 
introduced to ``harmless'' sports wagering.
    As the Internet reaches more and more college students and 
schoolchildren, the rate of Internet gambling among young people is 
certain to rise. Because no one currently stands between Internet 
casinos and their gamblers to check identification, our children will 
have the ability to gamble on the family computer after school, or even 
in the schools themselves. And we must not be lulled by the paper tiger 
set up by proponents of Internet gambling--that children cannot access 
gambling web sites because they lack credit cards. It does not take 
much effort for a child to ``borrow'' one of his or her parents' credit 
cards for the few minutes necessary to copy down the credit card number 
and use it to access an Internet gambling service.
    The problems connected with Internet gambling transcend the NFL's 
concerns about protecting the integrity of professional sports and the 
values they represent. According to experts on compulsive or addictive 
gambling, access to Internet sports wagering dramatically increases the 
risk that people will become active, pathological gamblers. The 
National Council on Problem Gambling has reported that sports betting 
is among the most popular form of gambling for compulsive gamblers in 
the United States. That means that once individuals become exposed to 
sports betting, there is a real problem with recurrent and 
uncontrollable gambling.
    Conducting a gambling business using the Internet is illegal under 
the Wire Act (18 U.S.C. Sec. 1084) and indeed has been prosecuted--for 
example, in the case brought against six Internet sports betting 
companies last March by federal authorities in the Southern District of 
New York (Ex. E).* But as the prosecutors in that case plainly 
recognized, asserting jurisdiction over offshore gambling businesses 
that use the Internet can be problematic. More significantly, the Wire 
Act does not include direct mechanisms for ensuring termination by 
Internet service providers of access to online gambling sites.
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    * For Exhibits A-E, see Senate Hearing 106-170, Hearing on Internet 
Gambling, Senate Judiciary Committee, March 23, 1999; pp. 27-53.
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    Just as Congress enacted the Wire Act to prohibit the use of the 
telephone as an instrument of gambling, so Congress should now enact 
specific legislation to prohibit the use of the Internet as an 
instrument of gambling. And just as the Wire Act provides an effective 
mechanism for bringing about the termination by telephone companies of 
service to gambling businesses, so the Internet Gambling Prohibition 
Act of 1999, through its injunctive relief provisions, would provide an 
effective mechanism for bringing about the termination by Internet 
service providers of access to gambling sites. In our view, Mr. 
Chairman, providing such a mechanism for ensuring that Internet service 
providers will terminate access to such sites is critical to any 
legislation to combat Internet gambling.
    In supporting the PASPA legislation to prevent the spread of 
legalized sports betting, Commissioner Tagliabue testified:

        ``Sports gambling threatens the character of team sports. Our 
        games embody the very finest traditions and values. They stand 
        for clean, healthy competition. They stand for teamwork. And 
        they stand for success through preparation and honest effort. 
        With legalized sports gambling, our games instead will come to 
        represent the fast buck, the quick fix, the desire to get 
        something for nothing. The spread of legalized sports gambling 
        would change forever--and for the worse--what our games stand 
        for and the way they are perceived.'' Quoted in S. Rep. No. 
        248, supra, at 4.

    Left unchecked, Internet gambling amounts to legalized gambling. 
Its effects on the integrity of professional and amateur sports and the 
values they represent are just as pernicious. Just as Congress 
intervened to stem the spread of legalized sports gambling in 1992, so 
it must intervene to stem the spread of Internet gambling today.
    Mr. Chairman, we applaud your efforts and the efforts of your staff 
to address this important problem. The Internet Gambling Prohibition 
Act of 1999 will strengthen the tools available to federal and state 
law enforcement authorities to prevent the spread of Internet gambling 
into every home, office and schoolhouse in this country, and will send 
the vital message--to children and adults alike--that gambling on the 
Internet is wrong. We strongly support the passage of your bill.
    Thank you.

