[Congressional Record Volume 145, Number 46 (Tuesday, March 23, 1999)]
[Senate]
[Pages S3144-S3146]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. KYL (for himself and Mr. Bryan):
  S. 692. A bill to prohibit Internet gambling, and for other purposes; 
to the Committee on the Judiciary.


                   internet gambling prohibition act

 Mr. KYL. Mr. President, I rise to introduce the Internet 
Gambling Prohibition Act.
  From the beginning of time, societies have sought to prohibit most 
forms of gambling. There are reasons for this--and they are especially 
applicable to gambling on the Internet today. Consider the following.
  Youth. A recent New York Times article warned that ``Internet sports 
betting entices youthful gamblers into potentially costly losses.'' In 
the same

[[Page S3145]]

article, Kevin O'Neill, deputy director of the Council on Compulsive 
Gambling of New Jersey, said that ``Internet sports gambling appeals to 
college-age people who don't have immediate access to a neighborhood 
bookie. . . . It's on the Net and kids think it's credible, which is 
scary.''
  Listen to the testimony of Jeff Pash, the Executive Vice President of 
the National Football League, before the Senate Judiciary Committee: 
``Studies . . . indicate that sports betting is a growing problem for 
high school and college students. . . . As the Internet reaches more 
and more school children, Internet gambling is certain to promote even 
more gambling among young people.''
  Families. Gambling often has terrible consequences for families and 
communities. According to the Council on Compulsive Gambling, five 
percent of all gamblers become addicted. Many of those turn to crime 
and commit suicide. We all pay for those tragedies.
  Harm to Businesses and the Economy. Internet gambling is likely to 
have a deleterious effect on businesses and the economy. As Ted Koppel 
noted in a ``Nightline'' feature on Internet gambling, ``[l]ast year, 
1,333,000 American consumers filed for bankruptcy, thereby eliminating 
about $40 billion in personal debt. That's of some relevance to all of 
us because the $40 billion debt doesn't just disappear. It's 
redistributed among the rest of us in the form of increased prices on 
consumer goods. . . .'' He continued: ``If anything promises to 
increase the level of personal debt in this country, expanding access 
to gambling should do it.''
  Professor John Kindt testified before the House Small Business 
Committee that a business with 1,000 workers can anticipate increased 
personnel costs of $500,000 a year due to job absenteeism and declining 
productivity simply by having various forms of legalized gambling 
accessible.
  Addiction. Internet gambling enhances the addictive nature of 
gambling because it is so easy to do: you don't have to travel; you can 
just log on to your computer. Professor Kindt has described electronic 
gambling, like the type being offered in the ``virtual casinos'' on the 
Internet, as the ``hard-core cocaine of gambling.''
  As Bernie Horn, the Executive Director of the National Coalition 
Against Legalized Gaming, testified before the House Judiciary 
Subcommittee on Crime: ``The Internet not only makes highly addictive 
forms of gambling easily accessible to everyone, it magnifies the 
potential destructiveness of the addiction. Because of the privacy of 
an individual and his/her computer terminal, addicts can destroy 
themselves without anyone ever having the chance to stop them.
  Unfair payouts. As Wisconsin Attorney General James Doyle testified 
before the Senate Judiciary Committee, ``[b]ecause [Internet gambling] 
is unregulated, consumers don't know who is on the other end of the 
connection. The odds can be easily manipulated and there is no 
guarantee that fair payouts will occur.'' ``Anyone who gambles over the 
Internet is making a sucker bet,'' says William A. Bible, the chair of 
an Internet gambling subcommittee on the National Gambling Impact Study 
Commission.
  Crime. Further, gambling on the Internet is apt to lead to criminal 
behavior. Indeed, ``Up to 90 percent of pathological gamblers commit 
crimes to pay off their wagering debts.'' A University of Illinois 
study found that for every dollar that states gain from gambling, they 
pay out three dollars in social and criminal costs.
  Cost. According to an article in the March 1999 ABA Journal, ``Online 
wagering is generating a $600-million-a-year kitty that some analysts 
say could reach as high as $100 billion a year by 2006.'' I want to 
repeat that: ``$100 BILLION a year.'' The article continues: ``The 
number of Web sites offering Internet gambling is growing at a similar 
rate. In just one year, that number more than quadrupled, going from 
about 60 in late 1997 to now more than 260 according to some 
estimates.'' And a recent HBO in-depth report by Jim Lampley noted that 
virtual sports books will collect more money from the Super Bowl than 
all the sports books in Las Vegas combined.
  This affects all of us.
  Not every problem that is national is also necessarily federal. 
Internet gambling is a national problem AND a federal problem. The 
Internet is, of course, interstate in nature. States cannot protect 
their citizens from Internet gambling if anyone can transmit it into 
their states. That is why the State Attorneys General asked for federal 
legislation to prohibit Internet gambling. In a letter to the Judiciary 
Committee members, the Chairs of the Association's Internet Working 
Group stressed the need for federal involvement: ``[M]ore than any 
other area of the law, gambling has traditionally been regulated on a 
state-by-state basis, with little uniformity and minimal federal 
oversight. The availability of gambling on the Internet, however, 
threatens to disrupt each state's careful balancing of its own public 
welfare and fiscal concerns, by making gambling available across state 
and national boundaries, with little or no regulatory control.''
  Further, in reaffirming his support for the bill, the former 
President of NAAG, Wisconsin Attorney General Jim Doyle, wrote: 
``Internet gambling poses a major challenge for state and local law 
enforcement officials. I strongly support Senator Kyl's Internet 
Gambling Prohibition Act. Prohibiting this form of unregulated gambling 
will protect consumers from fraud and preserve state policies on 
gambling that have been established by our citizens and our 
legislators.''
  In 1961, Congress passed the Wire Act to prohibit using telephone 
facilities to receive bets or send gambling information. [18 U.S.C. 
Sec. 1084.] In addition to penalties imposed upon gambling businesses 
that violate the law, the Wire Act gives local and state law 
enforcement authorities the power to direct telecommunication providers 
to discontinue service to proprietors of gambling services who use the 
wires to conduct illegal gambling activity. But, as pointed out in the 
March 1999 ABA Journal, ``The problem with current federal law is that 
the communications technology it specifies is dated and limited.'' The 
advent of the Internet, a communications medium not envisioned by the 
Wire Act, requires enactment of a new law to address activities in 
cyberspace not contemplated by the drafters of the older law.
  The Internet Gambling Prohibition Act ensures that the law keeps pace 
with technology. The bill bans gambling on the Internet, just as the 
Wire Act prohibited gambling over the wires. And it does not limit the 
subject of gambling to sports. The bill is similar to the one that the 
Senate, by an overwhelming 90-10 vote, attached to the Commerce-
Justice-State Appropriations bill last year. Let me take a moment to 
explain the bill.
  The bill covers sports gambling and casino games. Businesses that 
offer gambling over the Internet can be fined in an amount equal to the 
amount that the business received in bets via the Internet or $20,000, 
whichever is greater, and/or imprisoned for not more than four years. 
To address concerns raised by the Department of Justice, the bill (like 
the Wire Act) does not contain penalties for individual bettors. Such 
betting will, of course, still be the subject of state law.
  The bill contains a strong enforcement mechanism. At the request of 
the United States or a State, a district court may enter a temporary 
restraining order or an injunction against any person to prevent a 
violation of the bill, following due notice and based on a finding of 
substantial probability that there has been a violation of the law. In 
effect, the illegal website will have its service cut off. I have 
worked with the Internet service providers to address concerns they 
raised about how they would cut off service, and, as a result, the 
provisions dealing with the civil remedies have been revised along the 
lines of the WIPO legislation.
  In sum, the Internet Gambling Prohibition Act brings federal law up 
to date. With the advent of new, sophisticated technology, the Wire Act 
is becoming outdated. The Internet Gambling Prohibition Act corrects 
that problem.
  I would like to take a moment to review the consideration of the bill 
during the last Congress. In July 1997, the Judiciary Subcommittee on 
Technology held a hearing on S. 474. A wide variety of people testified 
in support of the legislation: Senator Richard Bryan; Wisconsin 
Attorney General Jim Doyle, the then-President of the

[[Page S3146]]

National Association of Attorneys General; Jeff Pash, Counsel to the 
National Football League; Ann Geer, Chair of the National Coalition 
Against Gambling Expansion; and Anthony Cabot, professor at the 
International Gaming Institute.
  Ann Geer stated that ``Internet gambling would multiply addiction 
exponentially, increasing access and magnifying the potential 
destructiveness of the addiction. Addicts would literally click their 
mouse and bet the house.''
  As I noted earlier, Wisconsin Attorney General James Doyle testified 
that ``gambling on the Internet is a very dumb bet. Because it is 
unregulated . . . odds can be easily manipulated and there is no 
guarantee that fair payouts will occur. . . . Internet gambling 
threatens to disrupt the system. It crosses state and national borders 
with little or no regulatory control. Federal authorities must take the 
lead in this area.''
  Additionally, in June, the Judiciary Committee held a hearing on FBI 
oversight at which I said to FBI Director Louis Freeh: ``the testimony 
from other Department of Justice and FBI witnesses has supported our 
legislation to conform the crime of gambling on the Internet to 
existing law. And I would just like a reconfirmation of the FBI's 
support for that legislation.'' Director Freeh replied ``yes, I think 
it's a very effective change. We certainly support it.''
  The Judiciary Subcommittee on Technology passed S. 474 by a unanimous 
poll and sent the bill to the full Committee for consideration. The 
Judiciary Committee passed S. 474 by voice vote.
  In July 1998, by a 90 to 10 vote, the Internet Gambling Prohibition 
Act was attached to the Commerce-Justice-State Appropriations bill. In 
the House, the bill passed Representative McCollum's Crime Subcommittee 
unanimously, but due to the lateness of the session, the bill failed to 
move farther in the House and was not included in the final CJS bill.
  The bill has broad bipartisan support in Congress and the strong 
support of law enforcement. As I just mentioned, FBI Director Freeh has 
testified that the bill makes a ``very effective change'' to the law 
and the National Association of Attorneys General sent a letter 
supporting S. 474 to all Senators.
  Further, the President of NAAG, Wisconsin Attorney General Jim Doyle, 
wrote a letter expressing his support of the bill: ``Internet gambling 
poses a major challenge for state and local law enforcement officials. 
I strongly support Senator Kyl's Internet Gambling Prohibition Act. 
Prohibiting this form of unregulated gambling will protect consumers 
from fraud and preserve state policies on gambling that have been 
established by our citizens and our legislators.''
  Florida Attorney General Bob Butterworth also wrote a letter 
stressing the support of the states for this bill: ``The adoption of a 
resolution on this issue by NAAG represents overwhelming support from 
the states for a bill which, in essence, increases the federal presence 
in an area of primary state concern. However, it is clear that the 
federal government has an important role in this issue which crosses 
state as well as international boundaries.''
  In the 105th Congress, S. 474 was strongly supported by professional 
and amateur sports. The National Football League, the National 
Collegiate Athletic Association, the National Hockey League, the 
National Basketball Association, Major League Soccer, and Major League 
Baseball sent a joint letter of support to all Senators.
  I would like to read a passage from this letter:

       Despite exiting federal and state laws prohibiting gambling 
     on professional and college sports, sports gambling over the 
     Internet has become a serious--and growing--national problem. 
     Many Internet gambling operations originate from offshore 
     locations outside the U.S. The number of offshore Internet 
     gambling websites has grown from two in 1996 to over 70 
     today. It is estimated that Inernet sites will book over $600 
     million in sports bets in 1998, up from $60 million just two 
     years ago. These websites not only permit offshore gambling 
     operations to solicit and take bets from the United States in 
     defiance of federal and state law but also enable gamblers 
     and would-be gamblers in the U.S. to place illegal sports 
     wagers over the Internet from the privacy of their own home 
     or office.

  The letter concludes: ``We strongly urge you to vote in favor of S. 
474 when it is considered on the Senate floor.''
  On behalf of the NCAA, Bill Saum testified in February before the 
National Gambling Impact Study Commission on the dangers of Internet 
gambling:

       Internet gambling provides college students with the 
     opportunity to place wagers on professional and college 
     sporting events from the privacy of his or her campus 
     residence. Internet gambling offers the student virtual 
     anonymity. With nothing more than a credit card, the 
     possibility exists for any student-athlete to place a wager 
     via the Intenet and then attempt to influence the outcome of 
     the contest while participating on the court or the playing 
     field. There is no question the advent of Internet sports 
     gambling poses a direct threat to all sports organizations 
     that, first and foremost, must ensure the integrity of each 
     contest played.

  Today, in the Judiciary Subcommittee on Technology, I chaired a 
hearing on Internet gambling. The testimony in today's hearing 
confirmed that Internet gambling is addictive, accessible to minors, 
subject to fraud and other criminal use, and evasive of state gambling 
laws. State Attorneys General from Wisconsin and Ohio asked for federal 
legislation to address the mushrooming problem of online gambling, and 
representatives of the National Football League and the National 
Collegiate Athletic Association expressed their concerns over the 
effect of Internet gambling on athletes, fans, and the integrity of 
sporting contests.
  Mr. President, I would like to thank Senator Bryan for his hard work 
on this bill. His support and assistance have been invaluable. I would 
also like to extend a special thanks to the NFL, NCAA, and the National 
Association of Attorneys General.
  The Internet offers fantastic opportunities. Unfortunately, some 
would exploit those opportunities to commit crimes and take advantage 
of others. Indeed, as Professor Kindt stated on ``Nightline,'' ``Once 
you go to Internet gambling, you've maximized the speed you've 
maximized the acceptability and the accessibility. It's going to be in-
your-face gambling, which is going to have severe detrimental effects 
to society. . . . it's the crack cocaine of creating new pathological 
gamblers.''
  Internet gambling is a serious problem. Society has always prohibited 
most forms of gambling because it can have a devastating effect on 
people and families, and it often leads to crime and other corruption. 
The Internet Gambling Prohibition Act will curb the spread of online 
gambling.

                          ____________________