[Congressional Record Volume 147, Number 150 (Friday, November 2, 2001)]
[Extensions of Remarks]
[Pages E1988-E1989]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


        COMBATING ILLEGAL GAMBLING REFORM AND MODERNIZATION ACT

                                 ______
                                 

                           HON. BOB GOODLATTE

                              of virginia

                    in the house of representatives

                       Thursday, November 1, 2001

  Mr. GOODLATTE. Mr. Speaker, I am pleased to introduce today 
legislation that represents a bipartisan effort to address the ever 
increasing problem of illegal Internet gambling in our Nation.
  The Internet is a revolutionary tool that dramatically affects the 
way we communicate, conduct business, and access information. As it 
knows no boundaries, the Internet is accessed by folks in rural and 
urban areas alike, in large countries as well as small. The Internet is 
currently expanding by leaps and bounds; however, it has not yet come 
close to reaching its true potential as a medium for commerce and 
communication.
  One of the main reasons that the Internet has not reached this 
potential is that many folks view it as a wild frontier, with no 
safeguards to protect children and very few legal protections to 
prevent online criminal activity. The ability of the World Wide Web to 
penetrate every home and community across the globe has both positive 
and negative implications--while it can be an invaluable source of 
information and means of communication, it can also override community 
values and standards, subjecting them to whatever may or may not be 
found online. In short, the Internet is a challenge to the sovereignty 
of civilized communities, States, and nations to decide what is 
appropriate and decent behavior.
  Gambling is an excellent example of this situation. It is currently 
illegal in the United States unless regulated by the States. As such, 
every state has gambling statutes to determine the type and amount of 
legal gambling permitted. With the development of the Internet, 
however, prohibitions and regulations governing gambling have been 
turned on their head. No longer do people have to leave the comfort of 
their homes and make the affirmative decision to travel to a casino--
they can access the casino from their living rooms.
  Since 1868, the federal government has enacted federal gambling 
statutes when a particular type of gambling activity has escaped the 
ability of states to regulate it. For over one hundred years, Congress 
has acted to assist states in enforcing their respective policies on 
gambling when developments in technology of an interstate nature, such 
as the Internet, have compromised the effectiveness of state gambling 
laws.
  The negative consequences of online gambling can be as detrimental to 
the families and communities of addictive gamblers as if a bricks and 
mortar casino was built right next door. Online gambling can result in 
addiction, bankruptcy, divorce, crime, and moral decline just as with 
traditional forms of gambling, the costs of which must ultimately be 
borne by society.
  Gambling on the Internet is especially enticing to youth, 
pathological gamblers, and criminals. There are currently no mechanisms 
in place to prevent youths--who make up the largest percentage of 
Internet users--from using their parents' credit card numbers to 
register and set up accounts for use at Internet gambling sites. In 
addition, pathological gamblers may become easily addicted to online 
gambling because of the Internet's easy access, anonymity and instant 
results. Dr. Howard J. Shaffer, director of addiction studies at 
Harvard, likens the Internet to new delivery forms of addictive drugs: 
``As smoking crack cocaine changed the cocaine experience, I think 
electronics is going to change the way gambling is experienced.'' 
Finally, Internet gambling can provide a nearly undetectable harbor for 
criminal enterprises. The anonymity associated with the Internet makes 
online gambling more susceptible to crime.
  I have long been a champion of the Internet and an advocate of 
limited government regulation of this new medium. However, that does 
not mean that the Internet should be a regulatory free zone or that our 
existing laws should not apply to the Internet. I think we can all 
agree that it would be very bad public policy to allow offline activity 
deemed criminal by states to be freely committed online and to go 
unpunished simply because we are reluctant to apply our laws to the 
Internet.
  Gambling on the Internet has become an extremely lucrative business. 
Numerous studies have charted the explosive growth of this industry, 
both by the increases in gambling websites available, and via industry 
revenues. A study by the research group Christiansen/Cumming Associates 
estimated that between 1997 and 1998, Internet gambling more than 
doubled, from 6.9 million to 14.5 million gamblers, with revenues 
doubling from $300 million to $651 million. More recently, Bear, 
Stearns & Co. Inc. reported that there were at that time as many as 
1,400 gambling sites, up from 700 just a year earlier. Other estimates 
indicate that Internet gambling could soon easily become a $10 billion 
a year industry.
  Most of the more than 1,400 Internet gambling sites are offshore. 
Virtual betting parlors accepting bets from individuals in the United 
States have attempted to avoid the application of United States law by 
locating themselves offshore and out of our jurisdictional reach. These 
offshore, fly-by-night Internet gambling operators are unlicensed, 
untaxed and unregulated and are sucking billions of dollars out of the 
United States.
  In addition, the FBI and the Department of Justice recently testified 
that Internet gambling serves as a vehicle for money laundering 
activities and can be exploited by terrorists to

[[Page E1989]]

launder money. The FBI currently has at least two pending cases 
involving Internet gambling as a conduit for money laundering, as well 
as a number of pending cases linking Internet gambling to organized 
crime.
  Current law already prohibits gambling over telephone wires. However, 
because the Internet does not always travel over telephone wires, these 
laws, which were written before the invention of the World Wide Web, 
have become outdated. My legislation simply clarifies the state of the 
law by bringing the current prohibition against wireline interstate 
gambling up to speed with the development of new technology.
  In addition, my legislation will add a new provision to the law that 
would prohibit a gambling business from accepting certain forms of non-
cash payment, including credit cards and electronic transfers, for the 
transmission of illegal bets and wagers. This provision provides an 
enforcement mechanism to address the situation where the gambling 
business is located offshore but the gambling business used bank 
accounts in the United States. The bill also provides an additional 
tool to fight illegal gambling by giving Federal, State, local and 
tribal law enforcement new injunctive authority to prevent and restrain 
violations of the law.
  The legislation I am introducing will return control to the states by 
protecting the right of citizens in each State to decide through their 
State legislatures if they want to allow gambling within their borders 
and not have that right taken away by offshore, fly-by-night operators. 
The regulation of intrastate gambling is within the jurisdiction of the 
states, so the bill leaves the regulation of wholly intrastate betting 
or wagering to the states with tight controls to be sure that such 
betting or wagering does not extend beyond their borders or to minors.
  The 104th Congress created the National Gambling Impact Study 
Commission and charged it with conducting a comprehensive legal and 
factual study of gambling, including an assessment of the interstate 
and international effects of gambling by electronic means, including 
the use of interactive technologies and the Internet. The Commission 
recommended to Congress that federal legislation is needed to halt the 
expansion of Internet gambling and to prohibit wire transfers to known 
Internet gambling sites, or the banks who represent them.
  As the National Gambling Impact Study Commission has documented, and 
Senate and House hearings have confirmed, Internet gambling is growing 
at an explosive rate. It evades existing anti-gambling laws, endangers 
children in the home, promotes compulsive gambling among adults, preys 
on the poor, and facilitates fraud. The ``Combating Illegal Gambling 
Reform and Modernization Act'' will put a stop to this harmful activity 
before it spreads further. I urge my colleagues to support this very 
important legislation.

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