[Congressional Record Volume 152, Number 89 (Tuesday, July 11, 2006)]
[House]
[Pages H4978-H5001]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           INTERNET GAMBLING PROHIBITION AND ENFORCEMENT ACT

  Mr. OXLEY. Mr. Speaker, pursuant to House Resolution 907, I call up 
the bill (H.R. 4411) to prevent the use of certain payment instruments, 
credit cards, and fund transfers for unlawful Internet gambling, and 
for other purposes, and ask for its immediate consideration.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 4411

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Unlawful Internet Gambling 
     Enforcement Act of 2005''.

     SEC. 2. PROHIBITION ON ACCEPTANCE OF ANY PAYMENT INSTRUMENT 
                   FOR UNLAWFUL INTERNET GAMBLING.

       (a) In General.--Chapter 53 of title 31, United States 
     Code, is amended by adding at the end the following new 
     subchapter:

 ``SUBCHAPTER IV--PROHIBITION ON FUNDING OF UNLAWFUL INTERNET GAMBLING

     ``Sec. 5361. Congressional findings and purpose

       ``(a) Findings.--The Congress finds the following:
       ``(1) Internet gambling is primarily funded through 
     personal use of payment system instruments, credit cards, and 
     wire transfers.
       ``(2) The National Gambling Impact Study Commission in 1999 
     recommended the passage of legislation to prohibit wire 
     transfers to Internet gambling sites or the banks which 
     represent such sites.
       ``(3) Internet gambling is a growing cause of debt 
     collection problems for insured depository institutions and 
     the consumer credit industry.
       ``(4) New mechanisms for enforcing gambling laws on the 
     Internet are necessary because traditional law enforcement 
     mechanisms are often inadequate for enforcing gambling 
     prohibitions or regulations on the Internet, especially where 
     such gambling crosses State or national borders.
       ``(b) Rule of Construction.--No provision of this 
     subchapter shall be construed as altering, limiting, or 
     extending any Federal or State law or Tribal-State compact 
     prohibiting, permitting, or regulating gambling within the 
     United States.

     ``Sec. 5362. Definitions

       ``In this subchapter, the following definitions shall 
     apply:
       ``(1) Bet or wager.--The term `bet or wager'--
       ``(A) means the staking or risking by any person of 
     something of value upon the outcome of a contest of others, a 
     sporting event, or a game subject to chance, upon an 
     agreement or understanding that the person or another person 
     will receive something of value in the event of a certain 
     outcome;
       ``(B) includes the purchase of a chance or opportunity to 
     win a lottery or other prize (which opportunity to win is 
     predominantly subject to chance);
       ``(C) includes any scheme of a type described in section 
     3702 of title 28;
       ``(D) includes any instructions or information pertaining 
     to the establishment or movement of funds by the bettor or 
     customer in, to, or from an account with the business of 
     betting or wagering; and
       ``(E) does not include--
       ``(i) any activity governed by the securities laws (as that 
     term is defined in section 3(a)(47) of the Securities 
     Exchange Act of 1934 for the purchase or sale of securities 
     (as that term is defined in section 3(a)(10) of that Act);
       ``(ii) any transaction conducted on or subject to the rules 
     of a registered entity or exempt board of trade under the 
     Commodity Exchange Act;
       ``(iii) any over-the-counter derivative instrument;
       ``(iv) any other transaction that--

       ``(I) is excluded or exempt from regulation under the 
     Commodity Exchange Act; or
       ``(II) is exempt from State gaming or bucket shop laws 
     under section 12(e) of the Commodity Exchange Act or section 
     28(a) of the Securities Exchange Act of 1934;

       ``(v) any contract of indemnity or guarantee;
       ``(vi) any contract for insurance;
       ``(vii) any deposit or other transaction with an insured 
     depository institution; or
       ``(viii) any participation in a simulation sports game, an 
     educational game, or a contest, that--

       ``(I) is not dependent solely on the outcome of any single 
     sporting event or nonparticipant's singular individual 
     performance in any single sporting event;
       ``(II) has an outcome that reflects the relative knowledge 
     of the participants, or their skill at physical reaction or 
     physical manipulation (but not chance), and, in the case of a 
     simulation sports game, has an outcome that is determined 
     predominantly by accumulated statistical results of sporting 
     events; and
       ``(III) offers a prize or award to a participant that is 
     established in advance of the game or contest and is not 
     determined by the number of participants or the amount of any 
     fees paid by those participants.

       ``(2) Business of betting or wagering.--The term `business 
     of betting or wagering' does not include a financial 
     transaction provider, or any interactive computer service or 
     telecommunications service.
       ``(3) Designated payment system.--The term `designated 
     payment system' means any system utilized by a financial 
     transaction provider that the Secretary, in consultation with 
     the Board of Governors of the Federal Reserve System and the 
     Attorney General, determines, by regulation or order, could 
     be utilized in connection with, or to facilitate, any 
     restricted transaction.
       ``(4) Financial transaction provider.--The term `financial 
     transaction provider' means a creditor, credit card issuer, 
     financial institution, operator of a terminal at which an 
     electronic fund transfer may be initiated, money transmitting 
     business, or international, national, regional, or local 
     network utilized to effect a credit transaction, electronic 
     fund transfer, stored value product transaction, or money 
     transmitting service, or a participant in such network, or 
     other participant in a designated payment system.
       ``(5) Internet.--The term `Internet' means the 
     international computer network of interoperable packet 
     switched data networks.
       ``(6) Interactive computer service.--The term `interactive 
     computer service' has the same meaning as in section 230(f) 
     of the Communications Act of 1934.
       ``(7) Restricted transaction.--The term `restricted 
     transaction' means any transaction or transmittal involving 
     any credit, funds, instrument, or proceeds described in any 
     paragraph of section 5363 which the recipient is prohibited 
     from accepting under section 5363.
       ``(8) Secretary.--The term `Secretary' means the Secretary 
     of the Treasury.
       ``(9) Unlawful internet gambling.--
       ``(A) In general.--The term `unlawful Internet gambling' 
     means to place, receive, or otherwise knowingly transmit a 
     bet or wager by any means which involves the use, at least in 
     part, of the Internet where such bet or wager is unlawful 
     under any applicable Federal or State law in the State or 
     Tribal lands in which the bet or wager is initiated, 
     received, or otherwise made.
       ``(B) Intrastate transactions.--The term `unlawful Internet 
     gambling' shall not include placing, receiving, or otherwise 
     transmitting a bet or wager where--
       ``(i) the bet or wager is initiated and received or 
     otherwise made exclusively within a single State;
       ``(ii) the bet or wager and the method by which the bet or 
     wager is initiated and received or otherwise made is 
     expressly authorized by and placed in accordance with the 
     laws of such State, and the State law or regulations 
     include--

       ``(I) age and location verification requirements reasonably 
     designed to block access to minors and persons located out of 
     such State; and
       ``(II) appropriate data security standards to prevent 
     unauthorized access by any person whose age and current 
     location has not been verified in accordance with such 
     State's law or regulations; and

       ``(iii) the bet or wager does not violate any provision of 
     the--

       ``(I) Interstate Horseracing Act;
       ``(II) Professional and Amateur Sports Protection Act;
       ``(III) Gambling Devices Transportation Act; or
       ``(IV) Indian Gaming Regulatory Act.

       ``(C) Intratribal transactions.--The term `unlawful 
     Internet gambling' shall not include placing, receiving, or 
     otherwise transmitting a bet or wager where--

[[Page H4979]]

       ``(i) the bet or wager is initiated and received or 
     otherwise made exclusively--

       ``(I) within the Indian lands of a single Indian tribe (as 
     those terms are defined by the Indian Gaming Regulatory Act); 
     or
       ``(II) between the Indian lands of 2 or more Indian tribes 
     to the extent that intertribal gaming is authorized by the 
     Indian Gaming Regulatory Act;

       ``(ii) the bet or wager and the method by which the bet or 
     wager is initiated and received or otherwise made is 
     expressly authorized by and complies with the requirements 
     of--

       ``(I) the applicable tribal ordinance or resolution 
     approved by the Chairman of the National Indian Gaming 
     Commission; and
       ``(II) with respect to class III gaming, the applicable 
     Tribal-State Compact;

       ``(iii) the applicable tribal ordinance or resolution or 
     Tribal-State compact includes--

       ``(I) age and location verification requirements reasonably 
     designed to block access to minors and persons located out of 
     the applicable Tribal lands; and
       ``(II) appropriate data security standards to prevent 
     unauthorized access by any person whose age and current 
     location has not been verified in accordance with the 
     applicable tribal ordinance or resolution or Tribal-State 
     Compact; and

       ``(iv) the bet or wager does not violate any provision of 
     the--

       ``(I) Interstate Horseracing Act;
       ``(II) the Professional and Amateur Sports Protection Act;
       ``(III) the Gambling Devices Transportation Act; or
       ``(IV) the Indian Gaming Regulatory Act.

       ``(D) Interstate horseracing.--The term `unlawful Internet 
     gambling' shall not include placing, receiving, or otherwise 
     transmitting a bet or wager that is governed by and complies 
     with the Interstate Horseracing Act of 1978.
       ``(E) Intermediate routing.--The intermediate routing of 
     electronic data shall not determine the location or locations 
     in which a bet or wager is initiated, received, or otherwise 
     made.
       ``(10) Other terms.--
       ``(A) Credit; creditor; credit card; and card issuer.--The 
     terms `credit', `creditor', `credit card', and `card issuer' 
     have the same meanings as in section 103 of the Truth in 
     Lending Act.
       ``(B) Electronic fund transfer.--The term `electronic fund 
     transfer'--
       ``(i) has the same meaning as in section 903 of the 
     Electronic Fund Transfer Act, except that such term includes 
     transfers that would otherwise be excluded under section 
     903(6)(E) of that Act; and
       ``(ii) includes any fund transfer covered by Article 4A of 
     the Uniform Commercial Code, as in effect in any State.
       ``(C) Financial institution.--The term `financial 
     institution' has the same meaning as in section 903 of the 
     Electronic Fund Transfer Act, except that such term does not 
     include a casino, sports book, or other business at or 
     through which bets or wagers may be placed or received.
       ``(D) Insured depository institution.--The term `insured 
     depository institution'--
       ``(i) has the same meaning as in section 3 of the Federal 
     Deposit Insurance Act; and
       ``(ii) includes an insured credit union (as defined in 
     section 101 of the Federal Credit Union Act).
       ``(E) Money transmitting business and money transmitting 
     service.--The terms `money transmitting business' and `money 
     transmitting service' have the same meanings as in section 
     5330(d) (determined without regard to any regulations issued 
     by the Secretary thereunder).

     ``Sec. 5363. Prohibition on acceptance of any financial 
       instrument for unlawful Internet gambling

       ``No person engaged in the business of betting or wagering 
     may knowingly accept, in connection with the participation of 
     another person in unlawful Internet gambling--
       ``(1) credit, or the proceeds of credit, extended to or on 
     behalf of such other person (including credit extended 
     through the use of a credit card);
       ``(2) an electronic fund transfer, or funds transmitted by 
     or through a money transmitting business, or the proceeds of 
     an electronic fund transfer or money transmitting service, 
     from or on behalf of such other person;
       ``(3) any check, draft, or similar instrument which is 
     drawn by or on behalf of such other person and is drawn on or 
     payable at or through any financial institution; or
       ``(4) the proceeds of any other form of financial 
     transaction, as the Secretary may prescribe by regulation, 
     which involves a financial institution as a payor or 
     financial intermediary on behalf of or for the benefit of 
     such other person.

     ``Sec. 5364. Policies and procedures to identify and prevent 
       restricted transactions

       ``(a) Regulations.--Before the end of the 270-day period 
     beginning on the date of the enactment of this subchapter, 
     the Secretary, in consultation with the Board of Governors of 
     the Federal Reserve System and the Attorney General, shall 
     prescribe regulations requiring each designated payment 
     system, and all participants therein, to identify and prevent 
     restricted transactions through the establishment of policies 
     and procedures reasonably designed to identify and prevent 
     restricted transactions in any of the following ways:
       ``(1) The establishment of policies and procedures that--
       ``(A) allow the payment system and any person involved in 
     the payment system to identify restricted transactions by 
     means of codes in authorization messages or by other means; 
     and
       ``(B) block restricted transactions identified as a result 
     of the policies and procedures developed pursuant to 
     subparagraph (A).
       ``(2) The establishment of policies and procedures that 
     prevent the acceptance of the products or services of the 
     payment system in connection with a restricted transaction.
       ``(b) Requirements for Policies and Procedures.--In 
     prescribing regulations under subsection (a), the Secretary 
     shall--
       ``(1) identify types of policies and procedures, including 
     nonexclusive examples, which would be deemed, as applicable, 
     to be reasonably designed to identify, block, or prevent the 
     acceptance of the products or services with respect to each 
     type of restricted transaction;
       ``(2) to the extent practical, permit any participant in a 
     payment system to choose among alternative means of 
     identifying and blocking, or otherwise preventing the 
     acceptance of the products or services of the payment system 
     or participant in connection with, restricted transactions; 
     and
       ``(3) consider exempting restricted transactions from any 
     requirement imposed under such regulations, if the Secretary 
     finds that it is not reasonably practical to identify and 
     block, or otherwise prevent, such transactions.
       ``(c) Compliance With Payment System Policies and 
     Procedures.--A financial transaction provider shall be 
     considered to be in compliance with the regulations 
     prescribed under subsection (a), if--
       ``(1) such person relies on and complies with the policies 
     and procedures of a designated payment system of which it is 
     a member or participant to--
       ``(A) identify and block restricted transactions; or
       ``(B) otherwise prevent the acceptance of the products or 
     services of the payment system, member, or participant in 
     connection with restricted transactions; and
       ``(2) such policies and procedures of the designated 
     payment system comply with the requirements of regulations 
     prescribed under subsection (a).
       ``(d) No Liability for Blocking or Refusing to Honor 
     Restricted Transactions.--A person that is subject to a 
     regulation prescribed or order issued under this subchapter 
     and blocks, or otherwise refuses to honor a transaction--
       ``(1) that is a restricted transaction;
       ``(2) that such person reasonably believes to be a 
     restricted transaction; or
       ``(3) as a member of a designated payment system in 
     reliance on the policies and procedures of the payment 
     system, in an effort to comply with regulations prescribed 
     under subsection (a),
     shall not be liable to any party for such action.
       ``(e) Regulatory Enforcement.--The requirements of this 
     section shall be enforced exclusively by the Federal 
     functional regulators and the Federal Trade Commission, in 
     the manner provided in section 505(a) of the Gramm-Leach-
     Bliley Act.

     ``Sec. 5365. Civil remedies

       ``(a) Jurisdiction.--The district courts of the United 
     States shall have original and exclusive jurisdiction to 
     prevent and restrain violations of this subchapter by issuing 
     appropriate orders in accordance with this section, 
     regardless of whether a prosecution has been initiated under 
     this subchapter.
       ``(b) Proceedings.--
       ``(1) Institution by federal government.--
       ``(A) In general.--The United States, acting through the 
     Attorney General, may institute proceedings under this 
     section to prevent or restrain a violation or a threatened 
     violation of this subchapter.
       ``(B) Relief.--Upon application of the United States under 
     this paragraph, the district court may enter a preliminary 
     injunction or an injunction against any person to prevent or 
     restrain a violation or threatened violation of this 
     subchapter, in accordance with rule 65 of the Federal Rules 
     of Civil Procedure.
       ``(2) Institution by state attorney general.--
       ``(A) In general.--The attorney general (or other 
     appropriate State official) of a State in which a violation 
     of this subchapter allegedly has occurred or will occur may 
     institute proceedings under this section to prevent or 
     restrain the violation or threatened violation.
       ``(B) Relief.--Upon application of the attorney general (or 
     other appropriate State official) of an affected State under 
     this paragraph, the district court may enter a preliminary 
     injunction or an injunction against any person to prevent or 
     restrain a violation or threatened violation of this 
     subchapter, in accordance with rule 65 of the Federal Rules 
     of Civil Procedure.
       ``(3) Indian lands.--
       ``(A) In general.--Notwithstanding paragraphs (1) and (2), 
     for a violation of this subchapter that is alleged to have 
     occurred, or may occur, on Indian lands (as that term is 
     defined in section 4 of the Indian Gaming Regulatory Act)--
       ``(i) the United States shall have the enforcement 
     authority provided under paragraph (1); and
       ``(ii) the enforcement authorities specified in an 
     applicable Tribal-State compact negotiated under section 11 
     of the Indian Gaming

[[Page H4980]]

     Regulatory Act (25 U.S.C. 2710) shall be carried out in 
     accordance with that compact.
       ``(B) Rule of construction.--No provision of this section 
     shall be construed as altering, superseding, or otherwise 
     affecting the application of the Indian Gaming Regulatory 
     Act.
       ``(c) Expedited Proceedings.--In addition to any proceeding 
     under subsection (b), a district court may, in exigent 
     circumstances, enter a temporary restraining order against a 
     person alleged to be in violation of this subchapter, upon 
     application of the United States under subsection (b)(1), or 
     the attorney general (or other appropriate State official) of 
     an affected State under subsection (b)(2), in accordance with 
     rule 65(b) of the Federal Rules of Civil Procedure.
       ``(d) Limitation Relating to Interactive Computer 
     Services.--
       ``(1) In general.--Relief granted under this section 
     against an interactive computer service shall--
       ``(A) be limited to the removal of, or disabling of access 
     to, an online site violating this subchapter, or a hypertext 
     link to an online site violating this subchapter, that 
     resides on a computer server that such service controls or 
     operates, except that the limitation in this subparagraph 
     shall not apply if the service is subject to liability under 
     this section under section 5367;
       ``(B) be available only after notice to the interactive 
     computer service and an opportunity for the service to appear 
     are provided;
       ``(C) not impose any obligation on an interactive computer 
     service to monitor its service or to affirmatively seek facts 
     indicating activity violating this subchapter;
       ``(D) specify the interactive computer service to which it 
     applies; and
       ``(E) specifically identify the location of the online site 
     or hypertext link to be removed or access to which is to be 
     disabled.
       ``(2) Coordination with other law.--An interactive computer 
     service that does not violate this subchapter shall not be 
     liable under section 1084(d) of title 18, except that the 
     limitation in this paragraph shall not apply if an 
     interactive computer service has actual knowledge and control 
     of bets and wagers and--
       ``(A) operates, manages, supervises, or directs an Internet 
     website at which unlawful bets or wagers may be placed, 
     received, or otherwise made or at which unlawful bets or 
     wagers are offered to be placed, received, or otherwise made; 
     or
       ``(B) owns or controls, or is owned or controlled by, any 
     person who operates, manages, supervises, or directs an 
     Internet website at which unlawful bets or wagers may be 
     placed, received, or otherwise made, or at which unlawful 
     bets or wagers are offered to be placed, received, or 
     otherwise made.
       ``(e) Limitation on Injunctions Against Regulated 
     Persons.--Nothwithstanding any other provision of this 
     section, and subject to section 5367, no provision of this 
     subchapter shall be construed as authorizing the Attorney 
     General of the United States, or the attorney general (or 
     other appropriate State official) of any State to institute 
     proceedings to prevent or restrain a violation or threatened 
     violation of this subchapter against any financial 
     transaction provider with respect to the designated payment 
     system (or systems) of the financial transaction provider.

     ``Sec. 5366. Criminal penalties

       ``(a) In General.--Whoever violates section 5363 shall be 
     fined under title 18, or imprisoned for not more than 5 
     years, or both.
       ``(b) Permanent Injunction.--Upon conviction of a person 
     under this section, the court may enter a permanent 
     injunction enjoining such person from placing, receiving, or 
     otherwise making bets or wagers or sending, receiving, or 
     inviting information assisting in the placing of bets or 
     wagers.

     ``Sec. 5367. Circumventions prohibited

       ``Notwithstanding section 5362(2), a financial transaction 
     provider, or any interactive computer service or 
     telecommunications service, may be liable under this 
     subchapter if such person has actual knowledge and control of 
     bets and wagers, and--
       ``(1) operates, manages, supervises, or directs an Internet 
     website at which unlawful bets or wagers may be placed, 
     received, or otherwise made, or at which unlawful bets or 
     wagers are offered to be placed, received, or otherwise made; 
     or
       ``(2) owns or controls, or is owned or controlled by, any 
     person who operates, manages, supervises, or directs an 
     Internet website at which unlawful bets or wagers may be 
     placed, received, or otherwise made, or at which unlawful 
     bets or wagers are offered to be placed, received, or 
     otherwise made.''.
       (b) Technical and Conforming Amendment.--The table of 
     sections for chapter 53 of title 31, United States Code, is 
     amended by adding at the end the following:


 ``Subchapter IV--Prohibition on funding of unlawful internet gambling

``5361. Congressional findings and purpose.
``5362. Definitions.
``5363. Prohibition on acceptance of any financial instrument for 
              unlawful Internet gambling.
``5364. Policies and procedures to identify and prevent restricted 
              transactions.
``5365. Civil remedies.
``5366. Criminal penalties.
``5367. Circumventions prohibited.''.

     SEC. 4. INTERNET GAMBLING IN OR THROUGH FOREIGN 
                   JURISDICTIONS.

       (a) In General.--In deliberations between the United States 
     Government and any other country on money laundering, 
     corruption, and crime issues, the United States Government 
     should--
       (1) encourage cooperation by foreign governments and 
     relevant international fora in identifying whether Internet 
     gambling operations are being used for money laundering, 
     corruption, or other crimes;
       (2) advance policies that promote the cooperation of 
     foreign governments, through information sharing or other 
     measures, in the enforcement of this Act; and
       (3) encourage the Financial Action Task Force on Money 
     Laundering, in its annual report on money laundering 
     typologies, to study the extent to which Internet gambling 
     operations are being used for money laundering purposes.
       (b) Report Required.--The Secretary of the Treasury shall 
     submit an annual report to the Congress on any deliberations 
     between the United States and other countries on issues 
     relating to Internet gambling.

  The SPEAKER pro tempore. In lieu of the amendments recommended by the 
Committees on Financial Services and the Judiciary printed in the bill, 
the amendment in the nature of a substitute depicted in the Rules 
Committee Print dated July 5, 2006, is adopted. Pursuant to House 
Resolution 907, the bill, as amended, is considered read.
  The text of the bill, as amended, is as follows:

     SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Internet 
     Gambling Prohibition and Enforcement Act''.
       (b) Table of Contents.--The table of contents is as 
     follows:
Sec. 1. Short title and table of contents.

            TITLE I--MODERNIZATION, OF THE WIRE ACT OF 1961

Sec. 101. Definitions.
Sec. 102. Modification of existing prohibition.
Sec. 103. Authorization of civil enforcement.
Sec. 104. Authorization of appropriations.
Sec. 105. Rules of construction.
Sec. 106. Sense of Congress.

  TITLE II--POLICIES AND PROCEDURES REQUIRED TO PREVENT PAYMENTS FOR 
                           UNLAWFUL, GAMBLING

Sec. 201. Policies and procedures required to prevent payments for 
    unlawful gambling.
Sec. 202. Technical and conforming amendment.

    TITLE III--INTERNET GAMBLING IN OR THROUGH FOREIGN JURISDICTIONS

Sec. 301. Internet gambling in or through foreign jurisdictions.

             TITLE I--MODERNIZATION OF THE WIRE ACT OF 1961

     SEC. 101. DEFINITIONS.

       Section 1081 of title 18, United States Code, is amended--
       (1) by designating the five undesignated paragraphs that 
     begin with ``The term'' as paragraphs (1) through (5), 
     respectively;
       (2) by amending paragraph (5), as so designated, to read as 
     follows:
       ``(5) The term `communication facility' means any and all 
     instrumentalities, personnel, and services (among other 
     things, the receipt, forwarding, or delivery of 
     communications) used or useful in the transmission of 
     writings, signs, pictures, and sounds of all kinds by aid of 
     wire, cable, radio, or an electromagnetic, photoelectronic or 
     photooptical system, or other like connection (whether fixed 
     or mobile) between the points of origin and reception of such 
     transmission.''; and
       (3) by adding at the end the following:
       ``(6) The term `bets or wagers'--
       ``(A) means the staking or risking by any person of 
     something of value upon the outcome of a contest of others, a 
     sporting event, or a game predominantly subject to chance, 
     upon an agreement or understanding that the person or another 
     person will receive something of value in the event of a 
     certain outcome;
       ``(B) includes the purchase of a chance or opportunity to 
     win a lottery or other prize (which opportunity to win is 
     predominantly subject to chance);
       ``(C) includes any scheme of a type described in section 
     3702 of title 28; and
       ``(D) does not include--
       ``(i) any activity governed by the securities laws (as that 
     term is defined in section 3(a)(47) of the Securities 
     Exchange Act of 1934) for the purchase or sale of securities 
     (as that term is defined in section 3(a)(10) of that Act);
       ``(ii) any transaction conducted on or subject to the rules 
     of a registered entity or exempt board of trade under the 
     Commodity Exchange Act;
       ``(iii) any over-the-counter derivative instrument;
       ``(iv) any other transaction that--
       ``(I) is excluded or exempt from regulation under the 
     Commodity Exchange Act; or
       ``(II) is exempt from State gaming or bucket shop laws 
     under section 12(e) of the Commodity Exchange Act or section 
     28(a) of the Securities Exchange Act of 1934;
       ``(v) any contract of indemnity or guarantee;

[[Page H4981]]

       ``(vi) any contract for insurance;
       ``(vii) any deposit or other transaction with an insured 
     depository institution;
       ``(viii) participation in any game or contest in which 
     participants do not stake or risk anything of value other 
     than--
       ``(I) personal efforts of the participants in playing the 
     game or contest or obtaining access to the Internet; or
       ``(II) points or credits that the sponsor of the game or 
     contest provides to participants free of charge and that can 
     be used or redeemed only for participation in games or 
     contests offered by the sponsor; or
       ``(ix) participation in any fantasy or simulation sports 
     game or educational game or contest in which (if the game or 
     contest involves a team or teams) no fantasy or simulation 
     sports team is based on the current membership of an actual 
     team that is a member of an amateur or professional sports 
     organization (as those terms are defined in section 3701 of 
     title 28) and that meets the following conditions:
       ``(I) All prizes and awards offered to winning participants 
     are established and made known to the participants in advance 
     of the game or contest and their value is not determined by 
     the number of participants or the amount of any fees paid by 
     those participants.
       ``(II) All winning outcomes reflect the relative knowledge 
     and skill of the participants and are determined 
     predominantly by accumulated statistical results of the 
     performance of individuals (athletes in the case of sports 
     events) in multiple real-world sporting or other events.
       ``(III) No winning outcome is based--
       ``(aa) on the score, point-spread, or any performance or 
     performances of any single real-world team or any combination 
     of such teams; or
       ``(bb) solely on any single performance of an individual in 
     any single real-world sporting or other event.
       ``(7) The terms `credit', `creditor', `credit card', and 
     `card issuer' have the same meanings as in section 103 of the 
     Truth in Lending Act.
       ``(8) The term `electronic fund transfer'--
       ``(A) has the same meaning as in section 903 of the 
     Electronic Fund Transfer Act, except that such term includes 
     transfers that would otherwise be excluded under section 
     903(6)(E) of that Act; and
       ``(B) includes any fund transfer covered by Article 4A of 
     the Uniform Commercial Code, as in effect in any State.
       ``(9) The term `financial institution' has the same meaning 
     as in section 903 of the Electronic Fund Transfer Act, except 
     that such term does not include a casino, sports book, or 
     other business at or through which bets or wagers may be 
     placed or received.
       ``(10) The term `financial transaction provider' has the 
     same meaning as in section 5361 of title 31 (as added by 
     title II of this Act).
       ``(11) The term `foreign jurisdiction' means a jurisdiction 
     of a foreign country or political subdivision thereof.
       ``(12) The term `gambling business' means a business of 
     betting or wagering.
       ``(13) The term `information assisting in the placing of 
     bets or wagers' means information knowingly transmitted by an 
     individual in a gambling business that enables or facilitates 
     a bet or wager and does not include--
       ``(A) any posting or reporting of any educational 
     information on how to make a legal bet or wager or the nature 
     of betting or wagering, as long as such posting or reporting 
     does not solicit or provide information for the purpose of 
     facilitating or enabling the placing or receipt of bets or 
     wagers in a jurisdiction where such betting is illegal; or
       ``(B) advertising relating to betting or wagering in a 
     jurisdiction where such betting or wagering is legal, as long 
     as such advertising does not solicit or provide information 
     for the purpose of facilitating or enabling the placing or 
     receipt of bets or wagers in a jurisdiction where such 
     betting is illegal.
       ``(14) The term `insured depository institution'--
       ``(A) has the same meaning as in section 3 of the Federal 
     Deposit Insurance Act; and
       ``(B) includes an insured credit union (as defined in 
     section 101 of the Federal Credit Union Act).
       ``(15) The term `interactive computer service' has the same 
     meaning as in section 230(f) of the Communications Act of 
     1934.
       ``(16) The terms `money transmitting business' and `money 
     transmitting service' have the same meanings as in section 
     5330(d) (determined without regard to any regulations 
     prescribed by the Secretary thereunder).
       ``(17) The terms `own or control' and to be `owned or 
     controlled' include circumstances within the meaning of 
     section 2(a)(2) of the Bank Holding Company Act of 1956.
       ``(18) The term `person' includes a government (including 
     any governmental entity (as defined in section 3701(2) of 
     title 28)).
       ``(19) The term `State' means a State of the United States, 
     the District of Columbia, or a commonwealth, territory, or 
     possession of the United States.
       ``(20) The term `tribe' or `tribal' means an Indian tribe, 
     as defined under section 4(5) of the Indian Gaming Regulatory 
     Act of 1988).
       ``(21) For purposes of Section 1085(b), the term `account' 
     means--
       ``(A) the unpaid balance of money or its equivalent 
     received or held by an insured depository institution in the 
     usual course of business and for which it has given or is 
     obligated to give credit, either conditionally or 
     unconditionally, to an account, including interest credited, 
     or which is evidenced by an instrument on which the 
     depository institution is primarily liable; and
       ``(B) money received or held by an insured depository 
     institution, or the credit given for money or its equivalent 
     received or held by the insured depository institution in the 
     usual course of business for a special or specific purpose, 
     regardless of the legal relationships established thereby, 
     including escrow funds, funds held as security for securities 
     loaned by the depository institution, funds deposited as 
     advance payment on subscriptions to United States Government 
     securities, and funds held to meet its acceptances.''.

     SEC. 102. MODIFICATION OF EXISTING PROHIBITION.

       Section 1084 of title 18, United States Code, is amended to 
     read as follows:

     ``1084. Use of a communication facility to transmit bets or 
       wagers; criminal penalties

       ``(a) Except as otherwise provided in this section, 
     whoever, being engaged in a gambling business, knowingly--
       ``(1) uses a communication facility for the transmission in 
     interstate or foreign commerce, within the special maritime 
     and territorial jurisdiction of the United States, or to or 
     from any place outside the jurisdiction of any nation with 
     respect to any transmission to or from the United States, 
     of--
       ``(A) bets or wagers;
       ``(B) information assisting in the placing of bets or 
     wagers; or
       ``(C) a communication, which entitles the recipient to 
     receive money or credit as a result of bets or wagers, or for 
     information assisting in the placing of bets or wagers; or
       ``(2) accepts, in connection with the transmission of a 
     communication in interstate or foreign commerce, within the 
     special maritime and territorial jurisdiction of the United 
     States, or to or from any place outside the jurisdiction of 
     any nation with respect to any transmission to or from the 
     United States of bets or wagers or information assisting in 
     the placing of bets or wagers--
       ``(A) credit, or the proceeds of credit, extended to or on 
     behalf of another (including credit extended through the use 
     of a credit card);
       ``(B) an electronic fund transfer or funds transmitted by 
     or through a money transmitting business, or the proceeds of 
     an electronic fund transfer or money transmitting service, 
     from or on behalf of the other person;
       ``(C) any check, draft, or similar instrument which is 
     drawn by or on behalf of the other person and is drawn on or 
     payable through any financial institution; or
       ``(D) the proceeds of any other form of financial 
     transaction as the Secretary of the Treasury and the Board of 
     Governors of the Federal Reserve System may prescribe by 
     regulation which involves a financial institution as a payor 
     or financial intermediary on behalf of or for the benefit of 
     the other person,

     shall be fined under this title or imprisoned not more than 
     five years, or both.
       ``(b) Nothing in this section prohibits--
       ``(1) the transmission of information assisting in the 
     placing of bets or wagers for use in news reporting if such 
     transmission does not solicit or provide information for the 
     purpose of facilitating or enabling the placing or receipt of 
     bets or wagers in a jurisdiction where such betting is 
     illegal;
       ``(2) the transmission of information assisting in the 
     placing of bets or wagers from a State or foreign country 
     where such betting or wagering is permitted under Federal, 
     State, tribal, or local law into a State or foreign country 
     in which such betting on the same event is permitted under 
     Federal, State, tribal, or local law; or
       ``(3) the interstate transmission of information relating 
     to a State-specific lottery between a State or foreign 
     country where such betting or wagering is permitted under 
     Federal, State, tribal, or local law and an out-of-State data 
     center for the purposes of assisting in the operation of such 
     State-specific lottery.
       ``(c) Nothing in this section prohibits the use of a 
     communication facility for the transmission of bets or wagers 
     or information assisting in the placing of bets or wagers, 
     if--
       ``(1) at the time the transmission occurs, the individual 
     or entity placing the bets or wagers or information assisting 
     in the placing of bets or wagers, the gambling business, and, 
     subject to section 1084(b)(3), any individual or entity 
     acting in concert with a gambling business to process the 
     bets or wagers are physically located in the same State, and 
     for class II or class III gaming under the Indian Gaming 
     Regulatory Act, are physically located on Indian lands within 
     that State;
       ``(2) the State or tribe has explicitly authorized such 
     bets and wagers, the State or tribal law requires a secure 
     and effective location and age verification system to assure 
     compliance with age and location requirements, and the 
     gambling business and any individual or entity acting in 
     concert with a gambling business to process the bets or 
     wagers complies with such law;
       ``(3) the State has explicitly authorized and licensed the 
     operation of the gambling business and any individual or 
     entity acting in concert with a gambling business to process 
     the bets and wagers within its borders or the tribe has 
     explicitly authorized and licensed the operation of the 
     gambling business and

[[Page H4982]]

     any individual or entity acting in concert with a gambling 
     business to process the bets and wagers, on Indian lands 
     within its jurisdiction;
       ``(4) with respect to class II or class III gaming, the 
     game and gambling business complies with the requirements of 
     the Indian Gaming Regulatory Act; and
       ``(5) with respect to class III gaming under the Indian 
     Gaming Regulatory Act, the game is authorized under, and is 
     conducted in accordance with, the respective Tribal-State 
     compact of the Tribe having jurisdiction over the Indian 
     lands where the individual or entity placing the bets or 
     wagers or information assisting in the placing of bets or 
     wagers, the gambling business, and any individual or entity 
     acting in concert with a gambling business to process those 
     bets or wagers are physically located, and such Tribal-State 
     impact expressly provides that the game may be conducted 
     using a communication facility to transmit bets or wagers 
     information assisting in the placing of bets or wagers.

     For purposes of this subsection, the intermediate routing of 
     electronic data constituting or containing all or part of a 
     bet or wager, or all or part of information assisting in the 
     placing of bets or wagers, shall not determine the location 
     or locations in which a bet or wager is transmitted, 
     initiated, received or otherwise made; or from or to which a 
     bet or wager, or information assisting in the placing of bets 
     or wagers, is transmitted.
       ``(d) Nothing in this section creates immunity from 
     criminal prosecution under any laws of any State or tribe.
       ``(e) Nothing in this section authorizes activity that is 
     prohibited under chapter 178 of title 28, United States Code.
       ``(f) When any common carrier, subject to the jurisdiction 
     of the Federal Communications Commission, is notified in 
     writing by a Federal, State, tribal, or local law enforcement 
     agency, acting within its jurisdiction, that any 
     communication facility furnished by it is being used or will 
     be used by its subscriber for the purpose of transmitting or 
     receiving gambling information in interstate or foreign 
     commerce, within the special maritime and territorial 
     jurisdiction of the United States, or to or from any place 
     outside the jurisdiction of any nation with respect to any 
     transmission to or from the United States in violation of 
     Federal, State, tribal, or local law, it shall discontinue or 
     refuse, the leasing, furnishing, or maintaining of such 
     facility, after reasonable notice to the subscriber, but no 
     damages, penalty or forfeiture, civil or criminal, shall be 
     found against any common carrier for any act done in 
     compliance with any notice received from a law enforcement 
     agency. Nothing in this section shall be deemed to prejudice 
     the right of any person affected thereby to secure an 
     appropriate determination, as otherwise provided by law, in a 
     Federal court or in a State, tribal, or local tribunal or 
     agency, that such facility should not be discontinued or 
     removed, or should be restored.''.

     SEC. 103. AUTHORIZATION OF CIVIL ENFORCEMENT.

       Chapter 50 of title 18, United States Code, is amended by 
     adding at the end the following new section:

     Sec. 1085. Civil remedies

       ``(a) Jurisdiction.--The district courts of the United 
     States (in addition to any other remedies under current law) 
     shall have original and exclusive jurisdiction to prevent and 
     restrain violations of section 1084 by issuing appropriate 
     orders in accordance with this section, regardless of whether 
     a prosecution has been initiated under section 1084.
       ``(b) Proceedings.--
       ``(1) The United States may institute proceedings under 
     this section--
       ``(A) to obtain injunctive or declarative relief, including 
     but not limited to a temporary restraining order and a 
     preliminary injunction, against any person (other than a 
     financial transaction provider) to prevent or restrain a 
     violation or a threatened violation of section 1084;
       ``(B) in the case of an insured depository institution that 
     is a financial transaction provider, to--
       ``(i) restrain an account maintained at such insured 
     depository institution if such account is--
       ``(I) owned or controlled by a gambling business; and
       ``(II) includes proceeds of, or is used to facilitate a 
     violation of, section 1084; or
       ``(ii) seize funds in an account described in subparagraph 
     (i) if such funds--
       ``(I) are owned or controlled by a gambling business; and
       ``(II) constitute the proceeds of, were derived from, or 
     facilitated, a violation of section 1084.
       ``(C) The limitation in subparagraph (A) shall not apply if 
     the financial transaction provider is a gambling business 
     within the meaning of section 1081(12), in which case such 
     financial transaction provider shall be subject to the 
     enforcement provisions under subparagraph (A).
       ``(2) The attorney general (or other appropriate State 
     official) of a State in which a communication in violation of 
     section 1084 allegedly has been or will be initiated or 
     received may institute proceedings under this section to 
     obtain injunctive or declarative relief to prevent or 
     restrain the violation or threatened violation. Upon 
     application of the attorney general (or other appropriate 
     State official) of an affected State under this paragraph, 
     the district court may enter a temporary restraining order, a 
     preliminary injunction, an injunction, or declaratory relief 
     against any person (other than a financial transaction 
     provider) to prevent or restrain a violation or threatened 
     violation of section 1084, in accordance with rule 65 of the 
     Federal Rules of Civil Procedure.
       ``(3) Notwithstanding paragraphs (1) and (2), for a 
     communication in violation of section 1084 that allegedly has 
     been or will be initiated or received on Indian lands (as 
     that term is defined in section 4 of the Indian Gaming 
     Regulatory Act)--
       ``(A) the United States shall have the enforcement 
     authority provided under paragraph (1);
       ``(B) the enforcement authorities specified in an 
     applicable Tribal-State compact negotiated under section 11 
     of the Indian Gaming Regulatory Act (25 U.S.C. 2710) shall be 
     carried out in accordance with that compact; and
       ``(C) if there is no applicable Tribal-State compact, an 
     appropriate tribal official may institute proceedings in the 
     same manner as an attorney general of a State.

     No provision of this section shall be construed as altering, 
     superseding, or otherwise affecting the application of the 
     Indian Gaming Regulatory Act.
       ``(4) Notwithstanding paragraph (3), no relief shall be 
     granted under this section against a financial transaction 
     provider except as provided in paragraph (1).
       ``(c) No damages, penalty, or forfeiture, civil or 
     criminal, shall be found against any person or entity for any 
     act done in compliance with any notice received from a law 
     enforcement agency.
       ``(d) Relief granted under this section against an 
     interactive computer service (as defined in section 230(f) of 
     the Communications Act of 1934) shall--
       ``(1) be limited to the removal of, or disabling of access 
     to, an online site violating section 1084, or a hypertext 
     link to an online site violating such section, that resides 
     on a computer server that such service controls or operates; 
     except this limitation shall not apply if the service is 
     violating section 1084 or is in active concert with a person 
     who is violating section 1084 and receives actual notice of 
     the relief;
       ``(2) be available only after notice to the interactive 
     computer service and an opportunity for the service to appear 
     are provided;
       ``(3) not impose any obligation on an interactive computer 
     service to monitor its service or to affirmatively seek facts 
     indicating activity violating section 1084;
       ``(4) specify the interactive computer service to which it 
     applies; and
       ``(5) specifically identify the location of the on-line 
     site or hypertext link to be removed or access to which is to 
     be disabled.''.

     SEC. 104. AUTHORIZATION OF APPROPRIATIONS.

       In addition to any other sums authorized to be appropriated 
     for this purpose, there are authorized to be appropriated to 
     the Department of Justice for each of fiscal years 2007 
     through 2010 $10,000,000 for investigations and prosecutions 
     of violations of section 1084 of title 18, United States 
     Code.

     SEC. 105. RULES OF CONSTRUCTION.

       (a) Nothing in this Act may be construed to prohibit any 
     activity that is allowed under Public Law 95-515 as amended 
     (15 U.S.C. 3001 et seq.).
       (b) Nothing in this Act may be construed to preempt State 
     law prohibiting gambling.

     SEC. 106. SENSE OF CONGRESS.

       It is the sense of Congress that this Act does not change 
     which activities related to horse racing may or may not be 
     allowed under Federal law. Section 105 is intended to address 
     concerns that this Act could have the effect of changing the 
     existing relationship between the Interstate Horseracing Act 
     (15 U.S.C. 3001 et seq.), and other Federal statutes that 
     were in effect at the time of this Act's consideration; this 
     Act is not intended to change that relationship; and this Act 
     is not intended to resolve any existing disagreements over 
     how to interpret the relationship between the Interstate 
     Horseracing Act and other Federal statutes.

  TITLE II--POLICIES AND PROCEDURES REQUIRED TO PREVENT PAYMENTS FOR 
                           UNLAWFUL GAMBLING

     SEC. 201. POLICIES AND PROCEDURES REQUIRED TO PREVENT 
                   PAYMENTS FOR UNLAWFUL GAMBLING.

       Chapter 53 of title 31, United States Code, is amended by 
     adding at the end the following new subchapter:

 ``SUBCHAPTER IV--POLICIES AND PROCEDURES REQUIRED TO PREVENT PAYMENTS 
                         FOR UNLAWFUL GAMBLING

     ``Sec. 5361. Definitions

       ``For purposes of this subchapter, the following 
     definitions shall apply:
       ``(1) Credit; creditor; credit card; and card issuer.--The 
     terms `credit', `creditor', `credit card', and `card issuer' 
     have the same meanings as in section 103 of the Truth in 
     Lending Act.
       ``(2) Designated payment system.--The term `designated 
     payment system' means any system utilized by a financial 
     transaction provider that the Secretary and the Board of 
     Governors of the Federal Reserve System, in consultation with 
     the Attorney General, jointly determine, by regulation or 
     order, could be utilized in connection with, or to 
     facilitate, any restricted transaction.
       ``(3) Electronic fund transfer.--The term `electronic fund 
     transfer'--
       ``(A) has the same meaning as in section 903 of the 
     Electronic Fund Transfer Act, except that such term includes 
     transfers that

[[Page H4983]]

     would otherwise be excluded under section 903(6)(E) of that 
     Act; and
       ``(B) includes any fund transfer covered by Article 4A of 
     the Uniform Commercial Code, as in effect in any State.
       ``(4) Financial institution.--The term `financial 
     institution' has the same meaning as in section 903 of the 
     Electronic Fund Transfer Act, except that such term does not 
     include a casino, sports book, or other business at or 
     through which bets or wagers may be placed or received.
       ``(5) Financial transaction provider.--The term `financial 
     transaction provider' means a creditor, credit card issuer, 
     financial institution, operator of a terminal at which an 
     electronic fund transfer may be initiated, money transmitting 
     business, or international, national, regional, or local 
     payment network utilized to effect a credit transaction, 
     electronic fund transfer, stored value product transaction, 
     or money transmitting service, or a participant in such 
     network, or other participant in a designated payment system.
       ``(6) Insured depository institution.--The term `insured 
     depository institution'--
       ``(A) has the same meaning as in section 3 of the Federal 
     Deposit Insurance Act; and
       ``(B) includes an insured credit union (as defined in 
     section 101 of the Federal Credit Union Act).
       ``(7) Money transmitting business and money transmitting 
     service.--The terms `money transmitting business' and `money 
     transmitting service' have the same meanings as in section 
     5330(d) (determined without regard to any regulations 
     prescribed by the Secretary thereunder).
       ``(8) Restricted transaction.--The term `restricted 
     transaction' means any transaction or transmittal involving 
     any credit, funds, instrument, or proceeds described in any 
     paragraph of section 5362 which the recipient is prohibited 
     from accepting under such section.
       ``(9) Secretary.--The term `Secretary' means the Secretary 
     of the Treasury.
       ``(10) Unlawful gambling.--
       ``(A) In general.--The term `unlawful gambling' means to 
     place, receive, or otherwise knowingly transmit a bet or 
     wager by any means which involves the use of a communication 
     facility where such bet or wager is unlawful under any 
     applicable Federal or State law in the State or tribal lands 
     in which the bet or wager is initiated, received, or 
     otherwise made.
       ``(B) Exclusion of certain authorized transactions.--The 
     term `unlawful gambling' does not include any intrastate or 
     intratribal transactions authorized under section 1084(c) of 
     title 18, United States Code.
       ``(C) Intermediate routing.--With respect to section 5362, 
     the intermediate routing of electronic data shall not 
     determine the location or locations in which a bet or wager 
     is initiated, received, or otherwise made.
       ``(11) Other terms.--The terms `bet or wager', 
     `communication facility', `gambling business', `own and 
     control', `person', `State', and `tribal' have the same 
     meanings as in section 1081 of title 18.

     ``Sec. 5362. Prohibition on acceptance of any financial 
       instrument for unlawful gambling

       ``No person engaged in a gambling business may knowingly 
     accept, in connection with the participation of another 
     person in unlawful gambling--
       ``(1) credit, or the proceeds of credit, extended to or on 
     behalf of such other person (including credit extended 
     through the use of a credit card);
       ``(2) an electronic fund transfer, or funds transmitted by 
     or through a money transmitting business, or the proceeds of 
     an electronic fund transfer or money transmitting service, 
     from or on behalf of such other person;
       ``(3) any check, draft, or similar instrument which is 
     drawn by or on behalf of such other person and is drawn on or 
     payable at or through any financial institution; or
       ``(4) the proceeds of any other form of financial 
     transaction, as the Secretary and the Board of Governors of 
     the Federal Reserve System may jointly prescribe by 
     regulation, which involves a financial institution as a payor 
     or financial intermediary on behalf of or for the benefit of 
     such other person.

     ``Sec. 5363. Policies and procedures to identify and prevent 
       restricted transactions

       ``(a) Regulations.--Before the end of the 270-day period 
     beginning on the date of the enactment of this subchapter, 
     the Secretary and the Board of Governors of the Federal 
     Reserve System, in consultation with the Attorney General, 
     shall prescribe regulations (which the Secretary and the 
     Board jointly determine to be appropriate) requiring each 
     designated payment system, and all participants therein, to 
     identify and block or otherwise prevent or prohibit 
     restricted transactions through the establishment of policies 
     and procedures reasonably designed to identify and block or 
     otherwise prevent or prohibit the acceptance of restricted 
     transactions in any of the following ways:
       ``(1) The establishment of policies and procedures that--
       ``(A) allow the payment system and any person involved in 
     the payment system to identify restricted transactions by 
     means of codes in authorization messages or by other means; 
     and
       ``(B) block restricted transactions identified as a result 
     of the policies and procedures developed pursuant to 
     subparagraph (A).
       ``(2) The establishment of policies and procedures that 
     prevent or prohibit the acceptance of the products or 
     services of the payment system in connection with a 
     restricted transaction.
       ``(b) Requirements for Policies and Procedures.--In 
     prescribing regulations under subsection (a), the Secretary 
     and the Board of Governors of the Federal Reserve System 
     shall--
       ``(1) identify types of policies and procedures, including 
     nonexclusive examples, which would be deemed, as applicable, 
     to be reasonably designed to identify and block or otherwise 
     prevent or prohibit the acceptance of the products or 
     services with respect to each type of restricted transaction;
       ``(2) to the extent practical, permit any participant in a 
     payment system to choose among alternative means of 
     identifying and blocking, or otherwise preventing or 
     prohibiting the acceptance of the products or services of the 
     payment system or participant in connection with, restricted 
     transactions; and
       ``(3) consider exempting certain restricted transactions or 
     designated, payment systems from any requirement imposed 
     under such regulations, if the Secretary and the Board 
     jointly find that it is not reasonably practical to identify 
     and block, or otherwise prevent or prohibit the acceptance 
     of, such transactions.
       ``(c) Compliance With Payment System Policies and 
     Procedures.--A financial transaction provider shall be 
     considered to be in compliance with the regulations 
     prescribed under subsection (a), if--
       ``(1) such person relies on and complies with the policies 
     and procedures of a designated payment system of which it is 
     a member or participant to--
       ``(A) identify and block restricted transactions; or
       ``(B) otherwise prevent or prohibit the acceptance of the 
     products or services of the payment system, member, or 
     participant in connection with restricted transactions; and
       ``(2) such policies and procedures of the designated 
     payment system comply with the requirements of regulations 
     prescribed under subsection (a).
       ``(d) No Liability for Blocking or Refusing To Honor 
     Restricted Transactions.--A person that identifies and blocks 
     a transaction, prevents or prohibits the acceptance of its 
     products or services in connection with a transaction, or 
     otherwise refuses to honor a transaction--
       ``(1) that is a restricted transaction;
       ``(2) that such person reasonably believes to be a 
     restricted transaction; or
       ``(3) as a designated payment system or a member of a 
     designated payment system in reliance on the policies and 
     procedures of the payment system, in an effort to comply with 
     regulations prescribed under subsection (a),

     shall not be liable to any party for such action.
       ``(e) Regulatory Enforcement.--The requirements of this 
     subchapter shall be enforced exclusively by--
       ``(1) the Federal functional regulators, with respect to 
     the designated payment systems and financial transaction 
     providers subject to the respective jurisdiction of such 
     regulators under section 505(a) of the Gramm-Leach-Bliley Act 
     and section 5g of the Commodities Exchange Act; and
       ``(2) the Federal Trade Commission, with respect to 
     designated payment systems and financial transaction 
     providers not otherwise subject to the jurisdiction of any 
     Federal functional regulators (including the Commission) as 
     described in paragraph (1).''.

     SEC. 202. TECHNICAL AND CONFORMING AMENDMENT.

       The table of sections for chapter 53 of title 31, United 
     States Code, is amended by adding at the end the following:


 ``subchapter iv--policies and procedures required to prevent payments 
                         for unlawful gambling

``5361. Definitions.
``5362. Prohibition on acceptance of any financial instrument for 
              unlawful gambling.
``5363. Policies and procedures to identify and prevent restricted 
              transactions.''.

    TITLE III--INTERNET GAMBLING IN OR THROUGH FOREIGN JURISDICTIONS

     SEC. 301. INTERNET GAMBLING IN OR THROUGH FOREIGN 
                   JURISDICTIONS.

       (a) In General.--In deliberations between the United States 
     Government and any other country on money laundering, 
     corruption, and crime issues, the United States Government 
     should--
       (1) encourage cooperation by foreign governments and 
     relevant international fora in identifying whether Internet 
     gambling operations are being used for money laundering, 
     corruption, or other crimes;
       (2) advance policies that promote the cooperation of 
     foreign governments, through information sharing or other 
     measures, in the enforcement of this Act; and
       (3) encourage the Financial Action Task Force on Money 
     Laundering, in its annual report on money laundering 
     typologies, to study the extent to which Internet gambling 
     operations are being used for money laundering purposes.
       (b) Report Required.--The Secretary of the Treasury shall 
     submit an annual report to the Congress on any deliberations 
     between the United States and other countries on issues 
     relating to Internet gambling.

  The SPEAKER pro tempore. After 1 hour of debate on the bill, as 
amended,

[[Page H4984]]

it shall be in order to consider the further amendment printed in House 
Report 109-551, if offered by the gentlewoman from Nevada (Ms. Berkley) 
or her designee, which shall not be subject to a demand for division of 
the question, shall be considered read, and shall be debatable for 20 
minutes, equally divided and controlled by the proponent and an 
opponent.
  The gentleman from Ohio (Mr. Oxley), the gentlewoman from Oregon (Ms. 
Hooley), the gentleman from Wisconsin (Mr. Sensenbrenner), and the 
gentleman from Michigan (Mr. Conyers) each will control 15 minutes.
  The Chair recognizes the gentleman from Ohio.
  Mr. OXLEY. Mr. Speaker, I yield myself 2 minutes.
  Mr. Speaker, I rise today in support of H.R. 4411, the Internet 
Gambling Prohibition and Enforcement Act. This bill represents the 
combined efforts of my esteemed colleagues, Chairmen Bob Goodlatte and 
Jim Leach, who have crafted an effective piece of legislation to 
finally stop the illegal Internet gambling we have worked against for 
so many years.
  The Goodlatte-Leach bill combines two complementary approaches. 
First, it cuts off the flow of money to Internet gambling Web sites. 
These Web sites, almost always located on some far-flung Caribbean 
island, will no longer be allowed to accept bettors' credit cards, fund 
transfers, or checks drawn on American banks.
  Secondly, H.R. 4411 clarifies that the 45-year-old Wire Act covers 
illegal Internet gambling. As a former FBI agent, I can attest to the 
fact that the Wire Act is an effective tool in stopping crime, and this 
bill will help us make better use of it.
  Illegal Internet gambling is bad for a number of important reasons. 
Experts at the FBI and Justice Department have warned that these sites 
are often fronts for money laundering, drug trafficking and terrorist 
financing. Internet gambling sites evade U.S.-based regulations that 
ensure the integrity of casino games, prevent minors from gambling, and 
puts in safeguards for problem gamblers.
  Because these businesses are located overseas, they provide no tax 
revenues, provide no U.S. jobs, all the while evading Federal and State 
law enforcement. Unlike legal gambling here in the United States, no 
enforcement mechanism exists to ensure that individuals are protected 
against these overseas Internet gambling sites. And with no age 
verification, savvy online gambling sites are preying on minors and 
young adults.
  This Internet gambling bill is a culmination of a decade of hard work 
by Chairmen Goodlatte and Leach. I would also like to commend the 
efforts of Mr. Bachus, Mr. Wolf, Mr. Pitts, Ms. Hooley, and Mrs. Kelly, 
just to name a few. With their help, we have passed several versions of 
this legislation in the House. I remain hopeful that the Senate will be 
able to do the same and we can once and for all give the banking 
regulators and the Justice Department the tools they need to stop 
illegal Internet gambling.

                              {time}  1215

  In the meantime, I strongly urge my colleagues to support the 
Goodlatte-Leach bill.
  Mr. Speaker, I reserve the balance of my time.
  Ms. HOOLEY. Mr. Speaker, I yield myself as much time as I may 
consume.
  Mr. Speaker, I rise in support of H.R. 4411, the Internet Gambling 
Prohibition Act.
  I would like to thank Mr. Leach and Mr. Goodlatte for their hard work 
on bringing this bill to the House floor. It certainly has not been an 
easy task.
  I would like to thank Mr. Frank, our ranking member on the Financial 
Services Committee, for the opportunity to manage this debate. Even 
though he and I do not see eye to eye on this legislation, I appreciate 
and respect the fact that we have agreed to disagree, and I welcome a 
healthy debate on enforcement of the illegal Internet gambling laws.
  Internet gambling is a growing problem in the United States, 
particularly among young people and college students. It is known to 
destroy families, marriages and entire lives. As so aptly put by 
University of Illinois Professor John Kindt, ``You just click the mouse 
and lose your house.''
  This legislation makes clear that we are serious about enforcing our 
Internet gambling laws that are already on the books. It takes a very 
important step forward, and we have worked very hard on the Financial 
Services Committee over the last few Congresses to advance this 
measure.
  This bill cuts off the flow of money to Internet gambling Web sites 
by regulating payment systems. The Department of Treasury and the 
Federal Reserve will jointly develop policies and procedures for 
identifying and preventing financial transactions related to illegal 
Internet gambling. Payment systems will be required to comply with 
these regulations.
  Even when criminal law cannot be enforced, the Federal Government's 
jurisdiction over financial systems can nevertheless cut off the money 
sources for these illegal businesses.
  I believe we should mean what we say when it comes to Internet 
gambling. If we are to keep laws on the books that prohibit Internet 
gambling, then we should take steps to enforce it. And by cutting off 
the flow of money, we can accomplish just that.
  As was previously noted, this bill is supported by 48 of the 50 State 
attorneys general, by the NCAA, the NBA, the NFL, the MLB and the NHL. 
It is a good bill and a commonsense approach to a growing problem. I 
urge my colleagues to end the flow of money to illegal Internet 
gambling Web sites, and I urge passage of this bill.
  Mr. Speaker, I reserve the balance of my time.
  The SPEAKER pro tempore. Without objection, the gentleman from Iowa 
may control the time of the gentleman from Ohio.
  There was no objection.
  Mr. LEACH. Mr. Speaker, I yield myself 3\1/4\ minutes.
  Mr. Speaker, for nearly a decade, many in the Congress have sought to 
deter Internet gambling. But time and again the issue has been stymied, 
often in ways that reflect imperfectly on this institution. But it 
cannot be stressed enough that from a macroeconomic perspective, there 
are no social benefits for Internet gambling, and from a microfamily 
perspective, enormous harm is frequently inflicted.
  John Kindt, a professor of business at the University of Illinois at 
Urbana-Champaign calls the Internet ``crack cocaine for gamblers. There 
are no needle marks,'' he says. ``There is no alcohol on the breath. 
You just click the mouse and lose your house.''
  These comments could not be more apropos than for Greg Hogan, Jr., a 
19-year old Lehigh University class president and chaplain's assistant 
from Barberton, Ohio. This pastor's son gambled away $7,500 playing 
online Texas Hold-'Em, then confessed to robbing a bank to try to 
recover his losses. His life is ruined.
  Never before has it been so easy to lose so much money, so quickly, 
at such a young age. Internet casinos are proliferating. Soon they will 
be ubiquitous.
  In the next 5 years, if Congress does not act to clarify and enforce 
the laws banning Internet gambling, and if Internet casinos' business 
plans come to pass, gamblers will be able to place bets not just from 
their home computers but also from their cell phones, while they drive 
from work, or from their BlackBerrys as they wait in line at the 
movies.
  Mr. Speaker, the time has come for Congress to finally deal with the 
subject matter. The measure before us, H.R. 4411, is supported by the 
NCAA, all the major professional sports organizations, from the NFL and 
Major League Baseball to the NBA and NHL, as well as the financial 
services industry, family groups, religious organizations and 48 of the 
50 State attorneys general.
  The reason the sports groups support the legislation, as our 
colleague, Tom Osborne, so thoughtfully noted, is that they are 
concerned with the integrity of the games.
  The reason the religious community has come together is that they are 
concerned for the unity of the American family. Internet gambling is 
not a subject touched upon in the Old or New Testament or the Koran or 
the Bhagavad Gita. But the pastoral function is one of dealing with 
families in difficulty. And religious leaders of all denominations and 
faiths are seeing gambling difficulties erode family values.

[[Page H4985]]

  It will be suggested in this debate that there is no call to rein in 
activities of individual choice. But it should be clear that in the 
history of the Western world, whenever gambling has been legalized it 
has been subject to careful regulation. This is simply not the case 
with the Internet. Nor is it the case that an individual's misjudgment 
does not affect society as a whole.
  There is nothing in Internet gambling that adds to the GDP or makes 
America more competitive in the world. Indeed, if an individual cannot 
repay his or her debt, neighbors will be subject to higher interest 
rates. Everyone loses if this industry continues its remarkable growth.
  While Congress has failed to act, the illegal Internet gambling 
industry has boomed. This year, Americans are projected to send more 
than $6 billion to unregulated, offshore, online casinos, half of the 
$12 billion that will be bet worldwide on Internet gambling, FBI and 
Justice Department experts have warned that Internet gambling sites are 
vulnerable to be used for money laundering, drug trafficking and even 
terrorist financing. Further, these sites evade rigorous U.S.-based 
regulations that control gambling by minors and problem gamblers, and 
ensure the integrity of the games.
  Internet gambling's characteristics are unique: online players can 
gamble 24 hours a day from home; children may play without sufficient 
age verification; and betting with a credit card can undercut a 
player's perception of the value of cash, leading to addiction, 
bankruptcy and crime. Unlike in brick-and-mortar casinos in the United 
States where legal protections for bettors exist and where there is 
some compensatory social benefit in jobs and tax revenues, Internet 
gambling sites principally yield only liabilities to America and to 
Americans.
  H.R. 4411 was introduced to provide federal and state governments 
strong tools to enforce existing gambling prohibitions. It would crack 
down on illegal gambling by clarifying that the Wire Act covers all 
forms of interstate gambling and would account for new technologies. 
Designed to cut the money flow from gamblers to Internet gambling 
sites, the bill would enhance criminal penalties for gambling 
businesses settling Internet wagers with financial instruments such as 
credit cards, checks, or fund transfers. It would also require payment 
systems to establish procedures for blocking these transactions.
  Internet gambling has become as much a part of the college experience 
as late-night study sessions and rooting for the football team. 
Researchers have called gambling online addictive. Players attest to 
becoming obsessed with it. The activity is illegal, but the law is not 
being forced.
  According to a study by the Annenberg Public Policy Center, nearly 10 
percent of college students gambled online last year. They play in 
their dorm rooms, in library lounges, in class. The number of college 
males who reported gambling online once a week or more quadrupled in 
the last year alone.
  Finally, a note about horseracing. In 1978, Congress passed the 
Interstate Horseracing Act (IHA) to set forth the rights and 
responsibilities applicable to interstate wagering on horseracing, to 
affirm that States have primary responsibility for regulating gambling 
within their borders, and to prevent States from interfering with the 
gambling policies of other States. In 2000, Congress amended the IHA to 
clarify that the statute applied to the transmission of interstate off-
track wagers via telephone or other electronic media.
  The Executive Branch has taken the position that the 1961 Wire Act 
overrides the IHA, even though the IHA is a more recent statute, 
because neither statute expressly exempts IHA transactions from the 
Wire Act. The horseracing industry vigorously disagrees. H.R. 4411 has 
been very carefully drafted to maintain the status quo regarding 
horseracing, preserving the ability of the Executive Branch and the 
horseracing industry to litigate the proper interpretation of these two 
statutes. The text of the bill is clear: ``this Act does not change 
which activates related to horseracing may or may not be allowed under 
Federal law.'' To the degree this act provides new definitional 
standards, it bolsters rather than diminishes the Justice Department's 
latitude.
  Bills of this nature are always controversial and subject to intense 
lobbying by powerful interests. I believe the approach on the table 
represents the only credible initiative likely to be considered in the 
foreseeable future. I urge support for this important legislation.
  Mr. Speaker, I reserve the balance of my time.
  Ms. HOOLEY. Mr. Speaker, I yield 4 minutes to the gentleman from 
Massachusetts (Mr. Frank), the ranking member on the Financial Services 
Committee.
  Mr. FRANK of Massachusetts. Mr. Speaker, I strongly disagree with the 
gentleman from Iowa with whom I often agree. I don't disagree with him 
entirely. I will stipulate that there is nothing in the Bagavagida 
about gambling. But other than that, I don't think he got much right.
  He says that gambling on the Internet does not add to the GDP or make 
America competitive. Has it become the role of this Congress to 
prohibit any activity that an adult wants to engage in voluntarily if 
it doesn't add to the GDP or make us more competitive?
  What kind of social, cultural authoritarianism are we advocating 
here?
  Now, I agree there is a practice around today that causes a lot of 
problems, damages families, people lose their jobs, they get in debt. 
They do it to excess. It is called drinking. Are we going to go back to 
Prohibition? Prohibition didn't work for alcohol; it doesn't work for 
gambling.
  When people abuse a particular practice, the sensible thing is to try 
to deal with the abuse, not outlaw it.
  By the way, this bill allows certain kinds of Internet gambling to 
stay, so apparently the notion is that those few people who are 
obsessive and addicted will not take advantage of those forms which are 
still available to them.
  But the fundamental point is this. If an adult in this country, with 
his or her own money, wants to engage in an activity that harms no one, 
how dare we prohibit it because it doesn't add to the GDP or it has no 
macroeconomic benefit. Are we all to take home calculators and, until 
we have satisfied the gentleman from Iowa that we are being socially 
useful, we abstain from recreational activities that we choose?
  This Congress is well on the way to getting it absolutely backwards. 
In areas where we need to act together to protect the quality of our 
life, in the environment, in transportation, in public safety, we 
abstain; but in those areas where individuals ought to be allowed to 
make their own choices, we intervene. And that is what this is.
  Now, people have said, well, some students abuse it. We should work 
to try to diminish abuse. But if we were to outlaw for adults 
everything that college students abuse, we would all just sit home and 
do nothing.
  By the way, credit card abuse among students is a more serious 
problem, I believe, than gambling. Maybe gambling will catch up. But we 
have heard many, many stories about young people who have credit cards 
that they abuse. Do we ban credit cards for them?
  But here is the fundamental issue. Shouldn't it be the principle in 
this government that the burden of proof is on those who want to 
prohibit adults from their own free choices to show that they are 
harming other people?
  We ought to say that, if you decide with your own money to engage in 
an activity that harms no one else, you ought to be allowed to do it. 
And once you say, oh, no, but that doesn't add to the GDP, and that can 
lead to some problems in families, then this is hardly the only thing 
you will end up banning.
  The fundamental principle of the autonomy of the individual is at 
stake today.
  Now, I have to say, I understand a lot of the conservatives don't 
like it because there are people on the religious side who don't like 
it. Some of my liberal friends, I think, are being very inconsistent. 
We are for allowing a lot of things. I mean, many of us vote to say, 
You can burn the flag; I wish you wouldn't, but you can. It shouldn't 
be a crime.
  You can look at certain things on television that maybe other people 
think you shouldn't. You can do other things but you can't gamble. 
There is a fundamental inconsistency there.
  I guess people think gambling is tacky. They don't like it. Well, 
fine, then don't do it. But don't prohibit other individuals from 
engaging in it.
  People have said, What is the value of gambling? Here is the value. 
Some human beings enjoy doing it. Shouldn't that be our principle? If 
individuals like doing something and they harm no one, we will allow 
them to do it, even if other people disapprove of what they do.
  And it is, of course, likely to be ineffective. The best thing that 
ever happens to illegal gamblers is when you do a measure like this.
  I hope the bill is defeated.

[[Page H4986]]

  Mr. LEACH. Mr. Speaker, I yield 1 minute to the gentleman from 
Alabama (Mr. Aderholt).
  Mr. ADERHOLT. Mr. Speaker, I rise today in support of H.R. 4411, 
which is the Internet Gambling Prohibition and Enforcement Act. 
Gambling in any form, especially Internet gambling, is especially 
dangerous to children. Because these illegal Web sites lack reliable 
age verification tools, children of any age can access the sites and 
begin gambling.
  For adults, these sites encourage gambling addiction with their ease 
of access, especially with regard to how easy it is to use credit 
cards.
  I would like to be clear for the record, Mr. Speaker. I oppose the 
expansion of gambling in all forms. I have been a long-time opponent of 
gambling. I have cosponsored tough enforcement measures in the past, 
including increased criminal penalties and support for international 
anti-money-laundering efforts.
  Today's bill includes those measures and takes a strong step to 
curtail those dangerous sites by cutting off their source of funding. 
It is an important step toward eradicating this threat and ensuring the 
safety of our children and our communities.
  Mr. Speaker, in closing, let me just say, I encourage my colleagues 
to support this legislation and to vote against the amendment that 
would be brought up today that would actually gut the results of this 
legislation.
  Ms. HOOLEY. Mr. Speaker, I yield 2 minutes to the gentleman from 
Texas (Mr. Paul).
  (Mr. PAUL asked and was given permission to revise and extend his 
remarks.)
  Mr. PAUL. Mr. Speaker, I rise in opposition to this legislation. It 
is not easy to oppose this legislation because it is assumed that 
proponents of the bill are on the side of the moral high ground. But 
there is a higher moral high ground in the sense that protecting 
liberty is more important than passing a bill that regulates something 
on the Internet.
  The Interstate Commerce Clause originally was intended to make sure 
there were no barriers between interstate trade. In this case, we are 
putting barriers up.
  I want to make the point that prohibition, as a general principle, is 
a bad principle because it doesn't work. It doesn't solve the problem 
because it can't decrease the demand. As a matter of fact, the only 
thing it does is increase the price. And there are some people who see 
prohibitions as an enticement, and that it actually increases the 
demand.
  But once you make something illegal, whether it is alcohol or whether 
it is cigarettes or whether it is gambling on the Internet, it doesn't 
disappear because of this increased demand. All that happens is, it is 
turned over to the criminal element. So you won't get rid of it.
  Sometimes people say that this prohibition that is proposed is 
designed to protect other interests because we certainly aren't going 
to get rid of gambling, so we might get rid of one type of gambling, 
but actually enhance the other.
  But one of the basic principles, a basic reason why I strongly oppose 
this is, I see this as a regulation of the Internet, which is a very, 
very dangerous precedent to set.
  To start with, I can see some things that are much more dangerous 
than gambling. I happen to personally strongly oppose gambling. I think 
it is pretty stupid, to tell you the truth.
  But what about political ideas? What about religious fanaticism? Are 
we going to get rid of those? I can think of 1,000 things worse coming 
from those bad ideas. But who will come down here and say, Just think 
of the evil of these bad ideas and distorted religions, and therefore 
we have to regulate the Internet?
  H.R. 4411, the Internet Gambling Prohibition and Enforcement Act, 
should be rejected by Congress since the Federal Government has no 
constitutional authority to ban or even discourage any form of 
gambling.
  In addition to being unconstitutional, H.R. 4411 is likely to prove 
ineffective at ending Internet gambling. Instead, this bill will ensure 
that gambling is controlled by organized crime. History, from the 
failed experiment of prohibition to today's futile ``war on drugs,'' 
shows that the government cannot eliminate demand for something like 
Internet gambling simply by passing a law. Instead, H.R. 4411 will 
force those who wish to gamble over the Internet to patronize suppliers 
willing to flaunt the ban. In many cases, providers of services banned 
by the government will be members of criminal organizations. Even if 
organized crime does not operate Internet gambling enterprises their 
competitors are likely to be controlled by organized crime. After all, 
since the owners and patrons of Internet gambling cannot rely on the 
police and courts to enforce contracts and resolve other disputes, they 
will be forced to rely on members of organized crime to perform those 
functions. Thus, the profits of Internet gambling will flow into 
organized crime. Furthermore, outlawing an activity will raise the 
price vendors are able to charge consumers, thus increasing the profits 
flowing to organized crime from Internet gambling. It is bitterly 
ironic that a bill masquerading as an attack on crime will actually 
increase organized crime's ability to control and profit from Internet 
gambling.
  In conclusion, H.R. 4411 violates the constitutional limits on 
Federal power. Furthermore, laws such as H.R. 4411 are ineffective in 
eliminating the demand for vices such as Internet gambling; instead, 
they ensure that these enterprises will be controlled by organized 
crime. Therefore I urge my colleagues to reject H.R. 4411, the Internet 
Gambling Prohibition and Enforcement Act.
  Mr. LEACH. Mr. Chairman, I yield 2 minutes to a great leader of this 
particular effort, Mr. Bachus from Alabama.

                              {time}  1230

  Mr. BACHUS. Mr. Speaker, I thank the chairman, and I would like to 
respond to the gentleman from Texas and the gentleman from 
Massachusetts and tell you why we need this bill and we need it 
desperately.
  We have been trying to move this legislation for 5 years, and in the 
5 years that we have failed to move it, as many as half a million young 
teenagers have become compulsive gamblers. Now, the Harvard Medical 
School, the University of South Florida, and the American Psychiatric 
Association have all told us that the younger someone is exposed to 
gambling, the younger they start gambling, the more addictive it 
becomes. In fact, about three times more addictive.
  The University of Connecticut did a recent study, and I am going to 
introduce it for the Record, that says Internet gambling is three times 
as likely to produce a problem gambler. Seventy-four percent of the 
young people that they surveyed who said they had gambled on the 
Internet developed a serious addiction.
  Now, what happens when they gamble and they get an addiction? McGill 
University did a study, and they said that teenagers who gamble on the 
Internet show increased criminal activity, strained family 
relationships, and depression. Thirty percent of those who became 
addicted to gambling on the Internet actually attempted suicide. That 
is why Mr. Leach talked about the young man who was the class sophomore 
president at Lehigh University who actually robbed a bank. A 17-year-
old who lost a $6,000 bet on the Internet committed suicide. We have 
got to move against this.
  Finally, let me conclude with this: let me tell you what has happened 
in the past year. According to the University of Pennsylvania, in the 
last year we have gotten another 150,000 young compulsive gamblers.
  It is already illegal. What we are doing is stopping it. You have got 
the criminals on one side, and you have got young people on the other 
side; and we must protect the young people from these criminals.
  Mr. Speaker, I rise today in strong support of H.R. 4411, the 
Goodlatte-Leach Internet Gambling Prohibition and Enforcement Act.
  I want to begin by thanking Chairmen Oxley and Sensenbrenner and 
Congressmen Goodlatte and Leach for bringing H.R. 4411 to the Floor 
today and for their undying determination to put an end to Internet 
gambling in the United States. H.R. 4411 would help stop the growing 
threat that Internet gambling poses to the most vulnerable in our 
society, kids and problem gamblers.
  H.R. 4411 provides strong new enforcement mechanisms to stop the 
offshore casinos that flagrantly violate existing state and federal 
laws against Internet gambling. This bill enables our financial 
regulators to prescribe regulations limiting the acceptance of 
financial instruments for unlawful Internet gambling. In addition, H.R. 
4411 amends the Wire Act of 1961 to expressly prohibit illegal online 
interstate gambling. H.R. 4411 was reported by both the Financial 
Services and Judiciary Committees. Similar legislation has passed the

[[Page H4987]]

House in the previous two Congresses. Now is the time to cut off 
illegal Internet gambling once and for all.
  We have been discussing this issue for years. It has taken way too 
long. In the time we've been debating this issue, Internet gambling 
sites have virtually overrun the Internet. Five years ago, there were 
less than 50 Internet gambling sites. Today, there are more than two 
thousand sites that will generate upwards of $5.9 billion this year 
alone, nearly half of the $12 billion bet worldwide on Internet 
gambling.
  Support for our efforts to stop the money flow to illegal gambling 
sites have been nearly universal, from family and religious groups to 
anti-gambling groups, from professional sports to college athletics, 
from major players in the banking and credit card industries to law 
enforcement and Internet service providers. Mr. Speaker, it is far 
easier and far quicker to just list who doesn't support our efforts. 
That would, of course, be the illegal gambling industry itself. They 
have launched an all-out effort at obfuscation and mischaracterization 
in hopes of defeating this bill and perpetuating their noxious 
activities.
  The ability of the Internet to penetrate every home and community has 
both positive and negative consequences. It can be a valuable source of 
information and a way to communicate quickly with loved ones. But, the 
Internet can also override community values and standards. Gambling is 
an excellent example of this. Gambling is currently illegal in the 
United States unless it is regulated by the states. With the Internet, 
however, prohibitions against gambling and regulations governing 
gambling are turned on their head.
  The negative effects of gambling have been widely documented. All too 
often, gambling results in addiction, bankruptcy, divorce, crime and 
moral decline. Internet gambling magnifies the destructiveness of 
gambling by bringing the casino into your home. According to an 
extensive survey done by the University of Connecticut Health Center, 
74 percent of those who have used the Internet to gamble have serious 
problems with addiction, and many of those have resorted to criminal 
activities to pay for the habit. We heard testimony at one of our 
hearings that Internet gambling is proving to be a serious problem for 
many college students. One student reportedly lost $10,000 on Internet 
sports gambling over a three-month period.
  Imagine if you found out that a casino was being built next door to 
your house, and that they had invited your children to participate in 
gambling activities. You would probably think that was unacceptable. 
But Internet gambling Web sites are actually worse than that. Sitting 
right on the computer desk in your home or in your child's bedroom is a 
computer with easy access to more than 2,000 Web sites that offer 
illegal Internet gambling services.
  Worse yet, your kids could use your credit card to gamble on the 
Internet and run you into bankruptcy--without you even knowing it.
  In addition, Internet gambling has been linked to terrorists and 
organized crime. The FBI and the Department of Justice have testified 
that Internet gambling serves as a vehicle for money laundering that 
can be exploited by terrorists. These Internet sites--most of which are 
operated offshore--represent a serious money laundering vulnerability 
for our country.
  So what would H.R. 4411 do?
  H.R. 4411 addresses the problem of Internet gambling in four ways:
  First, it clarifies that the Wire Act covers all forms of gambling 
including Internet gambling and increases the maximum penalty for 
violations of the Wire Act from two to five years in prison.
  Second, and most importantly, it cuts off the flow of money to 
Internet gambling Web sites by regulating the payments system.
  The legislation directs the Treasury Department and the Federal 
Reserve to jointly develop regulations preventing financial 
transactions related to illegal Internet gambling.
  Third, the legislation authorizes State and Federal law enforcement 
to seek injunctions against persons who facilitate illegal Internet 
gambling; and
  Fourth, the U.S. government through the Treasury Department is 
exhorted to advance international cooperation in law enforcement 
efforts against illegal gambling and related money laundering.
  Internet gambling is already illegal under Federal and State law, but 
most of the more than two thousand Internet gambling sites operate from 
offshore locations. Currently, these ``virtual casinos'' advertise the 
ease of opening betting accounts mainly through the use of credit 
cards. Therefore, they operate beyond the reach of our law. The 
regulations and anti-money laundering laws that apply to casinos in our 
country do not apply to these fly-by-night offshore Internet operators. 
Shutting off the money source is the only way to shut down these 
illegal Internet gambling Web sites.
  In closing, Mr. Speaker, let me just say that a vote for this bill is 
a vote against illegal Internet gambling. This bill shuts off the 
money. That is what these people are waiting for, the money. If we shut 
off the money, we shut off the sites.
  My thanks again go to Chairman Oxley, Chairman Sensenbrenner, 
Congressman Goodlatte and Congressman Leach for their tireless efforts 
in moving this bill forward and bringing it to the floor today. I urge 
all of my colleagues to vote in favor of this legisiation.


disordered gambling among university-based medical and dental patients: 
                      a focus on internet gambling

  George T. Ladd and Nancy M. Petry--University of Connecticut Health 
                                Center.

       The authors evaluated gambling behaviors, including 
     Internet gambling, among patients seeking free or reduced-
     cost dental or health care. Three hundred eighty-nine 
     patients at university health clinics completed a 
     questionnaire that included the South Oaks Gambling Screen 
     (SOGS; H. R. Lesieur & S. Blume, 1987). All respondents had 
     gambled in their lifetimes, with 70% gambling in the past 2 
     months. On the basis of SOGS scores, 10.6% were problem 
     gamblers, and 15.4% were pathological gamblers. The most 
     common forms of gambling were lottery, slot machines, and 
     scratch tickets. Internet gambling was reported by 8.1% of 
     participants. Compared to non-Internet gamblers, Internet 
     gamblers were more likely to be younger, non-Caucasian, and 
     have higher SOGS scores. This study is among the first to 
     evaluate the prevalence of Internet gambling and suggests 
     that people who gamble on the Internet are likely to have a 
     gambling problem. Results also illuminate the need to screen 
     patients seeking health care services for gambling problems.
       The fourth edition of the Diagnostic and Statistical Manual 
     of Mental Disorders (American Psychiatric Association, 1994) 
     describes pathological gambling as a disorder that involves 
     preoccupation with, tolerance of, and loss of control 
     relating to gambling behaviors. A recent meta-analysis of 
     prevalence rates (Shaffer, Hall, & VanderBilt, 1999) 
     concluded that approximately 1.6% of North American adults 
     may be Level 3 (pathological) gamblers. An additional 3.9% 
     may be Level 2 (problematic) gamblers, bringing the combined 
     percentage of disordered gamblers to more than 5%.
       Although prevalence rates in general populations have been 
     described (Shaffer et al. 1999), there is a paucity of 
     studies that have focused on the prevalence of gambling among 
     primary-care patients (Miller, 1996b; Pasternak & Fleming, 
     1999; Van Es, 2000). As a consequence, health care 
     professionals may not be aware of the impact that gambling 
     behaviors can have on the health of their patients. Health 
     comorbidities found to be associated with pathological 
     gambling include substance abuse, circulatory disease, 
     gastrointestinal distress, sexual dysfunction, anxiety 
     disorders, and depression (Bergh & Kuhlhorn, 1994; 
     Daghestani, 1987b; Lesieur, Blume, & Zoppa, 1986; Miller, 
     1996a; Pasternak & Fleming, 1999).
       This study presents two central opportunities for 
     contribution to the existing body of knowledge about 
     disordered gambling. First, we directed our attention toward 
     gambling behaviors among a subset of the population that 
     seeks free or reduced-cost health care. A second focus of 
     this study was the types of gambling activities in which 
     people engage, with special attention paid to Internet 
     gambling. Many researchers have examined the prevalence of 
     disordered gambling (e.g., Shaffer et al., 1999), but few 
     have presented data on the types of gambling in which 
     individuals participate, and no known published studies have 
     focused on the prevalence of Internet gambling.


                                 method

       Participants for this study were drawn from patients 
     seeking treatment at the University of Connecticut Health 
     Center (UCHC) each year. Of the 389 patients included in this 
     study, 76.5% were from UCHC dental clinics, which serve 
     primarily uninsured patients. The remaining 22.5% of 
     participants were from other UCHC medical clinics. The UCHC 
     is located 8 miles southeast of Hartford, Connecticut, and is 
     approximately 65 miles from two large casinos.
     Procedures
       Questionnaires were left in the waiting areas of various 
     UCHC health and dental clinics for 13 months (8/1/99-9/2/00) 
     along with collection boxes. Approximately 2,000 patients 
     were treated in these clinics during the study period. Signs 
     encouraging questionnaire completion were displayed in these 
     general areas. On occasion, a research assistant would 
     approach patients within clinics and ask them to complete a 
     screen. No patients who were verbally asked to complete a 
     questionnaire refused. Nonresponses were probably a result of 
     failure to notice the signs and questionnaires rather than 
     refusal to participate. An overall average return rate of 
     85.7% across the UCHC clinics was determined on weeks in 
     which the numbers of screens left out and collected were 
     monitored.
     Measures
       The 2-page questionnaire consisted of the South Oaks 
     Gambling Screen (SOGS; Lesieur & Blume, 1987) as well as 
     questions regarding demographic information and gambling 
     activities.
     Data analysis
       We used the SOGS (Lesieur & Blume, 1987) component of the 
     questionnaires to classify

[[Page H4988]]

     participants as Level I (score of 0-2), Level 2 (score of 3-
     4), or Level 3 (score > 5) gamblers (Lesieur & Heineman, 
     1988; Shaffer et al., 1999).
       We present here the types of participants' gambling 
     activities, along with the frequency and intensity of recent 
     gambling behaviors (past year, past 2 months, and past week) 
     by level of disordered gambling. We compared participants who 
     reported experience with Internet gambling and participants 
     who reported no experience with Internet gambling on 
     demographic variables and SOGS scores. We evaluated 
     differences among the three levels of gamblers, as well as 
     between Internet versus non-Internet gamblers, using the chi-
     square test for categorical data, analysis of variance for 
     continuous data, and Kruskal-Wallis tests for non-normally 
     distributed continuous data.


                                results

     Response rates and demographic characteristics of the 
         respondent sample
       In total, 402 questionnaires were filled out. Thirteen 
     respondents left many SOGS items unanswered and were thus 
     excluded, leaving 389 questionnaires for further analysis.
     Continuum of SOGS scores
       Of the respondents, 46.8% scored a 0 on the SOGS, 
     indicative of no problematic gambling behaviors. Additional 
     segments of respondents scored 1 (17.0%) and 2 (10.3%) on the 
     SOGS. Therefore, according to the classification system 
     described by Shaffer et al. (1999), 74.0% of respondents 
     qualified as Level 1 gamblers, and 10.6% of the respondents 
     were classified as Level 2 gamblers, with 6.2% scoring a 3 
     and 4.4% scoring a 4. The final 15.4% of respondents were 
     classified as Level 3 gamblers, with 6.9% scoring between 5 
     and 9, 5.7% scoring between 10 and 14, and 2.8% scoring 
     between 15 and 20.
     Demographic characteristics
       Although no statistically significant group differences 
     were found with regard to gender, the three groups of 
     gamblers differed on other demographic characteristics. 
     Specifically, differences among the groups emerged with 
     respect to age, F(2, 382) = 8.58, p <.01; ethnicity, X \2\ 
     (6, N = 374) = 23.01, p <.001; marital status, X \2\(8, N = 
     384) = 18.80, p <.001; education, X \2\(8, N = 376) = 34.45, 
     p <.001; and yearly income, X \2\(6, N = 374) = 12.89, p 
     <.05. Compared to Level 1 gamblers, Level 2 and 3 gamblers 
     were more likely to be younger, of non-Caucasian ethnicity, 
     not married, and have lower levels of education and income.
     Gambling participation
       All of the respondents reported having gambled in their 
     lifetimes, with 90.0% having gambled within the past year, 
     70.0% within the past 2 months, and 42.0% within the past 
     week. The most common form of gambling was the lottery, with 
     89.2% of the total sample having lifetime experience with the 
     lottery. Twenty-five percent of the sample reported weekly or 
     more frequent lottery playing. Slot machines were the next 
     most popular gambling activity, with 81.7% of the sample 
     having lifetime experience, and 6.7% playing slots at least 
     weekly. Scratch tickets were played by 78.7%, with 19.0% of 
     participants playing at least weekly. Card-playing forms of 
     gambling were reported by 70.8%, with 8.7% of participants 
     playing at least weekly. More than half of the participants 
     reported lifetime participation in sports betting (56.9%), 
     bingo (56.0%), and animal betting (52.7%). Lifetime 
     participation in other gambling activities, such as games of 
     skill (40.8%), roulette (37.1%), dice (33.8%), high-risk 
     stocks (23.6%), and video lottery (21.7%) were each reported 
     by only a minority of the total sample.
     Internet gambling
       Of note is that 8.1% (n = 31) of participants reported 
     Internet gambling in their lifetimes, including 3.7% (n = 14) 
     who reported gambling on the Internet at least weekly. 
     Demographic and other characteristics of Internet gamblers 
     compared to non-Internet gamblers are shown in Table 1. Age, 
     F(I, 378) = 17.68, p <.01, and ethnicity, X \2\(3, N = 376) = 
     17.80, p <.001, were found to differ significantly among 
     participants who reported Internet gambling compared to those 
     who did not. Younger participants were more likely than older 
     participants to have Internet gambling experience. Although 
     non-Caucasian participants represented 15.8% of the total 
     participants, they represented 35.8% of those participants 
     who had experience with Internet gambling.
       The comparison of participants with or without Internet 
     gambling experience revealed significant differences in both 
     SOGS scores, F(1, 382) = 40.79, p <.01, and classified 
     gambling levels, X \2\(2, N = 389) = 63.23, p <.001. Only 22% 
     of participants without any Internet gambling experience were 
     Level 2 or 3 gamblers. In contrast, 74% of participants with 
     Internet gambling experience were classified as Level 2 or 3 
     gamblers.


                               Discussion

       We examined gambling participation and problems of 389 
     patients who completed questionnaires at the UCHC medical and 
     dental clinics. When the lifetime rates of 10.6% for Level 2 
     and 15.4% for Level 3 gamblers are combined, the resulting 
     26.0% rate of disordered gambling (Levels 2 and 3) in this 
     study far exceeds the 6.7% derived from general population 
     surveys conducted since 1993 (National Gambling Impact Study 
     Commission, 1999; Shaffer et al., 1999).

               TABLE I.--DEMOGRAPHIC AND SOUTH OAKS GAMBLING SCREEN (SOGS) SCORING CHARACTERISTICS
----------------------------------------------------------------------------------------------------------------
                                                          Without internet    With internet
                        Variable                              gambling           gambling         Total sample
                                                             experience         experience
----------------------------------------------------------------------------------------------------------------
N......................................................                351                 31                389
Gender (female)........................................               56.7               41.9               54.4
Age (M/SD).............................................          43.5/15.8          31.7/13.6          42.8/16.0
Education level:
    No high school diploma.............................                9.3               20.0                9.8
    High school diploma................................               27.0               36.0               27.9
    Some college.......................................               23.8                8.0               22.6
    College diploma....................................               21.5               20.0               21.3
    Postcollege........................................               18.3               16.0               18.4
Ethnicity a:
    African American...................................                7.7               12.9                8.3
    Caucasian..........................................               86.3               61.3               84.2
    Hispanic...........................................                5.4               22.6                6.7
    Other..............................................                0.6                0.3                0.8
Marital status:
    Divorced or separated..............................               15.0               19.4               15.1
    Living w/partner...................................               10.4               16.1               10.7
    Married or remarried...............................               46.7               29.0               45.6
    Single.............................................               23.6               29.0               24.0
    Widowed............................................                4.3                6.5                4.7
Income:
    Under $10K.........................................               13.7               22.6               14.4
    $10-25K............................................               21.7               22.6               21.4
    $25,001-50K........................................               24.7               22.6               24.9
    Above $50K.........................................               39.9               32.2               39.3
SOGS score (M/SD) a....................................            1.8/3.4            7.8/2.0          2.26/4.01
SOGS level a:
    Level 1............................................               78.3               25.8               74.0
    Level 2............................................               10.5                9.7               10.6
    Level 3............................................               11.1               64.5               15.4
----------------------------------------------------------------------------------------------------------------
Note. All values are percentages unless otherwise indicated.
a Groups differ, p < .001.

       The higher rates of Level 2 and 3 gamblers found in this 
     study may be due to a response bias. Individuals who liked to 
     gamble or who had a problem with gambling may have been more 
     likely to complete the questionnaire. However, considering 
     that 74.0% of the participants were classified as 
     nonproblematic gamblers and that 58.2% scored 0 on the SOGS, 
     the majority of participants who completed the questionnaires 
     had no apparent gambling problems. Another explanation for 
     the higher rates of disordered gambling in this population 
     may be related to the demographics of the sample. People who 
     seek services at UCHC dental clinics have risk factors for 
     disordered gambling identified in other studies of special 
     populations, such as relatively younger age, lower income, 
     and less education (Cunningham-Williams, Cottler, Compton, & 
     Spitznagel, 1998; Feigelman, Wallisch, & Lesieur, 1998; 
     Pasternak & Fleming, 1999; Shaffer et al., 1999; Stinchfield 
     & Winters, 1998; Volberg, 1998; Westphal & Rush, 1996). The 
     prevalence of disordered gambling in this sample of medical 
     and dental patients is similar to rates reported in substance 
     abusing populations (Feigelman et al., 1998; Lesieur et al., 
     1986; Petry, 2000b; Shaffer et al., 1999).
       Because only one other known study reported on the 
     prevalence of Internet gambling, comparisons of the rates of 
     Internet gambling found in this study to other populations 
     are premature. Only Petry and Mallya's (2001) study provides 
     a comparative perspective. Using a methodology similar to

[[Page H4989]]

     that of the present study, Petry and Mallya examined rates of 
     Internet gambling among UCHC health center employees (n = 
     907) who, as a group, had an almost identical mean age (42.8) 
     but higher annual income and educational achievement than 
     participants in the present study. Yet Petry and Mallya found 
     a prevalence rate of Internet gambling of just 1.2%, which is 
     a considerable departure from the present study's findings of 
     8.1%. Because access to the Internet is traditionally 
     correlated with populations that have higher income and 
     educational attainment, the present study's higher rate of 
     Internet gambling was not expected.
       The relative difference in Internet gambling rates between 
     the present study and that of Petry and Mallya (2001) may be 
     due to the higher percentage of Level 2 and 3 gamblers found 
     in the present study. Among UCHC employees, Petry and Mallya 
     found a much smaller overall percentage of Level 2-3 gamblers 
     (4.8%) than the present study (26.0%). With the present 
     study's higher overall percentage of problematic gamblers, an 
     associated increase in percentage of Internet gambling may 
     not be surprising. Indeed, 74.2% of Internet gamblers were 
     found to be Level 2 or 3 gamblers, with 64.5% classified as 
     Level 3 gamblers.
       Although Internet gambling was the least common gambling 
     activity, the 8.1% (n = 31) of participants who reported 
     experience with Internet gambling remains an important 
     finding. Accessibility and use of Internet gambling 
     opportunities are likely to increase with the explosive 
     growth of the Internet. The University of California, Los 
     Angeles (UCLA) Internet Report (UCLA Center for Communication 
     Policy, 2000) indicated that the number of Americans using 
     the Internet exceeded 100 million by 1999. During each day of 
     the first 3 months of 2000, approximately 55,000 individuals 
     logged on to the Internet for the first time (UCLA Center for 
     Communication Policy, 2000). Thus, an increase in Internet 
     use may foster the development of more Level 2 and 3 
     gamblers, or attract individuals who already have a gambling 
     problem. Indeed, the availability of Internet gambling may 
     draw individuals who seek out isolated and anonymous contexts 
     for their gambling behaviors.
       The high rates of disordered gambling found among UCHC 
     patients illustrate the potential for proactive screening and 
     interventions by health professionals. Health professionals 
     typically attend to a range of patient health and behavior 
     correlates, such as alcohol use, sleep, diet, exercise, and 
     other psychosocial factors. These behaviors and contextual 
     attributes are understood to affect, in complex ways, the 
     health outcomes of patients. Yet attention to gambling as a 
     marker of potential comorbidities is still lacking within 
     health clinic settings. Persons struggling with gambling 
     behaviors are often burdened by health and emotional 
     difficulties (Daghestani, 1987a; Pasternak & Fleming, 1999). 
     These problems include substance abuse, circulatory disease, 
     digestive distress, depression, sexual dysfunction, pervasive 
     anxiety, and risky sexual behaviors (Daghestani, 1987b; 
     Lesieur et al., 1986; Miller, 1996a; Petry, 2000a, 2000b). 
     Screening for disordered gambling among patients may enhance 
     the ability of health professionals to intervene in the 
     physical and emotional health of individuals. Screening 
     strategies are particularly important when dealing with 
     populations in which regular visits to dental or general 
     health clinics may be the exception rather than the norm.
       With the expansion of localized and Internet gambling, a 
     rise in disordered gambling may be inevitable as individuals 
     gain easier access to gambling opportunities. The 
     consequences of gambling expansion may continue to negatively 
     affect the health and social contexts of individuals. As 
     interest in treatments for disordered gambling grows (Petry & 
     Armentano, 1999), health professionals should be aware of the 
     signs of disordered gambling and proactively inform patients 
     of the risks involved.
  Ms. HOOLEY. Mr. Speaker, I reserve the balance of my time.
  Mr. LEACH. Mr. Speaker, I yield 1 minute to the gentleman from 
Pennsylvania (Mr. Dent), who represents Lehigh University.
  Mr. DENT. Mr. Speaker, I rise today in very strong support of H.R. 
4411, the Internet Gambling Prohibition and Enforcement Act, for a 
variety of reasons, not the least of which is that Lehigh University 
was mentioned. That institution is in my district.
  And just to drive the point home, just in today's paper, the father 
of the young man who was alleged to have robbed a bank to support his 
gambling habit said that this bill was something that could have helped 
his son. He said this: ``He was addicted. He gambled 12 hours at a 
time. He gambled everything he had.'' The father went on to say, ``When 
he was out of money, he did what most addicts do when they are out of 
their supply. The Internet is flagrantly recruiting under-21-year-olds 
to gamble . . . This bill would have definitely helped my son.''
  Finally, while Internet gambling is a $12 billion worldwide business, 
it is not by anyone's definition economic development. The revenue from 
these enterprises is not job-creating. Most Internet gambling funds are 
destined for locations that exist offshore.
  Mr. Speaker, I rise today to speak in strong support of H.R. 4411, 
the Internet Gambling Prohibition and Enforcement Act.
  This legislation gives law enforcement the tools it needs to fight 
Internet gambling, which is already illegal in this country. Much 
Internet gambling originates from off-shore locations and thus is 
dependent upon the electronic transfer of money and wagering 
information between sites in the United States and these off-shore 
locations. Unfortunately, one of the major tools in this fight, the 
Wire Act, which is codified at title 18 United States Code Section 
1081, was enacted in 1961, well before the establishment of the 
Internet or other forms of similar electronic communication. H.R. 4411 
clarifies in statute that Internet communications made in furtherance 
of gambling transactions indeed fall within the scope of the Wire Act 
and are thus prosecutable.
  H.R. 4411 also gives law enforcement some additional authority to 
block these transactions. It requires the Department of the Treasury 
and the Federal Reserve to promulgate regulations aimed at preventing 
transfers of funds related to illegal Internet Gambling. It also gives 
law enforcement the ability to seek injunctions against those 
individuals who act to facilitate this gambling.
  While Internet gambling is a $12 billion worldwide business, it is 
not, anyone's definition, economic development. The revenue from these 
enterprises is not job-creating; most Internet gambling funds are 
destined for locations that exist off-shore. Internet gambling is, 
instead, wealth transfer--in most cases, from many who can least afford 
it to very few who don't need the cash. The proliferation of gambling 
in America--whether it involves playing the slots at a local racetrack, 
betting on roulette at a tribal casino hundreds of miles from the 
nearest Indian reservation, or placing wagers on college basketball 
games with an Internet site headquartered in the Bahamas--has done 
nothing to make this a healthier, more productive nation. That is why I 
support this bill.
  Ms. HOOLEY. Mr. Speaker, I have no further requests for time, and I 
reserve the balance of my time.
  Mr. LEACH. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from Virginia (Mr. Wolf), who has been a phenomenal advocate 
of this issue.
  Mr. WOLF. Mr. Speaker, I thank the gentleman for yielding.
  I want to begin by thanking Mr. Leach and Mr. Goodlatte for staying 
in there when the outside lobbyists were trying to control this 
institution. And people must know, if you go back and look at history, 
this institution, this institution, was manipulated by outside 
lobbyists. So there is a test today whether that outside lobby, outside 
influence will continue to take place.
  With the guilty plea of lobbyist Jack Abramoff and the information 
revealed about his role in the defeat of the Internet gambling ban a 
number of years ago, it is time to strengthen the law enforcement tools 
to crack down on illegal gambling.
  With online gambling, people can do it in their bathrobes, as Mr. 
Leach said. They can do it when they are standing in line. This is a 
test. Quite frankly, this is a test for this institution about outside 
influences, ones that all you have to do is read The Washington Post 
and the New York Times over and over and over to see what they have 
done. They have manipulated this place.
  And today, with Mr. Leach and Mr. Goodlatte and others, you have an 
opportunity to reverse the manipulation and pass this bill without 
amendment.
  Mr. Speaker, I rise in strong support of the legislation offered by 
my colleagues Jim Leach and Bob Goodlatte. I want to take this 
opportunity to commend them for working together and really sticking 
with it so that we could have a strong bill on the floor today that 
takes the strengths of each of their measures to comprehensively 
address Internet gambling.
  As the author of the legislation which established the National 
Gambling Impact Commission, I have long been concerned about the 
predatory nature of gambling and the corruption that is often 
associated with it.
  It seems as though every day in the news there is a new scandal 
related to gambling. Without this important legislation, there is no 
way to regulate Internet gambling.
  Today, gambling is legal in almost every State in the Union and more 
than 400 tribal casinos operate in over 30 States. Sadly, Internet 
gambling is a growing problem in America, particularly for our young 
people.
  You may recall that last December, Greg Hogan--a Lehigh University 
sophomore--made headlines when he robbed a bank in

[[Page H4990]]

order to pay his online poker debt of more than $5,000.
  According to a PBS NewsHour report last spring, recent studies 
indicate that more than 70 percent of youth between the ages of 10 and 
17 gambled in the past year, up from 45 percent in 1988.
  And of those who gamble online, an Annenberg Public Policy Center 
study released last fall indicates that almost 15 percent of our young 
people aged 14-22 gamble online at least once a month. While 15 percent 
may not set off alarm bells, consider that more than 50 percent of 
those who gamble once a week show signs of problem gambling.
  Gambling--and particularly online gambling--is a growing problem 
around the country. According to a Sports Illustrated article from last 
summer, more than 1.8 million online poker players gamble each month.
  They wager an average of $200 million a day. And the industry 
generates more than $2.2 billion, that's with a ``B,'' in gross revenue 
annually.
  I am pleased to support the Internet Gambling Prohibition and 
Enforcement Act that will improve law enforcement tools to address this 
problem. Additionally, I think we have momentum on our side to address 
the explosion of gambling.
  With the guilty plea of lobbyist Jack Abramoff and the information 
revealed about his role in the defeat of the Internet gambling ban a 
number of years ago, it's time to strengthen law enforcement's tools to 
crack down on illegal Internet gambling.
  With online gambling, people can do it in their bathrobes, in their 
family rooms, in fact they could even do it on their cell phones 
walking down the street. It's literally available everywhere at any 
time.
  The prevalence of online gambling and its explosive growth is a 
national disgrace that hurts young people. How will the Congress 
explain to the American people if it fails to address this issue?
  Mr. Speaker, I urge support for this legislation.
  Ms. HOOLEY. Mr. Speaker, I reserve the balance of my time.
  Mr. LEACH. Mr. Speaker, I yield 1 minute to the gentleman from 
Arizona (Mr. Shadegg).
  Mr. SHADEGG. Mr. Speaker, I thank the gentleman for yielding, and I 
compliment him on this bill. I also compliment the gentleman from 
Virginia (Mr. Goodlatte) and Chairman Oxley and Chairman Sensenbrenner 
and my colleague, Mr. Wolf, with whose remarks I associate myself.
  This is a huge problem. I have observed in my lifetime many, many, 
many people whose lives have been destroyed by unregulated gambling. 
Story after story was brought to me when I worked in the Arizona 
attorney general's office about people whose lives were destroyed 
because one member of their family became addicted to gambling.
  Now, we have regulated gambling in this Nation, and that is one thing 
and nobody is trying to ban that by this bill. But Internet gambling is 
totally unregulated gambling, and it victimizes people and it destroys 
lives.
  It seems to me that the critics of this bill, including those in the 
paper this morning, say it does not go after every gambling operation 
in the world. Of course it doesn't. There are regulated gambling 
organizations which are legitimate and at least have some government 
oversight.
  What this bill goes after is the epidemic of unregulated gambling 
that is destroying lives that puts a full online casino in every single 
home in America to corrupt the people there and destroy their lives.
  I urge my colleagues to support this bill, and I commend the leaders, 
including Chairman Sensenbrenner, who have brought it to the floor.
  Ms. HOOLEY. Mr. Speaker, I yield myself such time as I may consume.
  I just have to clarify a few things that have been said. First of 
all, this bill is about enforcing the law that is already on the books. 
This is not about prohibiting gambling. States can regulate their own 
gambling. They can regulate Internet gambling. This is about enforcing 
the laws.
  We had a hearing in Financial Services where the FBI Director was in 
front of us and he said this is a significant vehicle for money 
laundering. GAO reports that Internet gambling can be a significant 
vehicle for money laundering proceeds because they can move large 
quantities of money around rapidly to obscure criminal origins. 
Internet gambling generates over $10 billion in revenues. Nearly 80 
percent of those revenues are impossible to account for because illegal 
gambling sites are located in jurisdictions with no regulation on 
gambling.
  This allows States the prerogative to decide what kind of gambling 
should be permitted or forbidden within the State borders. Some States 
say you cannot gamble; other States say you can. The attorneys general 
of 48 States have said they are in support of this legislation. It will 
make online gambling impossible for minors. Minors cannot go into brick 
and mortar facilities right now. It should, in fact, make it 
inaccessible for minors.
  It recognizes the jurisdictional impediments for prosecuting offshore 
gambling businesses. Financial systems will be required to block money 
flow to these businesses, cutting off the oxygen for these illegal 
transactions.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LEACH. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from Pennsylvania (Mr. Pitts).
  Mr. PITTS. Mr. Speaker, I thank the gentleman for yielding, and I 
want to thank my colleagues, Mr. Goodlatte, Mr. Leach, Mr. 
Sensenbrenner, for their hard work and leadership on this issue.
  Mr. Speaker, it is time that we enforce the law when it comes to 
Internet gambling.
  Dozens of Web sites entice Web surfers to bet online with free 
software offers. Online sites advertise openly on TV. Stores carry 
books on how to get rich by gambling online.
  The only problem? Online gambling is illegal.
  This bill makes that clear and provides mechanisms to effectively 
enforce the law.
  This year Americans will send $5.9 billion to offshore, unregulated 
online casinos. The Justice Department warns that many of these sites 
are fronts for money laundering, drug trafficking, and even terrorist 
financing. And unregulated online gambling also takes a toll in untold 
numbers of personal lives destroyed.
  Gambling online is unique. No casinos, horse tracks, or betting 
parlors are required. All you need is a computer, credit card, and 
Internet access. With that, players are able to play 24 hours a day 
from the privacy of their homes. Minors are easily able to defy age 
requirements if they wish to play. And the online environment and 
credit card payment system combine to promote addiction, bankruptcy, 
and crime.
  Currently, online gambling operations avoid Federal and State law 
enforcement by locating offshore, and this bill addresses this loophole 
in three ways: first, it clarifies previous law, making it a Federal 
felony to use wire communications facilities to transmit bets or 
wagers. Secondly, it cuts off the flow of money to online gambling 
sites by regulating the payment systems they use to collect the money. 
And, finally, it authorizes penalties against those who facilitate 
illegal online gambling.
  Simply put, Mr. Speaker, the law is being flouted, and this bill does 
something about it. I strongly urge its adoption.
  Ms. HOOLEY. Mr. Speaker, I yield myself the balance of my time to 
close.
  First of all, in my opening statement there was a person I forgot to 
thank who has carried this banner in Financial Services for a long 
time, Mr. Bachus from Alabama. I thank you for all the hard work you 
have done on this.
  In closing, Mr. Speaker, I would like to share some interesting facts 
from an article written for the New York Times by Matt Schwartz.
  Researchers say that Internet gambling is addictive. Players say it 
is addictive. In fact, the action, the act of placing a bet, and the 
high that follows has been identified by neurologists as a similar high 
to doing a line of cocaine. Blood rushes to the face, the hands 
moisten, and the mouth dries up.
  Internet gambling has also dramatically changed the face of 
addiction. An estimated 1.6 million of the 17 million U.S. college 
students gambled online last year, mostly on poker. According to a 
study by the Annenberg Public Policy Center, the number of college 
males who reported gambling online once or more a week quadrupled in 
the last year alone. This is a growing addiction.
  The stereotypical compulsive gambler is now much more likely to be a 
teenager or a college student. Before

[[Page H4991]]

the rise of online gambling, the typical compulsive gambler was in his 
thirties or forties and took a decade to run the destructive course. 
Now online gamblers are running the same course in 18 months or less.
  These facts are disturbing and highlight the need for action by this 
Congress. Again, this bill is a commonsense approach that cuts off the 
flow of money to Internet gambling Web sites by regulating the payment 
systems.
  And, again, we have to remember these laws are already on the books. 
What we are trying to do is enforce the laws. The Department of the 
Treasury and the Federal Reserve will jointly develop policies and 
procedures for identifying and preventing financial transactions 
related to illegal Internet gambling. Payment systems will be required 
to comply with these regulations. Again, States are allowed to regulate 
gambling within their own States.

                              {time}  1245

  I urge my colleagues to end the flow of money to illegal Internet 
gambling Web sites, and I urge the passage of H.R. 4411.

                [From the New York Times, June 11, 2006]

              Chapter 2: The Gambler; The Hold-'Em Holdup

                        (By Mattathias Schwartz)

       Greg Hogan Jr. was on tilt. For months now, Hogan, a 19-
     year-old Lehigh University sophomore, had been on tilt, and 
     he would remain on tilt for weeks to come. Alone at the 
     computer, usually near the end of one of his long online 
     gambling sessions, the thought ``I'm on tilt'' would occur to 
     him. Dude, he'd tell himself, you gotta stop. These thoughts 
     sounded the way a distant fire alarm sounds in the middle of 
     a warm bath. He would ignore them and go back to playing 
     poker. ``The side of me that said, `Just one more hand,' was 
     the side that always won,'' he told me months later. ``I 
     couldn't get away from it, not until all my money was gone.'' 
     In a little more than a year, he had lost $7,500 playing 
     poker online.
       ``Tilt'' is the poker term for a spell of insanity that 
     often follows a run of bad luck. The tilter goes berserk, 
     blindly betting away whatever capital he has left in an 
     attempt to recoup his losses. Severe tilt can spill over past 
     the poker table, resulting in reputations, careers and 
     marriages being tossed away like so many chips. This is the 
     kind of tilt Hogan had, tilt so indiscriminate that one 
     Friday afternoon this past December, while on his way to see 
     ``The Chronicles of Narnia'' with two of his closest friends, 
     he cast aside the Greg Hogan everyone knew--class president, 
     chaplain's assistant, son of a Baptist minister--and became 
     Greg Hogan, the bank robber.
       On Dec. 9, 2005, Hogan went to see ``Narnia'' with Kip 
     Wallen, Lehigh's student-senate president, and Matt 
     Montgomery, Hogan's best friend, in Wallen's black Ford 
     Explorer. Hogan, who was sitting in front, asked Wallen to 
     find a bank so he could cash a check, and Wallen pulled over 
     at a small, oatmeal-colored Wachovia. Inside, Hogan paused at 
     the counter for a moment and then joined the line. He handed 
     the teller a note that said he had a gun, which was a bluff. 
     ``Are you kidding?'' her face seemed to say. He did his best 
     to look as if he weren't. With agonizing slowness, she began 
     assembling the money. Moments later, a thin sheaf of bills 
     appeared in the tray: $2,871. Hogan stuffed it into his 
     backpack, turned around and walked back out to the car.
       The movie ended, and the trio returned to campus. Hogan 
     went immediately to Sigma Phi Epsilon, his fraternity, and 
     used some of the stolen money to pay back brothers who had 
     lent him hundreds of dollars. He then joined a few friends at 
     an off-campus pizzeria for dinner. Someone's cellphone rang, 
     with the news that police had stormed the Sig Ep house. No 
     one knew why. Hogan stayed silent. After dinner, his friends 
     dropped him off at orchestra practice. Allentown police 
     officers were waiting for him. They handcuffed him and took 
     him to headquarters, where he confessed almost immediately.
       Hogan's first call was to his parents back home in Ohio. 
     They had just finished eating dinner at T.G.I. Friday's. ``He 
     was at the end of himself,'' Greg Hogan Sr. told me. ``He 
     couldn't believe he had done it. Not that he was denying 
     anything, but he felt like he was watching another person's 
     life.''
       To wired college students today, Internet gambling is as 
     familiar as beer, late-night pizza and the Saturday night 
     hook-up. Poker--particularly Texas hold 'em--is the game of 
     choice. Freshmen arrive already schooled by ESPN in the 
     legend of Chris Moneymaker, the dough-faced 27-year-old 
     accountant who deposited $40 into his PokerStars.com account 
     and parlayed it into a $2.5 million win at the World Series 
     of Poker in Las Vegas. Throughout the dorms and computer labs 
     and the back rows of 100-level lecture halls you can hear the 
     crisp wsshhp, wsshhp, wsshhp of electronic hands being dealt 
     as more than $2 billion in untaxed revenue is sucked into 
     overseas accounts each year.
       Researchers say that Internet poker is addictive. Players 
     say that it's addictive. The federal government says that 
     it's illegal. But colleges have done little to stop its 
     spread on campus. Administrators who would never consider 
     letting Budweiser install taps in dorm rooms have made high-
     speed Internet access a standard amenity, putting every 
     student with a credit card minutes away from 24-hour high-
     stakes gambling. Online casinos advertise heavily on sites 
     directed at college students like CollegeHumor.com, where 
     students post pictures of themselves playing online poker 
     during lectures with captions like: ``Gambling while in 
     class. Who doesn't think that wireless Internet is the 
     greatest invention ever?'' Some schools have allowed sites to 
     establish a physical on-campus presence by sponsoring live 
     cash tournaments; the sites partner with fraternities and 
     sports teams, even give away a semester's tuition, all as 
     inducements to convert the casual dorm-lounge poker player to 
     a steady online customer. An unregulated network of offshore 
     businesses has been given unfettered access to students, and 
     the students have been given every possible accommodation to 
     bet and lose to their hearts' content. Never before have the 
     means to lose so much been so available to so many at such a 
     young age.
       An estimated 1.6 million of 17 million U.S. college 
     students gambled online last year, mostly on poker. According 
     to a study by the Annenberg Public Policy Center, the number 
     of college males who reported gambling online once a week or 
     more quadrupled in the last year alone. ``The kids really 
     think they can log on and become the next world champion,'' 
     says Jeffrey Derevensky, who studies youth problem gambling 
     at McGill University in Montreal. ``This is an enormous 
     social experiment. We don't really know what's going to 
     happen.''
       Greg Hogan is far from the only college student to see the 
     game's role in his life grow from a hobby to a destructive 
     obsession. Researchers from the University of Connecticut 
     Health Center interviewed a random sample of 880 college 
     students and found that 1 out of every 4 of the 160 or so 
     online gamblers in the study fit the clinical definition of a 
     pathological gambler, suggesting that college online-poker 
     addicts may number in the hundreds of thousands. Many, like 
     Lauren Patrizi, a 21-year-old senior at Loyola University in 
     Chicago, have had weeks when they're playing poker during 
     most of their waking hours. Rarely leaving their rooms, they 
     take their laptops with them to bed, fall asleep each night 
     in the middle of a hand and think, talk and dream nothing but 
     poker. By the time Patrizi finally quit, the game seemed to 
     be both the cause of all her problems and her only means of 
     escaping them. ``I kept on playing so I wouldn't have to look 
     at what poker had done to my bank account, my relationships, 
     my life,'' she told me.
       Other addicts, like Alex Alkula, a 19-year-old living 
     outside Columbus, Ohio, decide to ``go pro,'' drop out of 
     school and wind up broke and sleeping on their friends' 
     couches. Alkula, who left the Art Institute of Pittsburgh 
     after five months, now makes his living dealing hold 'em in 
     private home games and organizing tournaments in bars. Having 
     overdrawn four bank accounts, Alkula can no longer play 
     online himself. But when he gets home from work at 3 or 4 in 
     the morning, he turns on his computer, clicks on Full Tilt 
     Poker and watches the players' cards flicker on the screen 
     until dawn. ``I can't get away from it,'' he told me. ``And 
     really, I don't want to. I'll keep playing poker even if it 
     means being broke for the rest of my life. I've fallen in 
     love with the game.''
       In its outline, Hogan's story closely resembles that of the 
     stereotypical compulsive gambler. Before the rise of online 
     poker, however, such a story typically involved a man in his 
     30's or 40's and took a decade or more to run its course. 
     Greg Hogan, on the other hand, went from class president to 
     bank robber in 16 months. His fall took place not at the 
     blackjack table or the track but within the familiar privacy 
     of his computer screen, where he was seldom more than a 
     minute away from his next hand of poker. He'd been brought up 
     too well to waste himself in some smoky gambling den and knew 
     too much to play a mere game of chance. He wanted to compete 
     against his peers, to see his superior abilities yield 
     dollars for the first time, a transaction he equated with 
     adulthood. His stubborn faith in his own ability--a trait 
     that had served him so well through his first 19 years--
     proved to be his undoing.
       Today's ruined gamblers are often too young to know any 
     better--too young, in fact, to legally gamble in most U.S. 
     casinos. Until now, these young addicts were ignored by the 
     news media, which swooned over the top of the poker pyramid, 
     the Chris Moneymakers and the ESPN heroes, the guys in the 
     wraparound sunglasses and the cowboy hats who made the 
     hustler's art seem somehow noble and athletic. No one was 
     interested in whose losses keep the poker economy humming, 
     not until a Baptist minister's son robbed a bank.
       A minister's eldest boy learns to perform early in life. On 
     Sundays, Greg's mother, Karen, would dress him and his two 
     brothers in matching slacks and blazers and take them and 
     their sister to hear Greg Sr. preach. The congregation looked 
     on as the boys followed Greg Jr's polite, attentive example. 
     Schooled at home through eighth grade, the straw-haired, 
     blue-eyed boy emulated his father's steady gaze, the soft but 
     firm quality in his voice. He saw that others would come to 
     rely on him if he revealed only his strongest side. When Greg 
     Sr. ran

[[Page H4992]]

     for City Council, Greg Jr. enlisted his playmates to help him 
     campaign door to door. Neighbors began calling Greg ``the 
     General.'' When it came to music, Greg was like a boat on a 
     still pond--one small push from his parents and he'd glide on 
     toward the goal. Karen, a psychiatric nurse, started him on 
     the piano at 5. Greg Sr. worked a second job to help pay for 
     $50-an-hour private music lessons for his daughter and three 
     boys. By 13, Greg had twice played onstage at Carnegie Hall. 
     Music won him a scholarship to the prestigious University 
     School, a day school outside Cleveland, where his classmates 
     noticed his oddly mature ways and dubbed him ``the 30-year-
     old man.'' By graduation, he'd developed something of an ego. 
     ``Greg will always be a people person,'' wrote his adviser in 
     an evaluation letter. ``Perhaps he should set his sights a 
     little lower and just become president of the United 
     States.''
       Hogan, who had palled around with the sons of bank 
     executives at his high school, threw himself into this new 
     environment. Even before his father had said goodbye to head 
     back to Ohio, Greg announced his plan to run for class 
     president. He played his first hands of live hold 'em with 
     real money that night, a way to break the ice with the guys 
     from his hall in the dorm lounge. A few weeks later, guided 
     by one of his roommate's friends, Hogan opened his first 
     online-poker account at PokerStars.com. He chose a screen 
     name that would carry his new school's banner all around the 
     world: geelehigh. He'd met someone from two floors down who 
     had lost $100--a fortune, it seemed--online. He decided to 
     stick to the play-money tables. Within 10 minutes, Hogan was 
     playing his first online hands.
       A few days later he met another friend of his roommate's. 
     Hogan claims that he remembers only his nickname, Phys. When 
     he turned 21, Phys told Hogan, he would plunk down $10,000 
     and become the youngest player ever to win poker's greatest 
     prize--the World Series of Poker No Limit Texas Hold 'Em 
     bracelet. He then showed Hogan where he planned on getting 
     that kind of money. He clicked on the PokerStars icon on 
     Hogan's computer, typed in a user name and password, clicked 
     on ``Cashier.'' And there it was, Phys's ``real money'' 
     balance: more than $160,000. Hogan clucked his tongue. ``Un-
     be-lievable,'' he said, almost to himself. He knew that the 
     money was indeed real. All Phys had to do was click on the 
     ``Cash Out'' button and wait two weeks, and he'd receive a 
     six-figure check in the mail. Four years' tuition, sitting 
     there like a high score. It was absurd.
       The next week, geelehigh used his debit card to make a $75 
     PokerStars deposit. He received a $25 ``deposit bonus,'' 
     which wouldn't clear until he'd played several hundred hands. 
     The money was real now, but it still felt as ephemeral as it 
     did at the play-money tables: $100 was a digitized chip icon, 
     an oval of black pixels on his computer screen. Green ovals 
     were $25, red ovals $5. All were smaller than a grain of 
     rice. When Hogan clicked on the ``Bet'' or ``Raise'' buttons, 
     the chips made a chik sound and floated across the glowing 
     table before melting into the pot. These tiny digital chips 
     represented money controlled by a corporation in Costa Rica. 
     The ``cards'' themselves were really just bits of data, 
     ``shuffled'' by a random-number generator on a Mohawk Indian 
     reservation in Quebec. The nine players at Hogan's table were 
     scattered all over the world, each sitting alone at his 
     screen, trying to take money from the other eight. 
     Eventually, in chunks of $50, then $100, he took two summers' 
     earnings, money his parents had given him for books and 
     expenses, hundreds of dollars in loans from friends, $2,000 
     in savings bonds bought in his name (bonds he took from the 
     family safe) and turned it into digital chips: $7,500 in all.
       Online, Hogan would play 60 to 100 hands an hour--three 
     times the number of his live games. There was no more 
     shuffling between hands, no more 30-second gaps to chat with 
     his friends or consider quitting. Each hand interlocked with 
     the next. The effect was paralyzing, narcotic. ``Internet 
     poker induces a trancelike state,'' says Derevensky, the 
     McGill professor, who once treated a l7-year-old Canadian boy 
     who lost $30,000, much of it at PokerStars. ``The player 
     loses all track of time, where they are, what they're 
     doing.'' When I spoke with an online hold-'em player from 
     Florida who had lost a whopping $250,000 online, he told me: 
     ``It fried my brain. I would roll out of bed, go to my 
     computer and stay there for 20 hours. One night after I went 
     to sleep, my dad called. I woke up instantly, picked up the 
     phone and said, `I raise.' ''
       A raked poker game cannot survive unless some players 
     either overestimate their abilities or are willing to keep 
     playing despite consistent losses. Fish, then, are the chum 
     that keeps the rest of the poker ecosystem alive. Poker 
     message boards monitor which sites are teeming with 
     geelehighs and which have been leached dry. To stay in 
     business, sites must attract fish, hold them for as long as 
     possible and replace them when they go broke. According to 
     Mike Shichtman, a professional gambler who consults for the 
     online site Pacific Poker, there is ``giant concern'' in the 
     industry that the total number of fish may be dwindling. It 
     is, he adds, a trend that can be reversed only by tapping new 
     markets.
       In a few weeks, Hogan had run his initial $75 up to $300. 
     Then, in November, came ``the hand that got me hooked.'' 
     Hogan drew a king-high flush and bet all $300. When his 
     opponent called the bet and showed his ace-high flush, Hogan 
     felt an impotent rage that broke on his forehead and coursed 
     through his body. Tilt. He cursed, shut down the program in 
     disgust and vowed never to play online again. Four days 
     later, however, he felt the traces of an urge as visceral as 
     the need to eat.
       Hogan was craving ``action,'' the gambler's drug. ``Getting 
     action'' is the act of placing a bet; being ``in action'' is 
     the high that follows, a state of arousal that neurologists 
     have likened to doing a line of cocaine. Blood rushes to the 
     face, the hands moisten, the mouth dries up. Time slows down 
     to a continuous present, an unending series of build-ups and 
     climaxes. The gains and losses begin to feel the same. Action 
     had already appeared intermittently in Hogan's life--when he 
     cheered the Ohio State Buckeyes through the last seconds of 
     overtime, when his father called him with Lehigh's admissions 
     decision in hand. Poker gave him the same rush whenever he 
     wanted it, for hours on end.
       Back in Ohio, Hogan's October bank statement arrived with 
     two $50 PSTARS withdrawals. His father called, asked why he'd 
     waste money like that. Greg promised to stop. He played again 
     that day. He had not and would not read any of the half-dozen 
     books that together give a rough grasp of how hard hold-em is 
     to master. He had no idea that many of his opponents were 
     self-styled professionals using a special program called 
     Poker Tracker to analyze betting patterns and seek out fish 
     like geelehigh. There were always some of these pros online, 
     some playing 8 or 12 tables at once to leverage their 
     advantage. They were waiting for him the night Lehigh's 
     football team lost to rival Lafayette, when Hogan, who'd 
     organized a cheering section, felt a little down and once 
     again pushed aside his father's warnings. They followed him 
     home over Thanksgiving weekend in November 2004, where, amid 
     the clutter of his father's small basement office, he watched 
     the World Series of Poker on TV, never changed out of his 
     pajamas and played online for 10 hours a day. He lost $1,500, 
     every penny he'd taken to school with him. Upstairs, the 
     Hogans wondered what was wrong with their son.
       ``It's just play money, Dad,'' he told his father, who 
     learned the truth when an overdraft notice arrived from 
     Greg's bank. Greg Jr.'s phone rang the moment he returned to 
     Lehigh. It was Greg Sr., who reminded Greg that the $1,500 
     had come from friends and relatives who didn't give it to him 
     so he could gamble it. Hogan, distraught, e-mailed Phys and 
     begged him to cover the loss. Phys agreed, so long as Greg 
     would stop playing. ``You're a fish,'' he said. ``You need to 
     stop.''
       Greg had begun to daydream about poker during student-
     council meetings, at orchestra practice, whenever he had a 
     free moment. Soon, Phys's $1,500 had melted away. Hogan's 
     parents arranged for him to meet with a Lehigh counselor. He 
     was told that live poker was harmless but to stay away from 
     online. For a time, the counseling worked. Hogan did not 
     gamble during spring semester. But that summer, back at home 
     in Ohio, Hogan was checking up on his friends at Facebook.com 
     when he saw a PartyPoker ad: make a $50 deposit, get a $50 
     bonus. He'd been coveting a red Jeep and remembered the times 
     he'd run $100 up to $500. Ten $500 sessions, get the 
     Cherokee, don't tilt and quit. And he did win, at first. 
     Then, as always, his opponents began to outmaneuver him. ``I 
     kept going back online, depositing another $50, winning, 
     withdrawing,'' he recalls. ``It happened a few times, but 
     then I wouldn't be withdrawing. And then I'd just keep 
     putting money in 'cause I kept losing.''
       In July, at his parents' behest, Hogan attended a few 
     Cleveland-area Gamblers Anonymous meetings, which proved 
     handy when a friend took him to a Canadian casino to play 
     live poker. He found it easy to play a disciplined game under 
     the appraising eyes of older strangers and won $500. The G.A. 
     meetings had taught him to recognize the fish at the table. 
     Except for the one sitting in his seat.
       Back at Lehigh that September, Hogan sometimes found 
     himself shoehorning counseling meetings between online-poker 
     sessions. To his friends and professors he was a terrific 
     success, the easygoing leader who organized landscaping 
     projects around the Sig Ep house and hobnobbed with Lehigh's 
     wealthy trustees at dinner parties. But to his parents, his 
     situation was growing desperate. Hogan had reneged on his 
     promise to attend G.A. meetings in Bethlehem. Withdrawals and 
     overdrafts continued to appear on his bank statements. ``I 
     really don't want to do this anymore, but I don't know how to 
     stop,'' Greg told his father. Greg Sr. then made the six-hour 
     drive from Ohio to install a $99 program called GamBlock on 
     his son's computer. Highly regarded among gambling 
     counselors, GamBlock makes it impossible for users to access 
     any Internet casinos. (The company's founder, David Warr, 
     says that half of his customer base, which he will only put 
     in the ``thousands,'' is connected to a college or 
     university.)
       Hogan soon found a way to circumvent GamBlock, gambling by 
     night in the library's computer lounges. ``It was funny to 
     see how many other kids were playing,'' he says. ``By this 
     point I didn't really care so much who saw me.'' Greg Sr. 
     realized what was happening and asked the administration to 
     lock poker sites out of the public terminals. He says he was 
     told that nothing could be done. As November approached, the 
     wall Hogan had built between his Lehigh life and his poker 
     life had begun to crack. He would

[[Page H4993]]

     borrow $100 or $200 from his fraternity brothers and fail to 
     pay them back by his self-imposed deadlines. He would skip 
     classes and meetings for long binges in the fraternity 
     lounge, gambling through the night and catching a few hours' 
     sleep before noon. People he hardly knew were asking him what 
     was the matter. On Oct. 19, when a fellow Sig Ep sent the 
     house an e-mail asking if anyone wanted to try to hit a 
     record Powerball jackpot, Greg sent this reply, a message 
     that went to all 60 of his brothers: ``O what the hell, maybe 
     my bad luck can change??? Please God??''
       The end came quickly, a weeklong series of 14-hour binges 
     at the end of November. ``There was very little thinking,'' 
     he told me. ``I'd get up and lose it. Get up, make another 
     deposit, lose it again. As soon as I lost, I had to get more 
     money in my account immediately. My whole body was shaking as 
     I waited for the program to load, I wanted to play so 
     badly.'' On Nov. 30, 2005, he lost the last $150 in his 
     account during a six-hour session in the Sig Ep lounge that 
     ended when a friend told him dinner was ready. ``I was up 
     about $500, and I was like, `I'll play two more hands,'' 
     Hogan says. ``Then one more hand, and one more after that. 
     And in those last three or four hands, I lost it all. All the 
     muscles in my body gave way.'' He fell asleep, completely 
     broke. All his poker accounts were at zero. His checking 
     account had a negative balance. At the Sig Ep winter social, 
     the fraternity treasurer told Hogan he would be kicked out if 
     he failed to come up with $200 in social fees. Having bailed 
     him out twice before, Greg's parents refused to give him the 
     money and were considering pulling him out of Lehigh 
     altogether. Hogan spent the next week wandering around the 
     Sig Ep house in a daze, skipping classes and drinking himself 
     into a stupor each night.
       ``It was the weirdest thing I've ever experienced in my 
     life,'' he said. ``Like an out-of-body experience. I was 
     watching myself walk around. Watching myself go and eat food. 
     Watching myself take a shower, but not actually doing 
     those things. I remember looking in the mirror, and it was 
     not me I was seeing in the reflection.''
       The night before the bank robbery, Greg spoke with his 
     father one last time. Greg Sr. remembers what he heard in his 
     son's voice. The tiredness. The lack of presence.
       ``Greg,'' he asked, ``are you gambling?'' Greg said what he 
     always said. ``Nah, Dad. It's been a while since I've done 
     any of that.'' Greg Sr. had gotten used to his son's half-
     truths, the ``wishing out loud,'' as he calls it. He knew it 
     was useless to press further. ``O.K., Gregory. I love you. 
     Good night.''
       I met Greg Hogan Jr. for breakfast one morning this spring, 
     at a diner a few miles from Lehigh. (As Hogan was in the 
     process of negotiating a plea with the county's D.A., I 
     agreed to ask him only about poker and refer all questions 
     about the day of the bank robbery to his attorney.) He had 
     recently completed an inpatient gambling-treatment program in 
     Louisiana, where he wasn't allowed to have more than $5 on 
     him at any time. ``I haven't played a hand of poker in 90 
     days,'' he said, with a recovering addict's confessional 
     cheer. He is 20, but his jowly face and all-business baritone 
     make him seem much older. Take away the American Eagle shirt 
     and the Ohio State Buckeyes cap and he'd resemble a young, 
     pale Harry Truman.
       Beside us sat Greg Sr. and Karen, still fuming over media 
     accounts that they are ``affluent.'' On the contrary, they 
     have scrimped to put children through college. After paying 
     Greg's treatment costs, legal fees and bank debts, they 
     expect to be out $35,000. Hogan's lawyer has been fielding 
     calls from bookers at ``Oprah,'' ``Montel'' and ``Good 
     Morning America,'' all drawn in by the irresistible ``good 
     kid robs bank'' story.
       Some $60 billion was bet last year in online poker games, 
     two-thirds of which came from the United States. The vast 
     majority of this money moves from player to player. About $3 
     billion wound up as revenue in the form of rake, a figure 
     that is growing by about 20 percent per year, making poker 
     the fastest-growing segment of the $12 billion online-
     gambling industry. Unlike their brick-and-mortar 
     counterparts, online casinos don't have to pay for dealers, 
     free drinks or air-conditioning, and they enjoy profit 
     margins as high as 60 percent.
       There are more than 400 online card rooms operating today, 
     offering every variety of poker game and every level of 
     stakes. Hold 'em, the most popular game, can be played for 
     anywhere from pennies to tens of thousands of dollars a hand. 
     Like pornography before it, gambling is shedding its stigma, 
     transitioning from the black market to Wall Street, from a 
     back-room vice to ubiquitous ``content.'' PartyGaming, the 
     largest operator, is valued at about $10 billion on the 
     London Stock Exchange. Its shares are held by Goldman Sachs, 
     Merrill Lynch and other top Wall Street firms. Five years 
     from now, if the plans of PartyGaming and other Internet 
     casinos come to pass, consumers will be able to place bets on 
     their cellphones and P.D.A.'s while waiting for a table in a 
     restaurant.
       The public visibility of online-poker seems to be growing 
     as fast as its revenues. Calvin Ayre, the globetrotting 
     founder of the online card room and sports-betting site 
     Bodog.com, spends $50 million a year promoting himself and 
     his company as a Hefner-like lifestyle brand. He has run ads 
     in Esquire and Vice magazine and on Gawker Media's sites in 
     which Ayre himself often appears as a dapper, rakish 
     bachelor, personally embodying both the new poker wealth and 
     the rewards his younger customers hope the game might 
     bring. The image has caught on--this March he appeared on 
     the cover of Forbes's Billionaires issue.
       While the Department of Justice maintains that online poker 
     violates U.S. laws, not a single player or site has been 
     indicted, and online gambling remains as available as pirated 
     music. To shut down Internet gambling, the D.O.J. would 
     either have to start monitoring what we download from the 
     Internet or raid legal, licensed businesses in Antigua, 
     Britain, Costa Rica and other countries where it has no 
     jurisdiction. The D.O.J. has succeeded in persuading some 
     credit-card companies to stop financing online-poker 
     accounts, but this hasn't stopped the flow of rake overseas. 
     U.S. players simply move funds through offshore third-party 
     ``e-wallets'' like Neteller and Firepay, which charge a small 
     fee and then pass the money on to the sites.
       ``The Department of Justice takes the position that online 
     poker is illegal,'' says the former U.S. attorney Jim Martin, 
     who led the first phases of the department's campaign against 
     online-gambling advertising. ``But I don't think they have 
     much of a motive to go after individual bettors at all.''
       Analysts say that online gambling's gray legal status 
     allows operators to avoid paying more than $7 billion a year 
     in federal taxes. And $7 billion is a lot of tax money to 
     leave on the table--nearly half of NASA's budget for next 
     year. It's probably too much for this ambiguous state of 
     affairs to continue for much longer. Late last month, the 
     House Judiciary Committee approved a bill introduced by 
     Representative Bob Goodlatte that would make it harder--but 
     far from impossible--for players to move their money 
     offshore, while leaving the question of domestic online 
     gambling to the states. With Congress unlikely to pass any 
     law authorizing federal oversight of our online activities, 
     Internet gambling's near future appears as healthy as illegal 
     downloading's. In the long term, the federal government's 
     response is likely to resemble either its response to 
     tobacco, with high taxes and more rigorous controls over 
     marketing and access to young people, or to marijuana, a 
     costly and mostly fruitless campaign to eradicate a demand-
     driven business by cutting off the supply.
       With plenty of disposable income and spare time, college 
     students constitute one of the gambling industry's most 
     coveted demographics. ``We've been surprised by this natural, 
     organic groundswell of demand from the college audience,'' 
     says Jason Reindorp, marketing director for 
     AbsolutePoker.com, which gave away a semester's tuition to 
     the winner of a college-only online tournament and promoted 
     its Web site at halftime during N.C.A.A. basketball 
     tournament games. Like many sites, AbsolutePoker.com enlists 
     players in multilevel marketing programs. Known as 
     ``affiliates,'' players are rewarded with a $75 bonus or a 
     percentage of the rake each time they find AbsolutePoker a 
     new customer. Reindorp says that AbsolutePoker relies on 
     students to make sure all this jibes with campus policy. 
     ``The student audience is very responsible,'' he says. ``They 
     know how to avoid getting into trouble by breaking their 
     school's rules, just like they know how to avoid playing 
     beyond their means.''
       I'd heard the same from almost every online player I'd 
     spoken with: I lose big, I win big, but at the end of the 
     day, I come out ahead. Johnson did know one losing player 
     who'd lost several thousand dollars and had to take a $6.25-
     an-hour job at this very smoothie shop to pay for his books.
       Johnson said Hogan never had much of a reputation among 
     Lehigh's hard-cord poker players. ``The funny thing is, he 
     wasn't even in that deep,'' he told me. ``Five thousand is 
     nothing. I know whole halls full of kids who play the 
     thousand-dollar buy-in No Limit tables. If everyone did the 
     same thing when they lost five large,'' he added with a 
     chuckle, ``well, there'd be a lot more bank robberies.''

  Mr. Speaker, I yield back the balance of my time.
  Mr. LEACH. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, very briefly, I would simply like to express a lot of 
personal appreciation to Chairman Mike Oxley of the Banking Committee, 
Spencer Bachus and all those who have preceded us on this side, to 
Chairman Sensenbrenner and, extraordinarily, to Bob Goodlatte who has 
led this movement for quite a long time.
  I also want to express a great deal of respect for points in the 
opposition, Ron Paul, our distinguished Libertarian leader in the 
House, and Barney Frank, who from a liberal perspective has taken a 
Libertarian view, have thoughts that deserve great respect; and I have 
always admired the work of the ranking member, John Conyers, on this 
committee.
  But I want to just conclude with this observation. This is not a 
partisan bill. It is not an ideological bill. As Ms. Hooley very 
thoughtfully reflected, from a Democratic perspective, this is a family 
bill, and this bill, I am hopeful, will get a lot of support from both 
sides, and it will get a little opposition from both sides. This is for 
the good of the American people, and in the development of legislation 
like this, outside

[[Page H4994]]

groups do play a role. Sometimes they are nefarious; that happens 
around here. Sometimes they are high-minded.
  When I think of Marty Gold of the NFL, when I think of Cynthia Abrams 
from United Methodist Church, I think of really fine Americans who have 
indicated that we should act in this area, and I am honored to work 
with them.
  I urge support for this legislation.
  The SPEAKER pro tempore. The gentleman's time has expired.
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in strong support of H.R. 4411, the Internet 
Gambling Prohibition and Enforcement Act. The version we consider today 
merges H.R. 4777, the Internet Gambling Prohibition Act, offered by the 
gentleman from Virginia (Mr. Goodlatte), and H.R. 4411, the Unlawful 
Internet Gambling Enforcement Act of 2006 introduced by the gentleman 
from Iowa (Mr. Leach).
  I am pleased to have worked closely with Mr. Goodlatte, Mr. Leach and 
members of the Committee on Financial Services to draft a compromise on 
this important legislation which has allowed it to come to the floor 
today.
  In recent years, illegal online gambling activities and their adverse 
social consequences have risen dramatically. Americans will send $6 
billion to unregulated, offshore, online casinos this year, 50 percent 
of the $12 billion wagered on Internet gambling worldwide.
  The Department of Justice has warned that Internet gambling sites are 
often fronts for money laundering, drug trafficking and even terrorist 
financing. Furthermore, these sites evade vigorous U.S.-based gambling 
regulations that restrict gambling by minors, protect chronic gamblers 
and ensure the integrity of the games.
  The characteristics of Internet gambling are unique: online players 
can gamble 24 hours a day from home; children may play without 
sufficient age verification; and betting with a credit card can 
undercut a player's perception of the value of cash, leading to 
addiction, bankruptcy and crime. Young people and compulsive gamblers 
are particularly vulnerable.
  The legislation we consider today clarifies the application of the 
Wire Act to the Internet, and prohibits not only sports betting, but 
traditional gambling such as online poker, blackjack and roulette.
  It further provides Federal, State and tribal law enforcement with 
the tools to combat Internet gambling and cuts off revenue to those who 
profit from this destructive and illegal activity. The bill 
accomplishes this by prohibiting the use of financial instruments such 
as credit cards, electronic fund transfers, checks and drafts to pay 
for online gambling bets. It also increases the criminal penalties for 
violation of the Wire Act from a maximum of 2 years to a maximum of 5 
years.
  Legislation to address illegal online gambling is strongly supported 
by a broad and diverse coalition representing religious organizations, 
professional sports leagues, entertainment companies, the financial 
services industry, and State lottery commissions. Moreover, the unique 
national and global character of the Internet requires a clear and 
decisive congressional response to illegal activities that occur 
online.
  The time to pass strong prohibitions against Internet gambling is 
now. I urge my colleagues to pass this vital legislation.

                                         House of Representatives,


                                   Committee on the Judiciary,

                                    Washington, DC, July 10, 2006.
     Hon. Joe Barton,
     Chairman, Committee on Energy and Commerce, Washington, DC.
       Dear Chairman Barton: Thank you for your recent letter 
     concerning the Committee on Energy and Commerce's 
     jurisdictional interest in H.R. 4411, the ``Unlawful Internet 
     Gambling Enforcement Act of 2006, as amended.'' I acknowledge 
     the Committee on Energy and Commerce's jurisdictional 
     interest in the amendment in the nature of a substitute to 
     H.R. 4411 and appreciate your willingness to waive further 
     consideration of the legislation in order to expedite its 
     consideration on the House floor.
       I agree that by foregoing consideration of the amendment in 
     the nature of a substitute to H.R. 4411, the Committee on 
     Energy and Commerce does not waive jurisdiction over subject 
     matter contained in this or similar legislation. In addition, 
     I agree to support representation from the Committee on 
     Energy and Commerce for provisions of H.R. 4411 determined to 
     be within its jurisdiction in the event of a House-Senate 
     conference on the legislation.
       Finally, as requested, I will include a copy of your letter 
     and this response in the Congressional Record during floor 
     consideration of this legislation.
           Sincerely,
                                      F. James Sensenbrenner, Jr.,
     Chairman.
                                  ____

                                         House of Representatives,


                             Committee on Energy and Commerce,

                                    Washington, DC, July 10, 2006.
     Hon. F. James Sensenbrenner, Jr.
     Chairman, Committee on the Judiciary,
     Washington, DC.
       Dear Chairman Sensenbrenner: I understand that the House 
     plans to consider H.R. 4411, as amended, the Unlawful 
     Internet Gambling Enforcement Act of 2006, this week. The 
     proposed amendment in the nature of a substitute contains 
     provisions that fall within the jurisdiction of the Committee 
     on Energy and Commerce.
       I recognize your desire to join Chairman Oxley and bring 
     this legislation before the House in an expeditious manner. 
     Accordingly, I will not exercise my Committee's right to a 
     referral. By agreeing to waive its consideration of the bill, 
     however, the Energy and Commerce Committee does not waive its 
     jurisdiction over the subject matter contained in the 
     amendment in the nature of a substitute to H.R. 4411. In 
     addition, the Energy and Commerce Committee reserves its 
     right to seek conferees for any provisions of the bill that 
     are within its jurisdiction during any House-Senate 
     conference that may be convened on this or similar 
     legislation. I ask for your commitment to support any request 
     by the Energy and Commerce Committee for conferees on H.R. 
     4411 or similar legislation.
       I request that you include this letter in the Congressional 
     Record during consideration of H.R. 4411. Thank you for your 
     attention to these matters.
           Sincerely,
                                                       Joe Barton,
                                                         Chairman.

  Mr. Speaker, I reserve the balance of my time.
  Mr. CONYERS. Mr. Speaker, I yield myself 4 minutes.
  I just want to tell my friend, the gentleman from Virginia (Mr. 
Wolf), that if he thinks we have fixed the Abramoff problem of this 
House by passing this legislation, I am sure that Jack is somewhere 
saying, Fooled again.
  Now, I oppose this bill for the same reasons that the Traditional 
Values Coalition opposes the bill, namely, that we are not doing the 
complete job; and if we were, I would be here as an advocate. But this 
legislation only bans certain forms of online gambling, while expanding 
legal authorization for certain favored special interests, including 
betting on the lotteries and interstate horse racing.
  This latter exception, the one reserved especially for the horse 
racing industry, is a great concern because in the last few months the 
horse racing industry has made it clear that they intend to use the 
carve-out to go after who, children, in order to encourage them to 
engage in online gambling. This is a big problem for me.
  But could we not have figured this out without going to the Baltimore 
Sun or listening to the chief executive officer of the Maryland Jockey 
Club tell us about the decades-long slump in attendance and wagering at 
the track and the ability of the Internet to turn that around?
  In response, Mr. DeFrancis declared, ``Over the 25 years I've been in 
this industry, not one day has gone by when I haven't heard people 
complaining that our customer base is getting older and we can't 
attract young people. And this gives us an opportunity to expand into 
the youth market unlike any we've ever had before.''
  Do you not get it? With this carve-out, we are starting something 
that is a slippery slope, and it has been thankfully remarked on by a 
number of people here.
  So, regardless of one's position with respect to whether or not 
Internet gambling should be banned, we can all, and should, agree that 
innocent children should not be taken advantage of when they go online. 
As is the case when it comes to protecting kids from pornography and 
other forms of online predators, children should be equally protected 
from those who make it their mission to encourage underage gambling.
  So, for that reason, the bill goes in the wrong direction and 
threatens to make an increasing problem even worse.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SENSENBRENNER. Mr. Speaker, I yield 4 minutes to the gentleman 
from Virginia (Mr. Goodlatte), the father of half this bill.

[[Page H4995]]

  Mr. GOODLATTE. Mr. Speaker, first, I want to thank Chairman 
Sensenbrenner for his long support of our efforts on this legislation. 
He is now in his sixth year as chairman of the Judiciary Committee, and 
this legislation even predates his strong leadership of the committee.
  I want to thank most especially Congressman Jim Leach of Iowa, who 
has worked very, very hard and very, very long in the Financial 
Services Committee to accomplish these same goals that we have worked 
on in the Judiciary Committee. Bringing these two bills together for 
the first time is a major accomplishment and provides the strongest 
bill that has ever been offered to deal with this scourge of Internet 
gambling.
  I am also deeply grateful and indebted to the gentleman from Virginia 
(Mr. Boucher) who has been the lead Democratic cosponsor of the 
Judiciary version of the legislation with me for many years, as well, 
and I thank him for his efforts.
  There are many Members on both sides of the aisle who have made great 
contributions, Congresswoman Hooley, Congressman Cardoza of California, 
many other Members on the Democratic side who will join with us to 
finally pass this legislation.
  Mr. Speaker, gambling on the Internet has become an extremely 
lucrative business. Internet gambling is now estimated to be a $12 
billion industry, with approximately $6 billion coming from bettors 
based in the U.S. It has been reported that there are as many as 2,300 
gambling sites, and the Department of Justice has testified that these 
offshore, fly-by-night Internet gambling operations can serve as 
vehicles for money laundering by organized crime syndicates and 
terrorists.
  The anonymity of the Internet makes it much easier for minors to 
gamble online. In addition, online gambling can result in addiction, 
bankruptcy, divorce, crime and moral decline just as with traditional 
forms of gambling, the costs of which must be ultimately borne by 
society.
  In fact, I have been contacted by a constituent in my district whose 
son fell prey to an Internet gambling addiction. Faced with 
insurmountable debt from Internet gambling, he took his own life.
  We heard earlier from Congressman Dent and his constituent, whose son 
robbed a bank as a college student because he could not meet his 
Internet gambling debts, and the final thing that the father had to say 
just in today's Associated Press story, This bill would have definitely 
helped my son.
  That is what we are about here today. As Congressman Leach said, this 
is about protecting America's families.
  Traditionally, States have had the authority to permit or prohibit 
gambling within their borders. With the development of the Internet, 
however, State prohibitions and regulations governing gambling have 
become increasingly hard to enforce as electronic communications move 
freely across borders.
  Current Federal law already prohibits interstate gambling over 
telephone wires. However, these laws, which were written before the 
invention of the Internet, have become outdated. The Internet Gambling 
Prohibition and Enforcement Act brings the current prohibition against 
wireline interstate gambling up to speed with the development of new 
technology. It also makes clear once and for all that the prohibition 
is not limited to sports-related bets and wagers, and would provide 
Federal, State and tribal law enforcement with new injunctive authority 
to prevent and restrain violations of the law.
  In addition, H.R. 4411 prohibits a gambling business from accepting 
certain forms of noncash payment, including credit cards and electronic 
fund transfers. In order to block transactions going overseas, the 
legislation also requires the Federal Reserve Board and the Treasury 
Department to issue regulations to help banks block illegal gambling 
transactions.
  H.R. 4411 also protects the rights of citizens in each State to 
decide through their State legislatures whether to permit gambling 
within their borders. The regulation of intrastate gambling has always 
been within the jurisdiction of each State, and this bill leaves the 
regulation of wholly intrastate betting to the States with tight 
controls to ensure that such betting or wagering does not extend beyond 
their borders or to minors.
  The opponents of this legislation have a lot to lose. Offshore, 
online gambling Web sites are cash cows, and the greed that propels 
these companies leads them to solicit bettors in the United States 
despite the fact that the Department of Justice already believes this 
activity is illegal. The greed that motivates many of these offshore 
establishments has also motivated nefarious lobbyists such as Jack 
Abramoff to spread misinformation about previous attempts of the 
Congress to ban online gambling.
  Internet gambling is a serious problem that must be stopped. The 
Internet Gambling Prohibition and Enforcement Act will help eliminate 
this harmful activity before it spreads further.
  This is legislation that was defeated by Jack Abramoff before. He is 
still out there with other lobbyists trying to do it again. Support the 
legislation. Defeat the amendment.
  Mr. CONYERS. Mr. Speaker, I am delighted to yield 3 minutes to the 
gentleman from Virginia (Mr. Scott), an esteemed member of the 
Judiciary Committee.
  Mr. SCOTT of Virginia. Mr. Speaker, I thank the gentleman for 
yielding.
  Mr. Speaker, I oppose the bill because it does not prohibit Internet 
gambling; it only tries to prohibit running an Internet gambling 
operation. But because of the nature of the Internet, it is probably 
unlikely to do that, and that is because even if we are successful in 
closing down business sites in the United States or in countries we can 
get to cooperate, it will be ineffective because it will have no effect 
on those operations run outside of the reach of the Department of 
Justice.
  Furthermore, it does not prohibit illegal gambling, just running the 
operations so that gamblers will be as free as they are now to gamble 
over the Internet.
  Further, Mr. Speaker, it provides a credit card prohibition. We heard 
from witnesses during our hearings that this will create an enforcement 
nightmare for financial institutions because it requires them to stop 
and look for illegal Internet gambling transactions.

                              {time}  1300

  It is hard to identify those transactions, because they are not going 
to be identified as an illegal Internet transaction. It will just be 
you may have a company with one code for all payments, even though the 
company may have many activities, including Internet gambling.
  Just as Caesar's Palace has a hotel and a gaming operation, a foreign 
company may have a hotel and a casino and an Internet gaming operation 
which is legal in that country, all paid to a single account. What 
about e-cash or electronic payment systems, or an escrow agent located 
in another country? All the bank knows is that the payment came from 
PayPal or went to some escrow agent.
  With some Internet gambling operations being legal, how would the 
final institution distinguish between what is legal and what is 
illegal? Furthermore, we should not overestimate the cooperation we 
might get from other countries. The Internet gambling Web sites were 
virtually unheard of a few years ago and now represent billion-dollar 
businesses and are growing at phenomenal rates.
  Over 85 foreign countries allow some form of gambling online, and 
that number is likely to grow as well. So what governments are likely 
to cooperate with us in prosecuting businesses that they authorize to 
operate?
  Even if we are successful in getting cooperation from some countries, 
it would simply increase the profit opportunities for sites located in 
uncooperative countries, especially those with whom the United States 
does not have normal diplomatic relations, and those sites would be 
unregulated with no consumer protections.
  Again, we have heard these stories about the problems of Internet 
gambling. But this bill does not prohibit Internet gambling. It 
prohibits running the operation. If we wanted to be effective in 
prosecuting illegal gambling on the Internet, we would prosecute the 
individual gamblers. A few sting operations would get the word out that 
if

[[Page H4996]]

you gamble on the Internet, you will be caught, because the money trail 
will lead back to each individual Internet gambler.
  So as long as individuals can gamble over the Internet with impunity, 
the market will be provided for them from some place.
  Mr. Speaker, this bill does not prohibit Internet gambling, just 
tries to prohibit running the operation in a jurisdiction within the 
reach of the Department of Justice, then it sets up an impossible 
regulatory scheme, requiring banks to figure out which of billions of 
transactions might be related to illegal Internet gambling.
  If we want to prohibit Internet gambling, let's debate that. 
Meanwhile, we should defeat this bill.
  Mr. SENSENBRENNER. Mr. Speaker, I yield 2 minutes to the gentleman 
from Virginia (Mr. Boucher).
  (Mr. BOUCHER asked and was given permission to revise and extend his 
remarks.)
  Mr. BOUCHER. Mr. Speaker, I thank the gentleman from Wisconsin for 
yielding this time and commend him for his work on this measure.
  Mr. Speaker, it has been my pleasure to work with our Virginia 
colleague, Mr. Goodlatte, in introducing this bipartisan measure that 
is before the House today, which will crack down on the growing problem 
of illegal offshore gambling as well as illegal gambling that crosses 
State lines by way of connections to the Internet.
  These activities take billions of dollars out of our national economy 
each year, serve as a vehicle for money laundering, undermine families, 
and threaten the ability of States to enforce their own laws. The time 
to approve a ban on Internet gambling has now arrived. The basic policy 
that we are promoting in this bill was adopted in the 1960s when 
Congress passed the Wire Act. That law makes it illegal to carry out a 
gambling transaction through use of the telephone network. We are 
modernizing the Wire Act to account for the arrival of the Internet as 
a communications medium by making it illegal to use the Internet for 
gambling transactions as well.
  In view of the fact that people connect to the Internet by means 
other than telephone lines, and that a large amount of Internet traffic 
does not even touch the public switched telephone network, we think it 
is necessary to specify that prohibited traffic which crosses either 
the telephone network or the Internet is illegal under the Wire Act.
  Our bill has now been joined with Mr. Leach's measure, which inhibits 
financial transactions arising from Internet gambling. This bill is 
needed. It effectively attacks the growing problem of offshore 
gambling. It attacks the money laundering that often attends these 
activities. It strengthens the ability of States to prohibit or to 
allow gambling transactions as they desire within their borders.
  It will enable States to enforce their own laws. I want to commend 
Mr. Goodlatte and Mr. Leach for their careful work on this measure. I 
am pleased to urge its adoption by the House.
  Mr. CONYERS. Mr. Speaker, no one has worked harder on this bill than 
the gentlewoman from Nevada (Ms. Berkley), and I yield her 4 minutes.
  Ms. BERKLEY. Mr. Speaker, I would like to thank Mr. Conyers for his 
extraordinary efforts on this legislation.
  Mr. Speaker, I rise in strong opposition to this legislation. Despite 
the misinformed and misguided claims of this bill's supporters, it 
would neither prohibit Internet gaming nor increase enforcement 
capabilities of the United States Government.
  Instead, passing this bill will do the exact opposite. The millions 
of Americans who currently wager online will continue to use offshore 
Web sites out of the reach of U.S. law enforcement, and they will 
remain unprotected by State regulators who ensure the integrity of 
brick and mortar gaming establishments in this country.
  I continue to be astounded by the Members of this body who constantly 
rail against an intrusive Federal Government; and yet when it comes to 
gaming, they are the first, the first to call for government intrusion.
  A man's home is his castle unless he chooses to participate in online 
gaming. Then his home is the province of the Federal Government. This 
bill was recently included on the House Republicans' American Values 
Agenda.
  Which American values is this promoting? It certainly cannot be the 
right to privacy. It certainly cannot be the right of individuals to be 
free to make their own decisions about what type of recreation to 
enjoy. And, yes, my colleagues, gaming is considered a form of 
recreation for millions of our fellow citizens.
  Gaming is legal in this country in those States who choose to allow 
it and to regulate it. The vast majority of States do allow gaming and 
regulate it, whether it be lotteries, racing, card rooms, casinos, or 
bingo. This bill would make a legal activity illegal in those same 
States solely because it is done online rather than in a casino or in a 
church. In reality, the intent of this bill, and it is rather obvious, 
is to attack and outlaw legal gaming in our Nation.
  Supporters of this bill argue that online gaming is a great danger to 
society and our youth because some people gamble too much and some 
underage people might access online wagering sites. By that logic, the 
next piece of legislation we should be considering is banning online 
shopping. Surely those who overspend their budgets online and young 
people who borrow their mom's credit card must be stopped by the long 
arm of Federal law enforcement.
  Supporters of the bill before us today claim that their target is the 
offshore gambling operations that are sucking billions of dollars out 
of the United States, as Mr. Goodlatte said. Indeed, Internet gaming 
has grown from a $3 billion industry in 2001, and it is projected to 
reach $25 billion by the end of the decade.
  Americans account for as much as half of that amount. But there is 
nothing in this bill, let me repeat that, nothing in this bill that 
will shut down these offshore companies who operate legally in other 
countries. Like it or not, Americans who wish to wager online will find 
a way to do so.
  The very nature of a free World Wide Web will continue to make online 
gaming available across the globe, including the United States. Under 
this bill, billions of dollars will continue to flow out of our 
country, with millions of Americans wishing to wager online. It is 
ridiculous, ridiculous to think this bill will actually stop online 
gaming. Just like Prohibition failed, this prohibition on gaming in the 
comfort of your own living room will fail as well.
  Mr. SENSENBRENNER. Mr. Speaker, I yield 2 minutes to the gentleman 
from Massachusetts (Mr. Meehan).
  Mr. MEEHAN. Mr. Speaker, I rise in support of this important bill to 
stop Internet gambling. Mr. Speaker, I do not have a problem with 
gambling; but the fact is that the Internet has grown, and gambling on 
the Internet has exploded. In 1995 the first online gambling site was 
born.
  By 1999, that number had grown to 100 sites. Today there are more 
than 2,300 gambling Web sites. This increase in availability has 
mirrored an explosion in the amount of money spent on online gambling. 
In 1999, online gambling revenues were estimated at $1 billion. By 2002 
that number had tripled to $3 billion. Today that number has quadrupled 
to $12 billion.
  Within those $12 billion are stories of families that are finally 
ruined, and children that are addicted to gambling. We take this 
drastic action today because the problem of Internet gambling is so 
unique. Because it is so accessible and unregulated, Internet gambling 
is marketed to minors.
  Now, I have been a leader in this institution in trying to prevent 
cigarette sales on the Internet. Why? Because if you go to try to 
purchase cigarettes at a convenience store, you have to demonstrate you 
are an adult or 18 years of age. When children can buy cigarettes on 
the Internet, they are able to get access. Young people, it is the same 
way with gambling. They cannot get in to brick and mortar casinos, but 
they can get onto a computer.
  Because Internet gambling does not know borders or boundaries, it 
does not recognize State law, or any law for that matter. That is one 
of the reasons why 48 State attorneys general support the action that 
this Congress is taking today. Congress has a unique opportunity today 
to pass a strong anti-Internet gambling bill.
  This bill does not do anything to affect legitimate gambling that is 
going

[[Page H4997]]

on in brick and mortar establishments. But the fact of the matter is 
when you allow unlimited, unregulated gambling, particularly in a 
country where States rely on gambling for revenues, but we see little 
money being spent on dealing with those people who have a problem, an 
addiction with gambling that has ruined literally thousands and 
thousands of lives across this country, we need to deal with this.
  I urge my colleagues to vote for this bill and put the brakes on 
Internet gambling.
  Mr. CONYERS. Mr. Speaker, I yield myself 15 seconds.
  Mr. Speaker, I want to just let me dear friend from Massachusetts 
know that this bill requires no age verification for minors to place 
horse racing bets.
  Mr. Speaker, I yield 1 minute to the gentleman from Nevada (Mr. 
Porter).
  Mr. PORTER. Mr. Speaker, I thank my colleague from Michigan. In all 
fairness to my friends and colleagues on this side of the aisle, I 
respectfully disagree with the concept.
  Whether you are for or against Internet gaming, this bill is not 
going to change some realities. The reality, as has been mentioned here 
time and time again is close to $12 billion is being invested on the 
Internet. We are not sure who these folks are, but we know the bulk of 
them are somewhere in other parts of the world.
  I would highly encourage that my colleagues in the House look 
seriously at my bill, which is H.R. 5474, that I cosponsored with 
Shelley Berkley from Nevada, my friend and colleague. It is an Internet 
gambling study. It is a comprehensive study that looks at government 
activities, existing legal frameworks. There is so much confusion for 
those that are using the Internet. I would highly encourage, this is a 
very complex issue that needs intense review in a bipartisan approach. 
We are not going to stop Internet gambling. It is illegal today. This 
bill is one more piece that is not going to be enforced. I encourage 
opposition to this bill.
  Mr. CONYERS. Mr. Speaker, I yield myself the balance of the time.
  Mr. Speaker and ladies and gentlemen, H.R. 4411 is Abramoff's 
revenge. If he were still lobbying and not on the way to imprisonment, 
he and his former client would have no reason to panic about H.R. 4411, 
because that bill contains the loophole for State lotteries that he was 
hired to secure in 2000, which is why he opposed the bill then. And now 
that he has got it, he would be in support of the bill.
  The supporters often note the defeat of his bill in 2000, and his 
role in that defeat, as the reason to enact this year's bill. Wrong. 
However, the supporters conspicuously fail to note that Abramoff's goal 
was to preserve the ability of his then clients to bring State 
lotteries onto the Internet. He only worked to defeat the Goodlatte 
bill when it was clear that State lotteries would not be exempt from 
the ban. He would be able and is able to rest easy today because we 
contain in this measure an amendment to the Wire Act that would allow 
States to sell lottery tickets online so long as certain minimal 
conditions are met, that is, that the State must specifically authorize 
online ticket sales.
  Please, let's be real. Let's be candid. Let's be honest with the 
American people about what they were doing.

                              {time}  1315

  If we didn't have this loophole as big as a barn door, this bill 
would be a lot better off. And so H.R. 4411 is Abramoff's revenge. It 
is a bill that he could have supported in 2000. And though the passage 
of this bill is rationalized as a way to exorcise the demons of 2000 
from the House, the reality is this bill serves his clients' interests. 
Please oppose this measure unless there are some changes made about it.
  Mr. Speaker, I yield back the balance of my time
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself the balance of my 
time.
  Mr. Speaker, it puzzles me greatly to hear my distinguished friend 
from Michigan (Mr. Conyers) call this bill Abramoff's revenge. There 
are no two Members of this body that fought Mr. Abramoff more strongly 
on this issue than the gentleman from Iowa (Mr. Leach) and the 
gentleman from Virginia (Mr. Goodlatte). And what side are they on? 
They are the sponsors of this bill, because they realize that we have 
to do something to curtail Internet gambling.
  Now, this bill started out before I became the chairman of the 
Judiciary Committee. It is still around, and Internet gambling is 
growing by leaps and bounds.
  Now, I think that they have struck a good compromise, they have 
struck a good balance, and they have come up with legislation that is 
practical not only in attempting to deal with the methods of payment 
for debts accrued through Internet gambling, but also through an 
amendment of the Wire Act to deal with this issue, since most 
transmissions over the Internet no longer even touch the public wire 
telephone and telecommunications system.
  I think that they have done a good job in coming up with something 
that can be passed by both Houses and signed into law; and the 
executive office of the President and the Office of Management and 
Budget issued a statement of administration policy saying that the 
administration supports passage of this bill.
  How come everybody who has been fighting for this issue, or almost 
everybody who has been fighting for this issue, wants to have the bill 
passed, and we see some folks from Nevada and elsewhere that don't? 
Vote ``aye'' on the bill.
  Mr. SMITH of Texas. Mr. Speaker, I support this legislation. It 
protects families and upholds the rule of law.
  Any gambling not currently regulated by the states is illegal in this 
country. To avoid such regulation, gambling organizations have 
established themselves offshore and have put their businesses on the 
World Wide Web.
  And the Internet has given anyone who knows how to use a computer--
including children--access to unlimited gambling.
  Unfortunately, illegal gambling businesses are rarely prosecuted. 
These 24-hour-a-day businesses entice children and adults and can lead 
to addiction, criminal behavior, financial troubles, and worse.
  What these Internet sites do impacts every American. Also, officials 
from the FBI recently testified that Internet gambling serves as a 
vehicle for money laundering activities by terrorists.
  The Internet Gambling Prohibition and Enforcement Act simply updates 
current law to make sure that all methods of gambling, even those done 
using the latest and ever-changing technologies, are covered under the 
established law known as the Wire Act.
  The bill does this while at the same time ensuring that a State has 
the right to regulate gambling that happens solely within that State's 
borders.
  And H.R. 4411 marginalizes organized gambling by banning those 
businesses from taking checks, wire transfers, and credit cards in 
payment for illegal gambling.
  Mr. Speaker, I thank Mr. Goodlatte and Mr. Leach for offering this 
legislation, and I urge my colleagues to support the bill.
  Mr. SHAYS. Mr. Speaker, I rise in strong support of H.R. 4411, of 
which I am a cosponsor. This legislation would prohibit banks and 
credit card companies from processing payments for online bets.
  I believe gambling is inherently dishonest and am opposed to it in 
any form. During my 14 years in the State legislature I voted against 
every gambling bill we considered.
  Gambling financially cripples those who can least afford it--the 
poor--through the cruel and misleading lure of ``winning it big.''
  I am concerned about the spread of gambling, especially among our 
children. We need to pause and rethink whether we truly want to 
legalize so many forms of gambling in so many areas of the country.
  In my judgment, Internet gambling should be regulated the same way as 
traditional forms of gambling, as was recommended by the National 
Gambling Impact Study Commission.
  Illegal acts should be prohibited wherever they occur--including 
cyberspace--and society clearly has the right to prevent cyberspace 
from being used for illegal purposes. I urge my colleagues to support 
this important legislation.
  Mr. RYAN of Wisconsin. Mr. Speaker, I supported H.R. 2143, the 
Unlawful Internet Gambling Funding Prohibition Act, which passed the 
House by an overwhelming 319-104 vote in 2003. I also voted in favor of 
H.R. 3125, the Internet Gambling Prohibition Act, in 2000. I supported 
reforming Internet gambling then, and I am pleased that Congress has 
decided to take up this issue again today.
  Current regulations on Internet gambling are out of date and 
ineffective. Forty-eight State Attorneys General have already written 
to Congress asking for Federal Internet gambling legislation, and many 
sports organizations have echoed their support. Although States

[[Page H4998]]

 have passed laws attempting to stem the tide against Internet 
gambling, it continues to occur with greater frequency, with more and 
more Web sites being created daily that explicitly target our children. 
These sites not only take advantage of young Americans who have no 
means to pay their debts, but also encourage a dangerous, and possibly 
lifelong, addiction. Equally problematic, online gambling also serves 
as a tool for criminals to launder money and evade taxes. We must 
ensure that this stream of funding is closed to those who seek to do 
harm to the United States.
  While it is essential to protect an individual's right to engage in 
legal and honest gaming, I also believe we have a duty to protect the 
public from abusive and fraudulent websites that take advantage of 
minors and exploit the system for their own gain. H.R. 4411 walks the 
fine line between these goals and provides law enforcement with the 
tools it needs to aggressively crack down on illegal gambling. I 
support this legislation and am pleased at its passage through the U.S. 
House of Representatives.
  Mr. SENSENBRENNER. Mr. Speaker, I yield back the balance of my time.


                    Amendment Offered by Ms. Berkley

  Ms. BERKLEY. Mr. Speaker, I offer an amendment.
  The SPEAKER pro tempore (Mr. Latham). The Clerk will designate the 
amendment.
  The text of the amendment is as follows:

       Amendment printed in House Report 109-551 offered by Ms. 
     Berkley:
       Page 13, strike line 12 and all that follows through line 
     18 on page 15.
       Redesignate succeeding subsections accordingly.
       Page 21, strike lines 21 through 23.
       Redesignate succeeding subsections accordingly.
       Strike section 106.

  The SPEAKER pro tempore. Pursuant to House Resolution 907, the 
gentlewoman from Nevada (Ms. Berkley) and the gentleman from Wisconsin 
(Mr. Sensenbrenner) each will control 10 minutes.
  The Chair recognizes the gentlewoman from Nevada.
  Ms. BERKLEY. Mr. Speaker, I am pleased to join the ranking member of 
the Judiciary Committee, Mr. Conyers, and my colleague from Florida, 
Mr. Wexler, in offering this amendment.
  Despite all the righteous indignation we are hearing about the 
supposed evils of Internet gaming, this bill specifically and brazenly 
exempts one giant gambling enterprise from its prohibition. This bill's 
advocates proclaim the immorality of online gaming and shout that it 
will destroy our society unless you are betting on horse races.
  Mr. Goodlatte asserts that his bill is neutral on the subject of 
interstate online pari-mutuel betting, but there is no getting around 
the fact that this bill very clearly and specifically states that 
online betting on horse racing is not prohibited.
  And if you don't believe me, Mr. Speaker, let's look at what the 
National Thoroughbred Racing Association has said about the bill. In 
March of this year, after Financial Services approved the Leach bill, 
the NTRA issued a press release saying, ``The National Thoroughbred 
Racing Association has secured language in the unlawful Internet 
Gambling Enforcement Act to protect Internet and account wagering on 
horse races.''
  Later in the same release, ``The NTRA worked with Congressman 
Goodlatte to ensure that H.R. 4777 also contained language that 
protects online and account pari-mutuel wagering.'' That sounds pretty 
clear to me.
  But wait, Mr. Speaker, there is more. After the Judiciary Committee 
approved both the Goodlatte and Leach bills in May, the Thoroughbred 
Times published an article titled, ``Gambling Bill Passes Committee 
With Racing Exemption Intact.'' The article states that the bill 
includes an exemption that would allow the United States horse racing 
industry to continue to conduct interstate account and Internet 
wagering. And, finally, it includes a quote from the NTRA spokesman who 
said, ``Not only did the bill pass by a significant margin, but three 
separate amendments to either slip out or substantially limit our 
exception were all defeated.'' It sounds to me like they think they got 
an exception in this bill.
  The bill also includes another hypocritical exemption for intrastate 
lotteries that is highly ironic because, as has been stated here 
before, this exemption is exactly what the notorious felon, Jack 
Abramoff, wanted when he reportedly orchestrated the defeat of a 
similar bill several years ago because it had no exemption for 
lotteries. Mr. Abramoff, if he were here, would be laughing about this 
turn of events. I am sure his former clients are giddy.
  Our amendment would strike the horse racing and lottery exemptions 
from this bill. Members who say they dislike Internet gaming have the 
opportunity to prove it by supporting this amendment.
  If we do not adopt the amendment, then this entire debate is a farce, 
Mr. Speaker, because the Internet Gambling Prohibition and Enforcement 
Act before us does not completely prohibit Internet gaming. You want to 
outlaw Internet gaming? This body wants to outlaw Internet gaming? 
Well, let's do it. Let's test the mettle of our fellow colleagues.
  I have heard many speakers talk about the special interests involved 
in this bill. Well, it seems to me that the most special interest is 
the Thoroughbred Horse Racing Association. They seem to have the most 
clout because they are the ones that got the exemption.
  I ask all of my colleagues to join with me. If you are serious about 
outlawing Internet gaming, then let's really do it, and let's not carve 
out an exemption because it suits your purposes and your special 
interests.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself 2 minutes.
  Mr. Speaker, I rise in strong opposition to the amendment. This 
amendment impairs States' rights to regulate gambling within their 
borders and eliminates the protection in this legislation that prevents 
gambling from crossing State lines.
  Now, what State has got the most gambling to export? I believe it is 
the State of the author of this amendment, the gentlewoman from Nevada. 
Congress has consistently found that States have the primary 
responsibility for determining what forms of gambling may legally take 
place within their borders, and this amendment infringes on that right 
and subverts this principle. Forty-nine of the 50 State attorneys 
general support a ban on Internet gambling. Guess which attorney 
general doesn't. It is the attorney general from Nevada, the same State 
as the sponsor of this amendment, my distinguished colleague the 
gentlewoman from Nevada (Ms. Berkley).
  And, unlike previous versions of the Internet gambling bills, H.R. 
4411 is neutral as it relates to the Interstate Horse Racing Act. The 
relevant provision in the legislation simply states that, if an 
activity is permitted under the Interstate Horse Racing Act, it would 
not be prohibited by this legislation. If someone wants to amend the 
Interstate Horse Racing Act, let them introduce a bill to do so and it 
will be considered by the Congress.
  It has been the Justice Department's position that the existing Wire 
Act covers gambling on interstate horse racing. So what is the beef? If 
the Wire Act already covers it, then this bill does not touch what the 
Wire Act covers. The amendment is nothing less than a poison pill to 
this crucial legislation. I urge my colleagues to oppose the amendment.
  Mr. Speaker, I reserve the balance of my time.
  Ms. BERKLEY. I would like to yield 2 minutes to the distinguished 
gentleman from Michigan (Mr. Conyers).
  Mr. CONYERS. I thank the gentlewoman for her amendment and for 
yielding to me, because the same Internet gambling legislation Abramoff 
fought so hard to defeat on behalf of a client that helped States 
conduct lotteries over the Internet now includes an exemption to 
protect those lotteries; and she speaks to this point in this amendment 
that she and I and the gentleman from Florida (Mr. Wexler) now present.
  If you are really for doing what you say you want to do, then what is 
wrong with this amendment? If we want to prohibit Internet gambling, 
let's do it completely. Let's not try to continue to fool the public.
  The Hill article that I quoted went on to point out that ``in 
addition to exemption for lotteries, the measure also included language 
to protect interstate pari-mutuel betting on horse races.'' The 
existence of these latter carve-outs

[[Page H4999]]

have also been confirmed by members of the horse racing industry 
themselves.
  The amendment that my colleagues and I join together to offer today 
merely seeks to prove, once and for all, that State lotteries and the 
horse racing industry are no better than any other form of Internet 
gambling.
  And so I am proud to strongly urge my colleagues to support our 
amendment. Please support the amendment and an across-the-board ban for 
all forms of online gambling.
  Mr. SENSENBRENNER. Mr. Speaker, I yield 4 minutes to Mr. Goodlatte 
from Virginia.
  Mr. GOODLATTE. Mr. Speaker, I rise in strong opposition to this 
amendment. A lot has been said here today about motivations. Well, I 
won't talk about motivations, but I will talk about consequences of 
this legislation, of this amendment.
  The gentlewoman from Las Vegas, who has here on the floor lauded the 
merits of gambling, or gaming as she calls it, now offers an amendment 
to make this bill that we have fought for 8 years tighter and tougher 
on gambling? I don't think so. I will tell you that this is all about 
undoing what was done before.
  The gentleman from Michigan tells us that this is what Jack Abramoff 
would love to see. But this is exactly the same method that Jack 
Abramoff used to derail this bill 6 years ago and 5 years ago, by 
arguing that the legislation was not strong enough on prohibiting 
gambling, when he was representing gambling interests, a whole host of 
gambling interests, offshore interests, lottery interests, a whole host 
of gambling interests. And that is what is being attempted here today.
  This, Mr. Speaker, is an amendment that is clearly a poison pill 
designed to derail this legislation. Regardless of the intentions in 
offering it, 48 of 50 State attorneys general have come out in support 
of a ban on Internet gambling. An amendment such as this that restricts 
the right of States to continue to permit gambling within their borders 
is nothing more than an attempt to derail the bill by undermining the 
support from the States. That provision was in the previous versions of 
the bill; that provision is in this bill today, only it is even 
tighter.
  The States have always had the right to allow or prohibit gambling 
within their borders. H.R. 4411 continues to ensure that States have 
that right, while imposing strict safeguards to ensure that the 
activity stays within State borders and does not extend to other 
States. These safeguards include requiring that the bettor, the 
gambling business, and any entity acting with a gambling business to 
process the bets and wagers all be physically located within the 
authorizing State, and that age and residence requirements are 
effective and in place.

                              {time}  1330

  Everyone knows that there is no technology that enables that to be 
done on the Internet and, therefore, there is no exception on this 
legislation for lotteries or any other form of State gambling on the 
Internet.
  Furthermore, H.R. 4411 gives new authority to State and Federal law 
enforcement to enforce the provisions of this bill to ensure that 
States comply with the safeguards established in the bill and that the 
law is enforced to the greatest extent possible.
  The Berkley-Conyers-Wexler amendment would limit what a State can do 
exclusively within its borders and infringes on the rights of the 
States that have always had the opportunity to create and enforce their 
own gambling laws.
  This amendment also deletes crucial language in the bill supported by 
the Department of Justice and the horse racing industry that maintains 
neutrality with respect to the Intrastate Horse Racing Act, a separate 
Federal statute that is not a part of this legislation unless you allow 
the supporters of this amendment to inject it into this bill.
  This amendment is nothing more than a poison pill that would kill 
this strong bipartisan legislation, and I urge my colleagues to vote 
``no'' on the Berkley amendment.
  Ms. BERKLEY. Mr. Speaker, I yield myself such time as I may consume.
  I absolutely am flabbergasted by the righteous indignation being 
displayed on the other side of the aisle, and it shocks my conscience 
hearing what I am hearing.
  If the gentleman from Virginia is so intent on banning Internet 
gaming, well, then he should be supporting my amendment. Better yet, I 
should not have had to introduce an amendment. It should have been 
included in his original legislation.
  If we are serious about banning gaming, then we should ban all forms 
of gaming, and I can't possibly imagine why he would be opposed to 
that. When he says it is a poison pill, why, because the horse racing 
association told him they would fight this if he brought in legislation 
that had this included and didn't make an exemption out of it?
  I am absolutely astounded also by the other gentleman from Virginia 
(Mr. Wolf), whom I don't think would be offended if I said that he was 
opposed to gaming of any form. But I find it incomprehensible that in 
the year 2000 Congress approved a provision allowing online betting on 
horse racing, and during consideration of the bill on the floor, Mr. 
Wolf made a statement in which he said, ``This provision deeply 
troubles me, and would expand gambling at a time when men and women are 
becoming addicted to this process.'' Now he seems to be okay with the 
Leach-Goodlatte amendment which specifically exempts the activity made 
legal by this 2000 provision.
  Now, if we want to let the States retain control of this issue, we 
should not be voting on doing this bill at all. It makes no sense. I 
would say that we are interfering with the States' rights, not helping 
them out.
  And if you are arguing that the bill is neutral on horse racing, then 
why is it even mentioned in this bill? And why does the Thoroughbred 
Horse Racing Association think they have an exemption? Is Mr. Goodlatte 
willing to stand up here and make a statement for the record that the 
Thoroughbred Horse Racing Association and horse racing is exempt and 
the Department of Justice can go after them and shut them down? I don't 
think so.
  And if you had an opportunity to go online, as I did just yesterday, 
and looked at the horse racing Internet sites, it is page after page 
after page. Anybody can log on. Anybody can place a bet. And I don't 
see any way to prevent children, and I don't see any way of keeping 
people from spending their hard-earned money on that.
  This creates a huge exemption which we will have no control of, and 
totally, in my opinion, undermines the bill and makes a mockery and a 
farce of what we are doing here today, or supposed to be doing here 
today.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SENSENBRENNER. Mr. Speaker, to demonstrate that all of the 
opposition to the amendment doesn't come from this side of the aisle, I 
yield 2 minutes to the gentleman from Virginia (Mr. Boucher), a very 
loyal Democrat.
  (Mr. BOUCHER asked and was given permission to revise and extend his 
remarks.)
  Mr. BOUCHER. Mr. Speaker, I thank the gentleman from Wisconsin for 
yielding to me, and I do rise in opposition to this amendment.
  The underlying bill contains a carefully negotiated balance which 
reflects existing laws that allow States to control gambling activities 
within their borders. The gentlewoman's amendment strikes that 
carefully negotiated balance. Its adoption would doom the bill. To 
those who support passage of the bill and a ban on Internet gambling, I 
urge a ``no'' vote on this amendment.
  Forty-eight of 50 State attorneys general have announced support for 
a ban on Internet gambling. But if the amendment that is offered by the 
gentlewoman passes and States lose the authority over gambling within 
their borders, the bill will fail because State support for it will be 
withdrawn.
  The bill is very clear on what authorities States will retain. States 
have traditionally been empowered to prohibit or allow gambling within 
their borders. The bill continues to give States that right while 
imposing strict safeguards to assure that gambling stays within a 
State's border and does not extend to other States.
  Those safeguards require that the bettor, the business conducting the 
gambling operation, any services that support the wagerers and other 
support services must be in the authorizing

[[Page H5000]]

State. Horse racing would continue to be governed by existing Federal 
law, and that is the Intrastate Horse Racing Act that has been on the 
books now for almost 30 years.
  Mr. Goodlatte's bill strikes a careful balance that respects States' 
rights and existing law. Don't upset that balance. Defeat this 
amendment and allow the bill that bans Internet gambling to pass.
  Ms. BERKLEY. Mr. Speaker, may I inquire as to how much time we have 
left?
  The SPEAKER pro tempore. The gentlewoman from Nevada has 1\1/2\ 
minutes, and the gentleman from Wisconsin has 2\1/2\ minutes.
  Ms. BERKLEY. I yield 45 seconds to the gentleman from Michigan (Mr. 
Conyers).
  Mr. CONYERS. Mr. Speaker, I thank the gentlewoman for yielding to me 
yet again, but I have something that I will ask unanimous consent to 
put into the Record.
  ``Horse racing is betting on Internet wagering. Maryland industry 
chief DeFrancis says it could attract youth.''
  Now, maybe they don't understand their business as well as some of 
you here do, who think that they are mistaken when they think they have 
an exemption.
  ``Horse racing's problem is obvious: A decade's-long slump in 
attendance and wagering at the track. Horse racing's solution might be 
less obvious: Get people to stay home and bet.''
  Mr. Speaker, I ask unanimous consent that the article be included in 
the Record.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Michigan?
  There was no objection.

                 [From the Baltimore Sun, May 15, 2006]

              Horse Racing Is Betting on Internet Wagering

                            (By Bill Ordine)

       Horse racing's problem is obvious: a decades-long slump in 
     attendance and wagering at the track.
       Horse racing's solution might be less obvious: Get people 
     to stay home--and bet.
       In a seemingly paradoxical and counterintuitive turn, 
     online technology, which would appear to discourage going to 
     the races, is being viewed as a potential life-saver for a 
     sport on life support.
       ``Over the 25 years I've been in this industry, not one day 
     has gone by when I haven't heard people complaining that our 
     customer base is getting older and we can't attract young 
     people,'' said Joseph A. De Francis, chief executive officer 
     of the Maryland Jockey Club and executive vice president for 
     operations of interactive betting channels for parent Magna 
     Entertainment Corp. ``And this gives us an opportunity to 
     expand into the youth market unlike any we've ever had 
     before.''
       When the 131st Preakness Stakes is run Saturday at Pimlico 
     Race Course in Baltimore, advanced-deposit wagering--the 
     broader category of which online betting forms the greatest 
     share--is expected to make up a growing portion of the bottom 
     line. So-called ADW handle, meaning the money wagered, comes 
     from bettors using telephones and other interactive devices 
     as well as computers.
       Last year, ADW handle accounted for $39 million, or nearly 
     8 percent of the total for racing at Pimlico and Laurel Park, 
     according to the Maryland Jockey Club, which runs the tracks. 
     Nationally, of the $14.6 billion wagered on horse racing in 
     2005, approximately 88 percent was off-track, and ADW handle 
     was about $1.16 billion, according to data published by the 
     Oregon Racing Commission.
       During this year's Kentucky Derby Day, Youbet.com--the 
     largest provider of Internet racing content in the country--
     processed nearly $5.6 million in wagers, a 34 percent 
     increase over 2005.
       Horse racing and online wagering officials say the near-
     term consequence of online betting is an increase in the 
     racing industry's overall handle. But just as important, they 
     contend, is that in the long run, people who are introduced 
     to horse racing via the computer will be enticed to see the 
     real thing more often.
       Racing hopes to follow the lead of poker, where card-
     playing Web sites, along with televised tournaments, inspired 
     a rejuvenation of poker playing at brick-and-mortar casinos.
       ``If you find a shoe that fits--steal it,'' said Youbet.com 
     CEO Chuck Champion. A publicly traded company based in 
     California, Youbet.com handled about $395 million in wagers 
     last year, according to the company's annual report. 
     Youbet.com's business plan calls for the company to retain 6 
     percent of the handle, and tens of millions of dollars were 
     passed on to the racing industry last year.
       Champion said a number of strategies employed by offshore 
     gambling sites, which often include betting opportunities 
     beyond horse racing, such as team sports and casino games, 
     provide other lessons. One is to offer a nongambling version 
     of a Web site (usually designated as a .net rather than a 
     .com) to educate the public with tutorials and play-money 
     games. Such Web sites also allow operators to get around 
     federal bans on advertising for Internet gambling, especially 
     on television.
       Youbet.com has introduced such a .net version.
       ``Our sport is harder to understand than poker,'' Champion 
     said, referring to the nuances of handicapping.
       De Francis, who oversees Magna Entertainment's similar Web 
     site, XpressBet, said people unfamiliar with poker usually 
     would be too intimidated to play in a casino, but the online 
     playing experience gives them the confidence to try the real 
     thing.
       ``I've seen people come to the track--you'll see them at 
     the Preakness next Saturday--and these are smart people, but 
     they're not regulars, and they don't know what to do. They 
     don't know what an exacta is, what across-the-board means, 
     what a furlong is--and they don't want to look foolish,'' De 
     Francis said. ``If they learn about these things online in 
     their home, then we may have new fans.''
       Some are not convinced that online bettors will become 
     regular railbirds.
       Hall of Fame trainer D. Wayne Lukas, a spokesman for 
     Youbet.com, is sold on the benefits of online wagering for 
     his industry but wonders about its impact at the track.
       ``We thought simulcasting would help with attendance, and 
     I'm not sure that happened,'' he said. But he said online 
     wagering is a necessary adaptation.
       ``We always worry about handle, but there's also the issue 
     of a fan base that we have to grow,'' he said. ``I had always 
     said that people relate to the horses. But now, the thing 
     that young people relate to is the technology.''
       And technology is what drives online horse wagering. The 
     most sophisticated Web sites offer a menu of entertainment 
     and information choices. A Web visitor can view the racing 
     charts for dozens of racetracks, watch the races--both live 
     and on replay--and wager on the outcomes.
       ``As we head toward what technology people call convergence 
     between the computer and the TV, what we have at the end of 
     the line is a product that appears to be ideally tailored for 
     horse racing,'' De Francis said. ``Where someone goes online, 
     and with a high-resolution LCD screen, can see the 
     post parade and get all the information needed to make an 
     informed wager.''
       Still, there are obstacles posed by legal complexities at 
     home and by illegal (in the United States) competitors 
     offshore.
       While the horse racing industry contends that federal 
     legislation enacted in 1978 and amended in 2001 gives the 
     green light to online wagering in states where it is legal, 
     the Department of Justice holds that pre-existing statutes 
     make the practice unlawful.
       Last month, a Justice Department lawyer told a 
     congressional subcommittee that the department is undertaking 
     a civil investigation of a potential violation of law on 
     interstate horse betting.
       A department spokesman said there have been no prosecutions 
     involving horse racing advanced deposit wagering operators.
       Web sites also have varying approaches for individual 
     states. For instance, Youbet.com will accept wagers from 
     bettors who live in all but 11 states. TVG.com, owned by 
     publicly traded Gemstar-TV Guide International, takes wagers 
     from bettors in only 12 states. Both take bets from Maryland 
     residents.
       And there is formidable competition from offshore Internet 
     sites that generally operate without U.S. legal constraints. 
     One of the most popular, Bodog.com, which has a marketing 
     partnership with Preakness-bound Brother Derek's racing team, 
     reported in a news release a 100 percent year-over-year 
     growth in betting volume for the Kentucky Derby without being 
     specific about the figures.
       De Francis concedes that offshore Web sites are ``killing'' 
     the onshore competition because they offer rebates, give 
     bettors the chance to gamble on other sports and extend 
     credit. And little of the millions made offshore finds its 
     way to the racing industry.
       Still, he considers regulated online wagering important for 
     horse racing.
       ``It's really the future,'' De Francis said. ``When you 
     look at the [wagering] numbers, you see us going from zero to 
     something that's beginning to be significant. And if you plot 
     that curve, there's no telling where the numbers will be in 
     10 years.''

  Mr. SENSENBRENNER. Mr. Speaker, I yield 1 minute to the gentleman 
from Virginia (Mr. Wolf).
  Mr. WOLF. I thank the gentleman.
  I rise in strong opposition to the amendment. It will gut the bill. 
If you want to kill this bill, hurt this bill, this amendment will do 
it. This is a poison pill. Mr. Goodlatte was right. God bless Mr. 
Goodlatte for staying in there. He is right.
  Members have been manipulated in the past. The question is, and I 
think the answer is, this Congress is not made up of people who are so 
stupid and able to be manipulated, and so my sense is that this 
Congress, when given an opportunity, will not allow this outside 
lobbyist, the outside groups to manipulate it again.

[[Page H5001]]

  I urge a ``no'' vote on the Conyers amendment and an ``aye'' vote and 
passage of the bill.
  Ms. BERKLEY. Mr. Speaker, I have heard a lot today about a carefully 
negotiated balance in this bill. I would like to know who was involved 
in this negotiation. I certainly wasn't. Was the horsing racing 
industry involved? Apparently, they were. Talk about a special 
interest. The lotteries? Jack Abramoff, perhaps? Because they are all 
getting exactly what they want with this piece of legislation.
  I would like to urge a little honesty on the floor today and urge my 
colleagues to support the Berkley-Conyers amendment. If you are serious 
about banning Internet gaming, well, then, let's ban it and let's not 
make a major exception that can drive a truck through this.
  I urge all my colleagues, before you vote on this, go online. Check 
out horse racing online and see the pages and pages of online betting 
that you can do when it comes to racing horses. There is no excuse and 
no reason for this exemption other than you couldn't cut a deal with 
the horse racing industry, so you exempted them.
  I urge everyone to vote for the Berkley amendment and against the 
Goodlatte bill.
  Mr. SENSENBRENNER. Mr. Speaker, I yield myself the balance of my 
time.
  Mr. Speaker, let's forget about who is on which side of this 
legislation and this amendment here in the House of Representatives, 
and let's look at the fact that 49 out of the 50 State attorneys 
general support this legislation. They are not in the back pocket of 
any industry. They are all elected, or most of them are elected by the 
people, and they are the chief law enforcement officers of their 
respective States. They say we need this legislation and they support 
this legislation and oppose the amendment.
  The only State attorney general that doesn't is the State attorney 
general of Nevada. Now, which State has got the most gambling to export 
across State lines into other States? I would submit it is Nevada. 
Which State doesn't have horse racing and doesn't have a State lottery 
to export? It is Nevada, among others.
  So I give the gentlewoman from Nevada a lot of credit for 
representing her State and her constituents. I don't think that is the 
priority of the other 49 States. It certainly is not the priority of 
their State attorneys general, and we ought to vote down this 
amendment.
  Mr. SWEENEY. Mr. Speaker, I rise to day in opposition of the Berkley 
amendment. This amendment would outlaw all gambling online throughout 
the United States. This is unnecessary and would hurt the domestic 
horseracing industry. The domestic horseracing industry is already 
regulated. This amendment would put unnecessary burdens on an industry 
that operates above board.
  A provision allowing for legal horse gambling domestically and 
opening the door to allow horse gambling over the Internet is included 
in this bill. Regulated by States though the Interstate Horseracing 
Act, IHA, this provision was agreed to by the Justice Department and 
the domestic horseracing industry.
  The primary focus of H.R. 4411 is to curb illegal--primarily 
offshore--wagering, not regulate further the domestic horse industry. 
We need to allow the States to continue regulating horseracing via 
State racing commissions or legislatures.
  Currently, ongoing discussions are occurring between Justice 
Department and the horseracing industry concerning horse race gambling 
over the Internet. The Berkley amendment would prevent this review from 
continuing.
  The horseracing industry is a massive economic engine in our Nation, 
providing $26 billion in economic activity and maintaining over 1 
million jobs. In my district alone, which is home to the Saratoga 
Racetrack, the oldest thoroughbred track in the country, the 
horseracing industry brings in over $70 million into the local economy. 
If this amendment passes, hard-working individuals would certainly lose 
their jobs. The industry sustains more than 40,000 people across my 
home State of New York, over 10,000 in my district.
  The industry supports a large sector of small businesses and is the 
reason for the existence of more than 400 New York State breeding 
farms. During the 2005 season alone, the Saratoga Racetrack attracted 1 
million people, who wagered approximately $145 million. That equates to 
1 million people in Saratoga spending $70 million at local restaurants, 
stores and various other attractions. These people make Saratoga the 
jewel of upstate New York that it is. We ought not to punish a 
legitimate industry that is already regulated.
  This is a responsible industry that provides jobs, pumps money into 
our economy and is already regulated. I urge a ``no'' vote on this 
amendment.
  Mr. SENSENBRENNER. I yield back the balance of my time.
  The SPEAKER pro tempore. Pursuant to House Resolution 907, the 
previous question is ordered on the bill, as amended, and on the 
further amendment by the gentlewoman from Nevada (Ms. Berkley).
  The question is on the amendment offered by the gentlewoman from 
Nevada (Ms. Berkley).
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Ms. BERKLEY. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to the order of the House of today, 
further consideration of H.R. 4411 will be postponed.

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