Congressional Record, Volume 152 Issue 89 (Tuesday, July 11, 2006)

[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.

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.

____________________