[Congressional Record (Bound Edition), Volume 147 (2001), Part 10]
[Extensions of Remarks]
[Pages 14084-14085]
[From the U.S. Government Publishing Office, www.gpo.gov]



               INTERNET GAMBLING PAYMENTS PROHIBITION ACT

                                 ______
                                 

                          HON. JOHN J. LaFALCE

                              of new york

                    in the house of representatives

                         Friday, July 20, 2001

  Mr. LaFALCE. Mr. Speaker, two years have passed since the 
Congressional-mandated National Gambling Impact Study Commission 
released its final report on gambling in the United States. A major 
recommendation of the report, adopted unanimously by the Commission, 
was a Federal prohibition on Internet gambling. The Commission 
determined that the traditional approach of state regulation of 
gambling was inadequate to address the problem of Internet gambling and 
that Federal legislation was needed.
  The bill I am introducing today, the ``Internet Gambling Payment 
Prohibition Act,'' seeks to implement this important Commission 
recommendation. However, it does not propose an outright prohibition of 
Internet gambling, since outright prohibition presents significant 
technical and enforcement difficulties. Instead, the bill would 
restrict the electronic payments that permit online betting and, thus, 
make Internet gambling possible. Regulation of electronic payment 
transfers and the most traditional check clearance system are Federal 
responsibilities that, in my view, offer the most effective means to 
address the unique challenges of Internet gambling.
  Any American with a computer and a credit card can find numerous 
opportunities for high stakes gambling on the Internet. The number of 
Internet gambling sites has grown geometrically in recent years. The 
Internet Gaming Council has identified some 1,400 web sites that entice 
people to engage in some form of gambling. The typical Internet 
gambling site or virtual casino operates from locations outside the 
United States, in places such as Antigua or the Netherlands Antilles 
that impose little regulatory scrutiny other than collecting licensing 
fees. And Internet gambling is proving to be extremely lucrative for 
both site operators and their host countries. Between 1999 and 2001, 
combined annual revenues received by Internet gambling sites nearly 
tripled, from $1.3 billion to $3.1 billion. Industry experts expect 
annual revenues to double to more than $6 billion by 2003.
  The problems presented by these lucrative and poorly regulated 
Internet gambling operations are numerous. There is no meaningful way 
to limit participation in gambling by adolescents or by problem 
gamblers. There is no assurance as to the integrity of the web site 
operators or the honesty of their games. There are little or no 
protections against security breaches, hacking, diversion of credit 
card payments or identity theft. And there is a strong chance that many 
off-shore gambling operations will be used as part of money laundering 
and other criminal operations.
  Perhaps my greatest concern with Internet gambling is the fact that 
the problems created by compulsive gambling, which in the past were 
largely localized to areas with legal gambling, will be experience 
almost anywhere, but without any added public revenues to help address 
these problems. The National Commission identified a very strong 
correlation between the availability of high stakes gambling 
opportunities and the incidence of problem or pathological gambling. 
Current estimates of compulsive gamblers range from 1.5% of the adult 
population to over 5%, depending on the amount of legal gambling in the 
state. Add to this another 15 million people which the Commission 
identified as also being at risk at any time of becoming addicted 
gamblers, the potential universe of problem gamblers is significant. 
Psychologist estimate that more than 5 percent of people develop a 
gambling problem at some time, twice the rate of cocaine of other 
serious drug addiction.
  Like alcoholism or any other addiction, the problems of compulsive 
gambling are not limited to individual gamblers, but affect entire 
families and communities. At a minimum, compulsive gambling leads to 
severe indebtedness and often bankruptcy. By the time most problem 
gamblers seek help they have debts exceeding $120,000 and their 
families are in shambles. Compulsive gamblers have a high incidence of 
broken families and lost homes, poor work productivity and job 
terminations, health problem and related alcohol or drug addiction. 
Most alarming is the high suicide rate among problem gamblers. The New 
York Times reported in 1999 that more than 80 percent of compulsive 
gamblers seriously consider suicide and nearly 20 percent attempt or 
succeed in killing themselves. This is considerably higher than the 
suicide rate for major depression.
  With the Internet rapidly expanding access to high-stakes gambling, 
the number of compulsive and pathological gamblers can only increase. 
This poses a serious problem for our nation's youth. A number of 
factors converge to make today's adolescents particularly vulnerable to 
the lure of Internet gambling. Today's teenagers are far more 
experienced and comfortable with computers than many of their parents. 
They have grown up playing a wide variety of video and computer games. 
Most have broad access to the Internet. And large numbers of 
adolescents now have access to some form of credit, debit or stored 
value cards to make on-line bets. Banks and credit card companies have 
aggressively marketed credit cards on college campuses for years and 
have recently initiated new programs to market stored-value cards to 
high school aged youth.
  While youth involvement in sports betting and other forms of gambling 
has increased in recent years, the heightened accessibility of Internet 
gambling, the ability to gamble in private and the ability to gamble 
with credit cards all place teenagers at greater risk. A young person 
sitting alone at home or in a college dormitory can gain access to 
hundreds of gambling sites and can easily run up the credit line on 
their own or their parent's credit cards on games that appear little 
different than the computer card games they have played for years. What 
seems an easy opportunity to win a big jackpot could result in 
financial losses that could harm their families and destroy their 
future plans.

[[Page 14085]]

  The issue Congress must address is how we can protect our nation's 
youth from the growing availability and potential negative consequences 
of Internet gambling. To me, the answer is simple. We cut off Internet 
gambling at its source by prohibiting the primary payment vehicles that 
make on-line betting possible. My legislation, the ``Internet Gambling 
Payment Prohibitions Act,'' would prohibit known Internet gambling 
sites from accepting any check, credit card, debit card or other form 
of electronic transfer as payment of any bet or wager over the 
Internet. The effect of this prohibition is to deny known Internet 
gambling sites from being approved for credit card, debit and other 
electronic transfer accounts. While liability for accepting prohibited 
payments would be on Internet site operators, credit card issuers, 
banks and money transmitting services would also be liable if it is 
determined that they knowingly participated in transferring payments to 
known Internet gambling operations. The benefit of this approach is 
that it is equally effective in denying payment of whether they are 
based within a state of half way around the world.
  Other bills have been introduced that propose to prohibit payments 
only to ``unlawful'' Internet gambling operations. While this approach 
may be appealing politically, it is of little practical benefit. The 
open and unrestricted nature of the world wide web makes distinctions 
between legal or unlawful gambling extremely difficult, if not 
impossible. We cannot distinguish with any certainty the location of 
most Internet gambling sites, nor the location of persons attempting to 
access these sites. If Internet gambling is legal anywhere in the 
world, it will be available to people everywhere in the world. 
Proposals that only restrict payments to ``unlawful'' Internet gambling 
sites would, in effect represent an actual expansion of legalized 
gambling under Federal law. For once the Internet gambling is 
sanctioned in any jurisdiction, domestic or international, the 
restrictions on electronic funds transfer, would be inoperative. We 
would, in effect, be legally sanctioning such gambling--the exact 
opposite of what we portend to do.
  Mr. Speaker, I believe the bill I am offering today provides the only 
effective approach for prohibiting Internet gambling and eliminating 
its potentially disastrous consequences for millions of American 
families. I urge adoption of this needed legislation.

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