[Congressional Record (Bound Edition), Volume 156 (2010), Part 10]
[Extensions of Remarks]
[Page 13487]
[From the U.S. Government Publishing Office, www.gpo.gov]




           LETTER FROM INDIANA ATTORNEY GENERAL GREG ZOELLER

                                 ______
                                 

                            HON. MIKE PENCE

                               of indiana

                    in the house of representatives

                         Tuesday, July 20, 2010

  Mr. PENCE. Madam Speaker, I submit the following letter.

       Dear Chairman Levin and Ranking Member Camp: I write to 
     express my serious concerns about H.R. 4976, the ``Internet 
     Gambling Regulation and Tax Enforcement Act of 2010,'' and 
     the legislation it implements, H.R. 2267, the ``Internet 
     Gambling Regulation, Consumer Protection, and Enforcement 
     Act.'' The ``optimum'' revenue effects of these bills can be 
     achieved only by massive and unprecedented expansion of 
     gambling and by preempting the powers of the States to 
     regulate gambling within their borders.
       Gambling regulation has traditionally been conducted by the 
     States and Indian tribes. H.R. 2267, the substantive proposal 
     that underlies the revenue provisions of H.R. 4976, creates 
     an Internet gambling licensing system that vests regulatory 
     authority in the United States Treasury Department. While 
     H.R. 2267 allows the Treasury to partner with States to carry 
     out regulatory and enforcement activities, the bill also 
     provides all Federal licensees with a ``complete defense 
     against any prosecution or enforcement action under any 
     Federal or State law.'' This ``safe harbor'' provision 
     effectively nullifies existing State laws by placing all 
     Federal license-holders outside the scope of the States' own 
     gambling enforcement powers.
       H.R. 2267 also preempts current Federal laws that are vital 
     to State gambling and regulatory frameworks. State laws are 
     reinforced by Federal statutes that either rely on 
     substantive State provisions or prevent interstate incursions 
     on State-level public policies. The Federal Wire Act of 1961, 
     for instance, supplements State gambling controls by barring 
     interstate wagers. The Unlawful Internet Gambling Enforcement 
     Act of 2006 is structured, in part, around State gambling 
     laws. By exempting licensees from laws such as the Wire Act 
     or UIGEA, H.R. 2267 severely impairs this long-standing, 
     complimentary relationship between Federal and State 
     regulatory systems.
       Importantly, the revenue-generating power of H.R. 4967 
     depends almost entirely on the Federal preemption made 
     possible by H.R. 2267. H.R. 2267 does provide a restrictive 
     opt-out mechanism through which the States may decline to 
     participate in the Federal licensing system. However, the 
     Joint Committee on Taxation's most expansive of four 
     different estimates--$42 billion--is based on discarding even 
     these State opt-out rights in favor of complete Federal 
     preemption. In that estimate, the Joint Committee explicitly 
     assumed that ``no State or tribal government will be 
     permitted to limit federally licensed Internet gambling 
     operators from providing online gambling services in their 
     jurisdictions.'' In other words, H.R. 4976 will generate $42 
     billion only if H.R. 2267's opt-out procedure--its principal 
     State-protective provison--is eviscerated.
       The Joint Committee on Taxation estimate that is most 
     clearly based on the texts of H.R. 2267 and H.R. 4976 
     indicates that the bills will generate approximately $10 
     billion in Federal revenue. This much more modest estimate 
     appears to assume that many States will choose to opt-out in 
     order to prevent the expansion of gambling on the Internet. 
     While we realize that H.R. 4976 provides license fee revenue 
     and grants to the States, these incentives do not assuage my 
     concerns.
       Thank you for considering my view.
           Sincerely,
                                               Gregory F. Zoeller,
     Indiana Attorney General.

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