[House Report 107-591]
[From the U.S. Government Publishing Office]



107th Congress                                            Rept. 107-591
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

======================================================================



 
        COMBATTING ILLEGAL GAMBLING REFORM AND MODERNIZATION ACT

                                _______
                                

                 July 18, 2002.--Ordered to be printed

                                _______
                                

 Mr. Sensenbrenner, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 3215]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 3215) to amend title 18, United States Code, to 
expand and modernize the prohibition against interstate 
gambling, and for other purposes, having considered the same, 
reports favorably thereon with an amendment and recommends that 
the bill as amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     2
Purpose and Summary..............................................     5
Background and Need for the Legislation..........................     6
Hearings.........................................................     7
Committee Consideration..........................................     7
Vote of the Committee............................................     7
Committee Oversight Findings.....................................    11
Performance Goals and Objectives.................................    11
New Budget Authority and Tax Expenditures........................    11
Congressional Budget Office Cost Estimate........................    11
Constitutional Authority Statement...............................    13
Section-by-Section Analysis and Discussion.......................    13
Changes in Existing Law Made by the Bill, as Reported............    17
Markup Transcript................................................    24
Dissenting Views.................................................   123
    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Combatting Illegal Gambling Reform 
and Modernization Act''.

SEC. 2. 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) in paragraph (5), as so designated--
                    (A) by striking ``wire communication'' and 
                inserting ``communication'';
                    (B) by inserting ``satellite, microwave,'' after 
                ``cable,''; and
                    (C) by inserting ``(whether fixed or mobile)'' 
                after ``connection''; 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, not skill, upon an agreement or 
                understanding that the person or another person will 
                receive something of greater value than the amount 
                staked or risked 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); 
                and
                    ``(C) does not include--
                            ``(i) a bona fide business transaction 
                        governed by the securities laws (as that term 
                        is defined in section 3(a)(47) of the 
                        Securities Exchange Act of 1934 (15 U.S.C. 
                        78c(a)(47))) for the purchase or sale at a 
                        future date of securities (as that term is 
                        defined in section 3(a)(10) of the Securities 
                        Exchange Act of 1934 (15 U.S.C. 78c(a)(10)));
                            ``(ii) a transaction on or subject to the 
                        rules of a contract market designated pursuant 
                        to section 5 of the Commodity Exchange Act (7 
                        U.S.C. 7) or to any transaction subject to an 
                        exemption pursuant to section 4(c) of such Act;
                            ``(iii) any over-the-counter derivative 
                        instrument;
                            ``(iv) a contract of indemnity or 
                        guarantee;
                            ``(v) a contract for life, health, or 
                        accident insurance;
                            ``(vi) 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) point 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
                            ``(vii) participation in any simulation 
                        sports game or educational game or contest in 
                        which (if the game or contest involves a team 
                        or teams) all teams are fictional and no team 
                        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 
                                        athlete in any single real-
                                        world sporting or other event.
            ``(7) The term `gambling business' means a business of 
        betting or wagering;
            ``(8) The term `information assisting in the placing of 
        bets or wagers' means information knowingly transmitted by an 
        individual in a gambling business for use in placing, 
        receiving, making, or otherwise enabling or facilitating 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; or
                    ``(C) information that is exchanged between or 
                among 1 or more pari-mutuel wagering facilities 
                licensed by the State or approved by the foreign 
                jurisdiction in which the facility is located, and any 
                support services, wherever located, if the information 
                exchanged is used exclusively for the pooling or 
                processing of bets or wagers made by or with the 
                facility or facilities under each State's applicable 
                law.
            ``(9) The term `person' includes a government (including 
        any governmental entity (as defined in section 3701(2) of title 
        28)).
            ``(10) The term `State' means a State of the United States, 
        the District of Columbia, or a commonwealth, territory, or 
        possession of the United States.
            ``(11) The terms `credit', `creditor', and `credit card' 
        have the meanings given such terms in section 103 of the Truth 
        in Lending Act.
            ``(12) The term `electronic fund transfer'--
                    ``(A) has the meaning given such term in section 
                903 of the Electronic Fund Transfer Act; or
                    ``(B) any fund transfer covered by Article 4A of 
                the Uniform Commercial Code, as in effect in any State.
            ``(13) The term `financial institution' has the meaning 
        given such term in section 903 of the Electronic Fund Transfer 
        Act.
            ``(14) The terms `money transmitting business' and `money 
        transmitting service' have the meanings given such terms in 
        section 5330(d) of title 31, United States Code.
            ``(15) The term `Tribe' or `tribal' means an Indian tribe, 
        as defined under section 4(5) of the Indian Gaming Regulatory 
        Act of 1988).''.

SEC. 3. MODIFICATION OF EXISTING PROHIBITION.

    (a) In General.--Section 1084 of title 18, United States Code, is 
amended to read as follows:

``Sec. 1084. Use of a communication facility to transmit bets or 
                    wagers; Penalties

    ``(a) Except as otherwise provided in this section, whoever, being 
engaged in a gambling business, knowingly uses a communication 
facility--
            ``(1) 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 bets or wagers, 
        or information assisting in the placing of bets or wagers; or
            ``(2) for 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, 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;
shall be fined under this title or imprisoned not more than five years, 
or both.
    ``(b)(1) Except as provided in paragraph (2), whoever, being 
engaged in a gambling business, knowingly 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 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.
    ``(2) Paragraph (b)(1) does not apply if the use of a communication 
facility for the transmission of bets or wagers or information 
assisting in the placing of bets or wagers is permitted under 
subsections (c) or (d).
    ``(c) 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.
    ``(d) Nothing in subsection (c) or (d) shall allow the use of a 
communication facility for the transmission of bets or wagers involving 
the purchase of a chance or opportunity to win a lottery, or the use of 
a communication facility for the transmission of information assisting 
in the placing of bets or wagers involving the purchase of a chance or 
opportunity to win a lottery, except that communication facilities may 
be used for the transmission of such bets or wagers and the 
transmission of information assisting such bets or wagers as long as 
such bets or wagers are placed on the premises of a retail outlet that 
is open to the public and licensed by the State in which it is located 
to sell chances or opportunities to win a lottery.
    ``(e) 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 
        any facility or support service processing those bets or wagers 
        are physically located in the same State, and the State has a 
        secure and effective customer verification and age verification 
        system to assure compliance with age and residence 
        requirements, 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;
            ``(3) the State has explicitly authorized and licensed the 
        operation of the gambling business, any facility processing the 
        bets and wagers, and the support service within its borders or 
        the Tribe has explicitly authorized and licensed the operation 
        of such gambling business, any facility processing the bets and 
        wagers, and the support service on Indian lands within its 
        jurisdiction;
            ``(4) with respect to class II or class III gaming, the 
        game is permitted under and conducted in accordance with the 
        Indian Gaming Regulatory Act;
            ``(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 facility or support service 
        processing those bets or wagers are physically located; and
            ``(6) with respect to class III gaming under the Indian 
        Gaming Regulatory Act, each such Tribal-State compact expressly 
        provides that the game may be conducted using a communication 
        facility to transmit bets or wagers or information assisting in 
        the placing of bets or wagers.
    ``(f) Nothing in this section creates immunity from criminal 
prosecution under any laws of any State or Tribe.
    ``(g) Nothing in this section authorizes activity that is 
prohibited under chapter 178 of title 28, United States Code.
    ``(h) 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.
    ``(i)(1) A Federal, State, tribal, or local law enforcement agency, 
acting within its jurisdiction may, in a civil action, obtain 
injunctive or declaratory relief to restrain or prevent any person from 
paying or assisting in the payment of bets or wagers, or communicating 
information assisting in the placing of bets or wagers, 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.
    ``(2) 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.
    ``(3) Relief granted under paragraph (1) against an interactive 
computer service (as defined in section 230(f) of the Communications 
Act of 1934) shall--
            ``(A) be limited to the removal of, or disabling of access 
        to, an online site violating this section, or a hypertext link 
        to an online site violating this section, that resides on a 
        computer server that such service controls or operates; except 
        this limitation shall not apply if the service is violating 
        this section or is in active concert with a person who is 
        violating this section and receives actual notice of the 
        relief;
            ``(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 section;
            ``(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.
    ``(j) Nothing in this section allows the use of a communication 
facility for the purpose of placing a bet or wager or the use of a 
communication facility for the purpose of transmitting information 
assisting in the placement of bets or wagers that was illegal as of 
June 6, 2002.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 50 of such title is amended so that the item relating to 
section 1084 reads as follows:

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

                          Purpose and Summary

    Under current Federal law, it is unclear that using the 
Internet to operate a gambling business is illegal. The statute 
that most directly restricts the use of the Internet for 
placing bets is the ``Wire Act'', 18 U.S.C. Sec. 1084. However, 
this statute was written before the age of the Internet and the 
use of wireless communication so there is uncertainty as to 
what type of betting is or is not covered. H.R. 3215, the 
``Combatting Illegal Gambling Reform and Modernization Act,'' 
will modernize the ``Wire Act'' to make it clear that its 
prohibitions include Internet gambling and brings the current 
prohibition against wireline interstate gambling up to speed 
with the development of new technology. The bill also prohibits 
a gambling business from accepting certain forms of non-cash 
payment, including credit cards and electronic transfers, for 
the transmission of bets and wagers. The bill further provides 
an additional tool to fight illegal gambling by allowing 
Federal, State, local and tribal law enforcement officials to 
seek injunctions against any party to prevent and restrain 
violations of the act.

                Background and Need for the Legislation

    Over the last few years, gambling websites have 
proliferated on the Internet. What was once a cottage industry 
has become an extremely lucrative and large business. The 
Internet gambling industry's revenues grew from $445 million in 
1997 to an estimated $1.6 billion in 2001. Industry analysts 
estimate that it could soon easily become a $10 billion a year 
industry.
    On-line casino operators envision the day when the Internet 
will provide access to a ``virtual-strip''--where gamblers who 
are tired of one casino can simply ``walk'' down the virtual 
boardwalk to a different casino. There are currently over 1,400 
gambling sites on the Internet, offering everything from sports 
betting to blackjack. Most of these virtual casinos are 
organized and operated from tropical off-shore locations, where 
the operators feel free from both State and Federal 
interference. Among the most popular locales are Antigua, St. 
Martin and Costa Rica.
    This legislation brings the current law up to date with 
Internet technology by clarifying Federal law so that there is 
no question that operating an Internet gambling business is 
illegal. It does not, however, supersede the traditional 
leadership roles of States in enforcing gambling laws within 
their borders. It addresses a growing problem that no single 
State, or collection of States, can adequately address. Because 
of the uniquely interstate and international nature of the 
Internet, H.R. 3215 is necessary. At the same time H.R. 3215 
provides the States and Federal Government with the needed 
tools to limit and regulate Internet gambling.
    Since the founding of our country, the Federal Government 
has left gambling regulation to the States. In 1996 Congress 
created the National Gambling Impact Study Commission (NGISC) 
to examine the issue of gambling in America. The NGISC 
concluded that States are best equipped to regulate gambling 
within their own borders, and recommended that Congress 
continue to defer to the States in this respect.\1\ The Federal 
Government has largely deferred to the authority of States to 
determine the type and amount of gambling permitted. For over 
100 years, Congress has acted to assist States in enforcing 
their respective policies on gambling when development in 
technology, such as the Internet, have compromised the 
effectiveness of State gambling laws.
---------------------------------------------------------------------------
    \1\ The National Gambling Impact Study Commission, Final Report, 3-
1, (1999).
---------------------------------------------------------------------------
    State attorneys general have been frustrated in their 
attempts to prevent Internet gambling from permeating their 
borders. Some have attempted to charge Internet gambling 
providers with violations of State consumer fraud laws, but 
jurisdictional issues and other problems have thwarted these 
efforts. Attorneys general report that citizens often are 
unaware that gambling on the Internet is illegal, even if those 
same persons are aware that their home State does not allow 
gaming.
    In addition, the FBI and the Department of Justice recently 
testified that Internet gambling serves as a vehicle for money 
laundering activities and can be exploited by terrorists to 
launder money. The FBI currently has at least two pending cases 
involving Internet gambling as a conduit for money laundering, 
as well as a number of pending cases linking Internet gambling 
to organized crime.

                                Hearings

    The Committee's Subcommittee on Crime held a legislative 
hearing on H.R. 3215 on November 29, 2001. The Subcommittee on 
Crime also heard testimony on a related bill, H.R. 556, at 
those hearings. Testimony was received from four witnesses. The 
witnesses were: Rep. Bob Goodlatte; Rep. James A. Leach; 
Timothy A. Kelly, Ph.D., Executive Director, National Gambling 
Impact Study Commission; and Frank Catania representing the 
Interactive Gaming Council (IGC). The U.S. Department of 
Justice submitted testimony for the record supporting H.R. 
3215.

                        Committee Consideration

    On March 12, 2002, the Subcommittee on Crime met in open 
session and ordered favorably reported the bill H.R. 3215 with 
amendment, by a voice vote, a quorum being present. On June 18, 
2002, the Committee met in open session and ordered favorably 
reported the bill H.R. 3215 with amendments by a recorded vote 
of 18 to 12, a quorum being present.

                         Vote of the Committee

    1. An amendment to the amendment in the nature of a 
substitute was offered by Mr. Wexler to insert language that 
provides an exemption to the provisions of the bill for 
transmitting or placing bets or wagers on parimutuel animal 
racing or jai-alai games. The amendment was defeated by a 
rollcall vote of 15 to 15.

                                                   ROLLCALL NO. 1
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................              X
Mr. Gekas.......................................................                              X
Mr. Coble.......................................................              X
Mr. Smith (Texas)...............................................
Mr. Gallegly....................................................                              X
Mr. Goodlatte...................................................                              X
Mr. Chabot......................................................                              X
Mr. Barr........................................................                              X
Mr. Jenkins.....................................................                              X
Mr. Cannon......................................................                              X
Mr. Graham......................................................                              X
Mr. Bachus......................................................                              X
Mr. Hostettler..................................................                              X
Mr. Green.......................................................                              X
Mr. Keller......................................................                              X
Mr. Issa........................................................                              X
Ms. Hart........................................................                              X
Mr. Flake.......................................................                              X
Mr. Pence.......................................................
Mr. Forbes......................................................
Mr. Conyers.....................................................              X
Mr. Frank.......................................................              X
Mr. Berman......................................................              X
Mr. Boucher.....................................................
Mr. Nadler......................................................              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................              X
Mr. Meehan......................................................
Mr. Delahunt....................................................
Mr. Wexler......................................................              X
Ms. Baldwin.....................................................              X
Mr. Weiner......................................................              X
Mr. Schiff......................................................                                           pass
Mr. Sensenbrenner, Chairman.....................................              X
                                                                 -----------------------------------------------
    Total.......................................................             15              15
----------------------------------------------------------------------------------------------------------------

    2. An amendment to the amendment in the nature of a 
substitute was offered by Mr. Scott to extend the criminal 
liability provisions of the bill to individuals. The amendment 
was defeated by a rollcall vote of 12 to 13.

                                                   ROLLCALL NO. 2
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................
Mr. Gekas.......................................................                              X
Mr. Coble.......................................................                              X
Mr. Smith (Texas)...............................................
Mr. Gallegly....................................................
Mr. Goodlatte...................................................                              X
Mr. Chabot......................................................                              X
Mr. Barr........................................................                              X
Mr. Jenkins.....................................................
Mr. Cannon......................................................              X
Mr. Graham......................................................
Mr. Bachus......................................................
Mr. Hostettler..................................................                              X
Mr. Green.......................................................              X
Mr. Keller......................................................                              X
Mr. Issa........................................................                              X
Ms. Hart........................................................                              X
Mr. Flake.......................................................              X
Mr. Pence.......................................................
Mr. Forbes......................................................                              X
Mr. Conyers.....................................................
Mr. Frank.......................................................              X
Mr. Berman......................................................
Mr. Boucher.....................................................
Mr. Nadler......................................................                              X
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................                              X
Ms. Waters......................................................              X
Mr. Meehan......................................................              X
Mr. Delahunt....................................................
Mr. Wexler......................................................              X
Ms. Baldwin.....................................................              X
Mr. Weiner......................................................
Mr. Schiff......................................................              X
Mr. Sensenbrenner, Chairman.....................................                              X
                                                                 -----------------------------------------------
    Total.......................................................             12              13
----------------------------------------------------------------------------------------------------------------

    3. An amendment to the amendment in the nature of a 
substitute was offered by Mr. Cannon to remove provisions of 
the bill relating to exemptions for the transmission of betting 
information between States and between Indian lands where such 
transmission is otherwise lawful and has been authorized by 
such States or Indian Tribes. The amendment would also add 
language to the bill that would allow for the transmission of 
bets or wagers related to State lotteries if the bet or wager 
is placed on the premises of a retail outlet that is open to 
the public and licensed by the State. The amendment was agreed 
to by a rollcall vote of 18 to 9.

                                                   ROLLCALL NO. 3
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................                              X
Mr. Gekas.......................................................                              X
Mr. Coble.......................................................                              X
Mr. Smith (Texas)...............................................
Mr. Gallegly....................................................              X
Mr. Goodlatte...................................................                              X
Mr. Chabot......................................................                              X
Mr. Barr........................................................              X
Mr. Jenkins.....................................................
Mr. Cannon......................................................              X
Mr. Graham......................................................              X
Mr. Bachus......................................................
Mr. Hostettler..................................................                              X
Mr. Green.......................................................              X
Mr. Keller......................................................              X
Mr. Issa........................................................              X
Ms. Hart........................................................              X
Mr. Flake.......................................................              X
Mr. Pence.......................................................              X
Mr. Forbes......................................................              X
Mr. Conyers.....................................................
Mr. Frank.......................................................              X
Mr. Berman......................................................
Mr. Boucher.....................................................
Mr. Nadler......................................................
Mr. Scott.......................................................                              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................                              X
Ms. Waters......................................................              X
Mr. Meehan......................................................
Mr. Delahunt....................................................
Mr. Wexler......................................................              X
Ms. Baldwin.....................................................              X
Mr. Weiner......................................................                              X
Mr. Schiff......................................................                                           pass
Mr. Sensenbrenner, Chairman.....................................              X
                                                                 -----------------------------------------------
    Total.......................................................             18               9
----------------------------------------------------------------------------------------------------------------

    4. An amendment to the amendment in the nature of a 
substitute was offered by Mr. Cannon to remove language which 
stated that nothing in the bill shall be construed to prohibit 
an activity already allowed under the Interstate Horse Racing 
Act (Pub. L. No. 95-515, 15 U.S.C. Sec. 3001 et seq.). The 
amendment was agreed to by a rollcall vote of 15 to 11.

                                                   ROLLCALL NO. 4
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................                              X
Mr. Gekas.......................................................                              X
Mr. Coble.......................................................                              X
Mr. Smith (Texas)...............................................
Mr. Gallegly....................................................              X
Mr. Goodlatte...................................................                              X
Mr. Chabot......................................................                              X
Mr. Barr........................................................              X
Mr. Jenkins.....................................................
Mr. Cannon......................................................              X
Mr. Graham......................................................              X
Mr. Bachus......................................................
Mr. Hostettler..................................................                              X
Mr. Green.......................................................              X
Mr. Keller......................................................              X
Mr. Issa........................................................              X
Ms. Hart........................................................              X
Mr. Flake.......................................................              X
Mr. Pence.......................................................              X
Mr. Forbes......................................................                              X
Mr. Conyers.....................................................
Mr. Frank.......................................................                                              X
Mr. Berman......................................................
Mr. Boucher.....................................................
Mr. Nadler......................................................
Mr. Scott.......................................................              X
Mr. Watt........................................................              X
Ms. Lofgren.....................................................              X
Ms. Jackson Lee.................................................                              X
Ms. Waters......................................................              X
Mr. Meehan......................................................
Mr. Delahunt....................................................
Mr. Wexler......................................................                              X
Ms. Baldwin.....................................................                              X
Mr. Weiner......................................................              X
Mr. Schiff......................................................                                           pass
Mr. Sensenbrenner, Chairman.....................................                              X
                                                                 -----------------------------------------------
    Total.......................................................             15              11
----------------------------------------------------------------------------------------------------------------

    5. Final Passage. The motion to report favorably the bill, 
H.R. 3215, as amended by the amendment in the nature of a 
substitute was agreed to by a rollcall vote of 18 to 12.

                                                   ROLLCALL NO. 5
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Hyde........................................................              X
Mr. Gekas.......................................................              X
Mr. Coble.......................................................              X
Mr. Smith (Texas)...............................................              X
Mr. Gallegly....................................................              X
Mr. Goodlatte...................................................              X
Mr. Chabot......................................................              X
Mr. Barr........................................................              X
Mr. Jenkins.....................................................
Mr. Cannon......................................................              X
Mr. Graham......................................................              X
Mr. Bachus......................................................
Mr. Hostettler..................................................              X
Mr. Green.......................................................              X
Mr. Keller......................................................              X
Mr. Issa........................................................                              X
Ms. Hart........................................................              X
Mr. Flake.......................................................                              X
Mr. Pence.......................................................              X
Mr. Forbes......................................................              X
Mr. Conyers.....................................................
Mr. Frank.......................................................                              X
Mr. Berman......................................................                              X
Mr. Boucher.....................................................
Mr. Nadler......................................................
Mr. Scott.......................................................                              X
Mr. Watt........................................................                              X
Ms. Lofgren.....................................................                              X
Ms. Jackson Lee.................................................              X
Ms. Waters......................................................                              X
Mr. Meehan......................................................
Mr. Delahunt....................................................
Mr. Wexler......................................................                              X
Ms. Baldwin.....................................................                              X
Mr. Weiner......................................................                              X
Mr. Schiff......................................................                              X
Mr. Sensenbrenner, Chairman.....................................              X
                                                                 -----------------------------------------------
    Total.......................................................             18              12
----------------------------------------------------------------------------------------------------------------

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

                    Performance Goals and Objectives

    H.R. 3215 does not authorize funding. Therefore, clause 
3(c) of rule XIII of the Rules of the House of Representatives 
is inapplicable.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of House rule XIII is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 3215, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 12, 2002.
Hon. F. James Sensenbrenner, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3215, the 
Combatting Illegal Gambling Reform and Modernization Act, and a 
separate statement on intergovernmental and private-sector 
mandates.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark 
Grabowicz, who can be reached at 226-2860.
            Sincerely,
                                  Dan L. Crippen, Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member
H.R. 3215--Combatting Illegal Gambling Reform and Modernization Act.
    CBO estimates that implementing H.R. 3215 would not result 
in any significant cost to the Federal Government. Enacting 
H.R. 3215 could affect direct spending and receipts; therefore, 
pay-as-you-go procedures would apply to the bill, but CBO 
estimates that any such effects would not be significant. H.R. 
3215 would impose both intergovernmental and private-sector 
mandates as defined in the Unfunded Mandates Reform Act. CBO's 
analysis of those mandates is contained in a separate statement 
on mandates.
    H.R. 3215 would further restrict gambling businesses 
involving interstate or foreign commerce by prohibiting, with 
certain exceptions, the use of communications facilities to 
transmit bets or wagers or information assisting in the placing 
of bets or wagers. The bill would thus enable the Federal 
Government to pursue cases that it otherwise would not be able 
to prosecute. However, CBO expects that any increase in costs 
for law enforcement, court proceedings, or prison operations 
would not be significant because of the small number of 
additional cases likely to be affected. Any such costs would be 
subject to the availability of appropriated funds.
    Because those prosecuted and convicted under H.R. 3215 
could be subject to criminal fines, the Federal Government 
might collect additional fines if the bill is enacted. 
Collections of such fines are recorded in the budget as 
governmental receipts (revenues), which are deposited in the 
Crime Victims Fund and later spent. CBO expects that any 
additional receipts and direct spending would be negligible 
because of the small number of cases involved.
    The CBO staff contact for this estimate is Mark Grabowicz, 
who can be reached at 226-2860. This estimate was approved by 
Robert A. Sunshine, Assistant Director for Budget Analysis.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in article I, section 8 of the Constitution.

               Section-by-Section Analysis and Discussion

Section 1. Short Title
    The short title of the bill is the ``Combatting Illegal 
Gambling Reform and Modernization Act.''
Section 2. Definitions
    This section amends 18 U.S.C. Sec. 1081 with respect to 
gambling definitions. The term ``wire communication facility'' 
under the current law would now read ``communication facility'' 
and includes transmissions by satellite and microwave as 
covered means of communication. The Committee intends that this 
definition will cover all present and future forms of 
communication.
    The term ``bets or wagers'' is defined as the staking or 
risking by any person of something of value upon the outcome of 
either: (1) a contest of others; (2) a sporting event; or (3) a 
game predominantly subject to chance, not skill, upon an 
agreement or understanding that such person or another person 
will receive something of value based on that outcome. The term 
includes the purchase of a chance or opportunity to win a 
lottery or other prize (if the opportunity is predominantly 
subject to chance). The term ``bets or wagers'' does not 
include bona fide business transactions governed by Federal 
securities law; certain specified transactions governed by 
Federal commodities law; contracts of indemnity or guarantee; 
contracts for life, health, or accident insurance.
    It is the view of the Committee that the term ``bets or 
wagers'' does not include participation in a simulation sports 
game or educational game or contest that: (1) is not dependent 
solely on the outcome of any single sporting event or 
nonparticipant's singular individual performance in any single 
sporting event; (2) has an outcome that reflects the knowledge 
and skill of the participants, with an outcome determined 
predominantly by accumulated statistical results of sporting 
events; and, (3) offers a prize or award established in advance 
of the game and not determined by the number of participants. 
This exclusion is intended to cover ``fantasy sports league 
games'' which are simulation sports games in which the outcome 
is determined using the results of actual sporting events, and 
the outcome reflects the relative knowledge and skill of the 
participants in determining those results. It is the view of 
the Committee that fantasy sport leagues operated in this 
manner are not gambling. It is important to note, however, that 
this exclusion from the definition of a bet or wager for the 
purposes of 18 U.S.C. Sec. 1084 is not intended to change the 
legality of fantasy sports league games or contests under the 
laws of any State, or under any other applicable Federal law.
    It is the view of the Committee that not all games offered 
on the Internet are ``games of chance'' for purposes of this 
definition. The Committee recognizes that many computer and 
video games played on the Internet are based predominantly on 
skill, and are not intended to be included within the 
definition of ``bets or wagers.'' Also, such computer and video 
games do not involve the staking or risking by any person of 
something of value. The Committee intends that the courts will 
continue to perform their traditional functions in determining 
whether games are ``games of chance.''
    The term ``gambling business'' is defined as a business of 
betting or wagering. However, the definition of ``gambling 
business'' is not intended to include credit card companies, or 
their cardholders, based only on the use of such credit cards 
for prohibited Internet gambling activities.
    The term ``information assisting in the placing of bets or 
wagers'' is defined as information knowingly transmitted by an 
individual in a gambling business for use in placing, 
receiving, making, or otherwise enabling or facilitating a bet 
or wager. It is the view of the Committee that the definition 
does not include: (1) information concerning parimutuel pools 
exchanged exclusively between or among parimutuel wagering 
facilities, if the information is used only to conduct common 
pool parimutuel pooling; (2) information exchanged exclusively 
between or among parimutuel wagering facilities and a support 
service, if the information is used only for processing bets or 
wagers; (3) information exchanged exclusively between or among 
wagering facilities in the same State and a support service, if 
the information is used only for the pooling or processing of 
bets or wagers made by or with the facility or facilities; (4) 
information exchanged via private network if the information is 
used only to monitor gaming device play, display prize amounts, 
provide security information, and provide other accounting 
information; (5) news reporting or analysis of wagering 
activity; and (6) posting or reporting of educational 
information on how to make a bet or wager or the nature of 
betting or wagering. Furthermore, it is the view of the 
Committee that information exchanged via a linked progressive 
game accounting system that does not accept bets or wagers and 
that does not affect game outcome is not included in the 
definition of the term ``information assisting in the placing 
of bets or wagers.''
    The term ``person'' includes a government, including a 
governmental entity as defined in 28 U.S.C. Sec. 3701(2). The 
term ``State'' means a State of the United States, the District 
of Columbia, or a commonwealth, territory, or possession of the 
United States.
    The terms ``credit,'' ``creditor,'' ``credit card,'' 
``electronic fund transfer,'' ``financial institution,'' 
``money transmitting business,'' ``Tribe,'' and ``tribal'' have 
the meanings given to such terms in the sections of the acts 
and codes referenced in the bill.
Section 3. Modification of Existing Prohibition
    This section amends 18 U.S.C. Sec. 1084, the ``Wire Act,'' 
to update the prohibitions on using communication facilities 
for transmitting bets or wagers. This new section 1084 would 
prohibit anyone engaged in a gambling business to knowingly use 
a communication facility: (1) for the transmission of bets or 
wagers, or information assisting in the placing of bets or 
wagers; or (2) for the transmission of a communication which 
entitles the recipient to receive money or credit as a result 
of bets or wagers. Gambling businesses would also be prohibited 
from knowingly accepting in connection with the transmission of 
a communication of a bet or wager any bank instruments such as 
credit cards, electronic fund transfers, checks, drafts, or any 
other form of financial transaction the Secretary of the 
Treasury may prescribe by regulation. Any person who violates 
these provisions shall be subject to a fine, imprisonment of 
not more than 5 years, or both.
    New section 1084(c)(1) states that the provisions of this 
section do not prohibit the transmission of information 
assisting in the placing of bets or wagers for use in news 
reporting as long as 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.
    New section 1084(c)(2) provides that nothing in this 
section prohibits 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 another State or foreign 
country in which such betting on the same event is permitted 
under Federal, State, tribal, or local law. The Committee 
intends this exception to cover multi-State lotteries such as 
``Powerball,'' ``Mega Millions'' and other legal and authorized 
multi-jurisdictional lotteries.
    New section 1084(c)(3) allows for 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. The 
Committee intends that this exception cover the situation where 
a State lottery transmits data from their State to a computer 
located in another State or foreign country for the purpose of 
processing the data. The Committee recognizes that some States 
have an outside vendor that runs and manages the data related 
to their lottery. These vendors are often located in a State 
other than the State in which the lottery is taking place. The 
Committee does not intend to prohibit the transmission of data 
in these situations.
    Section 1084(d) prohibits the use of a communication 
facility for the transmission of bets or wagers involving 
lotteries except when the bets or wagers are placed on the 
premises of a retail outlet that is open to the public and 
licensed by the State in which it is located to sell chances or 
opportunities to win a lottery. The Committee intends that this 
section will prohibit States from selling lottery tickets 
online in a person's home. States will still be able to use 
communication facilities for the transmission of bets or wagers 
involving lotteries as long as the individual purchasing those 
lottery tickets is required to physically enter a licensed 
retail outlet to make such purchase.
    New section 1084(e) sets forth conditions that States and 
tribes must satisfy if they decide to allow gambling on the 
Internet wholly within the borders of their State or Indian 
lands. 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) the individual placing the bets and the gambling business 
are physically located in the same State or Indian lands; (2) 
the State has a secure and effective customer verification and 
age verification system to assure compliance with age and 
residence requirements; (3) the State or Tribe has explicitly 
authorized such bets or wagers and has explicitly authorized 
and licensed the operation of the gambling business; and (4) 
with respect to gambling on Indian lands, such use is in 
accordance with the Indian Gaming Regulatory Act (Pub. L. No. 
100-497, 25 U.S.C. Sec. 2701 et seq.), the respective Tribal-
State compact, and expressly provided for in such Tribal-State 
compact.
    Section 1084(g) provides that nothing in this section 
authorizes activity that is prohibited under the Professional 
and Amateur Sports Protection Act (Pub. L. No. 102-559, 28 
U.S.C. Sec. 3701 et seq.).
    Under new section 1084(h), 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 by its 
subscriber for the purpose of transmitting or receiving 
gambling information, the common carrier shall discontinue or 
refuse the leasing, furnishing, or maintaining of such facility 
after reasonable notice to the subscriber. 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.
    Section 1084(i) provides Federal, State, tribal, and local 
law enforcement agencies acting within their jurisdiction, in a 
civil action, the right to obtain injunctive or declaratory 
relief to restrain or prevent any person from paying or 
assisting in the payment of bets or wagers in violation of 
Federal, State, tribal, or local law. 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.
    If the injunctive or declaratory relief is obtained against 
an interactive computer service, then the relief shall be 
limited to the removal of, or disabling of access to, an online 
site violating the provisions of section 1084, or a hypertext 
link to such site, that resides on a computer server controlled 
by such interactive computer service. No order issued under 
this subsection shall impose any obligation on an interactive 
computer service to remove or disable access to an online site 
that resides on a system or network controlled or operated by 
or for the interactive computer service by reason of the 
intermediate, and transient or temporary, storage of the online 
site in the course of transmission or system caching. It is the 
view of the Committee that interactive computer services may 
comply with a court order to remove a hyperlink, at their 
discretion, either by removing the hyperlink or by removing the 
entire web page, and the Committee intends that they be 
protected from liability if they take either step to comply 
with the court's order.
    This limitation will not apply if it is shown that the 
interactive computer service is either violating this section 
on its own or acting in concert with a person who is violating 
this section. Furthermore, the injunctive or declaratory relief 
will only be available after notice to the interactive computer 
service and an opportunity for the service to appear are 
provided. Such relief must specify the interactive computer 
service and specifically identify the location of the on-line 
site or hypertext link which is to be removed or disabled. This 
section does not impose any obligation on an interactive 
computer service to monitor its service or affirmatively seek 
facts indicating unlawful activity.
    New section 1084(j) states that nothing in this section 
allows the use of a communication facility for the purpose of 
placing a bet or wager or the use of a communication facility 
for the purpose of transmitting information assisting in the 
placement of bets or wagers that was illegal as of June 6, 
2002. The purpose of this section is to convey the intent of 
the Committee that the legislation shall not be interpreted as 
legalizing any further gambling activity using communications 
facilities which were not legal before the bill's passage by 
the Committee. The Committee, in no way, intends to expand 
legal forms of Internet gambling.
    The Committee does not intend the reach of this legislation 
to extend to United States entities which may hold an equity 
stake in, or manage, a communication facility which creates or 
transmits information assisting in the placing of bets or 
wagers, which processes bets or wagers, or which transmits 
communications entitling a recipient to receive money as a 
result of bets or wagers, as long as at the time the 
transmission occurs, the individual or entity placing the bets 
or wagers is physically located in a foreign jurisdiction where 
such betting or wagering is permitted under local law, the 
facility processing those bets or wagers is physically located 
in a foreign jurisdiction where such activity is permitted 
under local law, and the United States entity is in compliance 
with the laws of the State in which it is located.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

                     TITLE 18, UNITED STATES CODE

           *       *       *       *       *       *       *


                            PART I--CRIMES

           *       *       *       *       *       *       *


                          CHAPTER 50--GAMBLING

Sec.
1081.  Definitions.
     * * * * * * *
[1084.  Transmission of wagering information; penalties.]
1084.  Use of a communication facility to transmit bets or wagers; 
          penalties.

Sec. 1081. Definitions

    As used in this chapter:
            (1) The term ``gambling ship'' means a vessel used 
        principally for the operation of one or more gambling 
        establishments. Such term does not include a vessel 
        with respect to gambling aboard such vessel beyond the 
        territorial waters of the United States during a 
        covered voyage (as defined in section 4472 of the 
        Internal Revenue Code of 1986 as in effect on January 
        1, 1994).
            (2) The term ``gambling establishment'' means any 
        common gaming or gambling establishment operated for 
        the purpose of gaming or gambling, including accepting, 
        recording, or registering bets, or carrying on a policy 
        game or any other lottery, or playing any game of 
        chance, for money or other thing of value.
            (3) The term ``vessel'' includes every kind of 
        water and air craft or other contrivance used or 
        capable of being used as a means of transportation on 
        water, or on water and in the air, as well as any ship, 
        boat, barge, or other water craft or any structure 
        capable of floating on the water.
            (4) The term ``American vessel'' means any vessel 
        documented or numbered under the laws of the United 
        States; and includes any vessel which is neither 
        documented or numbered under the laws of the United 
        States nor documented under the laws of any foreign 
        country, if such vessel is owned by, chartered to, or 
        otherwise controlled by one or more citizens or 
        residents of the United States or corporations 
        organized under the laws of the United States or of any 
        State.
            (5) The term ``[wire] 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, satellite, 
        microwave, or other like connection (whether fixed or 
        mobile) between the points of origin and reception of 
        such transmission.
            (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, not 
                skill, upon an agreement or understanding that 
                the person or another person will receive 
                something of greater value than the amount 
                staked or risked 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); and
                    (C) does not include--
                            (i) a bona fide business 
                        transaction governed by the securities 
                        laws (as that term is defined in 
                        section 3(a)(47) of the Securities 
                        Exchange Act of 1934 (15 U.S.C. 
                        78c(a)(47))) for the purchase or sale 
                        at a future date of securities (as that 
                        term is defined in section 3(a)(10) of 
                        the Securities Exchange Act of 1934 (15 
                        U.S.C. 78c(a)(10)));
                            (ii) a transaction on or subject to 
                        the rules of a contract market 
                        designated pursuant to section 5 of the 
                        Commodity Exchange Act (7 U.S.C. 7) or 
                        to any transaction subject to an 
                        exemption pursuant to section 4(c) of 
                        such Act;
                            (iii) any over-the-counter 
                        derivative instrument;
                            (iv) a contract of indemnity or 
                        guarantee;
                            (v) a contract for life, health, or 
                        accident insurance;
                            (vi) 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) point 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
                            (vii) participation in any 
                        simulation sports game or educational 
                        game or contest in which (if the game 
                        or contest involves a team or teams) 
                        all teams are fictional and no team 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 athlete 
                                        in any single real-
                                        world sporting or other 
                                        event.
            (7) The term ``gambling business'' means a business 
        of betting or wagering;
            (8) The term ``information assisting in the placing 
        of bets or wagers'' means information knowingly 
        transmitted by an individual in a gambling business for 
        use in placing, receiving, making, or otherwise 
        enabling or facilitating 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; or
                    (C) information that is exchanged between 
                or among 1 or more pari-mutuel wagering 
                facilities licensed by the State or approved by 
                the foreign jurisdiction in which the facility 
                is located, and any support services, wherever 
                located, if the information exchanged is used 
                exclusively for the pooling or processing of 
                bets or wagers made by or with the facility or 
                facilities under each State's applicable law.
            (9) The term ``person'' includes a government 
        (including any governmental entity (as defined in 
        section 3701(2) of title 28)).
            (10) The term ``State'' means a State of the United 
        States, the District of Columbia, or a commonwealth, 
        territory, or possession of the United States.
            (11) The terms ``credit'', ``creditor'', and 
        ``credit card'' have the meanings given such terms in 
        section 103 of the Truth in Lending Act.
            (12) The term ``electronic fund transfer''--
                    (A) has the meaning given such term in 
                section 903 of the Electronic Fund Transfer 
                Act; or
                    (B) any fund transfer covered by Article 4A 
                of the Uniform Commercial Code, as in effect in 
                any State.
            (13) The term ``financial institution'' has the 
        meaning given such term in section 903 of the 
        Electronic Fund Transfer Act.
            (14) The terms ``money transmitting business'' and 
        ``money transmitting service'' have the meanings given 
        such terms in section 5330(d) of title 31, United 
        States Code.
            (15) The term ``Tribe'' or ``tribal'' means an 
        Indian tribe, as defined under section 4(5) of the 
        Indian Gaming Regulatory Act of 1988).

           *       *       *       *       *       *       *


[Sec. 1084. Transmission of wagering information; penalties

    [(a) Whoever being engaged in the business of betting or 
wagering knowingly uses a wire communication facility for the 
transmission in interstate or foreign commerce of bets or 
wagers or information assisting in the placing of bets or 
wagers on any sporting event or contest, or for the 
transmission of a wire 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, shall be fined under this title or imprisoned not more 
than two years, or both.
    [(b) Nothing in this section shall be construed to prevent 
the transmission in interstate or foreign commerce of 
information for use in news reporting of sporting events or 
contests, or for the transmission of information assisting in 
the placing of bets or wagers on a sporting event or contest 
from a State or foreign country where betting on that sporting 
event or contest is legal into a State or foreign country in 
which such betting is legal.
    [(c) Nothing contained in this section shall create 
immunity from criminal prosecution under any laws of any State.
    [(d) When any common carrier, subject to the jurisdiction 
of the Federal Communications Commission, is notified in 
writing by a Federal, State, or local law enforcement agency, 
acting within its jurisdiction, that any facility furnished by 
it is being used or will be used for the purpose of 
transmitting or receiving gambling information in interstate or 
foreign commerce in violation of Federal, State 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 or local tribunal or agency, that 
such facility should not be discontinued or removed, or should 
be restored.
    [(e) As used in this section, the term ``State'' means a 
State of the United States, the District of Columbia, the 
Commonwealth of Puerto Rico, or a commonwealth, territory or 
possession of the United States.]

Sec. 1084. Use of a communication facility to transmit bets or wagers; 
                    Penalties

    (a) Except as otherwise provided in this section, whoever, 
being engaged in a gambling business, knowingly uses a 
communication facility--
            (1) 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 bets or wagers, or information assisting in 
        the placing of bets or wagers; or
            (2) for 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, 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;
shall be fined under this title or imprisoned not more than 
five years, or both.
    (b)(1) Except as provided in paragraph (2), whoever, being 
engaged in a gambling business, knowingly 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 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.
    (2) Paragraph (b)(1) does not apply if the use of a 
communication facility for the transmission of bets or wagers 
or information assisting in the placing of bets or wagers is 
permitted under subsections (c) or (d).
    (c) 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.
    (d) Nothing in subsection (c) or (d) shall allow the use of 
a communication facility for the transmission of bets or wagers 
involving the purchase of a chance or opportunity to win a 
lottery, or the use of a communication facility for the 
transmission of information assisting in the placing of bets or 
wagers involving the purchase of a chance or opportunity to win 
a lottery, except that communication facilities may be used for 
the transmission of such bets or wagers and the transmission of 
information assisting such bets or wagers as long as such bets 
or wagers are placed on the premises of a retail outlet that is 
open to the public and licensed by the State in which it is 
located to sell chances or opportunities to win a lottery.
    (e) 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 any facility or support 
        service processing those bets or wagers are physically 
        located in the same State, and the State has a secure 
        and effective customer verification and age 
        verification system to assure compliance with age and 
        residence requirements, 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;
            (3) the State has explicitly authorized and 
        licensed the operation of the gambling business, any 
        facility processing the bets and wagers, and the 
        support service within its borders or the Tribe has 
        explicitly authorized and licensed the operation of 
        such gambling business, any facility processing the 
        bets and wagers, and the support service on Indian 
        lands within its jurisdiction;
            (4) with respect to class II or class III gaming, 
        the game is permitted under and conducted in accordance 
        with the Indian Gaming Regulatory Act;
            (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 facility or support service 
        processing those bets or wagers are physically located; 
        and
            (6) with respect to class III gaming under the 
        Indian Gaming Regulatory Act, each such Tribal-State 
        compact expressly provides that the game may be 
        conducted using a communication facility to transmit 
        bets or wagers or information assisting in the placing 
        of bets or wagers.
    (f) Nothing in this section creates immunity from criminal 
prosecution under any laws of any State or Tribe.
    (g) Nothing in this section authorizes activity that is 
prohibited under chapter 178 of title 28, United States Code.
    (h) 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.
    (i)(1) A Federal, State, tribal, or local law enforcement 
agency, acting within its jurisdiction may, in a civil action, 
obtain injunctive or declaratory relief to restrain or prevent 
any person from paying or assisting in the payment of bets or 
wagers, or communicating information assisting in the placing 
of bets or wagers, 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.
    (2) 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.
    (3) Relief granted under paragraph (1) against an 
interactive computer service (as defined in section 230(f) of 
the Communications Act of 1934) shall--
            (A) be limited to the removal of, or disabling of 
        access to, an online site violating this section, or a 
        hypertext link to an online site violating this 
        section, that resides on a computer server that such 
        service controls or operates; except this limitation 
        shall not apply if the service is violating this 
        section or is in active concert with a person who is 
        violating this section and receives actual notice of 
        the relief;
            (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 section;
            (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.
    (j) Nothing in this section allows the use of a 
communication facility for the purpose of placing a bet or 
wager or the use of a communication facility for the purpose of 
transmitting information assisting in the placement of bets or 
wagers that was illegal as of June 6, 2002.

           *       *       *       *       *       *       *


                           Markup Transcript



                            BUSINESS MEETING

                         WEDNESDAY, MAY 8, 2002

                  House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:03 a.m., in 
Room 2141, Rayburn House Office Building, Hon. F. James 
Sensenbrenner, Jr. [Chairman of the Committee] presiding.
    Chairman Sensenbrenner. [Presiding.] The Committee will be 
in order.
    [Intervening business.]
    The next item on the agenda is H.R. 3215, the ``Combatting 
Illegal Gambling Reform and Modernization Act.''
    The Chair recognizes the gentleman from Texas, Mr. Smith, 
Chairman of the Subcommittee on Crime, Terrorism, and Homeland 
Security, for a motion.
    Mr. Conyers. May I be excused, Mr. Chairman? [Laughter.]
    Chairman Sensenbrenner. With pleasure. [Laughter.]
    Mr. Smith. Mr. Chairman, the Subcommittee on Crime, 
Terrorism, and Homeland Security reports favorably the bill 
H.R. 3215 with a single amendment in the nature of a substitute 
and moves its favorable recommendation to the full House.
    Chairman Sensenbrenner. Without objection, the bill will be 
considered as read and open for amendment at any point. And the 
Subcommittee amendment in the nature of a substitute, which the 
Members have before them, will be considered as read and open 
for amendment at any point and be considered as the original 
text for purposes of amendment.
    [The amendment follows:]
      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


    Chairman Sensenbrenner. The Chair recognizes the gentleman 
from Texas to strike the last word.
    Mr. Smith. Thank you, Mr. Chairman.
    Mr. Chairman, H.R. 3215, the ``Combatting Illegal Gambling 
Reform and Modernization Act,'' introduced by Congressman Bob 
Goodlatte of Virginia, addresses a serious concern of many 
Americans, the problem of Internet gambling. The National 
Gambling Impact Study Commission has estimated that at least 
$1.6 billion was bet over the Internet last year. That is 
almost a fourfold increase in 4 years.
    One troubling aspect of Internet gambling is the relative 
ease of accessibility for our Nation's children. The anonymous 
nature of the Internet makes it almost impossible to prevent 
underage gamblers from using their parent's credit cards, or 
even their own, to log on to a gambling Web site.
    Many Internet sites require nothing more than a name, 
address, and a credit card number. Those sites that do require 
a person to disclose his or her age and make little or no 
effort to verify this information.
    Another group of people particularly susceptible to 
Internet gambling is the 11 million addicted gamblers in 
America. High rates of financial debt, unemployment, 
bankruptcy, divorce, homelessness, and suicide are all 
associated with gambling addiction.
    Internet gambling facilities are open 24 hours a day, 7 
days a week, all within a person's own home. By making gambling 
more convenient, it can do nothing but make the problem worse.
    Federal law is unclear as to whether or not all types of 
Internet gambling are illegal. The statute that most directly 
restricts the use of the Internet for placing bets is the Wire 
Act under section 1084 of Title 18 of the U.S.C. However, this 
statute was written before the age of the Internet and the use 
of wireless communication, so there is uncertainty as to what 
type of betting is or is not covered.
    This legislation modernizes the Wire Act to make it clear 
that the prohibitions include Internet gambling and brings the 
current prohibition against wireline interstate gambling in 
line with the development of new technology. And this 
legislation expands the existing prohibition to include all 
bets or wagers, not merely bets or wagers on sporting events or 
contests.
    Again, I thank the gentleman from Virginia, Mr. Goodlatte, 
for introducing this legislation. And I urge my colleagues to 
support it.
    Mr. Chairman, I'll yield back the balance of my time.
    Chairman Sensenbrenner. The gentleman from Virginia, Mr. 
Scott.
    Mr. Scott. Thank you, Mr. Chairman. I move to strike the 
last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Scott. Mr. Chairman, thank you for the opportunity to 
make a statement about H.R. 3215, the ``Combatting Illegal 
Gambling Reform and Modernization Act.'' This bill will expand 
the Wire Communications Act of 1961 to cover electronic and 
other communications modes, as well as wire communications, and 
then prohibit the use of these modes to place or facilitate the 
placement of a bet or wager over the Internet.
    I believe that gambling should be tightly regulated. It has 
traditionally been a State regulatory responsibility, 
primarily, and it should continue to be so. The Department of 
Justice was given a role in prosecuting illegal gambling 
pursuant to the 1961 Wire Communications Act as a way to assist 
Federal and State authorities in fighting gambling by organized 
crime syndicates. That was certainly a proper role for the 
Federal Government in getting at interstate features of illegal 
gambling by organized crime, such as conducting wagers and 
other aspects of business over the telephone and telegraph.
    Although the department did successfully prosecute an 
offshore gambling entity recently under the Wire Communications 
Act, clearly the act was not designed with prosecuting gambling 
over the Internet in mind. What is clear is that trying to 
regulate gambling businesses or anything else over the Internet 
is a daunting task. Most law enforcement is jurisdiction or 
situs dependent. The Internet has no technical jurisdiction. 
And as a result, I suspect that even if we're successful in 
closing down business sites in countries we can get to 
cooperate, because of the nature of the Internet, this approach 
will ultimately be ineffective. We would simply be increasing 
the profit opportunities for uncooperative countries, 
especially those the United States considers rogue countries.
    And even among our friends, even if they allow Internet 
gambling, they would have to wonder why we would push Internet 
freedom for most legal activities and restrict it on all of 
their Internet gaming while allowing some of our gaming. That 
is, the bill provides an exemption for our horse racing but 
prohibits everybody else's gambling altogether.
    Aside from these practical issues, there appear to be many 
policy issues in the bill before us. We continue to hear from 
lobbyists that many groups still have concerns with the bill, 
including casinos, charitable gaming, offshore gaming, tribal 
gaming, credit card companies, Internet service providers, and 
so forth.
    The offshore operations seem to be one of the prime targets 
of the legislation. Ironically, these operations are not only 
seeking but begging to be regulated, even with the knowledge 
that they probably be taxed. This approach recognizes the power 
of Government to license offshore gambling businesses, 
requiring them to meet all fiscal, management, and bonding 
requirements.
    The rationale is fairly simple. If the gaming public is 
given a choice between a Government-licensed provider with 
bonding, liability, accessibility, and other indicia of 
responsible operation, as opposed to an unregulated foreign 
gambling operation with no such protections, most of us know 
which one the gamblers will pick. So the regulatory approach 
may well be our best approach, and we should leave it to the 
States to do that regulation with a very minimal Federal role.
    To the extent that there is a Federal role, it should be 
effective. The most effective way in prosecuting gambling over 
the Internet by individuals in the United States is to 
prosecute them for gambling over the Internet. The bill does 
not make it illegal to gamble over the Internet, just run the 
gambling operation. Prosecuting only the business in an illegal 
gambling operation would be like prosecuting only the seller in 
a drug sale but not the buyer. Accordingly, I'll offer an 
amendment to make it a crime for individuals to gamble under 
the--illegally under the bill. That will, frankly, let us know 
whether we're serious or not about the legislation.
    So, Mr. Chairman, I'm not sure what the point of the bill--
I'm not sure what the point is of the bill that prohibits some 
forms of gambling over the Internet, leaves other gambling 
alone. But if we are going to pass it, we should make it 
effective to accomplish the goals that we seek.
    Thank you, Mr. Chairman. I yield back the balance of my 
time.
    Chairman Sensenbrenner. Does the gentleman from Virginia, 
the author of this bill, wish to add to the discussion?
    Mr. Goodlatte. I do. Thank you, Mr. Chairman.
    Chairman Sensenbrenner. You have 5 minutes to do so.
    Mr. Goodlatte. I thank you for bringing this legislation 
forward, and I want to commend it to my colleagues. I have 
worked with virtually everybody on this Committee on concerns 
that they have. We've addressed many concerns. We have not 
addressed all concerns, and I'd like to explain the nature of 
this bill at this time and address some of the concerns raised 
by the gentleman from Virginia, Mr. Scott, because they are 
concerns that do need to be addressed.
    First of all, this bill is different than the legislation 
that passed the Committee in the last Congress. The reason is 
that after it passed the Committee and was brought to the 
floor, where it received a substantial vote, it nonetheless was 
attacked on several grounds.
    First of all, it was attacked on the ground that it 
violated the rights of the States to regulate gambling. And 
gambling in this country has, not without exception, but has 
historically generally been illegal unless regulated by the 
States. The Wire Act is the principle law that implements that. 
It was written in 1961, and as the gentleman from Texas has 
indicated, and the gentleman from Virginia, it is clearly out 
of date in terms of dealing with modern challenges that the 
States face with gambling activities that take place within 
their jurisdiction.
    Secondly, the last bill was attacked for not being neutral 
amongst various gambling entities, and we have attempted to 
correct that in this legislation as well. That's not to say 
that all gambling entities are treated the same, because 
they're not treated the same now under existing State laws and 
other Federal laws not affected by this legislation.
    Finally, the bill was attacked because it was not 
technology-neutral. It created a new section of the Wire Act, 
which I recall the gentleman from Virginia, Mr. Scott, and 
others raising concerns about. In recognition of that, we have 
simply amended the current section 1084 of the Wire Act to 
address that problem.
    What this bill is primarily directed at are the 1,400 
offshore sites that are illegal, unregulated, untaxed, and 
sucking over $2 billion a year out of the country. We need to 
amend the Wire Act to address that problem.
    Now, in doing that, what we have done is to create a 
situation where there are lots of legal gaming enterprises in 
the United States. You've got horse racing, dog racing, jai 
alai, casino gambling, lotteries, Indian gaming, and probably 
several others that I haven't thought of to mention.
    In recognizing the right of the States to continue to 
regulate gambling of any form, they need to have a strengthened 
Wire Act. This was the original request that we received from 
the States' attorneys general, to address this concern. This 
was the concern that the Justice Department, both the Clinton 
Justice Department and now the Bush Justice Department, have.
    In doing that, we have to be careful that we fashion 
legislation that can finish the entire process and recognize 
these principles that we've annunciated.
    So a number of amendments will be offered, and we'll 
carefully consider each one, and work with the Members as they 
work through the problems they have with the bill. But if they 
attack one of those three principles, then it's going to have a 
fundamental change in how gambling is dealt with in the United 
States.
    Now, to address the concern raised by the gentleman from 
Virginia regarding individual bettors and the fact that the 
bill does not impose new penalties on individuals engaged in 
betting, there are two reasons for that.
    First of all, as I said, we're not creating a new section 
for the Wire Act. We're simply modernizing and updating the 
current law, which in its original form did not have such 
penalties on those individuals.
    And secondly, and even more importantly, the individual 
bettor is already within the jurisdiction of one of the 50 
States and, therefore, has the opportunity to be prosecuted by 
those States, if they choose to do so. What we have a problem 
with are these offshore sites that are beyond the reach of law 
enforcement. And because of the injunctive relief that is 
provided for in this bill, it will give law enforcement new 
tools to cut off their access to bettors in the United States. 
We don't attempt to shut down these businesses. Many of them 
operate today attempting not to do business in the United 
States, because they know their business is not welcome in many 
of the States of this country. Others do, however. The majority 
of them do. And we are simply tying to give law enforcement new 
tools to make it clear that any form of gambling that they're 
operating under that is illegal in the State that they are 
prosecuting them in, can be prosecuted. And the Wire Act, 
written primarily to deal with sports betting in the early 
1960's, is not clear as to its application for other types of 
betting like casino gaming and needs to be updated, and 
secondly, to give law enforcement these new tools.
    My time has expired, but I would urge my colleagues to look 
at this very carefully from the three principles of States' 
rights; being neutral with regard to the current state of 
affairs that the States have placed various gambling 
enterprises in; and attempting as best we can, even though this 
is a new technology, to be technology-neutral, to amend the 
current Wire Act rather than create a whole new section dealing 
with the Internet as a separate form of gambling.
    Mr. Smith. [Presiding.] Thank you, Mr. Goodlatte.
    Are there other Members who wish----
    Mr. Goodlatte. Mr. Chairman, I do have a written statement 
I'd ask to be put in the record. For those who didn't get 
enough, I have a written statement I'd ask be made a part of 
the record.
    Mr. Smith. I think, without objection, we are already 
making those a part of the record.
    [The prepared statement of Mr. Goodlatte follows:]
Prepared Statement of the Honorable Bob Goodlatte, a Representative in 
                  Congress From the State of Virginia
    Thank you Mr. Chairman for holding today's markup on legislation 
that I have introduced that represents a bipartisan effort to address 
the ever increasing problem of illegal Internet gambling in our 
Nation--H.R. 3215, the ``Combatting Illegal Gambling Reform and 
Modernization Act.''
    The Internet is a revolutionary tool that dramatically affects the 
way we communicate, conduct business, and access information. As it 
knows no boundaries, the Internet is accessed by folks in rural and 
urban areas alike, in large countries as well as small. The Internet is 
currently expanding by leaps and bounds; however, it has not yet come 
close to reaching its true potential as a medium for commerce and 
communication.
    One of the main reasons that the Internet has not reached this 
potential is that many folks view it as a wild frontier, with no 
safeguards to protect children and very few legal protections to 
prevent online criminal activity. The ability of the World Wide Web to 
penetrate every home and community across the globe has both positive 
and negative implications--while it can be an invaluable source of 
information and means of communication, it can also override community 
values and standards, subjecting them to whatever may or may not be 
found online. In short, the Internet is a challenge to the sovereignty 
of civilized communities, States, and nations to decide what is 
appropriate and decent behavior.
    Gambling is an excellent example of this situation. It is currently 
illegal in the United States unless regulated by the States. As such, 
every state has gambling statutes to determine the type and amount of 
legal gambling permitted. With the development of the Internet, 
however, prohibitions and regulations governing gambling have been 
turned on their head. No longer do people have to leave the comfort of 
their homes and make the affirmative decision to travel to a casino--
they can access the casino from their living rooms.
    Since 1868, the federal government has enacted federal gambling 
statutes when a particular type of gambling activity has escaped the 
ability of states to regulate it. For over one hundred years, Congress 
has acted to assist states in enforcing their respective policies on 
gambling when developments in technology of an interstate nature, such 
as the Internet, have compromised the effectiveness of state gambling 
laws.
    The negative consequences of online gambling can be as detrimental 
to the families and communities of addictive gamblers as if a bricks 
and mortar casino was built right next door. Online gambling can result 
in addiction, bankruptcy, divorce, crime, and moral decline just as 
with traditional forms of gambling, the costs of which must ultimately 
be borne by society.
    Gambling on the Internet is especially enticing to youth, 
pathological gamblers, and criminals. There are currently no mechanisms 
in place to prevent youths--who make up the largest percentage of 
Internet users--from using their parents' credit card numbers to 
register and set up accounts for use at Internet gambling sites. In 
addition, pathological gamblers may become easily addicted to online 
gambling because of the Internet's easy access, anonymity and instant 
results. Dr. Howard J. Shaffer, director of addiction studies at 
Harvard, likens the Internet to new delivery forms of addictive drugs: 
``As smoking crack cocaine changed the cocaine experience, I think 
electronics is going to change the way gambling is experienced.'' 
Finally, Internet gambling can provide a nearly undetectable harbor for 
criminal enterprises. The anonymity associated with the Internet makes 
online gambling more susceptible to crime.
    I have long been a champion of the Internet and an advocate of 
limited government regulation of this new medium. However, that does 
not mean that the Internet should be a regulatory free zone or that our 
existing laws should not apply to the Internet. I think we can all 
agree that it would be very bad public policy to allow offline activity 
deemed criminal by states to be freely committed online and to go 
unpunished simply because we are reluctant to apply our laws to the 
Internet.
    Gambling on the Internet has become an extremely lucrative 
business. Numerous studies have charted the explosive growth of this 
industry, both by the increases in gambling websites available, and via 
industry revenues. The Internet gambling industry's revenues grew from 
$300 million in 1997 to an estimated $1.6 billion in 2001. It has been 
reported that there are currently more than 1,400 gambling sites, up 
from 700 just a year earlier. Other estimates indicate that Internet 
gambling could soon easily become a $10 billion a year industry.
    Most of the more than 1,400 Internet gambling sites are offshore. 
Virtual betting parlors accepting bets from individuals in the United 
States have attempted to avoid the application of United States law by 
locating themselves offshore and out of our jurisdictional reach. These 
offshore, fly-by-night Internet gambling operators are unlicensed, 
untaxed and unregulated and are sucking billions of dollars out of the 
United States.
    In addition, the FBI and the Department of Justice recently 
testified that Internet gambling serves as a vehicle for money 
laundering activities and can be exploited by terrorists to launder 
money. The FBI currently has at least two pending cases involving 
Internet gambling as a conduit for money laundering, as well as a 
number of pending cases linking Internet gambling to organized crime.
    The ``Combatting Illegal Gambling Reform and Modernization Act'' 
will add a new provision to the law that would prohibit a gambling 
business from accepting certain forms of non-cash payment, including 
credit cards and electronic transfers, for the transmission of illegal 
bets and wagers. This provision provides an enforcement mechanism to 
address the situation where the gambling business is located offshore 
but the gambling business used bank accounts in the United States. The 
bill also provides an additional tool to fight illegal gambling by 
giving Federal, State, local and tribal law enforcement new injunctive 
authority to prevent and restrain violations of the law.
    The ``Combatting Illegal Gambling Reform and Modernization Act'' 
will return control to the states by protecting the right of citizens 
in each State to decide through their State legislatures if they want 
to allow gambling within their borders and not have that right taken 
away by offshore, fly-by-night operators.
    The 104th Congress created the National Gambling Impact Study 
Commission and charged it with conducting a comprehensive legal and 
factual study of gambling, including an assessment of the effects of 
gambling by electronic means, including the use of interactive 
technologies and the Internet. The Commission recommended to Congress 
that federal legislation is needed to halt the expansion of Internet 
gambling and to prohibit wire transfers to known Internet gambling 
sites, or the banks who represent them.
    As the National Gambling Impact Study Commission has documented, 
and Senate and House hearings have confirmed, Internet gambling is 
growing at an explosive rate. It evades existing anti-gambling laws, 
promotes compulsive gambling among adults, preys on the poor, and 
facilitates fraud. The ``Combatting Illegal Gambling Reform and 
Modernization Act'' will put a stop to this harmful activity before it 
spreads further. I urge my colleagues to support this very important 
legislation.

    Mr. Smith. Let me yield, in order of seniority, to the 
gentlewoman from Texas, Ms. Jackson Lee, for her opening 
statement on this bill.
    Ms. Jackson Lee. Thank you very much, Mr. Chairman. And let 
me thank Mr. Goodlatte for laying out some of the difficult, if 
you will, obstacles that we must weave our way through in 
trying to make a very constructive legislative initiative 
dealing with, I think, a key ailment, and that is the 
proliferation of gambling and the negative impact it has on 
individuals who are weakened, if you will, by the luring of 
gambling activities.
    We do realize that it represents the basis of a very strong 
economy in many areas. We realize that many of our Native 
American communities are involved, as well as our local 
communities are involved in gambling through lotteries and 
horse racing and dog racing. And these are very lucrative 
sources of income for these local communities.
    I think that is an important point. But as we look to this 
whole question of dealing with new technology, I think it's 
important that we try to find the correct balance between 
Federal regulation, Mr. Chairman, and, as well, State 
regulation.
    I have an issue that, Mr. Goodlatte, I hope that we will be 
able to work on, and that is, of course, dealing with what I 
believe may be the unintended consequence of this legislation. 
As you know, I've offered my support for it, dealing with 
charitable utilization of the Internet for fund-raising 
efforts. And I am looking forward to us working together to 
work through the amendment that I intend to offer and work 
through it to secure bipartisan support that deals with not 
barring charitable organizations from their activities for 
charitable activities. It is a simple amendment, as you well 
know. Charities have used lotteries and raffles and other games 
of chance to raise funds for their charitable purposes for over 
300 years in the United States and the colonies. It goes back 
that far. We also know that people who have an illness about 
gambling, if that is one of my concerns, and others, that no 
matter what agency is doing it, it still may be detrimental.
    But I do believe that we must find a way to ensure that our 
charities are not disadvantaged by the legislation that we may 
pass. Charitable organizations are presently permitted under 
Federal law and the law in 46 States to conduct bingo, lottery, 
similar games of chance, provided that the proceeds are 
dedicated to a charitable purpose.
    And so I would like to have us work through this process 
and work through this amendment in order to ensure that what we 
do from Washington does not negatively intrude into the local 
system and thereby inhibit forward thinking or those who have 
an institutional history of raising monies this way for good 
causes. And certainly, we would hope that those causes are 
good. And we don't want to eliminate the Rotary Club in 
Naperville or Houston, Texas, from doing their constructive 
works, nor do we want the local parish, churches or synagogues, 
mosques, and others, who raise monies for the community, to be 
eliminated through this legislation.
    Mr. Chairman, I would like to offer my full statement into 
the record and ask unanimous consent for such. But I'd like to 
raise that issue, and also bring to the attention of my 
colleagues that, in dealing with this new technology, I'm glad 
that we're going to make more time on marking up this bill. Let 
us be sure that we have legislation that has been sufficiently 
vetted. It has passed in the last Congress. I realize that. I 
think it's a good bill. But our particular attention to it, as 
it makes its way through this Committee, will be very helpful 
to gaining the support of our colleagues on the floor of the 
House.
    With that, I yield back the balance of my time.
    Mr. Smith. Thank you, Ms. Jackson Lee. And without 
objection, all opening statements will be made a part of the 
record.
    [The prepared statement of Ms. Jackson Lee follows:]
       Prepared Statement of the Honorable Sheila Jackson Lee, a 
           Representative in Congress From the State of Texas
    I have several concerns with the bill before us today. Paramount of 
concern to me is that the bill establishes an impracticable enforcement 
scheme. Given the fact the bill does not make it illegal for 
individuals to gamble, and the ability of Internet providers to close 
down a website and open another with the same customers or contacts, 
shutting down illegal operations would be to little avail. This is 
particularly the case if they are rogue operations or are run by 
operatives of a rogue organization, including some countries. The 
bill's prohibitions are still applicable only to gambling businesses, 
not individuals.
    My amendment is quite simple. It would extend current federal law 
regarding charitable gambling to the Internet. The amendment would 
allow charitable organizations to do on the Internet exactly what they 
can currently do off the Internet--raise funds for their charitable 
activities.
    Charitable organizations are presently permitted under federal law 
and the law in 46 states to conduct bingo, lotteries and similar games 
of chance provided that the proceeds are dedicated to a charitable 
purpose. In 2000, non-profit charitable organizations raised almost 
$770 million for their charitable activities through gambling, 
including bingo, lotteries, pull-tabs, and raffles. This represents 
only about 4% of all legal gambling in the United States, but is hugely 
important to charities.
    Charities are treated differently in several sections of federal 
law because they are different. Bona fide charities that register with 
the Internal Revenue Service are given tax-exempt status. The 
charitable distinction has already been recognized by Congress in 18 
U.S.C. Section 1955, which explicitly exempts from federal prohibition 
and penalties against illegal gambling business any bingo game, lottery 
or similar game of chance conducted by a charity. Extending the 
charities privileges in current law to the Internet is not an academic 
point. It is critically important to charities in congressional 
districts around the country. The Rotary Club in Naperville, Illinois, 
in Speaker Hastert's District, operates a raffle on the Internet. 
Ticket cost $100 and the top prize is a new house with a value of 
$175,000. The raffle nets the Rotary Club of Naperville as much as 
$750,000 annually for its charitable purposes. The raffle solicits 
participants from a national and international audience who use credit 
cards to play. Under this bill, the Rotary Club in Naperville would 
have to stop its successful fundraising effort. Realistically, there is 
no other means of fundraising that can result in such a large amount of 
money raise for charities at such a low cost. This money could probably 
not be replaced.
    Many charities are seeking new ways to expand their fundraising 
activities to maintain their charitable activities. Internet charitable 
lotteries represent a low-cost way for charities to raise necessary 
funds in the face of competition from for profit gaming operators.
    It is essential for charities in the United States that an 
amendment like the one I am proposing be included in this bill. It is 
not enough to allow local charities to raise money intrastate on-line 
via lotteries and raffles. That solution ignores the way that the 
Internet actually works. Any charity that seeks to raise money via 
games on-line will be accessed by people from all over the country and 
the world. That is a fact of life, whether it's the local firehouse, 
the local Rotary Club, or The Humane Society. His bill will make it 
impossible for them to fundraise via games online.
    I urge my colleagues to support the amendment.

    Mr. Smith. The gentleman from North Carolina, Mr. Coble, 
the Chairman of the Court Subcommittee, is recognized for his 
opening statement.
    Mr. Coble. I thank the Chairman, and I will not consume my 
5 minutes, Mr. Chairman.
    I have never thoroughly embraced this bill, but I'm getting 
closer to it. I've had problems with it. I've had questions 
about it. I have worked with the gentleman from valley, from 
the Virginia valley, consistently since last year, and I 
believe he is prepared to respond to the problems that I had. 
And I probably will ultimately embrace the bill, for what 
that's worth.
    And I yield back my time.
    Mr. Smith. Thank you, Mr. Coble.
    The gentleman from Florida, Mr. Wexler, is recognized for 
an opening statement.
    Mr. Wexler. Thank you, Mr. Chairman.
    I first want to just compliment the gentleman from Virginia 
for his continuing willingness to work with those of us who 
have concerns on the bill. I very much appreciate it. And I 
support wholeheartedly the intent of the bill, which is to, as 
he described, better regulate and prohibit where permissible 
the efforts of the 1,400-some-odd operations relative to 
offshore gambling sites.
    However, with all due respect to the gentleman from 
Virginia and the effort, the basic core principle of the bill 
as he annunciated it, neutrality, is not a part of this bill. 
And no one with a straight face can say that if this bill were 
adopted as it is now written, that there would be a neutral 
impact.
    The bottom line, and I'll stop with this, is if this bill 
is passed, at the end of the day, there will be one industry in 
the parimutuel industry where Americans will be able to bet on 
the Internet, and that's horse racing. Dog racing is out of 
luck. Jai alai is out of luck. And I cannot imagine, in any 
level of credibility or in good conscience, why the United 
States Congress would in effect legislate so that horse track 
betting can occur and they can profit, but dog track betting 
can't occur on the Internet, and they ultimately go out of 
business, and jai alai goes out of business.
    I cannot remember a time when this United States Congress 
has literally chosen between two or three entirely legitimate, 
lawful enterprises, where thousands of Americans are employed, 
and we say: Go ahead one industry. You have at it. You make all 
the money in the world. And you two other industries, the dog 
tracks and the jai alais, you're out of luck. We're, in effect, 
by legislation putting you out of business.
    So I support the general effort. I applaud the gentleman 
from Virginia for his ongoing willingness to consider the 
objections. But as it is written now, nobody can be fooled: 
This is horse track betting Internet bill; dog track, jai alai, 
you're out of luck. We, the Congress of the United States, all 
of a sudden, we're making business decisions. We're putting 
people in and other out.
    Mr. Smith. Thank you, Mr. Wexler.
    The gentleman from Wisconsin, Mr. Green, is recognized for 
a brief opening statement.
    Mr. Green. Thank you, Mr. Chairman. I will be brief.
    I supported this legislation last session. I originally put 
my name on as a co-author. As I've identified, though, with the 
main sponsor of this legislation, I do have grave concerns, 
which unfortunately are getting greater not less as we move 
along.
    I recognize the enormity of the task the gentleman has in 
taking on this effort. And he has had to make some changes and 
some compromises in order to pick up votes. In my view though, 
with some of those changes and compromises, we no longer have a 
ban on Internet gambling.
    There is uncertainty, and there is a lack of clarity in the 
current law. My fear is that this bill, where it resolves that 
uncertainty, resolves it in favor of greater gambling.
    And while the gentleman says that this doesn't change 
current law, perhaps we should change current law in some 
places.
    I'll continue to work with the gentleman. But as he knows, 
I support the intent. I support, like everyone here, going 
after offshore gambling, enthusiastically support it. But I am 
concerned with some of the changes, that they will have a 
harmful effect.
    And I yield back my time.
    Mr. Smith. Thank you, Mr. Green. Are there other Members 
who wish to make a brief opening statement?
    If not, the Committee will stand in recess subject to the 
call of the Chair.
    [Whereupon, at 11:19 a.m., the Committee was adjourned.]

           *         *         *         *         *

    The Committee met, pursuant to notice, at 10:00 a.m., in 
Room 2141, Rayburn House Office Building, Hon. F. James 
Sensenbrenner, Jr. [Chairman of the Committee] presiding.
    Chairman Sensenbrenner. The Committee notes the presence of 
a working quorum.
    [Intervening business.]
    The next item on the agenda which has been pending since 
the last markup is H.R. 3215, the ``Combatting Illegal Gambling 
Reform and Modernization Act.''
    When the Committee recessed, Chairman Smith, on behalf of 
the Subcommittee on Crime, Terrorism, and Homeland Security, 
made a motion to report favorably the bill H.R. 3215 with the 
single amendment in the nature of a substitute and moved its 
favorable recommendation to the full House. By order of the 
Committee, the Subcommittee amendment was considered as read 
and open for amendment at any point. Are there further 
amendments?
    The gentleman from Virginia, Mr. Goodlatte.
    Mr. Goodlatte. Mr. Chairman, I have an amendment in the 
nature of a substitute.
    Chairman Sensenbrenner. The clerk will report the amendment 
in the nature of a substitute.
    The Clerk. Amendment in the nature of a substitute to H.R. 
3215 offered by Mr. Goodlatte.
    Strike all after the enacting clause and insert the 
following----
    Chairman Sensenbrenner. Without objection, Mr. Goodlatte's 
amendment in the nature of a substitute is considered as read 
and open for amendment at any point.
    [The amendment follows:]
      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


      
      

  


    Chairman Sensenbrenner. Also without objection, this 
amendment in the nature of a substitute will be considered as 
an original bill for purposes of markup. That way we can have 
an additional degree of amendments as we are marking this up.
    The gentleman from Virginia is recognized for 5 minutes.
    Mr. Watt. Mr. Chairman, apparently, they didn't have enough 
copies. I would like to have a copy of it before we proceed.
    Chairman Sensenbrenner. The gentleman from Virginia will 
speak slowly for the next 5 minutes.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    Mr. Chairman, as Members will recall, we had opening 
statements on this legislation last time. I will not go over 
all of the details of the bill except to say that it is needed 
to update a 1961 law that is badly out of date and to give law 
enforcement new tools to combat the 2000 offshore sites that 
are in everybody's living room and den and are available for a 
multitude of different types of gambling.
    This amendment in the nature of a substitute contains three 
changes. First, the provision relating to injunctive relief 
with Internet service providers. This change makes clear that 
injunctions issued against interactive computer services to 
take down illegal gambling websites or websites containing 
hypertext links hosted by the ISP would issue only after 
notice, and a hearing would specify the service to which the 
order applies and provide enough information that the 
information--that the computer service could locate the site or 
hypertext link. These are the banner ads that you see all over 
the computer when you go online linking you to these offshore 
sites.
    Law enforcement, upon notice and due process, would under 
this language be able to, upon an order of the court, require 
that these links be broken.
    Secondly, it has a provision that was in the last bill that 
was omitted from this bill dealing with a term called ``common 
pool wagering.'' it is a common practice as a bookkeeping 
matter when taking wagers on a pari-mutuel contest to include 
those wagers in a wagering pool established specifically for 
that contest and pay any winning wagers out of the same pool.
    The transmission of information regarding the common pools 
is a purely technical activity. The current Wire Act permits 
the transmission of information assisting in the placing of 
bets or wagers on a sporting event or contest from a State 
where it is legal into a State where it is also legal. Language 
pertaining to common pool wagering was included in the previous 
version of this legislation which was overwhelmingly voted out 
of the Judiciary Committee and received a majority vote on the 
House floor but by oversight was left out of this bill. In the 
interest of not criminalizing activities that are legal under 
current law that language has been restored to the bill.
    To address the concern that authority be restored to the 
States to control their own borders with regard to the 
enforcement of their gambling status, a new paragraph D was 
added to the bill which provides that the interstate 
transmission of wagers is permitted under certain enumerated 
provisions. This provision, however, does not authorize the 
transmission of bets or wagers between a State and a foreign 
country, regardless of the legality of such bet or wagering in 
the foreign country.
    Further, this provision recognizes that while some States 
may wish to permit wagering with other States, other States 
will prohibit such activity. Thus, this provision requires 
that, at the time of the transmission, such betting or wagering 
must either be, one, legal in the State where the gambling 
business is physically located, the State where the bettor is 
physically located, and the State where any facility processing 
of bets is physically located; or, two, legal on Indian lands 
in the State where the gambling business is physically located, 
on the Indian lands in the States where the bettor is 
physically located and on Indian lands in the State where any 
facility processing the bets is physically located.
    Further, with respect to tribal gaming, such gaming must be 
authorized and conducted in accordance with the Indian Gaming 
Regulatory Act. This bill does not amend that act.
    In the case of class 3 gaming, the respective tribal State 
compacts must expressly authorize that such gaming may be 
conducted using a communication facility. In addition, such 
gaming must be expressly authorized by the State and ensure 
that minors do not have access and that residency requirements 
are met. This provision does not repeal the prohibitions 
contained in the Professional and Amateur Sport Protection Act, 
PASPA, so it does not authorize the interstate transmission of 
bets or wagers on supporting events to or from a State where 
such wagering is currently not permissible in 49 States.
    Mr. Chairman, this amendment is important. It maintains the 
focus of this legislation, which is to maintain the rights of 
the States, which historically have regulated gambling in this 
country, and it does so in such a way that it does not intrude 
upon or repeal rights that the States have bestowed to current, 
lawfully authorized gaming entities regulated by those States; 
and I urge my colleagues to adopt the amendment.
    Chairman Sensenbrenner. Are there amendments? Are there 
amendments?
    The gentleman from Florida, Mr. Wexler.
    Mr. Wexler. Speaking on Mr. Goodlatte's amendment or our 
own amendments?
    Chairman Sensenbrenner. The order would be that amendments 
to the amendment in the nature of a substitute would be in 
order at this time.
    Mr. Wexler. I have an amendment at the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    The Clerk. Amendment to the amendment in the nature of a 
substitute to H.R. 3215 offered by Mr. Wexler.
    Page 15, after line 19, insert the following:
    (h) Nothing in this section prohibits the use of a 
communication facility for the transmission of bets or wagers 
or information----
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read.
    [The amendment follows:]
    
    
    Chairman Sensenbrenner. The gentleman from Florida is 
recognized for 5 minutes.
    Mr. Wexler. Thank you, Mr. Chairman.
    As Mr. Goodlatte said, we had our opening statements some 
time ago; and I don't want to repeat in great detail what was 
said except to say this. This is an appeal to this Committee 
for fairness and equity. This is not a partisan issue. This is 
not an ideological issue. If you are against this bill because 
you don't want to extend opportunities for gambling, that is 
your business.
    But what this bill does, despite Mr. Goodlatte's best 
intentions and despite the fact that Mr. Goodlatte has been 
courteous in hearing the objections of those who are concerned 
about lawful American businesses who are getting the shaft, the 
bottom line on this bill is, if we pass this bill, at the end 
of the game what is the effect is that horse track betting will 
be able to occur on the Internet, but you won't be able to do 
dog track betting on the Internet, you won't be able to do Jai 
Alai fronton betting on the Internet.
    And although Mr. Goodlatte says his bill and the substitute 
are neutral, that respectfully I don't believe is the case. 
Because there is now an exemption for casinos, which I support. 
That is fine. There is an exemption for lotteries. That is 
fine. But there is no--my view, but there is no explainable 
reason why we would say horse track betting is okay on the 
Internet--we, the Congress of the United States--but dog track 
and Jai Alai are out.
    Now this is--we need to understand that the pari-mutuels, 
it is a competitive industry. That is the way it ought to be, 
good old-fashioned American capitalism. But what we are doing 
today would be no different than us saying to cellular phone 
companies, one company, you can use the newest, best technology 
but another company you are out of luck. We, the Congress of 
the United States, we are picking that company. And it would be 
no different from us telling Universal, you could have the 
fastest roller coaster in the world; but, Disney, I don't know, 
you are just not on our good side. You don't get it.
    Well, what we have got here, a lawful American business, is 
dog tracks; Jai Alai, I have got them all in my area; horses, 
all of them. I want them all to succeed. But for the Congress 
of the United States to play Big Brother, turn capitalism up 
side down and say this lawful American enterprise, you are not 
going to be able to do Internet business on the Internet, but 
you, you other competitors, you will be able to do it, there is 
no explainable reason.
    If this bill was simply a bill to regulate, prohibit, 
relieve the adverse consequences of offshore gambling, I would 
be totally for it. There would be no controversy. This thing 
would have passed months ago. But that is not what this bill 
is, with all due respect to the sponsor. This bill has become 
that plus a tremendous boondoggle for certain industries or 
portions of industries that have the favor of certain Members 
of Congress. With all due respect, I realize that dog tracks 
and Jai Alai frontons don't have the cachet of the horses, but 
the bottom line is they are a lawful American business. 
Thousands of Americans go to them.
    This isn't Democrat or Republican. I believe Mr. Bilirakis 
has contacted Members of the Committee. There is an institution 
in Mr. Bilirakis' and Mr. Young's area that has been there for 
decades, and we effectively will put them out of business. Did 
they do anything wrong? No. Did they violate any State or 
Federal laws? To my knowledge, no. We just decided today what 
we might decide that if Mr. Goodlatte, with all due respect, 
has his way, sorry, dog tracks, you have been here for a long 
time, but we are not going to have you any more. Jai Alai, 
sorry you are out.
    So I plead with this Committee, please, in fairness, either 
do one of two things: Either say no exemption, nobody gets them 
and nobody can do Internet gambling. But if you are going to 
let Internet gambling in one deal, then let them all do it. One 
or another, but don't pick and choose. This amendment would 
allow the dogs and Jai Alais, and I plead with you to be fair 
and even the score.
    Thank you, Mr. Chairman.
    Chairman Sensenbrenner. Without objection, the page and 
line numbers are modified to read page 17, line 20, which is 
where this amendment fits in.
    The gentleman from Virginia has something to say and is 
recognized for 5 minutes.
    Mr. Goodlatte. Indeed I do, and I appreciate the gentleman 
from Florida's kind words about our efforts to work with him, 
but he has completely mischaracterized the application of this 
bill to dog racing and Jai Alai. Because they are treated 
exactly the same way in this bill as every other form of legal 
gaming in this country.
    What the gentleman is explaining about and what those 
supporters of dog racing and Jai Alai are trying to do is to 
use this bill to leverage the same status, not of casinos, not 
of lotteries, not of any of the other gambling entities but of 
the horse racing industry. Because horse racing has over the 
years passed several other free-standing bills in the 
Congress--the Thoroughbred Act, the Simulcast Act, a provision 
that was put in an appropriations bill in the last Congress, 
and this bill treats the dog racing and Jai Alai industry 
exactly the same as every other entity.
    If a State wishes to allow a dog racing or Jai Alai entity 
to go online and they comply with the provisions of this bill 
that minors are not allowed to place bets, that they do not go 
across the borders of the State or any other State with which 
they have a cooperative agreement or they have explicit 
approval of their State legislature, they can do that. But that 
is the same thing that applies to every other legal gaming 
entity in the country.
    This bill is designed to go after the 2,000 offshore sites. 
It gives law enforcement new tools to deal with them, and in 
the process it also modernizes the Wire Act. The Wire Act was 
written in 1961 to cover types of bets that were placed back 
then. Technology has changed. Types of betting has changed, and 
the Wire Act needs to be modernized. As you do that, you have 
to, of necessity, deal with every legal gaming entity to make 
sure that rights are not impacted.
    The rights of dog tracks and Jai Alais are not in any way 
impacted by this bill. The gentleman wants them to be ahead of 
casinos and lotteries because, if his amendment were passed, he 
would be--he should seek separate legislation to do that. The 
Congress should not get involved in doing this. The fact that 
they have done it in past pieces of legislation should not 
cause this Committee to do that now, because it will open us 
open to other forms of gambling coming in and saying we want 
the same thing that the dogs and the Jai Alai have.
    I urge my colleagues to oppose the amendment.
    Mr. Wexler. Would the gentleman yield?
    Thank you, Mr. Goodlatte.
    I only want each element of gambling to be treated exactly 
the same, nobody have any benefit from this Congress. It is 
true that in your description, however, of the modernization of 
the Wire Act that there is an exemption, and the exemption is 
for the horse industry.
    Mr. Goodlatte. Reclaiming my time, that is not correct. The 
bill does not attempt to repeal any previously existing State 
or Federal laws related to anything that any particular legal 
entity may have. That is why this bill is neutral.
    Now the important point I think to make here is that you 
would be opening this up to further expansion, and that I think 
is the critical difference between your----
    Mr. Wexler. Will the gentleman yield?
    With all due respect, I admit, Mr. Goodlatte, I would open 
up the bill to more gambling on the Internet. But, with all due 
respect, I wasn't the first person to open it up. The bill 
opens it up.
    Mr. Goodlatte. That is not correct. The fact of the matter 
is that, right now, under current law, these entities can and 
some do go online and take bets, including the dog racing 
industry, including the horse racing industry. And the fact of 
the matter is that that legislation deals with the issue in a 
fair and impartial manner.
    Because everything that applies to horse racing in this 
legislation also applies to dog racing. But the fact that there 
are other State or Federal laws should not compel this 
Committee to get into the business of deciding what areas we 
should go into and what areas we should expand. The fact of the 
matter is that every State has different laws related to 
gambling. Forty-seven States have horse racing; 15 States have 
dog racing; vast majority of the States have lotteries; a few 
States have casino gambling; many States have Indian gaming. We 
have left it to the States to decide what they are going to 
allow.
    That is what this bill does, and that is why I would hope 
that my colleagues would defeat this amendment.
    Chairman Sensenbrenner. The gentleman's time has expired.
    So that Members can make their plans, there will be votes a 
little bit before 1:00 if things are running on schedule across 
the street. It is the Chair's intention to recess the Committee 
somewhere between 12:15 and 12:30 so that Members can grab some 
lunch and arrange their affairs before leaving town.
    For what purpose does the gentleman from Massachusetts seek 
recognition?
    Mr. Frank. Strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Frank. In this case I wish that was literally the case. 
I wish what I was saying would be the last word on this bill.
    I know people worked hard on it, but as I listen to the 
debate I have a great deal of admiration for the hard work and 
thoughtfulness of both of my colleagues, but I miss 
antiterrorism when we are talking about this. I must tell you 
that I think the amendment and the debate--there is a good 
reason why it shouldn't be in the bill. What are we going to 
decide? Whether dog racing is more like horse racing or 
blackjack and Jai Alai is more like harness racing or slot 
machines? It is none of our business.
    I think there is a very simple principle we ought to follow 
here. If American citizens or legal resident aliens want to 
gamble, let them. What do you care? Why is it our business?
    We have all these principles of libertarianism, of letting 
people make up their own minds and letting them make their own 
choices. Then we have this notion of let's not regulate the 
Internet, and all of a sudden it is gambling and those go out 
the window?
    I have to say, on the ideological side, the conservatives 
don't like gambling, and religious people don't think it is a 
good idea. Some of my liberal friends, when I listen to them, 
it sounds like the conservatives talking about sex-oriented 
literature. They don't like anyone else to do it.
    If you don't like it, don't do it. But don't change the 
laws and complicate the laws, and horse racing is in, and Jai 
Alai is out, and blackjack is off and gin rummy is I don't know 
where.
    I am going to vote for the amendment because I will vote 
for any amendment that lets more people gamble than not, no 
matter what the Government tells them to do; and then I am 
going to vote against the whole bill.
    I yield back the balance of my time.
    Chairman Sensenbrenner. The question is on the amendment 
offered by the gentleman from Florida, Mr. Wexler. Those in 
favor will say aye.
    The gentleman from Utah, Mr. Cannon.
    Mr. Cannon.  Where are we? Are we voting right now or 
discussing----
    Chairman Sensenbrenner. The Chair tried putting the 
question on the Wexler amendment, but I guess you want to say 
something.
    Mr. Cannon.  I would like to say something.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Cannon.  Thank you, Mr. Chairman.
    Let me first start by saying that we worked closely for 
some time now with the sponsor of this amendment and appreciate 
the open and can-do way we have spoken. We disagreed pretty 
much entirely, but while I was reading the substitute bill that 
we are about to vote on today I felt like I was listening to an 
alcoholic who was renouncing bourbon, Scotch and red wine but 
embracing vodka, white wine and beer.
    I will get back to that in a moment, but the issue before 
this Committee--we have to deal with two things I don't 
particularly like, gambling and Internet regulation. As you 
know, I come from one of the three States where all gambling is 
illegal. Utah, along with Tennessee and Hawaii, does not pick 
and choose when it comes to gambling. We simply prohibit it.
    Historically, most U.S. Gambling policy has focused on the 
rights of States to control the acceptance of wagers within 
their borders. If my constituents want to go to Nevada and 
gamble, that is up to them. But there are no legal gambling 
businesses in Utah. My constituents are not prohibited from 
gambling, but no one is allowed to accept bets in Utah.
    A large part of the rationale is that the community wants 
to protect itself from things that often accompany gambling 
establishments--prostitution, organized crime and drugs. The 
Internet generally is about making geographic distance 
irrelevant. If someone in my district wants to do research at 
Georgetown University and then go shopping at L.L. Bean in 
Maine and video conference with a client in Tokyo, she can do 
all that from her desk in Provo. The Internet lets people do 
that, effectively closing the distance between those places.
    The question before us is, what happens in a situation 
where we decide that we like those distances? Because, let's 
face it, the Internet can also take my constituents to a casino 
in Antigua just as easily as any of the places I mentioned 
before. So what do we do if the people of Provo, Utah, are 
visiting casinos in Antigua casinos via the Internet?
    I find this myself disturbing because there are sound 
arguments to be made that communities need to be protected not 
only from gambling establishments but from gamblers themselves. 
We have to consider the possibility that if the Internet makes 
gambling easier then maybe the Internet needs to be regulated, 
as distasteful as I find that idea. The problem has been how to 
come up with a cure that isn't worse than the sickness.
    This previous version of this bill in the last Congress 
proposed a particularly troubling solution, sought to 
effectively deputize ISPs and make them ensure that their 
customers couldn't access blacklisted sites. I am pleased to 
see those sponsors set aside that approach. Instead, the bill 
before you now provides a nonspecific injunctive authority to 
law enforcement along with a hold harmless provision for ISPs.
    As a practical matter, there are two regulatory choke 
points for e-commerce: information and settlement. Since the IP 
provisions essentially rule out information to the choke point, 
that pretty much leaves settlement. And my understanding is 
that the financial institutions are going to have to watch 
certain transactions to effectuate the purposes of this bill.
    My first reaction was one of concern with respect to this 
approach. I thought, if the U.S. proceeds to set the precedent 
for deputizing financial institutions in e-commerce 
regulations, then it is not hard to see how the EU will handle 
a Yahoo case or what Islamic countries will do if Amazon.com 
wants to advertize Salman Rushdie books. They will simply lean 
on credit card companies to work their will.
    But equally troubling to me is this: Under the bill before 
us we are not banning Internet gambling. In fact, with the 
addition of the sponsor's amendment, we would legalize certain 
wagers that are illegal today. With the Goodlatte amendment, 
the bill would have carve-outs for interstate horse wagering 
and perhaps dog wagering, according to what the gentleman just 
said, interstate wagers on Jai Alai and lotteries and a brand 
new exemption for casino-style gambling. More States choose to 
authorize that. Hence my earlier reference to the selected 
alcoholic swearing off certain liquors but not others. Just as 
booze is booze, gambling is gambling.
    Am I willing to step out on a slippery slope of Internet 
regulation to get rid of gambling on the Internet? I suppose 
the answer is a reluctant, yes, with some misgivings. But what 
I am not willing to do is go out on that same slippery slope 
and say that the people can bet via the Internet on some things 
but not on others.
    This bill breaks with one of my core principles in that it 
renders illegal in cyberspace that which is legal in the brick 
and mortar world, and that precedent really bothers me. If you 
are going to get a little bit pregnant on this issue, I don't 
want to get into the business of deciding how people gamble 
online. If we are going down this path, I urge my colleagues to 
make sure we do so to prohibit all gambling online. It seems we 
must decide which is the lesser evil between Internet gambling 
and Internet regulation. Yet if we pass the bill before us now 
the simple answer is we will have both Internet regulation and 
Internet gambling.
    I intend to offer an amendment which I confess is 
completely devoid of nuance. It is insensitive to the subtle 
differences among pari-mutuel gambling, Indian gambling, casino 
style and sports book. Let's us decide simply and without 
obfuscation whether people should be allowed----
    Chairman Sensenbrenner. The time of the gentleman has 
expired.
    Mr. Cannon.  If I could ask for 20 more seconds.
    Chairman Sensenbrenner. Without objection.
    Mr. Cannon. It would transform this bill from a mishmash of 
``maybe'' to a simple ``yes'' or ``no.''
    I urge my colleagues to support my amendment, oppose the 
underlying Goodlatte substitute; and I urge support of the 
people to thoughtfully proceed with this bill.
    Chairman Sensenbrenner. The question is on the Wexler 
amendment. No other amendments?
    Mr. Barr.
    Mr. Barr. Strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Barr. I would like to yield to the gentleman from 
Virginia, Mr. Goodlatte.
    Mr. Goodlatte. I will be brief. I want to respond to the 
gentleman from Utah.
    The way this bill is crafted, the gentleman's concerns 
about the fact that Utah does not allow any form of gambling 
will continue to be there. There will be no opportunity under 
this bill for any legal gaming to take place in Utah. However, 
right now, there are 2,000 gambling sites available in Utah in 
everybody's living room from offshore sites that are 
unregulated, untaxed and illegal.
    I say to the gentleman from Massachusetts, I appreciate his 
candor, which apparently is exactly the opposite from the 
gentleman from Utah, but the fact of the matter is that the 
entire history of our country we have allowed our States to 
regulate their gambling and they all have different approaches.
    What this bill does is give those States the right to 
continue to do it. They have complained to us that the Wire Act 
is out of date. With these 2,000 offshore sites they cannot 
reach them with the current tools that are available to them. 
They are suffering loss of revenues with their lotteries. The 
States that do not have lotteries want to be able to get at the 
sites that are offering lotteries.
    Each State needs to be able to decide for itself what it 
wants to allow and to enforce those laws that they have that 
prohibit certain types of gambling. That is what this bill 
does. It is not designed to pick winners and losers, and it 
does not pick winners and losers.
    I would be happy to yield to the gentleman from New York.
    Mr. Barr. Reclaiming my time. I yield back.
    Chairman Sensenbrenner. For what purpose does the gentleman 
from North Carolina, Mr. Watt, seek recognition?
    Mr. Watt. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Watt. Thank you, Mr. Chairman.
    I want to rise in support of Mr. Wexler's amendment pretty 
much on the same theory that was advanced by Mr. Frank. Also 
want to associate myself with the comments of Mr. Cannon. They 
don't believe in gambling in Utah, so anytime anybody wants to 
gamble they transfer a portion of the State into Nevada, which 
we just got through doing a bill on the floor.
    Mr. Cannon. We appreciate the condescension of this 
Committee.
    Chairman Sensenbrenner. Would the gentleman yield?
    Mr. Watt. I am happy to yield.
    Chairman Sensenbrenner. We can go all further and put all 
of Tooele County in Nevada, and that puts the State line 20 
miles from Salt Lake.
    Mr. Cannon.  That is a pretty good idea, but I don't think 
this Committee has jurisdiction to take that big a step.
    Chairman Sensenbrenner. We can do anything we want as long 
as there are 218 votes over there.
    Mr. Frank. I want to respond to my friend from Virginia.
    I am not persuaded about States interests here, but I am 
encouraged by his recognition that the States may need 
protection from the Internet. I just wish you would extend it 
to their ability to collect sales taxes. And maybe I will have 
to reconsider the notion. That we can now regulate the Internet 
in a very stringent way to protect States' rights would, of 
course, be an argument in favor of dealing with the sales tax 
issue. So I will have to reconsider, and maybe the precedential 
value of this is an argument for interfering with people's 
rights over the Internet to do whatever they want so we can 
enhance State power may give us a little leverage to get some 
sales tax collections.
    Mr. Watt. Anyone else want me to yield to them?
    I just want to make note of the irony of the bill we 
recently moved on suspension on the floor which transfers part 
of Utah into the State of Nevada for the purpose of giving the 
people in that part of the State the right to gamble and to 
have casinos. There is some irony about this, and I think it 
points up even more the kind of inconsistency that exists in 
this area.
    I mean, we don't want to regulate the Internet for any 
purpose except when we start regulating the Internet for 
purposes that we don't like; and there is something wrong with 
that picture, I think. We don't want to take away the rights of 
individual citizens to do things that the Government doesn't 
have any overwhelming interest in taking away from them. Yet we 
are willing to if we don't like what citizens are doing in this 
particular area. Even though they might not be hurting anybody, 
we are going to get into that.
    There is something very inconsistent with the arguments 
that get made when we start talking about gambling, and I 
just--I think we are on a slope that we can't define the 
parameters of. There is more than a slippery slope, and I just 
think we are making a mistake.
    I am going to support Mr. Wexler's amendment, and I am 
going to vote against the bill for whatever purposes.
    Ms. Jackson Lee. Would the gentleman yield?
    Mr. Cannon.  Would the would the gentleman yield, since I 
don't have time any longer?
    Mr. Watt. I would yield to Mr. Cannon, but Ms. Jackson Lee 
asked me to yield to her first.
    Mr. Cannon.  I think she can obtain her own time.
    Ms. Jackson Lee. I will be kind.
    Mr. Cannon.  Thank you for your kind words earlier. Let me 
associate myself with your words.
    I have a problem in my State that hates pornography as well 
as gambling, but I don't think we ought to be regulating the 
Internet in that area. I want to associate myself with your 
comments about what we should and should not be regulating on 
the Internet. Thank you.
    Mr. Watt. Yield back.
    Chairman Sensenbrenner. The time of the gentleman has 
expired.
    For what purpose does is the gentleman from New York, Mr. 
Nadler, want to be recognized?
    Mr. Nadler. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Nadler. Let me just say if this bill passes I look 
forward with anticipation to the debate on the Committee with 
the next bill which I would assume we will see making it a 
crime to transport someone across State lines to gamble in a 
State where it is legal from a State where it is illegal. I 
think that is----
    Is Mr. Goodlatte still here? I would ask the gentleman to 
yield for a question--or rather I will ask you a question. I 
suppose I will yield the time. I was listening to your last 
comment that, when you picked offshore gambling sites, it 
suddenly struck me how would this bill be enforced against 
offshore gambling businesses? In other words, we are not making 
it illegal. We are not going to send the police into somebody's 
home--aha, he is gambling on his computer. But if he is 
gambling we are going to shut down the businesses in the United 
States that are gambling through the Internet.
    Mr. Goodlatte. They are already shut down.
    Mr. Nadler. How do we enforce this bill at all?
    Mr. Goodlatte. The purpose of this bill is to address those 
offshore sites by giving law enforcement new tools to deal with 
them. If they establish proof that an offshore site is 
illegally taking bets from U.S. citizens, they will have the 
ability to get an order requiring any hyperlinks for 
advertising to be broken on the Internet requiring that any 
entity facilitating the transfer of funds to the sites and also 
increases the penalties.
    There has been one prosecution for sports betting of an 
offshore site where an individual entered the country and was 
arrested.
    Mr. Nadler. So what the bill would do is to take away sort 
of collateral aids like the ability to collect money and so 
forth someone would just send in as gambling debts. This would 
stop you, the offshore gambling site, from being able to 
collect gambling losses from somebody.
    Mr. Goodlatte. It wouldn't entirely. Because somebody could 
be determined to send money by a circuitous route.
    Mr. Nadler. If I am gambling on the Internet and I lost the 
bet and the it now says send $2,000 and send it through the 
mail, what with this bill do?
    Mr. Goodlatte. It would prohibit the bank from processing 
checks.
    Mr. Nadler. So I write a check to offshore gambling or 
Offshore Enterprises, Inc., and my bank is supposed to know 
that there is something wrong with that check?
    Mr. Goodlatte. They wouldn't know that. What they would 
have is they would have an order from a court saying do not 
accept any financial transactions from this entity that is 
engaged in----
    Mr. Nadler. Who would get that order?
    Mr. Goodlatte. That order would be served upon banks and 
credit card companies and----
    Mr. Nadler. The district attorney would go into court and 
ask for such an order against Offshore Enterprises, Inc. based 
on what evidence?
    Mr. Goodlatte. Based upon the evidence that they had sat 
down at a computer and placed a bet from their location in 
their State in violation of this law and that State's law.
    Mr. Frank. On the other hand, from the consumer standpoint, 
it would appear to make the debt uncollectible.
    Mr. Nadler. The consumer----
    Mr. Frank. A consumer who lost--you could bet and lose and 
kiss them off in cyberspace.
    Mr. Nadler. But that would argue that offshore company 
might start finding it unprofitable to do business with bettors 
in the United States because they couldn't collect the bet, 
assuming, of course, that our district attorneys found that 
they had a lot of time to seek these orders and they weren't 
busy with terrorism and a lot of other things.
    Mr. Goodlatte. If the gentleman would yield.
    The National Association of Attorney Generals was the first 
organization that came to us about this legislation because of 
the fact that, while they had historically been able to 
regulate gambling and enforce gambling laws within their 
States, when the site for it goes offshore they weren't able to 
do so and needed some new tools to do with that. They needed 
the law clarified.
    Mr. Nadler. Reclaiming my time, I have one further 
question. The State has a lot of interest, obviously, in a 
normal gambling situation. Do you want to have casinos--do you 
want to have all the problems that go along with casinos and so 
forth--what is the State's interest in deciding whether someone 
sitting at a computer terminal can gamble offshore?
    Chairman Sensenbrenner. The gentleman's time has expired. 
Let me observe that this meeting has gone way away from the 
Wexler amendment.
    Mr. Nadler. Could I ask for 30 seconds so he can answer?
    Chairman Sensenbrenner. Without objection.
    Mr. Goodlatte. The interest of the State is the traditional 
interest of the State in deciding whether they want gambling in 
their State or not. Those of us who are opposed to the gambling 
recognize the family problems, the organized crime, the problem 
with gambling addiction, bankruptcy and the whole host of 
things that come with gambling existing in your community 
whether it is because there is a casino in the community or 
whether it is because people are going online and engaging in 
the activity. So they have a historic interest in attempting to 
deal with this problem. We are simply giving them a tool to 
allow them to do that and modernizing the current law to make 
it clear that the----
    Chairman Sensenbrenner. The gentleman's time has expired.
    For what purpose does the gentlewoman from Texas seek 
recognition?
    Ms. Jackson Lee. Recognizing the time, however, I move to 
strike the last word.
    Let me say to the gentleman from Virginia that he knows I 
am impressed with his work, and I believe that any efforts to 
cease the person from drinking has some merit and maybe leave 
some of the others on the table, but I would hope that he could 
be a little bit more open-minded on this. He knows my concern 
about charitable entities who are attempting to raise money.
    But I speak to Mr. Wexler's amendment in the context as 
well whether any of us want to take a bet on how old Jerry 
Nadler is today because this is his birthday. But, in any 
event, we wish him happy birthday.
    But while Mr. Wexler's amendment--I hope that my colleague 
from Virginia could be a bit more open-minded because, as Mr. 
Wexler seems to say, this is an existing activity in his State. 
Am I hearing that correctly, Mr. Wexler?
    Mr. Wexler. Yes. Are you talking about dog track and Jai 
Alai? Yes.
    Ms. Jackson Lee. So what I am suggesting to the gentleman 
from Virginia is I am not sure where your motion--your 
substitute amendment is against what Mr. Wexler is saying. That 
you are talking about it can be a waiver, if I understand 
correctly. In any event, this is an existing activity in the 
State. So I would suggest to the gentleman, although I am 
impressed with your work, as you well know, and believe that 
the legislation has merit, I think that we are doing a 
disservice to the wholistic approach to the legislation by 
narrowing activity that already exists in States.
    So I do support Mr. Wexler's amendment, and I am going to 
also ask the gentleman from Virginia to be more open-minded on 
a refined language that I am going to be offering. I have 
looked at your amendment language on allowing charities to be 
exempt at the end.
    Mr. Conyers. I want to announce I am going to call the 
previous question as soon as you finish.
    Ms. Jackson Lee. I am going to conclude Mr. Conyers, but I 
am interested in making this legislation go where we are trying 
to go, which is to save people's lives and assets and families 
and to bring some restraint to this process so that our 
children are not impacted negatively. But I think we do a 
disservice to the underlying mission of this legislation where 
we cut off a State's economic opportunity that is already 
existing and particularly when we cut off charities that have 
the ability, need the ability to raise money, particularly in 
these trying times.
    With that, I yield back my time.
    Chairman Sensenbrenner. The question is on the amendment 
offered by the gentleman from Florida, Mr. Wexler. Those in 
favor will say aye. Opposed, no.
    The ayes appear to have it.
    Mr. Goodlatte. I request for a recorded vote.
    Chairman Sensenbrenner. rollcall is requested. The question 
is on agreeing to the Wexler amendment. Those in favor will 
signify by saying aye; opposed, no.
    The Clerk. Mr. Hyde.
    Mr. Hyde. Aye.
    The Clerk. Mr. Hyde aye.
    Mr. Gekas.
    Mr. Gekas. No.
    The Clerk. Mr. Gekas no.
    Mr. Coble.
    Mr. Coble. Aye.
    The Clerk. Mr. Coble aye.
    Mr. Smith.
    [No response.]
    The Clerk. Mr. Gallegly.
    Mr. Gallegly. No.
    The Clerk. Mr. Gallegly no.
    Mr. Goodlatte.
    Mr. Goodlatte. No.
    The Clerk. Mr. Goodlatte no.
    Mr. Chabot.
    Mr. Chabot. No.
    The Clerk. Mr. Chabot no.
    Mr. Barr.
    Mr. Barr. No.
    The Clerk. Mr. Barr no.
    Mr. Jenkins.
    Mr. Jenkins. No.
    The Clerk. Mr. Jenkins no.
    Mr. Cannon.
    Mr. Cannon. No.
    The Clerk. Mr. Cannon no.
    Mr. Graham.
    [No response.]
    The Clerk. Mr. Bachus.
    [No response.]
    The Clerk. Mr. Hostettler.
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler no.
    Mr. Green.
    Mr. Green. No.
    The Clerk. Mr. Green no.
    Mr. Keller.
    Mr. Keller. No.
    The Clerk. Mr. Keller no.
    Mr. Issa.
    Mr. Issa. No.
    The Clerk. Mr. Issa no.
    Ms. Hart.
    [No response.]
    The Clerk. Mr. Flake.
    Mr. Flake. No.
    The Clerk. Mr. Flake no.
    Mr. Pence.
    [No response.]
    The Clerk. Mr. Forbes.
    [No response.]
    The Clerk. Mr. Conyers.
    Mr. Conyers. Aye.
    The Clerk. Mr. Conyers aye.
    Mr. Frank.
    Mr. Frank. Aye.
    The Clerk. Mr. Frank aye.
    Mr. Berman.
    Mr. Berman. Aye.
    The Clerk. Mr. Berman aye.
    Mr. Boucher.
    [No response.]
    The Clerk. Mr. Nadler.
    Mr. Nadler. Aye.
    The Clerk. Mr. Nadler aye.
    Mr. Scott.
    Mr. Scott. Aye.
    The Clerk. Mr. Scott aye.
    Mr. Watt.
    Mr. Watt. Aye.
    The Clerk. Mr. Watt aye.
    Ms. Lofgren.
    Ms. Lofgren. Pass.
    The Clerk. Ms. Lofgren pass.
    Ms. Jackson Lee.
    Ms. Jackson Lee. Aye.
    The Clerk. Ms. Jackson Lee aye.
    Ms. Waters.
    Ms. Waters. Aye.
    The Clerk. Ms. Waters aye.
    Mr. Meehan.
    [No response.]
    The Clerk. Mr. Delahunt.
    [No response.]
    The Clerk. Mr. Wexler.
    Mr. Wexler. Aye.
    The Clerk. Mr. Wexler aye.
    Ms. Baldwin.
    Ms. Baldwin. Aye.
    The Clerk. Ms. Baldwin aye.
    Mr. Weiner.
    Mr. Weiner. Aye.
    The Clerk. Mr. Weiner aye.
    Mr. Schiff.
    Mr. Schiff. Pass.
    The Clerk. Mr. Schiff pass.
    Mr. Chairman.
    Chairman Sensenbrenner. Aye.
    The Clerk. Mr. Chairman aye.
    Chairman Sensenbrenner. Are there additional Members in the 
chamber who wish to cast or change their vote?
    The gentleman from South Carolina.
    Mr. Graham. No.
    The Clerk. Mr. Graham no.
    Chairman Sensenbrenner. The gentlelady from Pennsylvania.
    Ms. Hart. No.
    The Clerk. Ms. Hart no.
    Chairman Sensenbrenner. The gentleman from Alabama.
    Mr. Bachus. No.
    The Clerk. Mr. Bachus no.
    Chairman Sensenbrenner. The gentlewoman from California.
    Ms. Lofgren. Aye.
    The Clerk. Ms. Lofgren aye.
    Chairman Sensenbrenner. Any additional Member who wishes to 
cast or change their votes?
    If not, the clerk will report.
    The Clerk. Mr. Chairman, there are 15 ayes and 15 nays.
    Chairman Sensenbrenner. The amendment is not agreed to, and 
the Committee will be recessed subject to the call of the 
Chair.
    [Whereupon, at 12:20 p.m., the Committee was adjourned, 
subject to the call of the Chair.]

           *         *         *         *         *

    The Committee met, pursuant to notice, at 10:06 a.m., in 
Room 2141, Rayburn House Office Building, Hon. F. James 
Sensenbrenner, Jr. [Chairman of the Committee] presiding.
    Chairman Sensenbrenner. The Committee will be in order.
    The first item on the agenda, which is pending since the 
last markup, is H.R. 3215, the ``Combatting Illegal Gambling 
Reform and Modernization Act.''
    Chairman Sensenbrenner. At a previous meeting, the 
gentleman from Texas, Mr. Smith, on behalf of the Subcommittee 
on Crime, Terrorism, and Homeland Security, reported favorably 
on the bill H.R. 2315 with a single amendment in the nature of 
a substitute and moved its favorable recommendation to the full 
House. By order of the Committee, the Subcommittee amendment 
was considered as read and open for amendment at any point.
    Also by order of the Committee, the amendment in the nature 
of a substitute offered by Mr. Goodlatte had been considered as 
read and open for amendment at any point and considered the 
original text for purposes of an amendment. At the last 
meeting, an amendment which was offered to the substitute 
failed on a tie vote. So pending at this time is the Goodlatte 
amendment in the nature of a substitute which is amendable.
    Are there amendments to the Goodlatte amendment? The 
gentleman from Virginia, Mr. Scott?
    Mr. Scott. I have an amendment at the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    The Clerk. Amendment to H.R. 3215, offered by Mr. Scott, 
page 8, line 10, strike ``,being engaged in a gambling 
business,''----
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read.
    [The amendment follows:]
    
    
    Chairman Sensenbrenner. The gentleman from Virginia is 
recognized for 5 minutes.
    Mr. Scott. Thank you, Mr. Chairman.
    Mr. Chairman, this is a truth-in-legislating amendment. If 
we're going to combat illegal gambling on the Internet, this is 
the most effective way of doing it.
    What this does is make it illegal to gamble on the 
Internet. The bill makes it illegal to run a gambling operation 
on the Internet. So essentially, if the bill passes, it's okay 
to gamble on the Internet as long as you can find a website.
    Now, the way the Internet works, the website can be--the 
server can be located anywhere. It can be located in the 
continental United States. It can be in a friendly country. It 
can be in a rogue country, one we don't have diplomatic 
relations with. And if one--if this bill passes, what we've 
essentially done is to give a monopoly to websites in rogue 
nations.
    This amendment really joins the issue are we going to 
prohibit gambling on the Internet or not. I would urge my 
colleagues to vote on the amendment.
    Mr. Goodlatte. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Virginia, Mr. 
Goodlatte.
    Mr. Goodlatte. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman's recognized for 5 
minutes.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    Mr. Chairman, I must oppose this amendment. The intentions 
of the gentleman from Virginia may be good, although he seemed 
to express some other less opposing--made some other less 
opposing amendments--statements regarding offshore sites, but 
now he offers an amendment that would crack down on U.S. 
citizens who may participate.
    The reason I oppose the amendment is that it's simply not 
necessary in Federal legislation. It has not been put into 
Federal law in the past. The current Wire Act doesn't contain 
such a thing, and there's a good reason for that. Virtually 
every State in the country has laws dealing with gambling 
within the borders of those States. The people participating on 
the Internet are individuals within the jurisdiction of the 
States. They have laws. They can enforce those laws and do 
enforce those laws and can enforce those laws on the Internet 
if they choose to do so.
    So the gentleman's amendment is simply not necessary in 
terms of giving the States more power to crack down on gambling 
on the Internet, and that is the purpose of this legislation. 
They can pass or enhance or enforce the laws that already exist 
within each State.
    Virtually all of the sites that we're attempting to deal 
with are offshore, and so the purpose of the legislation is to 
give more tools to law enforcement and to make the current 
Federal law clear that it applies to all the different types of 
gambling, including casino gambling, which the current Wire Act 
is not clear on, that these offshore sites may engage in.
    So I would urge my colleagues to vote against this 
unnecessary amendment.
    Ms. Lofgren. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the 
gentlewoman from California seek recognition?
    Ms. Lofgren. To strike the last word.
    Chairman Sensenbrenner. The gentlewoman's recognized for 5 
minutes.
    Ms. Lofgren. It seems to me that the argument made by our 
colleague, Mr. Goodlatte, is defective because the whole thrust 
of this bill is to insert the Federal Government into 
regulation of gambling. As someone who is not a fan of 
gambling, in fact, the few times that gambling interests have 
inadvertently sent me campaign contributions, I send them back. 
I mean, I'm not believing that gambling is a good thing for 
individuals or communities.
    And so I really think that the amendment offered by Mr. 
Scott is in keeping with the bill and would yield further to 
Mr. Scott.
    Mr. Scott. Thank you. I appreciate the lady yielding.
    The way the bill is operated, if the bill were to pass and 
a State were to make gambling on the Internet legal, the people 
in the State wouldn't have any websites to gamble on. They'd 
have to gamble on sites run by rogue nations. There'd be no 
ability to control the gambling, to regulate the gambling, as 
it is in every State now, or even to tax the gambling, because 
all of the sites by virtue of this bill have been given--the 
rogue States have been given a monopoly. And that's why if 
we're going to do anything, if we're going to make gambling on 
the Internet illegal, let's do it. If we're not going to make 
gambling on the Internet illegal, let's not pass the bill.
    Mr. Goodlatte. Would the gentlewoman yield?
    Ms. Lofgren. I would yield.
    Mr. Goodlatte. The gentleman states the current condition, 
not what would happen under this law. The current condition is 
that virtually all of these sites are offshore. Any State that 
chooses to regulate Internet gambling and can meet the criteria 
of the bill, which are no minors allowed to engage in it, no 
participation--no allowing that participation to go beyond the 
boundaries of the State, and having explicit authorization from 
the State legislation, can do that, and the fact of the matter 
is that that's what a State can choose to do. But they 
certainly do not have the ability now to reach these offshore 
sites, and that's what this legislation is designed to do.
    The gentleman's amendment is not needed because they can 
reach those individuals within their States that might 
participate in illegal betting because they're all within the 
jurisdiction of the State and the State has complete control 
over the laws it passes and enforces to do so.
    I yield back to the gentlewoman.
    Ms. Lofgren. I would yield further to Mr. Scott.
    Mr. Scott. I would just say further that someone who 
suggests you are going to make intrastate website, my view is 
that's technologically impossible, and I would hope that we 
would pass the amendment or defeat the bill.
    I yield back.
    Ms. Lofgren. And I would yield back. Thank you, Mr. 
Chairman.
    Mr. Cannon. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Utah?
    Mr. Cannon. Thank you, Mr. Chairman.
    I was wondering if the gentleman from Virginia would 
explain his enforcement mechanism a bit more. I think we were 
in the middle of that discussion in our last markup.
    You've indicated that there are two enforcement methods in 
the bill. Would you mind explaining those, especially the 
hyperlinking, the injunction against the ISP or the website 
that would affect the hyperlinking?
    Mr. Goodlatte. Yes. I'm not sure it's pertinent to the 
gentleman from Virginia's amendment, but I'd be happy to 
explain that.
    The process is one in which law enforcement upon notice and 
due process would, through a court proceeding, obtain an order 
requiring any entity that is aiding and abetting an offshore 
site from engaging in illegal activity in the United States, 
which would be clearly illegal under this bill, to prohibit 
them from engaging in activity. With regard to Internet service 
providers, that is specifically spelled out in the bill as a--
essentially a notice and takedown provision where the entity 
that is allowing this offshore site to hyperlink on their 
server; in other words, if you go on to a particular page on 
their site and it has a big banner ad for gambling.com in 
Antigua and you click there and suddenly you're able to engage 
in gambling with them, upon notice and due process and a court 
order, that Internet service provider would be required to 
break that hyperlink.
    Mr. Cannon. So----
    Mr. Goodlatte. Take down that banner ad.
    Mr. Cannon.--would that not be a relatively significant 
burden on smaller ISPs and, therefore, competitive advantage to 
larger ISPs?
    Mr. Goodlatte. I don't believe it would because it would 
affect all of them in the same way and would be a requirement 
that----
    Mr. Cannon. Well, reclaiming my time, the question is: 
Small ISPs don't have the resources, but a State Attorney 
General or any other law enforcement agency acting under this 
bill could easily just add even a very small ISP to the list of 
people who were given notice. A small ISP is going to have a 
hard time attending a hearing, having counsel there, and then 
it will have a relatively significant cost in complying, would 
it not?
    Mr. Goodlatte. I don't believe so because all of the burden 
of proof in that regard is on the law enforcement entity.
    Mr. Cannon. Except my point is not as to burden of proof. 
My point is to the burden--the economic burden that we would be 
placing on small ISPs who would have to hire someone 
essentially, if this is an effective law enforcement tool, to 
work to sever hyperlinks through their server.
    Mr. Goodlatte. I think they would--since they--since they 
had the--they created the link on their server in the first 
place, they can easily take down the link.
    Mr. Cannon. But the link is done automatically. It's done 
without any human intervention. The severing of the link would 
require human intervention, would it not?
    Mr. Goodlatte. It would, but it certainly wouldn't involve 
a great deal of time or effort, about the same amount of time 
and effort it took to put up the link in the first place.
    Mr. Cannon. No, no. The link goes up automatically the way 
our system currently works on the Internet. But to hire a 
person, especially for a small ISP, to hire a person to 
implement court orders in this regard seems to me to be--that's 
not going to cause AOL any kind of problem, but AOL will get a 
huge advantage if small ISPs can't--can't comply and they're, 
therefore, under legal burden, in other words, some kind of 
problem if an ISP didn't----
    Mr. Goodlatte. If the gentleman would yield further, I 
think the gentleman misunderstands the procedure. If it gets on 
to their server because somebody who is doing business with 
them connected with AOL, it is not that small Internet service 
provider's responsibility. It is only the host of the----
    Mr. Cannon. No----
    Mr. Goodlatte.--site that is the problem.
    Mr. Cannon. Let me clarify because it's really--I'm sorry. 
Are you saying it is only the host that has the--so what if 
somebody hosts their own site and they're in Antigua and 
there's no----
    Mr. Goodlatte. But they're in--if they're doing business in 
the United States, they're subject to the court order of the 
United States. If they're--if they're outside of this country, 
then that particular provision will not help law enforcement.
    Mr. Cannon. So does this--does your provision affect ISPs? 
I think you explained just a moment ago that it did.
    Mr. Goodlatte. Yes.
    Mr. Cannon. So an ISP would have to sever its hyperlink to 
a server in Antigua, which means that a small ISP has the 
burden, would incur a fairly significant burden, a burden we 
probably can't even imagine at this point in time, to keep up 
with--with whoever tries to stop gambling from happening on the 
Internet. Is that--isn't that the case?
    Mr. Goodlatte. I do not believe it is burdensome at all, 
and I will tell you that there are two trade associations that 
represent Internet service providers, and both of them support 
this bill.
    Mr. Cannon. Sure, and those--but may I suggest, reclaiming 
my time, that those service--united service provider 
organizations are dominated by large Internet service 
providers, like AOL.
    On the other hand, if you've got a hyperlink, you're not 
going to stop anybody from gambling who wants to, because if 
you get a pop-up ad and you click on the ad and it doesn't take 
you to the site, it clearly is the kind of thing you can type 
the address in from the ad.
    Chairman Sensenbrenner. The time----
    Mr. Cannon. Thank you. I yield back my time.
    Chairman Sensenbrenner.--of the gentleman has expired.
    The question is on the----
    Mr. Watt. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from North Carolina?
    Mr. Watt. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman's recognize for 5 
minutes.
    Mr. Watt. Mr. Chairman, I think I'm going to reluctantly 
rise in support of Mr. Scott's amendment, not because I believe 
we should make gambling illegal, but because I think it's 
really the only way to force a confrontation with the real 
issue that this bill presents to us.
    I was trying to think of an appropriate analogy. I suppose 
this bill would be like making it illegal to distribute drugs 
in our country, yet not making it illegal to use drugs in our 
country. That's about the closest analogy I think I can get to 
this. And maybe that would have some rationality, but it just 
seems to me to be kind of double-faced to not go at this in a 
more direct fashion. And if we are going to say that gambling 
is somehow bad, then it seems to me that we have the capacity, 
a much, much easier capacity, I might add, to get to people who 
are--identify and get to people who are gambling on the 
Internet than we will ever have to get to people who are using 
drugs.
    Maybe we don't think that the offenses are comparable to 
each other, but if we don't, then I don't know why we are going 
out of our way to do this bill and make the provision of the 
process itself somehow illegal to people. If what we're trying 
to get at is--is people gambling, then I think there is a much, 
much more direct way to go at that than the bill would 
undertake.
    I yield to Mr. Scott. I think he wants me to yield to him. 
He'll either help me or hurt me.
    Mr. Scott. Thank you, and I thank the gentleman for 
yielding.
    In response to the gentleman from Utah and the problem of 
tracking down this problem through the hyperlinks and all that, 
the easiest way to do it is to prohibit gambling. That way 
people who gamble on the Internet know they might get busted, 
and, therefore, they would not gamble. And they could get 
busted because if the Federal Government ever gets hold of one 
of these sites, the site in plea bargaining can turn over its 
list. And so everybody that's gambled on that site would be 
exposed to prosecution and, in fact, you'd never know when 
you're dealing on the Internet with a foreign site or a 
domestic site or on an FBI site or an entrapment site. You 
don't know. So that would do something about gambling on the 
Internet, and those people that wanted to gamble can get 
caught.
    The present situation, with all the back and forth and the 
hyperlinks and the small ISPs and the big ISPs, that is not an 
efficient way of dealing with the problem of gambling on the 
Internet, and I thank the gentleman----
    Mr. Frank. Would the gentleman from North Carolina yield?
    Mr. Watt. I yield to the gentleman from Massachusetts.
    Mr. Frank. I just would summarize what my friend from 
Virginia said, which would be under these circumstances, if you 
decided to gamble, you'd be taking a chance. [Laughter.]
    Mr. Watt. A rather profound statement. And I think what 
this amendment would do is up that chance a little bit.
    Let me be clear. If this amendment passes, I'm going to 
vote against the bill. If the amendment fails, I'm going to 
vote against the bill. [Laughter.]
    Mr. Watt. So I at least want to make honest and full 
disclosure about my intentions here. I just think this 
amendment makes us face the real underlying issue, and it--
there's something about honesty in this process. I mean, we 
really need to be honest about what we're trying to do, face up 
to--to it, and if we're not going to do it, don't do it; if we 
are going to do it, let's do it the most effective way. And 
this seems the most effective way.
    Chairman Sensenbrenner. The gentleman's time has expired.
    For what purpose does the gentleman from Wisconsin, Mr. 
Green, seek recognition?
    Mr. Green. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman's recognized for 5 
minutes.
    Mr. Green. Thank you, Mr. Chairman.
    I agree with my colleague, Mr. Watt, about the importance 
of this amendment as a way of fleshing out some of the 
enforcement issues that are, I think, important to this bill.
    What I'd like to do with the rest of my time is to yield to 
Mr. Cannon. I know he has some questions that he would like to 
pose?
    Mr. Cannon. Thank you, Mr. Green. And let me also say that 
I agree with Mr. Watt. I am going to vote the same way he does 
on everything on this bill, it looks like. And I'm going to 
support the current amendment.
    The current amendment is dealing with the lack of 
enforcement or the lack of clarity in enforcement, and, 
therefore, I think the questions of how we enforce are 
critical. I can't imagine anybody on this Committee voting in 
favor of this bill without understanding the enforcement 
mechanisms, and I think in our last colloquy here, we did not 
come to some clarity either as to how we do the hyperlinking--
and we haven't even begun to talk about the financial 
instruments. So if I could ask the gentleman from Virginia to 
just walk me through who gets an injunction and who has the 
burden of responding to an injunction and what the effect of an 
injunction is on somebody who wants to gamble. If you could do 
that in a minute or so, I'd appreciate it because I have other 
questions about the financial instruments.
    Mr. Goodlatte. Sure. Well, first, let me say to all of you 
concerned about these laws for the States, every State that I'm 
aware of, including the State of Utah and the State of 
Wisconsin, already have laws prohibiting individuals from 
engaging in gambling in those States.
    But with regard to your question about the enforcement 
mechanism, a law enforcement officer, a local prosecutor, a 
State Attorney General, or a Federal prosecutor, would upon 
notice in a court of appropriate jurisdiction bring forth 
evidence that an entity in the United States is engaged in 
facilitating, enabling one of these offshore sites from 
participating in gambling, and upon proof of that, a court 
would order them to discontinue engaging in that activity of 
facilitating the offshore site's being able to do business with 
U.S. customers.
    Mr. Cannon. Just as a sidebar, about less than--fewer than 
half the States have laws that prohibit the accepting of 
wagers, as I understand it. So if I wanted to gamble and I was 
sitting at my computer and a pop-up window came up saying 
gamble at this site, would the ISP that serves me have to sever 
the link on that pop-up window?
    Mr. Goodlatte. That's correct, if they have a court order 
requiring that to be done.
    Mr. Cannon. And so if the pop-up window says you may not be 
able to click on this link and get to the site because of a 
Federal law, but there's nothing wrong--nothing illegal about 
doing it if you type in the address, www.youcanbet.com, seven 
or eight letters, not a hard thing to do----
    Mr. Goodlatte. That's correct.
    Mr. Cannon.--is this going to stop much gambling?
    Mr. Goodlatte. Yes, it will, because it is the advertising 
that obviously attracts folks to those major U.S. sites upon 
which they can find a lot of customers.
    Mr. Cannon. Except that--reclaiming my time, in this case 
you've got only four or five or six or seven letters you'd have 
to type in to get to the site. And if you had that site already 
bookmarked in your favor, you could click that site and it 
would not stop the connection to the Internet gambling site; is 
that----
    Mr. Goodlatte. That's absolutely correct.
    Mr. Cannon. Having established--in other words, this seems 
to me to be highly ineffective for doing what we need to do. 
And Mr. Scott's amendment at least is direct about doing that. 
Let me----
    Mr. Goodlatte. But Mr.----
    Mr. Cannon. But that's not the only enforcement mechanism. 
We're also dealing with financial services, and, of course, I 
expressed myself last year on this issue and will again say 
that I'm deeply reluctant to be--to be involved in ways that--
that make our--that burden the system of commerce that we have.
    How would--how does your--your system work in regard to the 
financial instruments?
    Mr. Goodlatte. It is similar to the measure that has 
already passed out of the Financial Services Committee by an 
overwhelming vote, but it is different in that it is more 
generic in its nature. That was more specifically tailored to 
financial entities like credit card companies, PayPal, Western 
Union, so on. But this would apply to anybody who was legally--
I'm sorry, illegally betting on an offshore site.
    Mr. Cannon. Reclaiming my time, if I get online and decide 
to place a bet and I decide to do that with a checking account 
or check drawn on my bank, Wells Fargo Bank, how--how does 
that--how does the law enforcement mechanism stop that 
transaction from being completed?
    Mr. Goodlatte. It may or may not stop that transaction from 
being completed. It is more likely to be successful with credit 
cards because the credit card company will be notified that 
this particular offshore site is engaged in illegal activity in 
the United States, and they will discontinue.
    You may have noted----
    Chairman Sensenbrenner. The time of the gentleman has 
expired.
    The question is on the amendment offered by the gentleman 
from Virginia, Mr. Scott. Those in favor will say aye? Opposed, 
no?
    The ayes appear to have it.
    Mr. Goodlatte. Mr. Chairman, I ask for a recorded vote.
    Chairman Sensenbrenner. A recorded vote is asked for. The 
question is on agreeing to the amendment offered by the 
gentleman from Virginia, Mr. Scott. Those in favor will as your 
names are called answer aye, those opposed no, and the clerk 
will call the roll.
    The Clerk. Mr. Hyde?
    [No response.]
    The Clerk. Mr. Gekas?
    Mr. Gekas. No.
    The Clerk. Mr. Gekas, no. Mr. Coble?
    Mr. Coble. No.
    The Clerk. Mr. Coble, no. Mr. Smith?
    [No response.]
    The Clerk. Mr. Gallegly?
    [No response.]
    The Clerk. Mr. Goodlatte?
    Mr. Goodlatte. No.
    The Clerk. Mr. Goodlatte, no. Mr. Chabot?
    Mr. Chabot. No.
    The Clerk. Mr. Chabot, no. Mr. Barr?
    Mr. Barr. No.
    The Clerk. Mr. Barr, no. Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Cannon?
    Mr. Cannon. Aye.
    The Clerk. Mr. Cannon, aye. Mr. Graham?
    [No response.]
    The Clerk. Mr. Bachus?
    [No response.]
    The Clerk. Mr. Hostettler?
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler, no. Mr. Green?
    Mr. Green. Aye.
    The Clerk. Mr. Green, aye. Mr. Keller?
    Mr. Keller. No.
    The Clerk. Mr. Keller, no. Mr. Issa?
    Mr. Issa. No.
    The Clerk. Mr. Issa, no. Ms. Hart?
    Ms. Hart. No.
    The Clerk. Ms. Hart, no. Mr. Flake?
    Mr. Flake. Aye.
    The Clerk. Mr. Flake, aye. Mr. Pence?
    [No response.]
    The Clerk. Mr. Forbes?
    Mr. Forbes. No.
    The Clerk. Mr. Forbes, no. Mr. Conyers?
    [No response.]
    The Clerk. Mr. Frank?
    Mr. Frank. Aye.
    The Clerk. Mr. Frank, aye. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    Mr. Nadler. No.
    The Clerk. Mr. Nadler, no. Mr. Scott?
    Mr. Scott. Aye.
    The Clerk. Mr. Scott, aye. Mr. Watt?
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye. Ms. Lofgren?
    [No response.]
    The Clerk. Ms. Jackson Lee?
    Ms. Jackson Lee. No.
    The Clerk. Ms. Jackson Lee, no. Ms. Waters?
    Ms. Waters. Aye.
    The Clerk. Ms. Waters, aye. Mr. Meehan?
    Mr. Meehan. Aye.
    The Clerk. Mr. Meehan, aye. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    Mr. Wexler. Aye.
    The Clerk. Mr. Wexler, aye. Ms. Baldwin?
    Ms. Baldwin. Aye.
    The Clerk. Ms. Baldwin, aye. Mr. Weiner?
    [No response.]
    The Clerk. Mr. Schiff?
    Mr. Schiff. Aye.
    The Clerk. Mr. Schiff, aye. Mr. Chairman?
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. Are there additional Members who 
wish to cast or change their votes? The gentlewoman from 
California?
    Ms. Lofgren. Aye.
    The Clerk. Ms. Lofgren, aye.
    Chairman Sensenbrenner. Additional Members who wish to cast 
or change their votes? If not, the clerk will report.
    The Clerk. Mr. Chairman, there are 12 ayes and 13 nays.
    Chairman Sensenbrenner. And the amendment is not agreed to.
    Are there further amendments?
    Ms. Jackson Lee. Mr. Chairman, I have an amendment at the 
desk.
    Chairman Sensenbrenner. The gentlewoman from Texas. The 
clerk will report the amendment.
    The Clerk. Amendment to the amendment in the nature of a 
substitute to H.R. 3215, offered by Ms. Jackson Lee. On page 5, 
line 10----
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read.
    [The amendment follows:]
    
    
    Chairman Sensenbrenner. The gentlewoman from Texas is 
recognized for 5 minutes.
    Ms. Jackson Lee. I thank the Chairman very much.
    The intent of the revised H.R. 3215 that was revised from 
H.R. 3125 I believe is to provide restraint. One of the reasons 
that I have not disagreed necessarily with my good friend from 
Virginia, Mr. Scott, was because the amendment that I now offer 
is an offer--is an amendment of restraint. And I'd ask Mr. 
Goodlatte to seriously consider this language in this amendment 
dealing with charities--charities that have existed for years 
and years and years, such as the bingo game, the lottery, or 
other games of chance.
    It is well known that 3215 does not make it illegal that 
individuals--for individuals to gamble. And the ability of the 
Internet providers to close down a website and open another 
with the same customers or contacts, shutting down illegal 
operations, would seemingly be to no avail.
    So we're going to have to work, as this bill moves to the 
floor, on the enforcement aspect of this legislation. This is 
particularly the case if there are rogue organizations, 
operations that are run by operatives of a rogue organization, 
including some countries. The bill's prohibitions are still 
applicable only to gambling and not to individuals.
    It seems quite obvious that lotteries and other entities 
that have brought about charitable contributions to communities 
should be allowed in this particular legislation. And so my 
amendment is quite simple. It would extend current Federal law 
regarding charitable gambling to the Internet. The amendment 
would allow charitable organizations to do on the Internet 
exactly what they can currently do off the Internet: raise 
funds for their charitable activities. Charitable organizations 
are presently permitted under Federal law and the law in 46 
States to conduct bingo, lotteries, and similar games of 
chance, provided that the proceeds are dedicated to a 
charitable purpose.
    In 2000, nonprofit charitable organizations raised almost 
$770 million for their charitable activities through gambling, 
including bingo, lotteries, pull tabs, and raffles. This 
represents only about 4 percent of all legal gambling in the 
United States, but it's hugely important to charities. 
Charities are treated differently in several sections of 
Federal law because they are different. Bona fide charities 
that register with the Internal Revenue Service are given tax-
exempt status. The charitable distinction has already been 
recognized by Congress in 18 U.S.C. Section 1955, which 
explicitly exempts from Federal prohibition and penalties 
against illegal gambling business any bingo game, lottery, or 
similar game of chance conducted by a charity.
    Extending the charities' privileges in current law to the 
Internet is not an academic point. It is critically important 
to charities in congressional districts around the country. The 
Rotary Club in Naperville, Illinois, in Speaker Hastert's 
district, operates a raffle on the Internet. Tickets cost $100, 
and the top prize is a new house with a value of $175,000. The 
raffle nets the Rotary Club of Naperville as much as $750,000 
annually for its charitable purposes. The raffle solicits 
participants from a national and international audience who use 
credit cards to play.
    Under this bill, the Rotary Club of Naperville would have 
to stop its successful fundraising effort. Realistically, there 
is no other means of fundraising that can result in such a 
large amount of money to raise for charities at such a low 
cost. The money could probably not be replaced.
    Many charities are seeking new ways to expand their 
fundraising activities to maintain their charitable activities. 
Internet charitable lotteries represent a low-cost way for 
charities to raise necessary funds in the face of competition 
for profit gambling operators.
    It is essential for charities in the United States that an 
amendment like the one I'm proposing be included in this bill. 
It is not enough to allow local charities to raise money 
interstate online via lotteries and raffles. That solution 
ignores the way that the Internet actually works. Any charity 
that seeks to raise money via games online will be accessed by 
people from all over the country and the world.
    Let me just say also to the response or the issue raised by 
Mr. Goodlatte that we would open this up to any kind of bootleg 
charity. I would offer to amend this amendment and say quite 
the contrary. I think, first of all, most people would see 
through that, but, in fact, I'd offer to amend this particular 
amendment to indicate that the charity had to be in existence 
for 10 years. And I would ask unanimous consent to do so.
    But I would ask my colleagues to consider----
    Chairman Sensenbrenner. The time of the gentlewoman has 
expired.
    Ms. Jackson Lee. I'd ask my colleagues to consider the 
amendment that I have just offered.
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Virginia seek recognition?
    Mr. Goodlatte. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman's recognized for 5 
minutes.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    First, I thank the gentlewoman for the seriousness with 
which she has approached this legislation and her attempt to 
address this issue with regard to charitable gaming. We have 
looked at it very carefully as well, but we have some 
additional concerns beyond the one that the gentlewoman just 
mentioned.
    The first one is that because of the nature of the 
amendment, it would allow a charitable organization to take 
bets from anywhere in the country, whether or not the State in 
which the bettor was placing the bet authorized or recognized 
that particular charity or not, so that virtually every State 
in the country, whether it be Utah or any other State that has 
severe restrictions on participation in various types of 
gaming.
    The second problem that we have with it is that it would 
remove from the purview of the States the ability to determine 
what types of charitable gaming they would allow within their 
particular State and make that essentially a Federal question 
defined by the Internal Revenue Code, and for those reasons I 
have to oppose the amendment. But I certainly would offer to 
work with the gentlewoman to attempt to find a way to make sure 
that within the confines of States that authorize it and 
recognize it, charitable gaming is--is able to participate on 
an equal footing with other types of gaming. That is the 
intention of the current law--that is the intention of the bill 
as it's drafted, that the same provisions that would pertain to 
any other form of legal gaming would also pertain to charitable 
gaming.
    This amendment, however, would expand that and allow them 
into States that do not want that particular type of gaming to 
take place and for organizations that a particular State may 
not recognize.
    Ms. Jackson Lee. Would the gentleman yield?
    Mr. Goodlatte. I would be happy to yield.
    Ms. Jackson Lee. I appreciate the gentleman's analysis of 
the amendment, but what I would offer to the gentleman, that 
these are charities that come under Federal law of the tax-
exempt status, which is 501(c)(3). So, therefore, the idea of 
States not wanting particular charities to be within, they have 
already--these particular charities already have a Federal 
exemption; therefore, they have been approved at a higher level 
than the State. And these are charities. I cannot imagine that 
the States would be rejecting charitable efforts to raise 
moneys that had a legitimate 501(c)(3) tax-exempt status. And, 
therefore, we would--I beg to differ that that would create a 
major problem.
    If such did occur, I believe that we could readily remedy 
that by going back and amending the legislation. But what 
you're doing now is you're giving an unequal status to existing 
charities that have done good. And I appreciate the gentleman's 
offer to look at this matter, but I think you have a whole 
constituency of individuals--what we're trying to do is 
restrain and restrict. You're not eliminating. And I think you 
should give strong consideration to what we might be doing to a 
very good body of work that we have all benefited from, and 
that is the charities that are in our respective communities 
that have helped those who are in need.
    Mr. Issa. Would the gentleman yield?
    Ms. Jackson Lee. I have the time----
    Mr. Goodlatte. I would yield to the gentleman.
    Mr. Issa. Very quickly----
    Ms. Jackson Lee. I yield back.
    Mr. Issa. The gentlelady's comments are well thought out 
and I'm sure well intentioned. But I would remind the 
gentlelady that the Holy Land Foundation, which funded 
terrorist activities in the Middle East, was a 501(c)(3). I 
don't believe that the standard for the Federal Government to 
give a 501(c)(3) is much more--I know that it is not much more 
than filing a piece of paperwork and waiting for a return 
saying you're approved, and that it is not a standard of 
charity but, rather, a tax request.
    I'd yield back.
    Mr. Goodlatte. Reclaiming my time, very briefly, the 
gentleman makes a very valid point. We do not have a Federal 
gaming commission that would oversee what charities might be 
legitimately engaged in this and what might not. States do have 
the opportunity to review that, and I believe it would be best 
to leave it at the State level. But I am willing to continue to 
work with the gentlewoman regardless of the outcome of this.
    Mr. Frank. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Massachusetts seek recognition?
    Mr. Frank. Mr. Chairman, I just have to note what this 
amendment and the debate about it reveals, which is, it seems 
to me, kind of a flawed premise at the heart of this bill. What 
we have been motivated by is the notion that gambling is a bad 
thing, and we have heard about the harm that results from 
gambling and why people shouldn't gamble. But now we're told--
and I'm not sure I'm even going to vote on the amendment--it's 
okay if someone is doing a bad thing for a good purpose. I 
mean, there's just this fundamental contradiction. If gambling 
has all these evils, why is it then okay if it's being done for 
a good purpose? I can't think of anything else, any other 
activity that I think ought to be banned that I would make an 
exception if it was being done by a charity. I mean, there's 
just this fundamental problem I have here. Do people really 
thing gambling is bad?
    And then the question is, well, then there's also this real 
breach in what I would have hoped would have been the general 
principle that said American citizens can do what they want as 
long as they're not doing some harm to somebody else.
    If it's okay to gamble on behalf of a charity, why is it 
not okay to gamble in general? Are we then, as the Congress, 
telling American citizens, look, here's this thing we don't 
like you to do, but we'll make an exception if you do it for a 
good cause? Well, why is it our business to tell people they 
can do this if it's for a good cause but they can't do it if 
it's for making money? Which I thought many of the Members of 
this Committee thought was also a good cause.
    I think charities have a very important purpose, but I 
think this just shows the fundamental lack of a coherent 
rationale for this whole approach. Again, if it's a bad thing, 
why is it okay if it's done for a good cause? And if it's not a 
bad thing, why are we telling people they can't do it? And why 
are we conditioning this right of Americans--and I know people 
say, well, we're just trying to enforce State laws. But, you 
know, we've had this before. There are other arguments that 
State laws can be more easily evaded because of the Internet. 
We've had this debate about the sale of wine. We've had it 
about sales tax enforcement. We haven't had a consistent 
position on making sure that the Internet is restricted if it 
offers some way to evade State law.
    Obviously, an anti-gambling motive is a large part of this 
bill. Many of the advocates, much of the rhetoric has to do 
with people not liking gambling. And given that, well, I want 
to help charities, I literally do not understand what the logic 
is of saying that here is this terrible activity that's really 
so destructive that people shouldn't engage in it and it's 
illegal, unless they're doing it for a good cause and then it's 
okay. And I think that, as I said, this amendment and the kind 
words being said about on all sides really go to a fundamental 
flaw in the rationale for the bill.
    I yield back.
    Mr. Gekas. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Pennsylvania seek recognition?
    Mr. Gekas. Move to strike the last word.
    Chairman Sensenbrenner. The gentleman's recognized for 5 
minutes.
    Mr. Gekas. I fear that this amendment is pandering to 
Pandora by wandering into several different avenues born out of 
the subject matter, namely, gambling. And because I have always 
believed from the start that the Goodlatte bill, the basic 
structure is tight enough and narrow enough and lean enough to 
accommodate the attempt to correct a serious problem, I will 
defend that bill against all the amendments that I believe will 
open end it to its own destruction.
    I yield back the balance of my time.
    Chairman Sensenbrenner. The question is on the amendment. 
All----
    Mr. Watt. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from North Carolina?
    Mr. Watt. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman's recognized for 5 
minutes.
    Mr. Watt. I want to join with Mr. Frank's comments, but I 
would also add to his comments that there are a couple of other 
areas where this whole approach seems to me to be entirely 
inconsistent with what--with the positions that people have 
taken on various things in the past.
    One is this--the whole bill sets a Federal standard and 
basically federalizes this issue. It strikes me as somewhat 
strange, then, to hear Mr. Goodlatte say that we don't want to 
use the Federal tax-exemption standard, we want the States to 
be able to set that standard.
    Second, it seems to me that the very people who are 
supporters of this bill have been the strongest advocates of 
non-involvement and non-interference with the Internet and the 
whole e-commerce area.
    So in addition to the inconsistency that Mr. Frank pointed 
up, there are at least two other major inconsistencies that I 
would point out. And with that, I think Ms. Jackson Lee wanted 
me to yield to her, so I will yield to Ms. Jackson Lee.
    Ms. Jackson Lee. I thank the distinguished gentleman, and 
obviously there are very, I think, potent comments being made. 
I've already made the point, Mr. Goodlatte, that we are trying 
to restrain, we're not eliminating. And I would just make a 
point to my good friend Mr. Issa that ill-conceived charities 
have been readily found out.
    Inasmuch as we have exempted horse racing, for example, 
this is why--and we didn't respond to my good friend from 
Florida's concern. I think in order to strengthen this 
legislation with the intent of the author--and I hope that as 
this bill makes its way to the floor we can take into 
consideration the comments of my good friends who have been 
very reasonable about how we're approaching this.
    This idea of eliminating charities smacks in the face of 
reality. They exist. They've existed for years. I believe we do 
ourselves a disservice going--taking this bill forward without 
trying to respond to this question.
    I would in this instance ask my friends to--and colleagues 
to vote for this amendment because we are able to weed out the, 
``bad guys.'' We all know the charities. They're in our 
community. They're conspicuous, they're obvious, we see them 
all the time. Our friends are accessing it, and our community, 
our constituents are accessing it, and they want to utilize it. 
Let's not shut the door on the local Boy Scout troop, the local 
Girl Scout troop and many other charities that have the 
opportunity to raise funds for people who are in need.
    I think getting a house in Speaker Hastert's district is a 
darn good utilization of the Internet for charity, and I would 
hope that we would support this particular amendment.
    I might just say, and as I said, I'd like to work with my 
colleague on this, we allow horse racing, State lotteries, 
Nevada casinos, and fantasy sports, we disallowed dog racing, 
tribal gaming and charitable gaming. So I would just like to 
say that the charities should rise to a level of consideration 
of my colleagues, and I think that we would be able to work 
this legislation, due to the intent of the underlying 
legislation, which is to restrain and to prohibit the abuse of 
gambling, and I don't think charitable gambling represents 
abuse, it represents help.
    With that, may I just, as well, ask unanimous consent to 
amend this amendment to indicate that the charities will be in 
existence for 10 years?
    Chairman Sensenbrenner. Without objection, the modification 
is agreed to, and the question is----
    Mr. Cannon. Mr. Chairman, may I amend the last word?
    Chairman Sensenbrenner. Well, the gentleman from North 
Carolina still has 23 seconds left.
    Mr. Watt. I will yield to the gentleman or I will yield 
back, and he can get his own time, whichever he prefers.
    Mr. Cannon. Thank you. My own time.
    Mr. Watt. I yield back.
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Utah seek recognition?
    Mr. Cannon. To strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Cannon. Thank you, Mr. Chairman.
    In response to the inconsistencies pointed out by the 
gentleman from Massachusetts, back in law school I recall that 
the professors made a big thing about finding a golden thread 
that would tie seemingly irreconcilable cases together, and I 
think there is, in fact, a golden thread that ties these things 
together, the inconsistencies before us today. That, in fact, 
is a golden thread of money.
    And I, unfortunately, I feel like I need to oppose the 
gentlewoman's amendment because I oppose gambling, generally, 
and so I'll try to be consistent there, but I think it's 
important to recognize that the Goodlatte bill is part of an 
ongoing effort to shape the landscape of gambling, and this 
began with its predecessor from the last Congress. That was 
H.R. 3125.
    Mr. Goodlatte, you claim, and I think correctly, that your 
bill does not itself legalize horse wagers, that it's another--
that is done by another provision of law, and what is that 
provision?
    Mr. Goodlatte. I think there are several, if the gentleman 
will yield. One is the Horse Racing Act. I believe there's also 
a Thoroughbred Act, a Simulcast Act, and I think there is even 
a provision that was put in the appropriations bill in the last 
Congress.
    Mr. Cannon. I think that appropriations bill was pretty 
much the same language as was in your bill last year, was it 
not?
    Mr. Goodlatte. No, that's not correct.
    Mr. Cannon. How is it different? Because I think it's 
pretty similar language.
    Mr. Goodlatte. No. No, it is not. There was no language in 
my bill, other than to recognize the existence of existing 
laws. It did not add any new laws to the horse-racing 
provisions.
    Mr. Cannon. In testimony before this Committee last year, 
Kevin DiGregory, the Deputy Attorney General for the Criminal 
Division----
    Mr. Goodlatte. If the gentleman would yield, the language 
in the bill said, ``otherwise lawful,'' meaning, referring to 
other already lawfully allowed.
    Mr. Cannon. The way Kevin DiGregory characterized that is, 
``Related to this,'' he spoke last year about your bill, 
``Related to this point, is our second concern that the passing 
of H.R. 3125 will allow gambling on-line that currently is not 
allowed in the physical world. For example, people cannot 
currently legally call gambling businesses in other States from 
their homes and place bets on horse races, and H.R. 3125 would 
allow them to place the same such bets over the Internet.''
    Now that was the Justice Department opining about the 
effect of the appropriations language and your--talking about 
your bill--but saying that your bill, in effect, did the same 
thing that the appropriations language did; isn't that the 
case?
    Mr. Goodlatte. No, that is not the case. The language in 
the last bill was ``otherwise lawful,'' but we're debating a 
new bill this year.
    Mr. Cannon. That's true, and we've all--but we've changed 
the landscape substantially based upon the last bill. It would 
seem to me that all we're doing here is creating the context 
here for more gambling, whether in this bill or in the series 
of things that is happening before Congress. What is motivating 
that is money, we're talking about big money, and I would urge 
my colleagues to vote against this amendment and against the 
bill.
    Thank you, and I yield back, Mr. Chairman.
    Chairman Sensenbrenner. The question is on the amendment by 
the gentlewoman from Texas, as modified, Ms. Jackson Lee.
    Those in favor, will say aye.
    Opposed, no.
    The noes appear to have it, the noes have it, and the 
amendment is not agreed to.
    Are there further amendments?
    Mr. Cannon. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Utah, Mr. 
Cannon?
    Mr. Cannon. I have an amendment at the desk.
    Chairman Sensenbrenner. The clerk will report the 
amendment.
    The Clerk. Amendment to the amendment in the nature of a 
substitute to H.R. 3215, offered by Mr. Cannon. Page 11, strike 
line 1 and all that follows through line 4 on Page 13.
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read, and the gentleman from Utah is recognized 
for 5 minutes.
    [Mr. Cannon's amendment follows:]
    
    
    Mr. Cannon. Thank you, Mr. Chairman.
    The goal of my amendment is simple. It seeks to return to 
the stated goal of the legislation, which is to avoid a 
situation where people can place bets from their living room, 
using communication facilities that are interstate in nature. 
``Click the mouse and lose your house'' is the maxim that may 
have put forward in support of this bill. But in the bill, as 
drafted, it doesn't really address the question of whether you 
can lose your house, it only answers to whom your house might 
be lost.
    Under the substitute amendment, if you blow the family 
savings on the Internet by picking the wrong horse to run 
around the track, that's perfectly okay. If you blow the kids' 
college fund on an Internet roulette wheel, that's wrong if the 
roulette wheel is operated by a Caribbean website, but fine if 
it's operated by a Las Vegas casino website.
    It would be illegal to lose the grocery money to an Indian 
tribe's on-line bingo game, but if you blow it on State lottery 
tickets, well, that's your bad luck.
    If this sounds ridiculous, that's because it is, and it 
begs the question of whether a bill that allows this is better 
than the status quo, and I think the answer to that is no, 
unless we get rid of the carve-outs.
    Let me say this as clearly as possible. I am generally 
against regulating the Internet. Unless we're talking about 
something universally abhorred like child pornography or 
sharing obscenity with minors, my opinion is that people are 
going to do what they're going to do on the Internet and, 
generally speaking, anything the Government does to try and 
change that is going to cause more problems than it solves, but 
in this case, I'm willing to make an exception if it really 
will keep people from betting from their homes.
    That's why my amendment to the substitute is necessary, and 
it is necessary to bring this bill back to its intended 
purpose. The original bill to prohibit gambling on-line, at 
least as I understand it, was introduced by Senator John Cobb 
back in 1997, and that bill did not have any carve-outs. It 
just said, if you want to bet, go ahead, but don't use your 
computer. It didn't deputize the private-sector entities 
either.
    Since then, this bill and its predecessors have been 
through a variety of permutations. Sometimes it gave carve-outs 
to lotteries and sometimes it didn't. Sometimes it gave carve-
outs to dog tracks and sometimes it didn't. Sometimes it took 
care of the tribal gaming and sometimes it didn't. Sometimes 
Internet service providers were the enforcement agents and 
other times it was credit card companies.
    The horse-racing industry has been a lobbyist inspiration 
on this. In every version of every Internet gambling bill, 
except the very first one, they have been taken care of. They 
pushed very hard for the Goodlatte bill in the last Congress 
because it would have allowed them to take bets that DOJ 
considered illegal at the time, but then when that bill didn't 
become law in 2000, at the end of the session, a provision was 
magically slipped into the omnibus appropriations bill, which 
gave them the authority to take interstate Internet wagers. I 
guess you could say that the horse industry hedges their bets.
    In any case, thanks to the magic of conference report add-
ons, the horse industry only needs a savings clause in this 
bill to preserve that victory. I suppose that there is a fight 
among the various industries and such who will ultimately 
control Internet gambling.
    To borrow a joke from a staffer of this Committee, ``I 
don't have a dog in that fight or a horse for that matter.'' I 
support Internet regulation to keep gambling out of people's 
living rooms or to keep them from losing their houses or to 
keep gambling off the Internet, generally, but I won't do it to 
decide which industry segment ends up controlling Internet 
gambling.
    My amendment is supported by the Judicial Values Coalition, 
the Free Congress Foundation, the American Taxpayers 
Association, the National Indian Gaming Association, and the 
National Association of Convenience Stores, among others, 
mostly supported by the original intent of this bill, which was 
to keep people from clicking their mouse and losing their 
house. That goal might be worth getting involved in Internet 
regulation, but just deciding who they may lose their house to, 
that's not worth it at all.
    I urge my colleagues to support this amendment and 
eliminate the carve-outs in the manager's substitute.
    Thank you, Mr. Chairman. I yield back.
    Chairman Sensenbrenner. The gentleman from Virginia, Mr. 
Goodlatte?
    Mr. Goodlatte. Mr. Chairman, I move to strike the last 
word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    Mr. Chairman, I strongly oppose this amendment, and the 
gentleman has mischaracterized what his amendment does. In 
fact, if his amendment were adopted, it would replace and 
reconstitute the advantage that he decries with the horse-
racing industry because the last provision of his amendment 
says, ``Nothing in this section allows the use of a 
communication facility for the purpose of placing a bet or 
wager or the use of a communication facility for the purpose of 
transmitting information assisting in the placement of bets or 
wagers that was illegal as of June 6, 2002.''
    We just went through all of the bills, all of the Federal 
laws that were passed over a period of 20 or more years that 
benefitted that industry. He would constitute all of those as 
continuing to be legal, and he would strip the States of their 
ability to regulate gambling.
    And the fact of the matter is that the provisions in this 
bill allow the States to do that. This amendment takes away the 
ability of the States to make decisions for themselves about 
what they are going to allow, and what they are not going to 
allow, with three conditions attached: The first being that 
they not allow bets to be taken by minors; the second that they 
not go beyond the boundaries of their State or other States in 
which they have a cooperative arrangement; or that they have 
the explicit authorization of the State legislature.
    It is, in my opinion, a very, very serious mistake to 
attempt to take away the rights of the States to make these 
decisions with the provisions that the gentleman has offered in 
his amendment.
    Given the Federal Government's history of respecting 
State's rights to regulate gambling matters, this bill is 
careful to avoid unintentionally impacting otherwise lawful 
gaming activities. It is important to remember that the 
existence of any legal gaming conducted over the Internet will 
be completely subject to State regulatory authority. Contrary 
to any misunderstanding of this provision that it will expand 
gambling, this means that States, through their legislatures, 
and ultimately their voters, will be the final authority on 
whether these activities are available over the Internet.
    I would urge my colleagues to oppose this amendment.
    Chairman Sensenbrenner. Because there are two separate 
propositions, the chair will order a division of the question, 
and the amendment will be decided, first, the matter that 
appears on Page 1 of the amendment through line 13, and, 
second, the second question will be the remainder of the 
amendment that begins, ``Redesignate the succeeding--'' or, 
excuse me, Page 15, strike lines 3 through 5.
    Is there further debate on the amendment?
    Mr. Wexler. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Florida, Mr. 
Wexler.
    Mr. Wexler. Thank you, Mr. Chairman. I move to strike the 
last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Wexler. I want to speak in favor of Mr. Cannon's 
amendment for exactly opposite reasons of Mr. Cannon, but the 
truth is the gentleman from Utah, his description of the basis 
of this bill and the logic behind it is exactly correct.
    Now Mr. Cannon believes, and I respect that, that we need 
neutrality and that there ought to be no exemptions whatsoever. 
I would respectfully disagree. I believe everybody ought to be 
treated just like the horse industry is treated in the 
Goodlatte bill, but so far we've been unable to accomplish 
that. But the whole design of the bill, if it's going to be 
fair, is to be neutral, and so this amendment would, if it were 
adopted, present a neutral situation, so I'm going to vote for 
it.
    With all due respect to the sponsor of the bill, on one 
hand, the sponsor explains that the Federal Government, that 
Congress should not be in the business of regulating or 
effectuating change in an industry, the parimutuel industry, 
which is basically regulated by the States, but, in fact, his 
bill changes, a Federal bill, changes the playing field for the 
parimutuel industry in an extraordinary way.
    And then he says one of the problems or one of the 
arguments against Mr. Cannon's amendment is that all of a 
sudden we're going to allow the States not the opportunity to 
regulate an industry that they have already regulated. Well, 
this bill, the underlying bill, regulates, in a very 
significant way, parimutuels. It changes the economy of the 
industry in a very significant way.
    So I would, respectfully, suggest to the Committee you 
can't have it both ways. You either, in fairness, have to adopt 
Mr. Cannon's amendment, and then there will be no exemptions, 
or adopt amendments to come, which would provide the same 
exemption for the horse industry to the entire parimutuel 
industry, and that's why I'm going the support Mr. Cannon's----
    Mr. Frank. Would the gentleman yield?
    Mr. Wexler. Of course, yes.
    Mr. Frank. I just want to question because I haven't 
studied all of the details of the bill, but I guess the 
question is this, based on what the gentleman from Virginia had 
said. In a State in which both horse racing and dog racing is 
legal, would this bill create a differential legal impact with 
regard to Internet gambling?
    Mr. Wexler. My understanding is the case being the State of 
Florida, where there's not only horses, and dogs and jai-alai, 
the way it's drafted now you could bet on the Internet for 
horse tracks, you could not for dogs, you could not for jai-
alai. There are questions as to when things are simulcast, 
which I know they are, like if you go to a dog track, 
apparently, you can watch on the screen the horse racing, and 
you can bet on the horse race, I guess, at the dog track.
    Now, whether you'll be able to work on your Internet, if 
you're sitting in the dog track to bet on the horse races, I 
don't think is clear.
    Mr. Frank. But even without the complication, if the 
gentleman would yield further, I guess I would ask the 
gentleman from Virginia to address that because I understand 
the rationale that says, well, we're simply respecting State 
decisions, but the assertion is that, absent the Cannon 
amendment, we would be respecting State decisions regarding 
horse racing more than we would or differently than we would be 
respecting State decisions regarding dog racing, and that seems 
to me a degree of differentiation probably beyond the expertise 
of most of the Members, but certainly beyond what ought to be 
our authority.
    Mr. Goodlatte. Would the gentleman from Florida yield?
    Mr. Wexler. Of course.
    Mr. Goodlatte. I thank the gentleman for yielding.
    The gentleman from Massachusetts is quite right. That would 
be the effect of passing the Cannon amendment. The effect would 
be that the longstanding Federal laws that recognize horse 
racing would have a superior position.
    Mr. Frank. Would the gentleman from Florida yield?
    My question--my diction may have interfered with my 
question--my question is whether the bill, without the Canon 
amendment, would then treat differently a State's legal 
decision to allow dog racing and a State's legal decision--or 
would the law do it? The gentleman is saying it wouldn't be the 
effect of the bill, but would the effect be that the law would 
then differentiate between State decisions to make horse racing 
legal and State decisions to make dog racing legal, in terms of 
their access to the Internet?
    Mr. Goodlatte. I thank the gentleman for clarifying.
    The gentleman might want to seek additional--his own time, 
since we're running short on time, and this may take a minute 
to clarify.
    Mr. Frank. I would just ask the gentleman for an additional 
minute.
    Chairman Sensenbrenner. Without objection, the gentleman 
from Florida will be given an additional minute.
    Mr. Goodlatte. I thank the Chairman.
    The answer to the gentleman's question is, without the 
Cannon amendment, the States would have the full authority to 
recognize--and the characterization that dog racing would not 
be able to be on the Internet is absolutely not correct. They 
would be able to be on the Internet, as would horse racing. In 
fact, they would be able to do it between States, if the two 
States agree to it.
    Mr. Frank. Would the gentleman from Florida yield?
    Would that agreement between States be required for horse 
racing, as well as for dog racing, or only for dog racing?
    Mr. Goodlatte. Yes, it must be legal in both States. That 
is the difference, by the way with the--the amendment that the 
gentleman from Florida offered last week because that would not 
require it to be legal in both States.
    Mr. Wexler. If I could reclaim my time, I don't believe 
that that's a sufficient answer.
    I believe, under Mr. Goodlatte's bill, in order for dog 
racing to be allowed on the Internet, you would need a special 
State act by a legislature, which is what he says, and that's 
correct. The horse tracks would not need a special State act.
    And let's be honest about this, we're talking about 
grandfathering statutes that existed before the Internet 
existed. So, when these horse-racing statutes were initially 
created, there was no idea that there'd be horse-racing betting 
on the Internet. The Internet didn't exist. But we're going 
through the back door to grandfather that kind of gaming.
    Chairman Sensenbrenner. The time of the gentleman from 
Florida has, once again, expired.
    The gentleman from Wisconsin, Mr. Green?
    Mr. Green. Thank you, Mr. Chairman.
    In light of the chair's decision to split the questions up, 
I'd like to address the first question of the Committee, which 
is about the prohibition of Internet lottery ticket sales. This 
legislation, the underlying bill, would allow for the Internet 
sale of lottery tickets. That is a very bad thing for three 
reasons:
    First, this bill, unless this amendment is adopted, would 
make it easier for kids to gamble. The age verification and 
security provisions in this bill are insufficient. The 
enforcement mechanisms, as we've heard discussed previously, 
just are not going to work. It is very hard to verify the age 
of gamblers with Internet lottery ticket sales. We know, 
studies have shown, that the number one way that kids gamble, 
lottery ticket sales. So this bill can only be characterized as 
something that is going to increase underage gambling.
    Secondly, this bill strikes at many of the State lotteries 
in existence now and their original goals. In many States, like 
my State, the State lottery was authorized for a very specific 
person. In my State, the money goes towards property tax 
relief. In other States, it's an education fund. In other 
States, it's being used to build sports complexes.
    However, if you authorize, as this bill would, the Internet 
sale of lottery tickets, you're going to have lottery ticket 
purchases, gamblers, flocking to the most popular lotteries, 
the lotteries that have the largest payouts.
    States like mine, Wisconsin, which authorized lottery 
ticket sales for a very specific purpose, are going to lose 
out. You're going to see all of the money go for the major, 
nationally advertised lotteries, and the States like many of 
the States that are represented here, which my guess have used 
lottery ticket sales for very specific civic purposes, are 
going to lose out. They're going to see a dramatic reduction in 
activity. In my State, it means less property tax relief, in 
your State it may mean less money available for education. I 
think that is a very dangerous thing.
    And, third, many States, like my own State of Wisconsin, 
conduct a lottery ticket--a lottery sale that is essentially a 
bargain between several parties: the taxpayers, the State 
itself that does the regulation, and the small businesses which 
get a modest benefit by being, essentially, the ticket sales 
outlet.
    If you have Internet sales of lottery tickets, you're going 
to break that bargain. You're going to see a number of small 
businesses, convenience stores, restaurants, in my State a lot 
of small taverns in the North and rural areas sell lottery 
tickets, they're going to suffer badly. This part of the 
bargain will be broken and, in my view, that's a very, very 
dangerous thing.
    I supported this legislation, originally. I was originally 
a co-author of this legislation, but in my view, especially 
with respect to the Internet sales of lottery tickets, I think 
this legislation is going to expand gambling, and I don't think 
that was the original purpose. It certainly wasn't the purpose 
that originally attracted me to this legislation, and I think 
that because of the way that lottery ticket transactions are 
portrayed, advertised and conducted now, I think we'll lose 
badly.
    A final point, I mentioned the convenience stores and 
retail outlets that often market and sell lottery tickets 
currently, it's not just the bargain that they get of the small 
percentage that they get, but also they have the charge of 
verifying age. So, when someone goes to a gas station 
convenience store to buy a lottery ticket, they have to show 
that they are of age. All of that goes away if you open this up 
to Internet sales.
    I think that that would be a terrible development. This 
legislation, instead of restricting Internet gambling, is going 
to dramatically expand it, and it's going to expand it, quite 
frankly, to those that are least capable of making mature 
decisions about gambling. I think that's a terrible thing.
    So I certainly would hope that the Committee would vote for 
the first question on this. I think we need to ban Internet 
lottery ticket sales.
    I yield back my time.
    Mr. Flake. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Arizona, Mr. Flake, seek recognition?
    Mr. Flake. I move to strike the last word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Flake. I would yield some time to the gentleman from 
Utah.
    Mr. Cannon. Thank you.
    I just wanted to clarify a couple of things and perhaps ask 
Mr. Green a question. At some point, Mr. Green, if you could 
distinguish between your language and the language of the 
question as it is--I think we have the first paragraph is 
slightly different, but if you could take a look at that, so we 
could be clear about that.
    I just wanted to reiterate that, for the Members of this 
Committee, if you oppose gambling, if you oppose the carve-
outs, you will want to vote aye for both pieces of this 
amendment, as it has now been split by the Chairman. So I would 
advocate or hope that you would do that.
    By the way, Mr. Green, would you like to speak as to the 
difference between your amendment that you would offer and what 
this amendment is, now that the question has been divided by 
the Chairman, for which purpose I yield to you.
    Mr. Green. Thank you for yielding.
    My staff is right now looking. We believe that they are 
substantively the same. The first question from your amendment, 
we believe, is the same as the amendment that I was going to 
offer on banning Internet lottery ticket sales.
    I have not sought time on the second question. I would like 
to do that separately. I support the second question, too. I 
support your entire amendment. Obviously, the focus, by virtue 
of the amendment that I was going to offer, is as to the first 
question.
    I agree with the larger issue that you're raising. This 
legislation, in my view, started off as a decent idea, but now 
contains so many exemptions and loopholes, in my view, it's 
become unenforceable, and I believe it will expand gambling.
    Mr. Cannon. Thank you.
    It is also my view that this bill will expand gambling, and 
it will actually expand illegally gambling. So, if I might, Mr. 
Chairman, today, if Virginia and Nevada wanted to enter into a 
compact to allow players to place bets in either of the States, 
they can do that. That would clearly be illegal without the 
current bill that we have before us today, and so I think 
everyone should vote on this bill, understanding that it does 
create a new context for gambling.
    But going back to what Mr. Wexler was saying earlier, if I 
might, the requirement for dog racing to achieve parity with 
horse racing is that two States have to compact or 50 States 
have to compact together under this bill. That means, to get 
back to what Mr. Frank was saying earlier, we are treating, we 
are continuing to treat, through this Committee and through 
this bill process, if we pass it, different segments of the 
gambling industry in a different fashion.
    And we perpetuate that and exaggerate the differences to 
the benefit of one segment of the industry, horse racing, and 
to the detriment of other segments, jai-alai and dog racing, 
and also to the benefit of one geographic segment of casino-
style gambling, as opposed to the rest of the world.
    Finally, if I might just remind the Members of the 
Committee that the enforcement mechanisms that these--that this 
bill or the substitute amendment would put in place are 
exceedingly crude and harsh. They are injunctions. They would 
distort the marketplace among ISPs, and they are financial 
devices or processes which we haven't even had a chance to 
debate here.
    We just didn't get to the point of discovering what the 
differences between the bill that was passed and referred to as 
having been passed by the Financial Services Committee and 
what's before us right now.
    I would suggest to the Members of this Committee that it is 
exceedingly course and exceedingly dangerous to start using 
financial instruments as the means of trying to attempt to stop 
gambling. From my own perspective, I can't imagine my bank, and 
I think this is what the bill does, although we haven't had a 
chance to really explore this, I can't imagine my bank getting 
an injunction, enjoining them, stopping them from covering my 
check or my neighbor's check that was made out to an 
institution that had been found to be improperly allowing 
gambling on the Internet.
    That is just such an incredible burden and distortion of 
our system that I think we ought to be very, very careful, as 
we approach the final vote on this amendment, which amendment 
or the now divided question on this amendment would be the, I 
think the end of the special interests that are pushing this 
bill, and therefore probably the end of this bill.
    With that, Mr. Chairman, I request my colleagues to 
consider and vote in favor of both issues under the divided 
question and yield back my time.
    Mr. Frank. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Massachusetts seek recognition?
    Mr. Frank. To strike the last word, Mr. Chairman.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Frank. Having raised the question, I think I now have 
my answer, and I just want to state my understanding of the 
answer, and people can refute it, if they wish, but I think 
it's fair to say that there is, absent this bill, a distinction 
in Federal law between horse racing and other forms of 
gambling. As the gentleman from Virginia has pointed out, that 
previous to this bill, those were created.
    On the other hand, I think it is also fair to say that this 
bill, by stepping up enforcement in various ways, exacerbates 
the impact of those differences. It does not create the 
differences. They are in existent Federal law, but this bill, 
by ramping up enforcement, gives more effect to those 
differences, and therefore that does seem to me to argue that 
if you're going to pass this bill, you ought to pass it in a 
way that equalizes this. In other words, the preexisting 
difference that the gentleman from Virginia didn't create, but 
which is there, is now given much more impact, and I think 
that's as I now understand it, and I would yield back.
    Mr. Cannon. Mr. Chairman, may I ask unanimous consent to 
have admitted to the record a letter from the Traditional 
Values Coalition in support of my amendment?
    Mr. Frank. I'm glad the gentleman didn't ask me to yield 
for that purpose. [Laughter.]
    Chairman Sensenbrenner. Without objection, paternity is 
denied by the gentleman from Massachusetts of the letter----
    Mr. Frank. That's for sure. [Laughter.]
    Chairman Sensenbrenner. The letter is admitted to the 
record.
    [The Traditional Values Coalition letter follows:]
    
    
    Mr. Hostettler. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from Indiana seek recognition?
    Mr. Hostettler. Mr. Chairman, I move to strike the last 
word.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Hostettler. And I yield to my colleague from Wisconsin, 
Mr. Green.
    Mr. Green. I thank the gentleman for yielding.
    I just wanted a few minutes to talk about the larger issues 
raised by both parts of Mr. Cannon's amendment together and 
reiterate that I supported the original concept of this 
legislation. I was a co-author. The problem is that by the time 
we got to the point where we are today, this has become a 
moving target. The legislation has changed repeatedly.
    I would warn some of my colleagues that you may have 
received representations that various groups have endorsed this 
legislation. The question that you need to go back to them with 
is which version, because this legislation has changed many 
times. In my view, it is now so full of exemptions and 
loopholes, I'm not sure that anybody out there really knows 
what's in here.
    I guess the question that we have to ask ourselves, when we 
look at this, is whether or not this legislation is better than 
the status quo. With the original version of this bill, I 
believe it was. If we do want to limit Internet gambling, I 
thought the base bill, without all of these loopholes and 
exemptions, I thought it was a step in the right direction. I 
am convinced, though, however, now that we have gotten to this 
point, we have seen the substitute, we are no longer in that 
position.
    I don't believe this is better than the status quo. In my 
own view, this makes it worse than status quo. We will see 
gambling expand. Ask yourself why it is that the American 
Gaming Association has endorsed this legislation. If this were 
restricting Internet gambling, I don't think they would be on 
board. That is a question that I think we need to ask 
ourselves.
    This is a moving target. I don't think this is good 
legislation, so, again, I would urge Members to vote for both 
parts of the Cannon question, and I yield back my time to Mr. 
Hostettler.
    Mr. Hostettler. I yield back the balance of my time, Mr. 
Chairman.
    Mr. Gallegly. Mr. Chairman?
    Chairman Sensenbrenner. For what purpose does the gentleman 
from California, Mr. Gallegly, seek recognition?
    Mr. Gallegly. Strike the last word, Mr. Chairman.
    Chairman Sensenbrenner. The gentleman is recognized for 5 
minutes.
    Mr. Gallegly. I'd yield to the gentleman from Virginia, Mr. 
Goodlatte.
    Mr. Goodlatte. Thank you. I thank the gentleman for 
yielding.
    I want to address both halves of the amendment, and I want 
to make it clear to everybody exactly what is included in each 
half. The first half includes a provision that deals with the 
ability of States to work in a cooperative fashion. For 
example, Power Ball, if you vote for the provision that 
includes Mr. Green's provision, Power Ball or any other form of 
cooperative effort between States would not be allowed.
    Now, with regard to the other provision in that amendment, 
is the provision that is I guess identical, am I not correct, 
Mr. Green, to your provision; is that correct?
    Mr. Green. If the gentleman will yield, I understand there 
are some technical differences.
    Mr. Goodlatte. Okay.
    Mr. Green. The other--I believe the first question also 
contains a casino provision that is not in our amendment. So 
our amendment is slightly different.
    Mr. Goodlatte. Well, I don't believe--I think I just 
described the interstate provision. It's not a casino 
provision, it is a provision that applies to all forms of 
gambling regulated by the States on an interstate basis.
    But then the second part relates to your amendment. Now 
your amendment is one that was included in the last 
legislation. That was a different bill, and the amendment, 
either your language or Mr. Cannon's language, is somewhat 
different than that language, which I supported at the time, 
but because of the nature of the bill becoming a State's rights 
bill, where the States will have the authority to make these 
decisions, I can't support that amendment at this point in 
time.
    The gentleman noted correctly that lotteries are the number 
one form of gambling on the part of children. Well, there are 
only two ways they can buy lottery tickets now. One is at the 
convenience stores the gentleman described and the other is 
from the literally hundreds of off-shore lotteries that they 
have access to on the Internet today. So this bill goes after 
those off-shore lotteries.
    The gentleman from Utah doesn't like the way we go after 
them, but, nonetheless, the fact of the matter is that we give 
law enforcement some new tools to deal with that problem.
    Now the problem I have with the gentleman's provision is 
that if the provision that he suggests were to pass and the 
overall bill, as a result of Mr. Cannon's efforts, were to 
fail, we would be left with current law. Current law is much 
worse than either of the gentleman's amendment or what is 
provided in this bill, but the bill passing is vitally 
important because it has two provisions that the gentleman 
cannot address with current law.
    There is nothing to stop a State, under current law, from 
going on-line and selling lottery tickets. That's simply a 
fact. But this bill adds two provisions to that that I think 
will make sure that they don't go on-line for a long time. The 
gentleman doesn't like the provision that says that you can't 
sell tickets to minors, but it's easily enforceable. A law 
enforcement office goes on-line with a minor, places a bet, 
shows the evidence to the Court that that violation took place, 
and the State is in violation of the law. Right now that is not 
the case, and it will not be the case unless this bill passes.
    Secondly, the bill requires explicit authorization of the 
State in order to be able to sell lottery tickets on-line, and 
that simply does not exist under current law. Maryland and 
Idaho are known to be getting ready to go on-line and sell 
lottery tickets, and this is a safeguard, not an expansion.
    But I would say to the gentleman that we should not 
discriminate against forms of technology, and we should not get 
in and try to micro-manage how the States make these decisions. 
That's exactly what we're doing here. We're telling the States 
that they cannot make the decision for themselves whether or 
not they want to sell lottery tickets on-line. So I would 
oppose the first amendment on that basis.
    The second amendment, I've already explained my opposition 
to that. It is simply going to place one industry head above 
heels over all others if that second amendment passes, and I 
think that's simply a mistake. We should trust the States to do 
the right things, with the basic guidelines of no sales to 
minors, no sales beyond State boundaries, and explicit 
authorization of the State, not allow a lottery commissioner or 
a gaming commissioner to say, well, the State allows this 
particular activity, we can go on-line with the activity. No, 
you've got to have explicit authorization from the State 
legislature.
    I yield back.
    Chairman Sensenbrenner. The gentleman's time has expired.
    The question is on Part 1 of the amendment to the amendment 
in the nature of a substitute offered by the gentleman from 
Utah, Mr. Cannon. Part 1 consists of that text of the Cannon 
amendment which begins at the beginning, ``Page 11, strike line 
1'' through that part that says ``Redesignate succeeding 
subsections accordingly.''
    Those in favor, will say aye.
    Opposed, no.
    The ayes appear to have it.
    Mr. Goodlatte. Mr. Chairman, I ask for a recorded vote.
    Chairman Sensenbrenner. A recorded vote is requested. The 
question is on agreeing to Part 1 of the Cannon amendment. 
Those in favor will, as your names are called, answer aye; 
those opposed, no, and the clerk will call the roll.
    The Clerk. Mr. Hyde?
    Mr. Hyde. No.
    The Clerk. Mr. Hyde, no. Mr. Gekas?
    Mr. Gekas. No.
    The Clerk. Mr. Gekas, no. Mr. Coble?
    Mr. Coble. No.
    The Clerk. Mr. Coble, no. Mr. Smith?
    [No response.]
    The Clerk. Mr. Gallegly?
    Mr. Gallegly. Aye.
    The Clerk. Mr. Gallegly, aye. Mr. Goodlatte?
    Mr. Goodlatte. No.
    The Clerk. Mr. Goodlatte, no. Mr. Chabot?
    Mr. Chabot. No.
    The Clerk. Mr. Chabot, no. Mr. Barr?
    Mr. Barr. Aye.
    The Clerk. Mr. Barr, aye. Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Cannon?
    Mr. Cannon. Aye.
    The Clerk. Mr. Cannon, aye. Mr. Graham?
    [No response.]
    The Clerk. Mr. Bachus?
    [No response.]
    The Clerk. Mr. Hostettler?
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler, no. Mr. Green?
    Mr. Green. Aye.
    The Clerk. Mr. Green, aye. Mr. Keller?
    Mr. Keller. Aye.
    The Clerk. Mr. Keller, aye. Mr. Issa?
    Mr. Issa. Aye.
    The Clerk. Mr. Issa, aye. Ms. Hart?
    Ms. Hart. Aye.
    The Clerk. Ms. Hart, aye. Mr. Flake?
    Mr. Flake. Aye.
    The Clerk. Mr. Flake, aye. Mr. Pence?
    Mr. Pence. Aye.
    The Clerk. Mr. Pence, aye. Mr. Forbes?
    Mr. Forbes. Aye.
    The Clerk. Mr. Forbes, aye. Mr. Conyers?
    [No response.]
    The Clerk. Mr. Frank?
    Mr. Frank. Pass.
    The Clerk. Mr. Frank, pass. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    [No response.]
    The Clerk. Mr. Scott?
    Mr. Scott. Pass.
    The Clerk. Mr. Scott, pass. Mr. Watt?
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye. Ms. Lofgren?
    Ms. Lofgren. Aye.
    The Clerk. Ms. Lofgren, aye. Ms. Jackson Lee?
    Ms. Jackson Lee. No.
    The Clerk. Ms. Jackson Lee, no. Ms. Waters?
    Ms. Waters. Aye.
    The Clerk. Ms. Waters, aye. Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    Mr. Wexler. Aye.
    The Clerk. Mr. Wexler, aye. Ms. Baldwin?
    Ms. Baldwin. Aye.
    The Clerk. Ms. Baldwin, aye. Mr. Weiner?
    Mr. Weiner. Pass.
    The Clerk. Mr. Weiner, pass. Mr. Schiff?
    Mr. Schiff. Pass.
    The Clerk. Mr. Schiff, pass. Mr. Chairman?
    Chairman Sensenbrenner. Aye.
    The Clerk. Mr. Chairman, aye.
    Chairman Sensenbrenner. Are there additional Members who 
wish to cast or change their vote?
    The gentleman from California?
    Mr. Issa. Aye.
    The Clerk. Mr. Issa, aye.
    Chairman Sensenbrenner. The gentlewoman from Pennsylvania?
    Ms. Hart. Aye.
    The Clerk. Ms. Hart changes to aye.
    Chairman Sensenbrenner. Additional Members?
    The gentleman from Virginia, Mr. Scott?
    Mr. Scott. No.
    Chairman Sensenbrenner. Mr. Scott is a no.
    The Clerk. Mr. Scott, no.
    Mr. Frank. Mr. Chairman?
    Chairman Sensenbrenner. The gentleman from Massachusetts, 
Mr. Frank?
    Mr. Frank. Aye.
    The Clerk. Mr. Frank, aye.
    Chairman Sensenbrenner. Additional Members who----
    The gentleman from New York, Mr. Weiner?
    Mr. Weiner. Can I inquire about the count?
    Chairman Sensenbrenner. No. [Laughter.]
    Chairman Sensenbrenner. You've got to keep your own on 
that. [Laughter.]
    Mr. Weiner. What's the over/under? [Laughter.]
    Chairman Sensenbrenner. The gentleman from South Carolina, 
Mr. Graham?
    Mr. Graham. Aye.
    The Clerk. Mr. Graham, aye.
    Chairman Sensenbrenner. The gentleman from New York, Mr. 
Weiner?
    Mr. Weiner. No.
    The Clerk. Mr. Weiner, no.
    Chairman Sensenbrenner. Further Members who wish to cast or 
change their votes?
    If not, the clerk will report.
    The Clerk. Mr. Chairman, there are 18 ayes and 9 noes.
    Chairman Sensenbrenner. And Part 1 of the amendment is 
agreed to.
    The question is now on Part 2, which is the remainder of 
the Cannon amendment that begins ``Page 15, strike lines 3 
through 5,'' and ends at the end of the amendment on the second 
page.
    Those in favor of Part 2 of the Cannon amendment to the 
amendment in the nature of a substitute will say aye.
    Opposed, no.
    The ayes appear to have it.
    Mr. Goodlatte. Mr. Chairman, I request a recorded vote.
    Chairman Sensenbrenner. The recorded vote is requested. 
Those in favor of Part 2 of the Cannon amendment to the 
amendment in the nature of a substitute will, as your names are 
called, answer aye; those opposed, no, and the clerk will call 
the roll.
    The Clerk. Mr. Hyde?
    Mr. Hyde. No.
    The Clerk. Mr. Hyde, no. Mr. Gekas?
    Mr. Gekas. No.
    The Clerk. Mr. Gekas, no. Mr. Coble?
    Mr. Coble. No.
    The Clerk. Mr. Coble, no. Mr. Smith?
    [No response.]
    The Clerk. Mr. Gallegly?
    Mr. Gallegly. Aye.
    The Clerk. Mr. Gallegly, aye. Mr. Goodlatte?
    Mr. Goodlatte. No.
    The Clerk. Mr. Goodlatte, no. Mr. Chabot?
    Mr. Chabot. No.
    The Clerk. Mr. Chabot, no. Mr. Barr?
    Mr. Barr. Aye.
    The Clerk. Mr. Barr, aye. Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Cannon?
    Mr. Cannon. Aye.
    The Clerk. Mr. Cannon, aye. Mr. Graham?
    [No response.]
    The Clerk. Mr. Bachus?
    [No response.]
    The Clerk. Mr. Hostettler?
    Mr. Hostettler. No.
    The Clerk. Mr. Hostettler, no. Mr. Green?
    Mr. Green. Aye.
    The Clerk. Mr. Green, aye. Mr. Keller?
    Mr. Keller. Aye.
    The Clerk. Mr. Keller, aye. Mr. Issa?
    [No response.]
    The Clerk. Ms. Hart?
    Ms. Hart. No.
    The Clerk. Ms. Hart, no. Mr. Flake?
    Mr. Flake. Aye.
    The Clerk. Mr. Flake, aye. Mr. Pence?
    Mr. Pence. Aye.
    The Clerk. Mr. Pence aye. Mr. Forbes?
    Mr. Forbes. No.
    The Clerk. Mr. Forbes, no. Mr. Conyers?
    [No response.]
    The Clerk. Mr. Frank?
    Mr. Frank. Pass.
    The Clerk. Mr. Frank, pass. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    [No response.]
    The Clerk. Mr. Scott?
    Mr. Scott. Aye.
    The Clerk. Mr. Scott, aye. Mr. Watt?
    Mr. Watt. Aye.
    The Clerk. Mr. Watt, aye. Ms. Lofgren?
    Ms. Lofgren. Aye.
    The Clerk. Ms. Lofgren, aye. Ms. Jackson Lee?
    Ms. Jackson Lee. No.
    The Clerk. Ms. Jackson Lee, no. Ms. Waters?
    Ms. Waters. Aye.
    The Clerk. Ms. Waters, aye. Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    Mr. Wexler. Pass.
    The Clerk. Mr. Wexler, pass. Ms. Baldwin?
    Ms. Baldwin. No.
    The Clerk. Ms. Baldwin, no. Mr. Weiner?
    Mr. Weiner. Pass.
    The Clerk. Mr. Weiner, pass. Mr. Schiff?
    Mr. Schiff. Pass.
    The Clerk. Mr. Schiff, pass. Mr. Chairman?
    Chairman Sensenbrenner. No.
    The Clerk. Mr. Chairman, no.
    Chairman Sensenbrenner. Do additional Members wish to cast 
or change their vote. Gentleman from Massachusetts, Mr. Frank?
    Mr. Frank. Present.
    The Clerk. Mr. Frank, present.
    Chairman Sensenbrenner. Gentleman from Florida, Mr. Wexler?
    Mr. Wexler. No.
    The Clerk. Mr. Wexler, no.
    Chairman Sensenbrenner. Gentleman from New York, Mr. 
Weiner.
    Mr. Weiner. Yes.
    The Clerk. Mr. Weiner, aye.
    Chairman Sensenbrenner. Gentleman from South Carolina, Mr. 
Graham?
    Mr. Graham. Aye.
    The Clerk. Mr. Graham, aye.
    Chairman Sensenbrenner. Further Members who wish to cast or 
change their vote? If not, the clerk will report.
    The Clerk. Mr. Chairman, there are 15 ayes, 11 nays and 1 
voting present.
    Chairman Sensenbrenner. And Part 2 of the amendment to the 
amendment in the nature of a substitute is agreed to.
    Are there further amendments to the amendment in the nature 
of a substitute?
    [No response.]
    Chairman Sensenbrenner. If not, the question is on the 
amendment in the nature of a substitute as amended. Those in 
favor will say aye.
    Opposed, no.
    The ayes appear to have it. The ayes have it, and the 
amendment in the nature of the substitute is agreed to.
    A reporting quorum is present. The question now occurs on 
reporting the bill favorably as amended by the amendment in the 
nature of a substitute as amended. Those in favor will say aye.
    Opposed, no.
    The ayes appear to have--a rollcall is demanded. The 
question is on reporting the bill favorably. Those in favor 
will, as your names are called, answer aye, those opposed no, 
and the clerk will call the roll.
    The Clerk. Mr. Hyde?
    Mr. Hyde. Aye.
    The Clerk. Mr. Hyde, aye. Mr. Gekas?
    Mr. Gekas. Aye.
    The Clerk. Mr. Gekas, aye. Mr. Coble?
    [No response.]
    The Clerk. Mr. Smith?
    [No response.]
    The Clerk. Mr. Gallegly?
    Mr. Gallegly. Aye.
    The Clerk. Mr. Gallegly, aye. Mr. Goodlatte?
    Mr. Goodlatte. Aye.
    The Clerk. Mr. Goodlatte, aye. Mr. Chabot?
    Mr. Chabot. Aye.
    The Clerk. Mr. Chabot, aye. Mr. Barr?
    Mr. Barr. Aye.
    The Clerk. Mr. Barr, aye. Mr. Jenkins?
    [No response.]
    The Clerk. Mr. Cannon?
    Mr. Cannon. Aye.
    The Clerk. Mr. Cannon, aye. Mr. Graham?
    [No response.]
    The Clerk. Mr. Bachus?
    [No response.]
    The Clerk. Mr. Hostettler?
    Mr. Hostettler. Aye.
    The Clerk. Mr. Hostettler, aye. Mr. Green?
    Mr. Green. Aye.
    The Clerk. Mr. Green, aye. Mr. Keller?
    Mr. Keller. Aye.
    The Clerk. Mr. Keller, aye. Mr. Issa?
    Mr. Issa. No.
    The Clerk. Mr. Issa, no. Ms. Hart?
    Ms. Hart. Aye.
    The Clerk. Ms. Hart, aye. Mr. Flake?
    Mr. Flake. No.
    The Clerk. Mr. Flake, no. Mr. Pence?
    Mr. Pence. Aye.
    The Clerk. Mr. Pence, aye. Mr. Forbes.
    Mr. Forbes. Aye.
    The Clerk. Mr. Forbes, aye. Mr. Conyers?
    [No response.]
    The Clerk. Mr. Frank?
    Mr. Frank. No.
    The Clerk. Mr. Frank, no. Mr. Berman?
    [No response.]
    The Clerk. Mr. Boucher?
    [No response.]
    The Clerk. Mr. Nadler?
    [No response.]
    The Clerk. Mr. Scott?
    Mr. Scott. No.
    The Clerk. Mr. Scott, no. Mr. Watt?
    Mr. Watt. No.
    The Clerk. Mr. Watt, no. Ms. Lofgren?
    Ms. Lofgren. Pass.
    The Clerk. Ms. Lofgren, pass. Ms. Jackson Lee?
    Ms. Jackson Lee. Aye.
    The Clerk. Ms. Jackson Lee, aye. Ms. Waters?
    Ms. Waters. No.
    The Clerk. Ms. Waters, no. Mr. Meehan?
    [No response.]
    The Clerk. Mr. Delahunt?
    [No response.]
    The Clerk. Mr. Wexler?
    Mr. Wexler. No.
    The Clerk. Mr. Wexler, no. Ms. Baldwin?
    Ms. Baldwin. No.
    The Clerk. Ms. Baldwin, no. Mr. Weiner?
    Mr. Weiner. No.
    The Clerk. Mr. Weiner, no. Mr. Schiff?
    Mr. Schiff. No.
    The Clerk. Mr. Schiff, no. Mr. Chairman?
    Chairman Sensenbrenner. Aye.
    The Clerk. Mr. Chairman, aye.
    Chairman Sensenbrenner. Are there additional Members who 
wish to cast or change their vote? Gentleman from Texas, Mr. 
Smith.
    Mr. Smith. Mr. Chairman, I vote aye.
    The Clerk. Mr. Smith, aye.
    Chairman Sensenbrenner. Gentleman from North Carolina, Mr. 
Coble.
    Mr. Coble. Aye.
    The Clerk. Mr. Coble, aye.
    Chairman Sensenbrenner. Gentleman from South Carolina, Mr. 
Graham?
    Mr. Graham. Aye.
    The Clerk. Mr. Graham, aye.
    Chairman Sensenbrenner. The gentlewoman from California, 
Ms. Lofgren.
    Ms. Lofgren. No.
    The Clerk. Ms. Lofgren, no.
    Chairman Sensenbrenner. Other Members who wish to cast or 
change their vote? Gentleman from California, Mr. Berman.
    Mr. Berman. No.
    The Clerk. Mr. Berman, no.
    Chairman Sensenbrenner. Anybody else who wishes to cast or 
change their vote?
    [No response.]
    Chairman Sensenbrenner. If not, the clerk will report.
    The Clerk. Mr. Chairman, there are 18 ayes and 12 nays.
    Chairman Sensenbrenner. And the ayes have it. The motion to 
report favorably is agreed to. Without objection----
    Ms. Jackson Lee. Mr. Chairman, Mr. Chairman?
    Chairman Sensenbrenner. Without objection, the bill will be 
reported favorably to the House in the form of a single 
amendment in the nature of a substitute, incorporating the 
amendments that have been adopted.
    Without objection, the Chairman is authorized to move to go 
to conference pursuant to House rules.
    Without objection, the staff is directed to make any 
technical and conforming changes, and all Members will be given 
2 days as provided by the rules in which to submit additional 
dissenting supplemental or minority views.
    Ms. Jackson Lee. Mr. Chairman?
    Chairman Sensenbrenner. For what does the gentlewoman from 
Texas, Ms. Jackson Lee, seek recognition?
    Ms. Jackson Lee. To strike the last word.
    Chairman Sensenbrenner. Well, we don't have anything--you 
wish to speak out of order?
    Ms. Jackson Lee. I'd like to speak out of order, Mr. 
Chairman.
    Chairman Sensenbrenner. The gentlewoman is recognized to 
speak out of order for a limited period of time.
    Ms. Jackson Lee. Thank you, Mr. Chairman.
    Mr. Goodlatte--I'd like to yield to Mr. Goodlatte. Is he 
present? As you well know, I have a great interest in this as 
it relates to children and the restriction of children. I also 
have a great interest in the question of charitable gambling, 
and as I recall your remarks during the debate of my amendment, 
I'd like to yield to you because I'd like to make sure that 
we'll have the opportunity to work on the charitable 
organizations questions and concerns that I have before this 
bill moves to--moves to the floor. I yield to the gentleman.
    Mr. Goodlatte. I thank the gentlewoman for yielding, and we 
certainly will continue the work with you on that, but you will 
note that the Committee passed a very tough anti-gambling bill, 
and so the mood, particularly on your side of the aisle, to 
work out and fashion a compromise was difficult, and therefore, 
I don't know. But we will definitely--I am interested in trying 
to work with you.
    Chairman Sensenbrenner. It is time to move on. The next 
item----
    Ms. Jackson Lee. It is time to move on. I thank the 
gentleman for his somewhat weak response and I will act 
accordingly as we move to the floor. Thank you, gentleman.
    Chairman Sensenbrenner. The regular order has been called 
for.
                            Dissenting Views

    Although we are opposed to illegal gambling, whether done 
over the Internet or otherwise, we cannot support the 
legislation reported by the Judiciary Committee because the 
enforcement mechanisms will likely be ineffective. We question 
the wisdom of spending valuable prosecutorial resources on 
attempting to shut down Internet gambling sites--an endeavor 
which ultimately is likely to be futile.
    H.R. 3215 would make it unlawful for a person engaged in a 
gambling business knowingly to use a communication facility \1\ 
to transmit a bet, wager, or information assisting in the 
placing of bets or wagers.\2\ The bill also makes it unlawful 
for a person engaged in a gambling business knowingly to 
accept, with respect to the transmission of bets or wagers, 
credit, electronic fund transfers, checks and other similar 
financial instruments.\3\ By prohibiting the payment of credit, 
electronic funds, checks and other similar instruments to 
Internet gambling businesses, H.R. 3215 deputizes the financial 
services industry to be the primary enforcers of the law.
---------------------------------------------------------------------------
    \1\ 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, or other like connection between the points of 
origin and reception of such transmission. 18 U.S.C. Sec. 1081.
    \2\ H.R. 3215, subsection (a).
    \3\ H.R. 3215, subsection (b).
---------------------------------------------------------------------------
    In order to ensure compliance, the bill authorizes law 
enforcement to obtain injunctive or declaratory relief to 
restrain or prevent any person from paying or assisting in the 
payment of bets or wagers in interstate commerce.\4\ Such 
relief, when granted against an interactive computer service, 
is limited to the removal of, or disabling of access to, an 
online site violating the law or a hypertext link to an online 
site violating the law, that resides on a computer server that 
such service controls or operates.\5\
---------------------------------------------------------------------------
    \4\ H.R. 3215, subsection (i)(1).
    \5\ H.R. 3215, subsection (i)(3)(A).
---------------------------------------------------------------------------
    The version of H.R. 3215 that the Committee initially 
considered would have created an unfair situation in which 
Internet betting was legal for certain types of gambling (horse 
racing, fantasy sports, state lotteries, and casino gambling 
\6\), but illegal for other types of Internet gambling (dog 
racing, jai alai, charitable gaming, and Tribal gambling \7\). 
At markup, however, the Committee adopted an amendment offered 
by Rep. Cannon that outlawed all interstate Internet gambling, 
thereby eliminating the bill's preferences for certain types of 
gambling interests.\8\
---------------------------------------------------------------------------
    \6\ Such wagering was legal if both the bettor and the gambling 
business were located in a State that had explicitly authorized such 
bets or wagers.
    \7\ The bill's requirement that the player physically be present on 
Indian lands had the practical effect of prohibiting Tribal gaming 
because no potential customer would travel to an Indian reservation in 
order to access the Internet to make a transaction on a Tribal Internet 
gaming site.
    \8\ The Committee adopted the Cannon Amendment after Rep. Wexler 
failed to prevail on an amendment that would have permitted Internet 
gambling on dog racing and jai alai.
---------------------------------------------------------------------------
  Although the bill treats all interstate Internet gambling equally, we 
are nevertheless concerned with the bill's overly restrictive treatment 
of Indian tribal governments with respect to intrastate Internet 
gambling. Except for prohibiting state lotteries, the bill does not 
address the ability of states to authorize Internet gambling on an 
intrastate basis. Thus, states are still empowered to license Internet 
gaming sites that could offer wagering opportunities to anyone within 
that state who is legally eligible to place a wager. However, the bill 
limits the ability of tribes to take wagers by requiring that the 
individuals physically be located on reservation lands. Congress should 
not be in the practice of picking winners and losers when establishing 
public policy.
    Credit card companies such as Visa and Master Card have 
raised concerns with the bill because it could subject them to 
injunctions in numerous jurisdictions that require different--
or even conflicting--remedies to prevent the payment of 
Internet bets or wagers. The result will be a hodge-podge of 
inconsistent court orders, rather than a cohesive enforcement 
scheme.
    In addition, relying on financial institutions to enforce 
the law will likely be ineffective. Credit card companies have 
a limited ability to block financial transactions to illegal 
Internet gambling businesses. The companies rely on a merchant 
coding system to ascertain the nature of particular 
transactions, but this system has limitations. First, it 
depends on the merchant to accurately code a transaction. There 
are obvious incentives for many Internet gambling merchants to 
falsify their merchant identification.\9\
---------------------------------------------------------------------------
    \9\ Testimony of Mark MacCarthy, Senior Vice President of Public 
Policy, Visa U.S.A., Inc., before the Subcommittee on Oversight and 
Investigations of the Committee on Financial Services, 107th Congress, 
2nd Sess. (July 12, 2001).
---------------------------------------------------------------------------
    More significantly, the coding system applies only when an 
online gambler uses a credit card to transact business directly 
with an online gambling merchant. Often times, an Internet 
gambler will use electronic cash and account funding systems to 
create a pool of electronically available funds. Thus, a 
cardholder could use his or her credit card to purchase ``e-
cash'' on a web site that does not, itself, offer gambling, but 
allows that e-cash to be used on another web site that does 
offer gambling. The credit card coding system would not capture 
these transactions as Internet gambling.\10\ And if the e-cash 
website is offshore, it could be beyond the reach of U.S. law 
enforcement.
---------------------------------------------------------------------------
    \10\ Id.
---------------------------------------------------------------------------
    Additionally, the bill does not make it illegal for an 
individual to place an Internet bet. Rather, the bill only 
criminalizes an Internet gambling business which accepts bets 
or wagers or accepts credit or other types of financial 
instruments. As such, the bill leaves out the most effective 
enforcement mechanism--targeting individual bettors. This 
legislation, therefore, has little or no deterrent value. 
Offshore gambling sites will evade any restrictions easily, and 
individual bettors will continue to seek out these sites and 
gamble free from any fear of any legal consequences.

                               CONCLUSION

    Although the intent of this legislation is laudable, we 
believe conscripting credit card companies to enforce our 
criminal laws is ineffective and will set a bad precedent 
regarding the Internet. In addition, criminalizing only the 
Internet gambling business without placing any penalty on the 
individual bettor further weakens the enforcement scheme of the 
bill. In the end, it is unlikely that this legislation will 
successfully halt Internet gambling.

                                   John Conyers, Jr.
                                   Robert C. Scott.
                                   Melvin L. Watt.
                                   Maxine Waters.

                                  
