[House Report 108-51]
[From the U.S. Government Publishing Office]
108th Congress Rept. 108-51
HOUSE OF REPRESENTATIVES
1st Session Part 1
======================================================================
UNLAWFUL INTERNET GAMBLING FUNDING PROHIBITION ACT
_______
March 27, 2003.--Ordered to be printed
_______
Mr. Oxley, from the Committee on Financial Services, submitted the
following
R E P O R T
together with
DISSENTING VIEWS
[To accompany H.R. 21]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred the
bill (H.R. 21) to prevent the use of certain bank instruments
for unlawful Internet gambling, and for other purposes, having
considered the same, report favorably thereon without amendment
and recommend that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 2
Hearings......................................................... 5
Committee Consideration.......................................... 5
Committee Votes.................................................. 5
Committee Oversight Findings..................................... 5
Performance Goals and Objectives................................. 5
New Budget Authority, Entitlement Authority, and Tax Expenditures 5
Committee Cost Estimate.......................................... 6
Congressional Budget Office Cost Estimate........................ 6
Federal Mandates Statement....................................... 8
Advisory Committee Statement..................................... 8
Constitutional Authority Statement............................... 8
Applicability to Legislative Branch.............................. 8
Section-by-Section Analysis...................................... 8
Changes in Existing Law Made by the Bill, as Reported............ 10
Minority, Additional, or Dissenting Views........................ 12
Purpose and Summary
H.R. 21 prohibits the acceptance of any bank instrument for
unlawful Internet gambling. It defines certain terms for
purposes of the Act; establishes civil remedies, criminal
penalties, and regulatory enforcement authorities; encourages
cooperation by foreign governments in the enforcement of the
Act; and requires the Secretary of the Treasury to report
annually to Congress on deliberations between the United States
and other countries on issues relating to Internet gambling.
Its primary purpose is to give U.S. law enforcement a new, more
effective tool for combating offshore Internet gambling sites
that illegally extend their services to U.S. residents via the
Internet.
Background and Need for Legislation
The Committee has established a comprehensive hearing and
markup record on Internet gambling, most particularly in the
107th Congress. In addition to the extensive debate at the
Committee's October 11, 2001 markup of H.R. 3004, the Financial
Anti-Terrorism Act of 2001, Internet gambling was addressed at
the Committee's October 3, 2001 hearing on terrorism and money
laundering. At that hearing, the Federal Bureau of
Investigation (FBI), the Department of Justice, and a money
laundering expert testified that Internet gambling serves as a
vehicle for money laundering and can be exploited by terrorists
for that purpose. The FBI also testified about pending
litigation linking organized crime to money laundering and
Internet gambling.
At two hearings held in July, 2001 by the Subcommittee on
Oversight and Investigations and the Subcommittee on Financial
Institutions and Consumer Credit, witnesses discussed the legal
status of Internet gambling, the social and financial
challenges it poses, and legislative options for addressing
those challenges.
Many legal experts, including officials from the Department
of Justice, State attorneys general, and others involved in law
enforcement hold the view that Internet gambling is generally
prohibited under various Federal statutes. Among them, the
Federal Wire Act (18 U.S.C. 1084 et seq.) criminalizes the
knowing use of a wire communication facility by a gambling
establishment for the transmission of bets and wagers in
interstate or foreign commerce.
Conventional forms of gambling activities, such as casino
wagering, State lotteries, slot machines and horseracing, legal
in many jurisdictions, are regulated by the individual States.
However, these activities are subject to intense scrutiny and a
myriad of licensing and other operational requirements.
Virtually all States prohibit the operation of gambling
businesses not expressly permitted by their respective
constitutions or special legislation. Internet gambling
currently constitutes illegal gambling activity in all 50
States. Although in June of 2001 the Nevada legislature
authorized the Nevada Gaming Commission to legalize on-line,
Internet gambling operations if and when such operations can be
conducted in compliance with Federal law, the Gaming Commission
believes that such compliance cannot be ensured at present.
Because Internet gambling is generally held to be illegal
under Federal and State law, most of the estimated 2,000
Internet gambling sites today operate from offshore locations
in the Caribbean and elsewhere. As such, they operate
effectively beyond the reach of U.S. regulators and law
enforcement, as well as the statutory anti-money laundering
regimes that apply to U.S.-based casinos. These ``virtual
casinos'' advertise the ease of opening betting accounts mainly
through the use of credit cards and alternative payment
systems. Internet gambling sites are not only vulnerable to
criminal exploitation by money launderers; they also can easily
abuse a customer's credit card information or manipulate the
odds of a particular wager to the casino's advantage.
At the Oversight Subcommittee's hearing on July 12, 2001,
the American Gaming Association-representing commercial casinos
and their supporters in the United States, addressed some of
the practical problems associated with Internet gambling,
including the difficulty of subjecting Internet operations to
the kinds of regulation currently applied to U.S.-based
casinos. According to the AGA, its major concern is that
offshore Internet gambling sites ``frustrate important state
policies, including restrictions on the availability of gaming
within each State.'' The AGA went on to say: ``* * *
unregulated Internet gambling that exists today allows an
unlicensed, untaxed, unsupervised operator to engage in
wagering that is otherwise subject to stringent federal and
state regulatory controls. These controls are vital to
preserving the honesty, integrity and fairness that those in
the gaming industry today have worked so hard for so long to
bring about.'' The AGA further reported that it does not
believe the technology for exercising such controls with
respect to Internet gambling is yet available.
Testifying from a State perspective, the New Jersey
Director of Gaming Enforcement also noted that offshore
Internet gambling operations provide no tax revenue or jobs to
States, unlike State-regulated casinos.
In addition to the legal and economic challenges cited
above, problem gambling-including problem Internet gambling-can
lead to personal and family hardships, such as lost savings,
excessive debt, bankruptcy, foreclosed mortgages, and divorce.
In particular, Internet gambling is proving to be a serious
problem for many college students. The National Collegiate
Athletic Association (NCAA) at the July, 2001 hearings
underscored the vulnerability of young people to losing large
sums through Internet gambling. According to a Nellie Mae
survey cited by the NCAA, 78 percent of college students have
credit cards, nearly a third have four or more credit cards,
and one in ten will graduate with balances over $7,000. One
student reportedly lost $10,000 on Internet sports gambling
over a three-month period. And, in another case, a student
reportedly lost $5,000 on a single Internet wager on the Super
Bowl and was forced to drop out of school. Further, current
events show that not just student athletes, but professional
athletes can be caught by the lure of Internet gambling, as the
sports pages have detailed the roughly $500,000 owed by
Washington Capitals hockey star Jaromir Jagr to a Caribbean
Internet betting site.
The New Jersey Director of Gaming Enforcement testified
that the State of New Jersey had filed a suit against certain
offshore casinos found to be taking online bets from minors in
that State. Witnesses from the National Council on Problem
Gambling and the Compulsive Gambling Center testified about the
problems associated with compulsive or pathological gambling,
and the Christian Coalition, in a letter to a Member of the
Committee, echoed concerns about the impact of gambling on
families and society and, in particular, the impact of Internet
gambling on the poor, youth, and those who are already
compulsive gamblers.
Because of the pervasive legal, economic and social
challenges posed by the rapid growth of Internet gambling, the
National Gambling Impact Study Commission unanimously
recommended in its 1999 final report that the Federal
government prohibit, with no new exemptions, all Internet
gambling not already authorized by law. The Commission also
recommended that legislation be adopted to prohibit wire
transfers to Internet gambling sites or to the banks which
represent them, and called on the government to develop
enforcement strategies that include credit card providers and
money transfer agencies that facilitate Internet gambling.
H.R. 21, the Unlawful Internet Gambling Funding Prohibition
Act, builds on the recommendations of the National Gambling
Impact Study Commission by prohibiting gambling businesses from
accepting credit cards or other bank instruments in connection
with unlawful Internet gambling. Because of the anticipated
difficulty in enforcing this prohibition offshore, the
legislation also authorizes the Attorney General (or
appropriate State officials) to seek an injunction against any
person to prevent or restrain a violation of this bill,
including to prohibit banks and other financial service
providers from processing any credit card transaction or other
financial instrument with a specified illegal Internet gambling
site. The bill provides for the Secretary of the Treasury, in
conjunction with the Federal Reserve and the U.S. Attorney
General, to prescribe regulations reasonably designed to
identify, block or prevent unlawful Internet gambling
transactions, and provides that a payment system is not liable
for blocking or refusing a restricted transaction in an attempt
to comply with the bill's enforcement. It is intended to
provide regulatory flexibility so that compliance may be
achieved through coding of transactions or--for those financial
instruments for which coding is not viable--through alternative
methods consistent with the bill's goals. The bill is identical
to H.R. 556, which passed the House of Representatives by voice
vote in the 107th Congress. It is similar to provisions
incorporated in the 107th Congress in the Committee-reported
version of H.R. 3004, the Financial Anti-Terrorism Act of 2001,
as well as to legislation adopted by the House Banking
Committee in the 106th Congress (H.R. 4419).
H.R. 21 is not intended to spell out which activities are
legal and which are illegal under the bill; rather, it relies
on the substantive laws in effect at the time a case is brought
under the legislation, and law enforcement's interpretation of
the underlying law. It would not in general apply to a computer
or video game that does not involve the staking or risking of
something of value, nor to a game of skill played, created or
distributed over the Internet.
H.R. 21 is not intended to impose new burdens on financial
institutions to identify which offshore gambling sites may be
engaged in unlawful activities. Rather, the legislation
contemplates a mechanism whereby banks and other financial
service providers will be provided, pursuant to an injunction,
with the names of specific Internet gambling sites to which
payments are to be prohibited. The obligation of financial
institutions pursuant to such an injunction would be similar in
effect to their obligations under certain other U.S. laws, such
as those administered by the Office of Foreign Assets Control
(OFAC) barring financial transactions with terrorists and drug
kingpins. The bill recognizes that many credit card companies
and credit card banks are taking steps to identify, block or
prevent Internet gambling transactions, and allows for
enforcement of this bill by the Federal bank regulators prior
to the issuance of an injunction.
Hearings
No hearings were held on this legislation in the 108th
Congress.
Committee Consideration
The Committee on Financial Services met in open session on
March 13, 2003 and ordered H.R. 21, the Unlawful Internet
Gambling Funding Prohibition Act, reported to the House with a
favorable recommendation by a voice vote, a quorum being
present.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. No
record votes were taken in conjunction with the consideration
of this legislation. A motion by Mr. Oxley to report the bill
to the House with a favorable recommendation was agreed to by a
voice vote.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee made findings that are
reflected in this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
Using authority granted by this legislation, the Attorney
General, and the Federal functional regulators and the Federal
Trade Commission under applicable law (section 505(a) of the
Gramm-Leach-Bliley Act), will reduce the availability of
illegal offshore Internet gambling in the United States.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of budget authority, entitlement authority, or
tax expenditures or revenues contained in the cost estimate
prepared by the Director of the Congressional Budget Office
pursuant to section 402 of the Congressional Budget Act of
1974.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Cost Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, March 27, 2003.
Hon. Michael G. Oxley,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 21, the Unlawful
Internet Gambling Funding Prohibition Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Ken Johnson
and Mark Hadley.
Sincerely,
Douglas Holtz-Eakin,
Director.
Enclosure.
H.R. 21--Unlawful Internet Gambling Funding Prohibition Act
Summary: H.R. 21 would prohibit gambling businesses from
accepting credit cards, checks, or other bank instruments from
gamblers who illegally bet over the Internet. The bill also
would require financial institutions to take steps to identify
and block gambling-related transactions that are transmitted
through their payment systems. The Office of the Comptroller of
the Currency (OCC), the Board of Governors of the Federal
Reserve System, the Federal Deposit Insurance Corporation
(FDIC), the Office of Thrift Supervision (OTS), and the
National Credit Union Administration (NCUA) would enforce the
provisions of H.R. 21 as they apply to financial institutions.
CBO estimates that implementing this legislation would
result in no significant cost to the federal government. The
bill could affect direct spending and revenues, but CBO
estimates that any impact on direct spending and revenues would
not be significant.
H.R. 21 would create no new intergovernmental or private-
sector mandates as defined in the Unfunded Mandates Reform Act
(UMRA) and would impose no costs on state, local, or tribal
governments.
Estimated cost to the Federal Government: CBO estimates
that the government would incur no significant costs under H.R.
21. CBO estimates that implementing H.R. 21 would increase
administrative costs of the Department of Justice, but any such
costs would be negligible. The bill also would have a small
effect on the operating costs of the FDIC and the Federal
Reserve System. Finally, the bill would have a negligible
effect on the collection and spending of criminal penalties.
Basis of estimate
The bill would have only minor budgetary effects, as
described below.
Spending subject to appropriation
Because H.R. 21 would establish new federal crimes relating
to Internet gambling, the federal government would be able to
pursue cases that it otherwise would not be able to prosecute.
CBO expects, however, that most cases would be pursued under
existing state laws. Therefore, we estimate that any increase
in federal costs for law enforcement, court proceedings, or
prison operations would not be significant. Any such additional
costs would be subject to the availability of appropriated
funds.
H.R. 21 would require the Department of the Treasury to
submit an annual report on deliberations with other countries
on issues related to Internet gambling. CBO estimates that
preparing and completing the report would cost less than
$100,000 a year, subject to the availability of appropriated
funds.
Direct spending and revenues
The NCUA, the OTS, and the OCC charge fees to cover all
their administrative costs; therefore, any additional spending
by those agencies to implement the bill would have no net
budgetary effect. That is not the case with the FDIC, however,
which uses deposit insurance premiums paid by banks to cover
the expenses it incurs to supervise state-chartered
institutions. (Under current law, CBO estimates that the vast
majority of thrift institutions insured by the FDIC would not
pay any premiums for most of the 2004-2013 period.)
The bill would cause a small increase in FDIC spending but
would not affect its premium income. In total, CBO estimates
that H.R. 21 would increase direct spending and offsetting
receipts of the NCUA, OTS, OCC, and FDIC by less than $500,000
a year over the 2002-2006 period.
Budgetary effects on the Federal Reserve are recorded as
changes in revenues (governmental receipts). Based on
information from the Federal Reserve, CBO estimates that
enacting H.R. 21 would reduce such revenues by less than
$500,000 a year.
Becaue those prosecuted and convicted under the bill 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
(i.e., revenues), which are deposited in the Crime Victims Fund
and spent in subsequent years. Any additional collections are
likely to be negligible because of the small number of cases
involved. Because any increase in direct spending would equal
the amount of fines collected (with a lag of one year or more),
the additional direct spending also would be negligible.
Intergovernmental and private-sector impact: Although H.R.
21 would prohibit gambling businesses from accepting credit
card payments and other bank instruments from gamblers who bet
illegally over the Internet, the bill would not create a new
intergovernmental or private-sector mandate as defined in UMRA.
Under current federal and state law, gambling businesses are
generally prohibited from accepting bets or wagers over the
Internet. Thus, H.R. 21 does not contain a new mandate relative
to current law and would impose no costs on state, local, or
tribal governments.
Estimate prepared by: Federal spending: Ken Johnson and
Mark Hadley; federal revenues: Mark Booth; impact on state,
local, and tribal governments: Victoria Heid Hall; impact on
the private sector: Jean Talarico.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
Constitutional Authority of Congress to enact this legislation
is provided by Article 1, section 8, clause 1 (relating to the
defense and general welfare of the United States), and clause 3
(relating to the power to regulate foreign and interstate
commerce).
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
Section-by-Section Analysis of the Legislation
Section 1. Short title
This section provides the short title of the bill, the
``Unlawful Internet Gambling Funding Prohibition Act.''
Section 2. Findings
This section provides certain Congressional findings. In
particular, Congress finds that: (1) Internet gambling is
primarily funded through the use of personal banking
instruments and plays a large role in the creation of
ultimately uncollectible personal debt; and (2) Internet
gambling is susceptible to abuse by money launderers.
Section 3. Prohibition on acceptance of any bank instrument for
Internet gambling
This section prohibits a gambling business from accepting
bank instruments in connection with unlawful Internet gambling.
Covered instruments include credit cards, electronic fund
transfers, and checks.
Subsection (b) defines the term ``bets or wagers'' as the
staking or risking by any person of something of value upon the
outcome of a contest of others, a sporting event, or a game
subject to chance with the agreement that the winner will
receive something of greater value than the amount staked or
risked. This subsection clarifies that ``bets or wagers'' does
not include a bona fide business transaction governed by the
securities laws; a transaction subject to the Commodity
Exchange Act; an over-the-counter derivative instrument and any
other transaction exempt from State gaming or bucket shop laws
pursuant to the Commodity Exchange Act or Securities Exchange
Act; a contract of indemnity or guarantee; a contract for life,
health, or accident insurance; a deposit with a depository
institution; certain participation in a simulation sports game
or education game; or a lawful transaction with a business
licensed or authorized by a State. Paragraph (2) excludes from
the term ``business of betting or wagering'' any creditor,
credit card issuer, insured depository institution, financial
institution, operator of a terminal at which an electronic fund
transfer may be initiated, money transmitting business, or
international, national, regional, or local network utilized to
effect a credit transaction, electronic fund transfer, stored
value product transaction, or money transmitting service, or
any participant in such network, or any interactive computer
service or telecommunications service, unless that entity has
actual knowledge and control of bets and wagers and operates or
is controlled by an entity that operates an unlawful Internet
gambling site. Subsection (b) also defines the terms
``designated payment system,'' ``Internet,'' ``interactive
computer service,'' ``restricted transaction'' and ``unlawful
Internet gambling.''
Subsection (c) authorizes the Attorney General and State
Attorneys General to pursue civil remedies, including a
preliminary injunction or injunction against any person to
prevent or restrain a violation of this legislation. It
clarifies that the bill does not alter, supersede or otherwise
affect the Indian Gaming Regulatory Act; generally limits the
liability of an interactive computer service to the removal or
disabling of access to an online site violating this section,
upon proper notice; clarifies that an interactive computer
service not liable under this bill is not liable under the Wire
Act unless it has actual knowledge and control of bets and
wagers, and operates or is controlled by an entity that
operates, an unlawful Internet gambling site; sets out factors
to be considered by a court in deciding whether to issue an
injunction against any payment system; and provides for notice
to bank regulators and institutions to allow violations to be
addressed through the bank regulatory process before the
injunction process is triggered.
Subsection (d) authorizes criminal penalties, including
fines or imprisonment for not more than five years or both.
Subsection (e) provides that, notwithstanding the safe
harbor provided in subsection (b)(2), a financial intermediary
(creditor, credit card issuer, financial institution, operator
of a terminal at which an electronic fund transfer may be
initiated, money transmitting business, or national, regional,
or local network), or interactive computer service or
telecommunications service that has actual knowledge and
control of bets and wagers, and operates or is controlled by an
entity that operates, an unlawful Internet gambling site can be
held liable under this section.
Subsection (f) requires the Secretary of the Treasury, in
conjunction with the Federal Reserve and the U.S. Attorney
General, to prescribe regulations within six months requiring
any payment system to establish policies and procedures
reasonably designed to identify restricted transactions, block
restricted transactions, or prevent restricted transactions
from entering its system; and provides that a payment system is
not liable for blocking or refusing a restricted transaction in
an attempt to comply with the bill's enforcement. The Federal
functional regulators and the Federal Trade Commission are
given the authority to enforce this subsection.
Section 4. Internet gambling in or through foreign jurisdictions
Section 4 provides that, in deliberations between the U.S.
Government and any other country on money laundering,
corruption, and crime issues, the U.S. Government should
encourage cooperation by foreign governments in identifying
whether Internet gambling operations are being used for money
laundering, corruption, or other crimes, advance policies that
promote the cooperation by foreign governments in the
enforcement of this legislation, and encourage the Financial
Action Task Force on Money Laundering to study the extent to
which Internet gambling operations are being used for money
laundering. It also requires the Secretary of the Treasury to
submit an annual report to Congress on the deliberations
between the United States and other countries on issues
relating to Internet gambling.
Section 5. Amendments to gambling provisions
Section 5 makes certain amendments to definitions under
section 1081 of Title 18, the Federal Wire Act, and increases
the penalty for unlawful wire transfers of wagering
information.
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 italic, existing law in which no change is
proposed is shown in roman):
CHAPTER 50 OF TITLE 18, UNITED STATES CODE
CHAPTER 50--GAMBLING
* * * * * * *
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.
* * * * * * *
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] 5 years, or both.
* * * * * * *
DISSENTING VIEWS
H.R. 21 limits the ability of individual citizens to use
bank instruments, including credit cards or checks, to finance
Internet gambling. This legislation should be rejected by
Congress since the federal government has no constitutional
authority to ban or even discourage any form of gambling.
In addition to being unconstitutional, H.R. 21 is likely to
prove ineffective at ending Internet gambling. Instead, this
bill will ensure that gambling is controlled by organized
crime. History, from the failed experiment of prohibition to
today's futile ``war on drugs,'' shows that the government
cannot eliminate demand for something like Internet gambling
simply by passing a law. Instead, H.R. 21 will force those who
wish to gamble over the Internet to patronize suppliers willing
to flaunt the ban. In many cases, providers of services banned
by the government will be members of criminal organizations.
Even if organized crime does not operate Internet gambling
enterprises their competitors are likely to be controlled by
organized crime. After all, since the owners and patrons of
Internet gambling cannot rely on the police and courts to
enforce contracts and resolve other disputes, they will be
forced to rely on members of organized crime to perform those
functions. Thus, the profits of Internet gambling will flow
into organized crime. Furthermore, outlawing an activity will
raise the price vendors are able to charge consumers, thus
increasing the profits flowing to organized crime from Internet
gambling. It is bitterly ironic that a bill masquerading as an
attack on crime will actually increase organized crime's
ability to control and profit from Internet gambling!
In conclusion, H.R. 21 violates the constitutional limits
on federal power. Furthermore, laws such as H.R. 21 are
ineffective in eliminating the demand for vices such as
Internet gambling; instead, they ensure that these enterprises
will be controlled by organized crime. Therefore I urge my
colleagues to reject H.R. 21, the Internet Gambling Prohibition
Act.
Ron Paul.