House Passes Bill To Limit Online Gambling, Card Usage

The House Committee on Financial Services released the following press release:

Financial Services Committee Chairman Michael G. Oxley (OH) said, “The Goodlatte-Leach bill combines two complementary approaches. First, it cuts off the flow of money to Internet gambling websites. These websites, almost always located on some far-flung Caribbean island, will no longer be allowed to accept bettors’ credit cards, fund transfers or checks drawn on American banks. Second, H.R. 4411 clarifies that the 45-year-old Wire Act covers illegal Internet gambling. As a former FBI agent, I can attest to the fact that the Wire Act is an effective tool in stopping crime and this bill will help us make better use of it.”

H.R. 4411, the Goodlatte-Leach Internet Gambling Prohibition and Enforcement Act, was approved by the Financial Services Committee on March 15 and the Judiciary Committee on May 25. Similar legislation has passed in the past two Congresses.

Financial Institutions and Consumer Credit Subcommittee Chairman Spencer Bachus (AL) said, “Some claim illegal Internet gambling is a victimless crime. In fact, the very real victims of illegal Internet gambling are underage gamblers, who are by the tens of thousands becoming compulsive, addictive gamblers. It is a mushrooming epidemic, leaving in its wake suicides, crime, and financial and family tragedies.”

The amount of money spent on illegal Internet gambling has surged in recent years, as has the number of gambling sites. This year alone, Americans will send $5.9 billion to unregulated, offshore, online casinos; nearly half of the $12 billion bet worldwide on Internet gambling. Currently there are more than 2,300 online gambling sites.

Former Banking and Financial Services Committee Chairman James A. Leach (IA) said, “The ball is now in the Senate's court. Hopefully this multi-year effort will end this year with the enactment of strong anti-Internet gambling legislation.”

Internet gambling’s characteristics are unique: online players can gamble 24 hours a day from home; children may play without sufficient age verification; and betting with a credit card can undercut a player’s perception of the value of cash, leading to addiction, bankruptcy, and crime.

Agriculture Committee Chairman Bob Goodlatte (VA) said, “I am extremely pleased by the passage of this legislation through the House of Representatives and now I call on the Senate to act on this important legislation. 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, and by the rise in revenues. These virtual betting parlors 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.”

Majority Whip Roy Blunt (MO) said, “Widespread Internet gambling by minors and young adults is giving way to addiction-forming behavior by gamblers of all ages. But Internet gambling is more than a social problem; it's a national security problem, and I'm pleased to see the House act today to put an end to this destructive and illegal activity by providing law enforcement with the tools to stop it.”

H.R. 4411 is endorsed by the religious community, family groups, financial services groups, all the major professional sports organizations, and 48 states’ attorneys general.

Oversight and Investigations Subcommittee Chairwoman Sue W. Kelly (NY) said, “The FBI and the GAO have cited Internet gambling as a haven for money laundering. As we continue to enact tough anti-terror finance measures, terrorists are utilizing alternative ways to fund their operations. Their attempts to launder money through Internet gambling sites are likely to increase. This legislation enables us to keep pace with money launderers by providing U.S. financial regulators with the necessary tools to block these illegal transactions.”

FBI and Justice Department experts have warned that Internet gambling sites are often fronts for money laundering, drug trafficking, and terrorist financing. The sites evade U.S.-based regulations that control gambling by minors and problem gamblers, and ensure the integrity of the games.

Appropriations Subcommittee Chairman Frank Wolf (VA) said, “Gambling – and particularly online gambling – is a growing problem around the country. It used to be that you had to plan a trip to a casino. With online gambling, people can do it in their bathrobes, in their family rooms, in fact they could even do it on their cell phones walking down the street. It’s literally available everywhere at any time. This legislation will go a long way toward giving law enforcement the tools to address this problem.”

Unlike bricks-and-mortar casinos in the United States that provide jobs and tax revenues, Internet gambling sites yield no benefits to Americans. Easy access and lack of law enforcement give the U.S. public a misimpression that Internet gambling is legal. The result is widespread gambling by minors and young adults, and addiction-forming behavior by gamblers of all ages.

Rep. Darlene Hooley (OR) said, “We should mean what we say when it comes to Internet gambling: if we’re to keep laws on the books that prohibit Internet gambling, then we should take steps necessary to enforce them. Even when criminal law can’t be enforced, the Federal government’s jurisdiction over financial systems can nevertheless cut off the money sources for these illegal businesses. By cutting off the flow of money, we can truly enforce the prohibition.”

The Goodlatte-Leach Internet Gambling Prohibition and Enforcement Act would:

• Update the Wire Act to clarify that it covers all types of gambling and all types of communication facilities;
  
• Increase the maximum penalty for violations of the Wire Act from two to five years in prison;
  
• Preserve the right of states to regulate gambling that occurs solely within state borders;
  
• Cut off the flow of money to Internet gambling websites by regulating payment systems;
  
• Authorize state and federal law enforcement to seek injunctions against persons who facilitate illegal Internet gambling; and
  
• Advance international cooperation in law enforcement efforts against illegal gambling and related money laundering.