SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Internet Gambling Prohibition Act of 
1998''.

SEC. 2. DEFINITIONS.

    Section 1081 of title 18, United States Code, is amended--
            (1) in the matter immediately following the colon, by 
        designating the first 5 undesignated paragraphs as paragraphs 
        (1) through (5), respectively, and moving the indentation of 
        each paragraph 2 ems to the right;
            (2) in paragraph (5), as so designated--
                    (A) by striking ``wire communication'' and 
                inserting ``communication'';
                    (B) by striking ``transmission of writings'' and 
                inserting ``transmission or receipt of data, 
                writings''; and
                    (C) by striking ``or other like'' and all that 
                follows before the period and inserting ``radio, 
                electromagnetic, photo-optical, photoelectric, or other 
                similar facility''; 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 (other than in a de minimis amount) 
                upon the outcome of a contest or game predominantly 
                subject to chance, 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 if the 
                opportunity to win is predominantly subject to chance 
                and the purchase requires a consideration that is not 
                in a de minimis amount; 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 contract of indemnity or 
                        guarantee;
                            ``(iii) a contract for life, health, or 
                        accident insurance;
                            ``(iv) 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
                            ``(v) participation in a simulation sports 
                        game or an educational game or contest that--
                                    ``(I) is not dependent solely on 
                                the outcome of any single sporting 
                                event or nonparticipant's singular 
                                individual performance;
                                    ``(II) has an outcome that reflects 
                                the relative knowledge and skill of the 
                                participants; and
                                    ``(III) offers a prize or award to 
                                a participant that is established in 
                                advance of the game or contest and is 
                                not determined by the number of 
                                participants or the amount of any fees 
                                paid by those participants.
            ``(7) The term `information assisting in the placing of 
        bets or wagers'' means information that is--
                    ``(A) sent by a person engaged in the business of 
                betting or wagering that is necessary in order for the 
                recipient to place a bet or wager by means of a 
                communication facility being used in interstate or 
                foreign commerce; or
                    ``(B) intended by the sender to be used by a person 
                engaged in the business of betting or wagering to 
                accept or place a bet or wager.''.

SEC. 3. TRANSMISSION OF WAGERING INFORMATION; PENALTIES.

    (a) In General.--Section 1084 of title 18, United States Code, is 
amended by striking subsections (a) through (d) and inserting the 
following:
    ``(a) In General.--
            ``(1) Persons engaged in the business of betting or 
        wagering.--Whoever, being engaged in the business of betting or 
        wagering knowingly uses a communication facility for the 
        transmission or receipt in interstate or foreign commerce of 
        bets or wagers, information assisting in the placing of bets or 
        wagers, or a communication that entitles the transmitter or 
        receiver to the opportunity to receive money or credit as a 
        result of bets or wagers made using a communication facility in 
        interstate or foreign commerce, shall be fined under this title 
        or imprisoned not more than 4 years, or both.
            ``(2) Other persons.--Whoever (other than a person 
        described in paragraph (1) or a common carrier subject to the 
        jurisdiction of the Federal Communications Commission) 
        knowingly uses a communication facility with the intent to 
        initiate or receive in interstate or foreign commerce the 
        transmission of bets or wagers, information assisting in the 
        placing of bets or wagers, or a communication that entitles the 
        transmitter or receiver to the opportunity to receive money or 
        credit as a result of bets or wagers, shall be fined under this 
        title or imprisoned not more than 6 months, or both.
    ``(b) Exceptions.--
            ``(1) News reporting; legal bets and wagers.--Nothing in 
        this section shall be construed to prohibit the transmission or 
        receipt in interstate or foreign commerce of--
                    ``(A) information for use in the news reporting or 
                analysis of any wagering activity, including odds, 
                racing or event results, schedules, or categories of 
                wagering;
                    ``(B) educational material relating to betting or 
                wagering;
                    ``(C) information assisting in the placing of bets 
                or wagers, or parimutuel bets or wagers conducted by an 
                interactive computer service, if such betting or 
                wagering--
                            ``(i) is legal in the State or foreign 
                        country in which the transmission originates; 
                        and
                            ``(ii) is legal in each State and each 
                        foreign country in which the sender intends the 
                        transmission to be received for the purposes of 
                        betting or wagering; or
                    ``(D) advertising, promotion, or other 
                communication by, or authorized by, anyone licensed to 
                operate a gambling business in a State.
            ``(2) Interactive computer service.--Subsection (a) does 
        not impose liability on an interactive computer service 
        provider whose facilities or services are used by another 
        person to engage in activity prohibited by that subsection--
                    ``(A) arising out of the provider's provision of 
                communications services, if--
                            ``(i) the communication was initiated by or 
                        at the direction of a person other than the 
                        provider;
                            ``(ii) the transmission, receipt, routing, 
                        or providing of connection is carried out 
                        through an automatic process without selection 
                        of the communicated information by the 
                        provider; and
                            ``(iii) the provider does not select the 
                        recipients of the information, except as an 
                        automatic response; or
                    ``(B) if the provider does not intend the use of 
                its facility for a violation of this section, and, with 
                respect to material or information residing on the 
                provider's system, the provider--
                            ``(i) complies with subsection (c)(2) with 
                        respect to the particular material or 
                        information at issue; and
                            ``(ii) makes available on its web site, in 
                        a location accessible to the public, the name 
                        address, phone number, and electronic mail 
                        address of an agent designated to receive 
                        notices under subsection (c)(2).
            ``(3) State law.--Nothing in this section shall be 
        construed to preempt any State law.''.
    ``(c) Duties of Common Carriers and Interactive Computer Service 
Providers.--
            ``(1) Notice to common carriers.--If 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.
            ``(2) Notice to interactive computer service providers.--If 
        any interactive computer service provider is notified by a 
        Federal, State, or local law enforcement agency, acting within 
        its jurisdiction, through receipt of written or electronic 
        notice that a particular online site residing on the provider's 
        system or network is being used or will be used for the purpose 
        of engaging in the business of betting or wagering or for 
        displaying information assisting in the placing of bets or 
        wagers in interstate or foreign commerce in violation of 
        Federal, State, or local law, the provider shall cease or 
        refuse providing access to the material or information that 
        allegedly violates this section residing at that online site, 
        but no civil or criminal liability shall be found against any 
        interactive computer service provider for any act done in 
        compliance with any notice received from a law enforcement 
        agency. Such notice shall identify the business or information 
        that allegedly violates this section, and must--
                    ``(A) be supplied to a service provider's agent if 
                one is designated under this section and information 
                regarding such designation is readily available to the 
                public; and
                    ``(B) provide information reasonably sufficient to 
                permit the provider to locate such material or 
                information.
            ``(3) Injunctive relief.--Except as provided in paragraph 
        (4), any State or local law enforcement agency acting within 
        its jurisdiction, may, following the issuance of a notice under 
        this subsection, in a civil action, obtain an injunction or 
        other appropriate relief preventing the use of the common 
        carrier or interactive computer service provider for the 
        purpose of transmitting or receiving gambling information in 
        interstate or foreign commerce in violation of State or local 
        law.
            ``(4) Limitation on injunctive relief against an 
        interactive computer service provider.--In the case of any 
        application for an injunction against an interactive computer 
        service provider to prevent a violation by another person of 
        this section--
                    ``(A) arising out of the provider's transmitting, 
                routing, or providing connections for an activity or 
                information that is prohibited by this section, or 
                performing the intermediate and transient storage of 
                such material or activity in the course of such 
                transmitting, routing, or providing connections, the 
                injunctive relief is limited to--
                            ``(i) an order restraining the provider 
                        from providing access to an identified 
                        subscriber of the interactive computer service 
                        provider's system or network, who is using that 
                        access to violate this section by terminating 
                        the specified accounts of such subscriber; and
                            ``(ii) an order restraining the provider 
                        from providing access, by taking reasonable 
                        steps specified in the order to block access to 
                        a specific, identified, foreign online 
                        location.
                    ``(B) with respect to conduct other than that which 
                qualifies for the limitation on remedies set forth in 
                subparagraph (A), the injunctive relief is limited to--
                            ``(i) an order restraining the provider 
                        from providing access to information or 
                        material that violates this section residing at 
                        a particular online site on the provider's 
                        system or network;
                            ``(ii) an order restraining the provider 
                        from providing access to a subscriber of the 
                        interactive computer service's system or 
                        network, who is identified in the order and who 
                        is using such service to engage in a gambling 
                        business or to initiate a transmission that 
                        violates this section by terminating the 
                        specified accounts of such subscriber; or
                            ``(iii) such other injunctive remedies as 
                        the court considers necessary to prevent or 
                        restrain specified activity or information that 
                        is prohibited by this section at a particular 
                        online location that are the least burdensome 
                        to the provider that are comparably effective 
                        for that purpose.
                    ``(C) Considerations.--The court, in determining 
                appropriate injunctive relief, shall consider--
                            ``(i) whether such an injunction, either 
                        alone or in combination with other such 
                        injunctions issued against the same provider, 
                        would significantly burden either the provider 
                        or the operation of the provider's system or 
                        network;
                            ``(ii) the magnitude of the harm likely to 
                        be realized by law enforcement if the 
                        injunction is not granted;
                            ``(iii) whether implementation of such an 
                        injunction would be technically feasible and 
                        effective, and would not interfere with access 
                        to lawful material at other online locations;
                            ``(iv) whether other less burdensome and 
                        comparably effective means of preventing or 
                        restraining access to the illegal activity are 
                        available; and
                            ``(v) the magnitude of the harm likely to 
                        be suffered by the community through the 
                        accessibility of illegal activity.
                    ``(D) Notice and ex parte orders.--Injunctive 
                relief under this subsection shall not be available 
                without notice to the service provider and an 
                opportunity for such provider to appear before the 
                court, except for orders ensuring the preservation of 
                evidence or other orders having no material adverse 
                effect on the operation of the service provider's 
                communications network.''.
    (b) Stylistic Amendment.--Subsection (e) of section 1084 of title 
18, United States Code, is amended--
            (1) by inserting ``Definition.--'' after ``(e)''; and
            (2) by redesignating the subsection as subsection (d).
Internet Gambling Prohibition Act of 1998 - Amends the Federal criminal code to prescribe penalties to be imposed against any person who, while engaged in the business of betting or wagering, knowingly uses a communication facility for the transmission or receipt in interstate or foreign commerce of bets or wagers, information assisting in the placing of bets or wagers, or a communication that entitles the transmitter or receiver to receive money or credit as a result of bets or wagers.  Provides a smaller penalty for those engaging in such activities who are not in the business of betting or wagering.  Provides prohibition exceptions, including for information for use in news reporting. 
Sets forth provisions regarding duties of common carriers and interactive computer service providers upon being notified by a Federal, State, or local law enforcement agency of violations. Provides for injunctive relief, subject to specified limitations.
Internet Gambling Prohibition Act of 1998