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93–898 PDF 2015

RESTORATION OF AMERICA’S WIRE ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON CRIME, TERRORISM, 

HOMELAND SECURITY, AND INVESTIGATIONS 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

ON

H.R. 707 

MARCH 25, 2015 

Serial No. 114–19 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 
(II) 

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

MIMI WALTERS, California 

KEN BUCK, Colorado 

JOHN RATCLIFFE, Texas 

DAVE TROTT, Michigan 

MIKE BISHOP, Michigan 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SCOTT PETERS, California 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON CRIME, TERRORISM, HOMELAND SECURITY, AND INVESTIGATIONS

F. JAMES SENSENBRENNER, JR., Wisconsin, Chairman 

LOUIE GOHMERT, Texas, Vice-Chairman 

STEVE CHABOT, Ohio 

J. RANDY FORBES, Virginia 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

KEN BUCK, Colorado 

MIKE BISHOP, Michigan 

SHEILA JACKSON LEE, Texas 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

CAROLINE LYNCH, Chief Counsel 
(III) 

C O N T E N T S 

MARCH 25, 2015 

Page 

THE BILL 

H.R. 707, the ‘‘Restoration of America’s Wire Act’’ ............................................... 2 

OPENING STATEMENTS 

The Honorable Sheila Jackson Lee, a Representative in Congress from the 

State of Texas, and Ranking Member, Subcommittee on Crime, Terrorism, 

Homeland Security, and Investigations ............................................................. 5 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Committee on the Judiciary ................................. 6 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, and Ranking Member, Committee on the Judiciary ......... 7 

The Honorable Jason Chaffetz, a Representative in Congress from the State 

of Utah, and Member, Subcommittee on Crime, Terrorism, Homeland Security, and Investigations ....................................................................................... 8 

WITNESSES 

John Warren Kindt, Professor Emeritus of Business Administration, University of Illinois 

Oral Testimony ..................................................................................................... 10 

Prepared Statement ............................................................................................. 13 

Les Bernal, National Director, Stop Predatory Gambling (SPG) 

Oral Testimony ..................................................................................................... 25 

Prepared Statement ............................................................................................. 27 

Michael K. Fagan, Adjunct Professor of Law and Counsel-Consultant, Washington University School of Law 

Oral Testimony ..................................................................................................... 39 

Prepared Statement ............................................................................................. 41 

Andrew Moylan, Executive Director and Senior Fellow, R Street Institute 

Oral Testimony ..................................................................................................... 67 

Prepared Statement ............................................................................................. 69 

Parry Aftab, Esq., Founder and Executive Director, WiredSafety, Inc. 

Oral Testimony ..................................................................................................... 81 

Prepared Statement ............................................................................................. 83 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Material submitted by the Honorable Sheila Jackson Lee, a Representative 

in Congress from the State of Texas, and Ranking Member, Subcommittee 

on Crime, Terrorism, Homeland Security, and Investigations ......................... 98 

Material submitted by the Honorable Ted Poe, a Representative in Congress 

from the State of Texas, and Member, Subcommittee on Crime, Terrorism, 

Homeland Security, and Investigations ............................................................. 103 

Material submitted by the Honorable Sheila Jackson Lee, a Representative 

in Congress from the State of Texas, and Ranking Member, Subcommittee 

on Crime, Terrorism, Homeland Security, and Investigations ......................... 114 
Page

IV 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD

Response to Questions for the Record from John Warren Kindt, Professor 

Emeritus of Business Administration, University of Illinois ........................... 128 

Response to Questions for the Record from Les Bernal, National Director, 

Stop Predatory Gambling (SPG) ......................................................................... 137 

Response to Questions for the Record from Michael K. Fagan, Adjunct Professor of Law and Counsel-Consultant, Washington University School of 

Law ........................................................................................................................ 147

Response to Questions for the Record from Andrew Moylan, Executive Director and Senior Fellow, R Street Institute .......................................................... 152 

Supplemental Testimony in Response to Questions for the Record from Parry 

Aftab, Esq., Founder and Executive Director, WiredSafety, Inc. ..................... 158 

OFFICIAL HEARING RECORD 

MATERIAL SUBMITTED FOR THE HEARING RECORD BUT NOT REPRINTED

Material submitted by the Honorable Jason Chaffetz, a Representative in Congress 

from the State of Utah, and Member, Subcommittee on Crime, Terrorism, Homeland Security, and Investigations: 

http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=103090 

Supplemental Material submitted by John Warren Kindt, Professor Emeritus of 

Business Administration, University of Illinois School of Law: 

http://docs.house.gov/meetings/JU/JU08/20150325/103090/HHRG-114- 

JU08-Wstate-KindtJ-20150325-SD001.pdf 

Additional Supplemental Material submitted by John Warren Kindt, Professor 

Emeritus of Business Administration, University of Illinois School of Law: 

http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=103090 

Supplemental Statement submitted by Michael K. Fagan, Adjunct Professor of Law 

and Counsel-Consultant, Washington University School of Law: 

http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=103090 

Extraneous Material submitted for the Hearing Record: 

http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=103090 
(1) 

RESTORATION OF AMERICA’S WIRE ACT 

WEDNESDAY, MARCH 25, 2015 

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON CRIME, TERRORISM, 

HOMELAND SECURITY, AND INVESTIGATIONS

COMMITTEE ON THE JUDICIARY

Washington, DC. 

The Subcommittee met, pursuant to call, at 4:56 p.m., in room 

2237, Rayburn Office Building, the Honorable Jason Chaffetz presiding. 

Present: Representatives Chaffetz, Goodlatte, Chabot, Poe, Buck, 

Bishop, Jackson Lee, Conyers, and Richmond. 

Staff present: (Majority) Allison Halataei, Parliamentarian & 

General Counsel; Robert Parmiter, Counsel; Alicia Church, Clerk; 

(Minority) Joe Graupensperger, Counsel; Vanessa Chen, Counsel; 

and Veronica Eligan, Professional Staff Member. 

Mr. CHAFFETZ. The Committee will come to order. I thank you 

for being here, appreciate your patience as we have a hearing today 

on H.R. 707, the ‘‘Restoration of America’s Wire Act.’’ We appreciate your patience and understanding. 

We have critical votes that are on the floor of the House. We will 

have another set of votes. We do hope to get through opening statements prior to the next set of votes, but we will have to recess 

again. It is the intention of the Committee to come back into order 

after this next series of votes. 

This is an important issue. It is an important topic. I happen to 

be the one who had introduced H.R. 707. I know there are various 

thoughts and perspectives on that. 

[The bill, H.R. 707, follows:] 
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Mr. CHAFFETZ. In the spirit of timeliness, I am going to first recognize the Ranking Member, Ms. Jackson Lee, for her statement. 

Ms. JACKSON LEE. Mr. Chairman, thank you so very much, and 

thank you for your thoughtfulness in introducing a piece of legislation that will give us the opportunity to review some very important issues. 

Let me also thank the Chairman of the Committee, Mr. Sensenbrenner, for calling this very timely hearing. 

I want to add my appreciation to all of the witnesses for their 

patience as we try to do the people’s business, and also for your astuteness on this issue, because obviously that is the case that we 

have called you as witnesses because we want to hear your testimony. 

There are 143 million smartphones in operation in America, and 

at least 75 percent of all U.S. households have computers. 

Again, I want to acknowledge, as I see both the Ranking and the 

Chairman in the Committee of the full Committee. Let me acknowledge our Ranking Member, Mr. Conyers, who is here, and 

Mr. Goodlatte, the Chairman of the full Committee, who is here as 

well. 

Each of these Internet-connected devices is a potential slot machine or roulette wheel, and every home in America is potentially 

a casino. That is why it is critical today that we address important 

issues concerning Internet gaming, including not only statutory interpretation but also questions related to law enforcement and the 

appeal of online gaming to minors. 

Traditional offline gaming revenues in the United States total 

$35 billion annually. As the Internet continues to offer new possibilities for gaming online, it has been estimated that the American 

market for online casinos in total could be worth as much as $12 

billion per year. Gaming is big business, but we must ensure that 

our laws governing all forms of gaming reflect a careful weighing 

of the related costs and benefits. 

Illegal gambling has long been a source of revenue for organized 

crime. In 1961, then-Attorney General Robert F. Kennedy’s Justice 

Department worked with the 87th Congress to enact a series of 

laws targeting organized crime operations. One of these statutes, 

the Wire Act, was passed to prohibit the use of interstate telephone 

and telegraph wagering services which processed bets that provided substantial revenues for criminal organizations. 

However, the advent of the Internet in the 1990’s allowed greater 

remote interactions with bettors and expanded the types of games 

that could be played from a distance. These evolving circumstances 

led to increased focus on the scope of the prohibitions under the 

Wire Act. 

Prior to 2011, the Department of Justice interpreted the Wire 

Act to prohibit wagering of any kind over interstate telecommunications. In 2011, the Department reexamined the text and legislative history of the statute and developed its current position, that 

the law was meant only to apply to bets placed on sporting events. 

Some fear that this change will lead to the proliferation of nonsports Internet gaming and possible related harms to our citizens, 

which all of us are concerned about. 
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Others assert that because Americans already spend an esti- mated $2.6 billion on illegal offshore gambling websites per year, 

the better course is to encourage them instead to participate in 

legal, regulated Internet gaming in the states that allow it. So far 

Delaware, New Jersey and Nevada have amended their laws to 

allow either poker or casino-style gaming over the Internet, and 

several other states allow the online sales of lottery tickets. 

We must take seriously the concerns that are raised about the 

expansion of Internet gaming, including worries that it may facilitate money laundering, prey on those who engage in problem gambling, and allow the participation of minors who would not be able 

to gamble in a casino. And I would add that all of us, no matter 

what side of the issue you are on, raise that as a concern. 

In fact, the Adolescent Psychiatry Journal’s review of studies 

concerning Internet gambling and children concluded that the potential for future problems among youth is high, especially among 

a generation of young people who have grown up with video games, 

computers, and the Internet. 

We also must consider the arguments of those who assert that 

online gaming taking place under state regulation would better 

prevent those harms than unregulated offshore gaming. For instance, in 2011, former FBI Director Louis Freeh stated that these 

offshore gaming sites are run by shady operators, often outside the 

effective reach of U.S. law enforcement, an environment rife with 

opportunity to defraud players and launder money for much more 

dangerous operations. 

There certainly are different perspectives on these questions, and 

the Committee will examine all of them as we evaluate H.R. 707, 

a bill which would provide that the Wire Act prohibits non-sports 

betting as well as betting on sporting events. 

I look forward to the hearing, the insights and opinions of our 

witnesses concerning each of these issues, and I believe that we 

have gathered individuals with expertise and balance and a contribution that will help us move forward on a question that the underlying premise should be how do we serve the American public. 

With that, Mr. Chairman, I yield back. 

Mr. CHAFFETZ. I thank the gentle woman. 

I will now recognize the Chairman of the full Committee, the 

gentleman from Virginia, Mr. Goodlatte, for 5 minutes. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

Internet gambling has been an issue of particular interest to me 

during my service in Congress. I am personally opposed to Internet 

gambling because it is used as a mechanism to launder money, because it causes bankruptcy and breaks up families, and because it 

can even lead to suicide, as it did for a constituent from my district. I have introduced multiple bills dealing with Internet gambling in the past, and I am looking forward to a frank and detailed 

discussion with our distinguished witnesses, and the Members of 

this Subcommittee, on the topic. 

As the Chairman noted, the OLC opinion reinterpreting the Wire 

Act caused a dramatic shift in the way the Department of Justice 

views the laws proscribing Internet gambling. In the three-plus 

years since the opinion was issued, it has led to an increased push 

toward the availability of online gambling in this Nation. Many 
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participants in the gambling industry, from Indian tribes to state 

lottery commissions to casino operators, have been exploring ways 

to increase their involvement in remote gaming. 

In this environment, we must explore ways to protect the rights 

of states to prevent unwanted Internet gambling from creeping 

across their borders and into their states. Updating the Wire Act 

can be a tool to protect states’ rights to prohibit gambling activity. 

However, there is also another states’ rights dynamic that we must 

acknowledge, and that is what to do about states that want to regulate and permit Internet gambling within their own borders. Some 

states have already legalized online gambling. Thus, any update to 

the Wire Act will need to address how to handle both the states 

that have already enacted laws allowing online gambling and any 

states that would want to do so in the future. 

These are tough decisions, and we are having this hearing today 

to seek answers to these tough decisions. 

While I am sympathetic to the argument that states are laboratories of democracy, I am also concerned about whether it is possible to keep this sort of gambling activity from crossing state lines 

and thus violating the rights of other states. 

There is a role for Congress to play in upholding states’ rights 

in this area. Wholly intrastate criminal conduct may nevertheless 

have an interstate nexus, or be facilitated utilizing an instrumentality of interstate commerce such as a highway, telephone network, or, yes, the Internet. It is therefore within Congress’s purview to legislate this conduct. The question for the Members of this 

Committee, then, is whether Congress should act in this area, and 

if the approach taken by H.R. 707 is the appropriate way to do so. 

I will be interested in our panel’s take on that and many other 

questions. How would a state-by-state regulatory approach to Internet gambling affect the citizens of states who do not want legalized 

gambling within their borders? In other words, how would you ensure that online gambling, if legal in one state, wouldn’t bleed over 

into a neighboring state where it is not legal, particularly since the 

Internet doesn’t stop at state borders? Is geolocation technology 

sufficient to determine whether an individual who places a bet is 

physically present in a state where it is legal? Should all Internet 

gambling be prohibited? What should be done with states that have 

already passed laws to permit Internet gambling? 

I look forward to discussing all these issues in detail with our 

witnesses. This is a complex issue and evokes strong opinions on 

all sides. Should we decide to move forward with legislation to address this issue, we need to do so deliberately and thoughtfully. 

I thank the witnesses for their testimony and yield back the balance of my time. 

Mr. CHAFFETZ. I thank the Chairman. 

I will now recognize the Ranking Member of the Judiciary Committee, the former Chairman of the Judiciary Committee, Mr. Conyers, for 5 minutes. 

Mr. CONYERS. Thank you, Mr. Chairman. 

First, I too join in in greeting five witnesses today. 

In recent years, I have reviewed the discussion concerning the intended meaning of the Wire Act and have tried to determine the 

best course for public safety. As a result of legal analysis, I have 
8 

the following observations which lead me to oppose legislation to 

amend the Wire Act to prohibit non-state gaming. 

Three points. I agree with the position of the Department of Justice based on a 2011 analysis that the Wire Act’s prohibitions are 

limited to sports betting and not to other forms of betting facilitated by wire communications, now including the Internet. 

Secondly, while unlawful gaming has long been associated with 

harms relating to criminal enterprises, banning online gaming is 

not the answer. That is why the Fraternal Order of Police wrote 

to myself and Chairman Goodlatte in May of last year in which 

they said we cannot ban our way out of this problem as this would 

simply drive online gaming further underground and put more people at risk. Not only does the black market for Internet gaming include no consumer protections, it also operates entirely offshore 

with unlicensed operators, drastically increasing the threat of identity theft, fraud, and other criminal acts. 

And finally, considering the greater risk of harm from offshore 

gambling, the better option is to allow states, if they choose, to permit online gaming as they see fit, subject to regulation and monitoring, of course. 

So that is why the Department of Justice’s interpretation of the 

Wire Act and three states—New Jersey, Nevada, and Delaware— 

have already permitted online poker or some forms of online casino-style gaming in compliance with the law. Other states, including my own, Michigan, now allow online sales of lottery tickets. 

States should be allowed to decide this question for themselves, 

and we should not take any action that would overturn such state 

laws. But I anxiously await our discussions back and forth today. 

I thank the Chairman and yield back the balance of my time. 

Mr. CHAFFETZ. I thank the gentleman. 

I will now recognize myself for 5 minutes. 

I obviously am in favor of this bill, having introduced it. I believe 

it is a states’ rights bill, and I think it is important that states 

have the ability, such as Utah and Hawaii, where we have no gaming, to protect ourselves from something that we would not like to 

see within our borders. 

I personally am opposed to gambling but recognize the right of 

others and other states, if they so choose, our neighbors, good 

friends in Nevada if they so choose to have at it. But nevertheless, 

I do believe that, going back to December 23, 2011, the Wire Act 

had an interpretation for more than 50 years, and if there is going 

to be an alteration of such significance to the law, then that should 

be done through the regular congressional process, not simply a 13- 

page memo issued by the Office of Legal Counsel within the bowels 

of the Department of Justice. 

Now, there are a number of people on both sides of this issue. 

It is something that people, as Chairman Goodlatte talked about, 

are passionate about. I would like to ask unanimous consent to 

enter into the record 42 different letters that we have received by 

and large in support of restoring America’s Wire Act or are very 

concerned about the implications of the OLC’s opinion. 

These include letters from the African American Mayors Association, the Southern Baptist Convention; Senator Mark Warner; the 

Eagle Forum; the American Family Association; two letters from 
9 

*Note: The submitted material is not included in this printed record but is on file with the 

Subcommittee and can be accessed at: 

http://docs.house.gov/Committee/Calendar/ByEvent.aspx?EventID=103090 

the Family Research Council; a letter from the Concerned Women 

for America; a letter from Senator Lindsey Graham, Senator 

Dianne Feinstein, and Senator Kelly Ayotte; Attorneys General 

from 16 states that wrote to us that this is a problem; the National 

Association of Attorneys General. We have letters from Governor 

Rick Perry, Governor Nikki Haley, Governor Herbert of Utah, Governor Scott, Senator Reid, Senator Kyl, Governor Mike Pence; an 

op-ed by Governor Rick Perry; another op-ed from Governor Bobby 

Jindal; another letter from Senator Dianne Feinstein; a USA Today 

editorial from November 20, 2013; a New York Times editorial 

from November 25, 2013; a cover story on Newsweek of August 22, 

2014; former Representative Spencer Bachus, a Member that was 

on this Committee; the Department of Justice; and the Federal Bureau of Investigation’s Criminal Investigations. There are a host of 

letters and people who have opined that this is fraught with problems and challenges.* 

But truly, we are here not to hear from the Members of Congress 

but to hear from our distinguished panel, so let me introduce them 

briefly. We will swear you in, and then we will start with the testimony from our panel. We do appreciate it. I know some of you have 

traveled from out of state. 

Mr. John Kindt. Did I pronounce that properly? 

Mr. KINDT. Yes, sir. 

Mr. CHAFFETZ. Thank you. 

Professor Kindt is the Professor Emeritus of Business Administration at the University of Illinois. He is a well-published academic author on issues in relationship to gambling. His academic 

research and publications contributed to the enactment of the 1996 

U.S. National Gambling Impact Study Commission and the United 

States Unlawful Internet Gambling Enforcement Act of 2006, 

among other Federal and state statutes. Professor Kindt received 

his B.A. degree from William and Mary, earned his J.D. and MBA 

from the University of Georgia, and his LLM at SJD from the University of Virginia. 

Mr. Les Bernal is the National Director to Stop Predatory Gambling Foundation. He has spoken and written extensively regarding 

the dangers of casinos and lotteries to the American public. He has 

testified before Congress and appeared on numerous television and 

radio outlets. Previously, Mr. Bernal served as the Chief of Staff 

in the Massachusetts State Senate. He earned his undergraduate 

degree from Ithaca College and his MPA from Suffolk University. 

Mr. Michael Fagan is an attorney and adjunct professor at Washington University School of Law. He is also a special advisor to the 

Missouri Office of Homeland Security, as well as an advisory board 

member at Speartip LLC, where he is a consultant on cyber 

counter-intelligence issues. Previously, Mr. Fagan served as Assistant U.S. Attorney for the Eastern District of Missouri for 25 years, 

where he prosecuted several high-profile Federal cases involving illegal gambling activity. He received his Bachelor’s degree from 

Southern Illinois University and his J.D. from Washington University School of Law. 
10 

We are also pleased to have Mr. Andrew Moylan. He serves as 

the Executive Director and Senior Fellow for the R Street Institute, 

where he is the organization’s lead voice on tax issues. Prior to 

joining R Street, he was Vice President of Government Affairs for 

the National Taxpayers Union. He previously served with the Center for Educational Freedom at the Cato Institute and has written 

numerous articles for national publications. He is a graduate of the 

University of Michigan and somebody we have seen frequently up 

here in the halls of Congress. 

And Ms. Parry Aftab—did I pronounce that properly?—is the 

Founder and Executive Director for Wired Safety, an organization 

that provides information and education to cyberspace users on a 

myriad of Internet and interactive technology safety, privacy, and 

security issues. In 1999, she was appointed the head of Online 

Child Protection Project for the United States by the United Nations’ Educational, Scientific, and Cultural Organization, a specialized agency within the United Nations. She received her B.A. degree as valedictorian at Hunter College and her J.D. degree from 

the New York School of Law. 

We have a diverse group of people who have come to testify. 

Again, we thank you for your time and effort to be here. 

It is the tradition of the Committee to have people sworn in. So 

if you will please rise and raise your right hand? 

Do you solemnly swear that the testimony you are about to give 

this Committee shall be the truth, the whole truth, and nothing 

but the truth, so help you God? 

Thank you. You may be seated. 

Let the record reflect that all witnesses answered in the affirmative. 

It is a busy, crowded schedule. I will assure you that your full 

testimony will be inserted into the record, but we would appreciate 

it if you would keep your verbal comments to 5 minutes or less. 

Professor Kindt, we will start with you. 

TESTIMONY OF JOHN WARREN KINDT, PROFESSOR EMERITUS 

OF BUSINESS ADMINISTRATION, UNIVERSITY OF ILLINOIS 

Mr. KINDT. Mr. Chairman, Ranking Member, Members of the 

Committee, participants and guests from the U.S. House of Representatives and the U.S. Senate, thank you for your kind invitation to testify. 

As a University of Illinois professor since 1978, I believe that a 

large majority of not only Illinois academic experts but also other 

U.S. academics would and should urge President Barack Obama 

and Obama Administration colleagues to support the restoration of 

the Wire Act. 

Internet gambling is an issue of strategic financial stability and 

Wall Street regulation. It is not an issue of electronic poker, daily 

fantasy sports gambling, and other fun and games methodologies, 

which are actually deceptive proposals to leverage gateways for legalizing various gambling activities throughout international cyberspace. 

Alarmed by gambling, U.S. Senator Paul Simon and House Judiciary Chair Henry Hyde sponsored the bipartisan U.S. National 

Gambling Impact Study Commission. Reporting to Congress in 
11 

1999, the Commission concluded that Internet gambling was impossible to regulate and that Internet gambling must continue to 

be prohibited, including by the Wire Act initiated by U.S. Attorney 

General Robert F. Kennedy to combat organized crime, and via 

even stronger prosecutorial enforcement mechanisms. 

Accordingly, upon the urging of 49 state Attorney Generals, the 

2006 UIGEA was enacted into law. At the time, there was concern 

about a UIGEA fantasy sports loophole, which has since been dangerously exploited by disreputable organizations and needs to be 

closed. 

Internet gambling’s destabilization of Wall Street and international financial systems becomes apparent in the investigative 

news video, ‘‘The Bet That Blew Up Wall Street,’’ which Warren 

Buffett titled ‘‘financial WMDs’’ and which members are respectfully but strongly urged to watch at the 60 Minutes website or on 

YouTube under ‘‘Credit Default Swaps.’’ Wall Street is dangerously 

flirting again with trillions in unregulated derivatives; that is, financial side bets. In this context, vacuous Internet gambling financials predicated on gambling activities are in development, and 

Internet gambling stocks would cannibalize a series of speculative 

bubbles, which can only lead to another Great Recession, or worse. 

Killing personal, business, and institutional finances, Internet 

gambling is widely known as the ‘‘killer application’’ of the Internet. Internet gambling places real-time gambling on every cell 

phone, at every school desk, at every work desk, and in every living 

room. With ease, people can ‘‘click your phone, lose your home’’ or 

‘‘click your mouse, lose your house.’’ 

Internet gambling destabilizes U.S. national security and the 

strategic economic base. 

Titles of some of the United States International Gambling Report series produced at the University of Illinois speak directly to 

these dangers. Volume I, The Gambling Threat to Economies and 

Financial Systems: Internet Gambling. Volume II, The Gambling 

Threat to National and Homeland Security: Internet Gambling. 

Volume III, The Gambling Threat to World Public Order and Stability: Internet Gambling. The over 3,700 pages in these three volumes alone include reprints of 97 original congressional documents 

detailing the dangers of Internet gambling. 

Citing the threat to national security, in 2006/2007 Vladimir 

Putin recriminalized 2,230 electronic gambling casinos. What do 

the Russian economists know that still eludes the Federal Reserve 

Board and Washington decision-makers? 

Internet gambling is big government interstate gambling promoted and abused by big government. 

Like Illinois, the U.S. needs the ‘‘New Untouchables.’’ 

Gambling lobbyists now dominate the economic policies of 28 

states, giving away at least $35 to $100 billion to gambling’s insiders since 1990. Illinois is now the most bankrupt state in the country, with over $110 billion in unfunded liabilities, including being 

branded by the SEC in 2013 for pension and securities fraud, and 

placing teachers, public employees, pensions and social programs in 

extreme jeopardy. 

For example, in 1990, 10 casino licenses worth $5 to $10 billion 

were given away to political insiders in Illinois for only $25,000 
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**Note: Supplemental material submitted with this prepared statement is not included in this 

printed record but is on file with the Subcommittee and can be accessed at: 

http://docs.house.gov/meetings/JU/JU08/20150325/103090/HHRG-114-JU08-WstateKindtJ-20150325-SD001.pdf 

each, including one insider convicted in the Governor Rodney 

Blagojevich scandals. The 2011 reinterpretation of the Wire Act 

was initiated by Illinois officials. 

Similarly, lobbyists callously use the 9/11 tragedy to slip into 

Federal law billions of dollars in tax breaks for slot machine electronic gambling. These breaks should be ferreted out and eliminated. 

Big government gambling cheats consumers. Are the electronic 

games and slots fair? 

Conclusion: The U.S. should reinstate the ban on Internet gambling and encourage other countries to emulate the U.S. ban. 

Thank you, Mr. Chairman and Members of the Committee. 

Thank you. 

[The prepared statement of Mr. Kindt follows:]** 
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Mr. CHAFFETZ. Thank you. 

Mr. Bernal, you are recognized for 5 minutes. 

TESTIMONY OF LES BERNAL, NATIONAL DIRECTOR, 

STOP PREDATORY GAMBLING (SPG) 

Mr. BERNAL. Hello. My name is Les Bernal, and I am the National Director of Stop Predatory Gambling. Our focus is government-sponsored gambling, whether it is casinos, state lotteries, 

tribal casinos, or the topic of today’s hearing, which is Internet 

gambling. 

Government-sponsored gambling is playing a major role in the 

rising unfairness and inequality in American life, and it is directly 

impacting the lives of your constituents in your district. 

Up until about 10 years ago, for me, government-sponsored gambling was like the paint on the wall. It was just there. I never questioned it. But when you finally stop to look at it, you can’t avoid 

the obvious evidence that this public policy is contributing to the 

unfairness and inequality in our country, which has been considered one of the defining issues of our time by leaders from across 

the political spectrum. 

Banning the practice of states sponsoring Internet gambling, 

which the bill before you would do, is part of the foundation of any 

serious effort toward reversing this rising inequality in our country. 

One important job of the Federal Government is to ensure that 

every state gives every citizen equal protections under the law. Yet, 

at this moment in history, state governments across the United 

States are blatantly, blatantly cheating and exploiting their own 

citizens, infringing on the rights of millions of Americans through 

the extreme forms of gambling they sponsor and market to our 

communities. Many of these state-sponsored games, especially electronic gambling machines, are designed mathematically so users 

are certain to lose their money the longer they play. At the same 

time, these games are literally designed so citizens can’t stop using 

them. They are exploiting aspects of human psychology and inducing irrational behavior. 

Citizens, your constituents, aren’t demanding these extreme 

forms of gambling. No one is pounding the table for this in your 

district. In partnership with commercial gambling operators, states 

are forcing these gambling games onto the public. The most recent 

poll of New Jersey voters found that 57 percent, 57 percent opposed 

online gambling, and only 32 percent approved. This is after, after 

their state government began sponsoring online gambling in 2013. 

So if not for the Federal Government, who will step in to protect 

the rights of individuals, your constituents, against these blatantly 

dishonest practices that are contributing to inequality and being 

done by an active predatory state? 

People are and should remain free to wager money and to play 

games of chance for money. But while citizens have every right to 

engage in a financially damaging activity, the government has no 

business encouraging them to do it. 

In most of your congressional districts, 5 percent of your district, 

5 percent of your district, about 35,000 of your constituents have 

been turned upside-down by gambling, most of which was spon-
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sored by state government. This figure does not account for the reality that each of these citizens has at least one or two people close 

to them whose lives are also upended because of this public policy. 

There is no debate that the financial losses of these individuals, 

these people being harmed by this public policy, they make up the 

majority of the revenue taken by state-sponsored casinos and lotteries. Millions of men and women and their families have sacrificed and hurt so much to provide these needed revenues to 

American government. But no one has ever thanked them for their 

service. There are no parades with fluttering American flags in the 

breeze, no yellow ribbons. Our country simply renders these people 

as failures. 

Banning state-sponsored Internet gambling also creates more 

fairness for the two-thirds of your constituents who almost never 

use government-sponsored gambling. Because of this public policy, 

they are paying higher taxes for less services. State-sponsored casinos and lotteries have proven to be a failed source of government 

revenue, and they haven’t delivered on their famous promises to 

fund education, lower taxes, or to pay for needed public services. 

The evidence is clear that state-run gambling operations add to 

rather than ease long-term budget problems for states. Internet 

gambling sponsored by government will only make it worse. That 

is why state-sponsored gambling is the symbol of anti-reform politicians across the United States, regardless of party. 

‘‘No taxation without representation’’ was one of America’s founding principles. After 40 years of state governments using lotteries 

and casinos to prey on their own citizens, to extract as much money 

as possible, the time has come to add the principle of ‘‘no taxation 

by exploitation’’ beneath it. 

Thank you. 

[The prepared statement of Mr. Bernal follows:] 
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Mr. CHAFFETZ. I thank the gentleman. 

Mr. Fagan, you are now recognized for 5 minutes. 

TESTIMONY OF MICHAEL K. FAGAN, ADJUNCT PROFESSOR OF 

LAW AND COUNSEL-CONSULTANT, WASHINGTON UNIVERSITY SCHOOL OF LAW 

Mr. FAGAN. We need to update and restore the Wire Act, and 

particularly to undo the misinterpretation recently given to it by 

the Department of Justice’s Office of Legal Counsel. The need for 

a legislative fix I prefer to set out in the written testimony submitted to the Subcommittee. It is not greatly different from the language in H.R. 707 and returns the Act to its proper scope, with a 

few less exceptions and a bit more First Amendment protection. 

Also in my written submission is an analysis of how and why the 

Office of Legal Counsel’s December 2011 strained interpretation of 

the Wire Act to preclude its application to non-sports gambling 

communications is wrong substantively and was achieved via a 

closed legislation-by-fiat process neither democratic nor sensible 

given the change it portends for daily life in the United States. 

Indeed, the 50-year understanding that the Wire Act applies to 

both sports and non-sports wagering interstate communication was 

the understanding that even the gambling industry had during 

that largely pre-Internet period, as industry behavior shows. So 

when the Office of Legal Counsel’s 2011 reinterpretation of the Act 

became public, many wondered whether the opinion was either 

careless or corrupt. 

No matter. For present purposes, as a result, it was wrong both 

as a matter of law and as a matter of policy. A restored, repaired 

Wire Act will help states enforce their gambling laws whether the 

state prohibits or authorizes intrastate gambling activities. This 

kind of help is just as needed today as in 1961. 

Organized crime, both traditional and non-traditional, and now 

increasingly transnational, has long exploited and continues to exploit the evasive opportunities presented by conducting cross-border gambling operations. By unwisely cutting in half the utility of 

the Wire Act as a tool in the prosecutor’s toolbox, the Office of 

Legal Counsel opened a window for organized crime and others intent on impoverishing Americans through illicit, commercially operated gambling enterprises, whether via the numbers racket, lotteries, bolita virtual card games, slots, or any of the myriad creative ways con men and sharp operators use non-sports gambling 

to generate revenue from gangs designed to exploit and even addict. 

The money laundering utility of gambling enterprises, long 

known but hard to investigate in brick-and-mortar settings, becomes all the more difficult to defeat when Internet-based gambling 

moves funds and obfuscates records at the speed of light. Of even 

more serious concern, law enforcement and intelligence analysts 

have seen online gambling sites, sites which by their nature are 

interstate and international in scope, being used as terrorist financing vehicles, places to clandestinely store and transmit funds. 

Terrorism-related convictions in the United Kingdom of Tariq ad 

Daour and two associates who used Internet gambling to facilitate 

terrorism conduct and planning a few years ago only hint at the 
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dozens of classified and non-classified investigations that U.S., 

U.K., and Canadian authorities have made under the exploitation 

of gambling websites to finance terrorism. 

More recently, terrorists in Afghanistan have been using illegal 

gambling sites to move their money as well, reports Janes Advisory 

Services. It is no wonder that the Federal Criminal Investigators 

Association supports legislation to return the Wire Act to its original scope and opposes any carve-out that would weaken its protections and further enable criminal and terrorist activity. Without a 

restored Wire Act, there is not adequate legal framework for law 

enforcement to shut down substantial illegal interstate gambling 

activities. 

Relatedly, the present inability to use the Wire Act in cases of 

non-sports gambling further denies millions of Americans the efficient recourse of sentencing-based restitution when they become 

victims of fraud or other gambling-based criminal conduct conducted by illegal cross-border enterprises. 

Those who dream that it’s possible to regulate and tax this supposedly well-monitored interstate system of online gambling are 

just that, dreamers. I can tell you with the certainty of a person 

who has been there, done that, that there is no way the Federal 

Government or any individual or combination of state governments 

can expand to the degree necessary to effectively police and regulate the scale of Internet gambling, multiple millions of transactions involving billions of lines of code in malleable, disguisable 

formats with anonymizing and proxy tools readily available with 

easily disguised traditional and evolving collusive behaviors. For 

example, Meerkat-type video streaming over Twitter service will always give collusion teams a leg up. 

Remote access and control of computers in a jurisdiction where 

intrastate gambling is allowed will defeat geolocation and geo-fencing, and it is fairly trivial to leverage the Tor network to obfuscate 

the original IP address of a client, whether it is a laptop, a phone, 

a tablet, et cetera. 

All this means no police force or regulatory body will be big 

enough, trained enough, or funded enough to keep criminals and 

terrorists from using institutionalized online interstate gambling to 

their advantage. 

I see my time has run out. 

[The prepared statement of Mr. Fagan follows:] 
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Mr. CHAFFETZ. Thank you. 

Mr. Moylan, you are now recognized for 5 minutes. 

TESTIMONY OF ANDREW MOYLAN, EXECUTIVE DIRECTOR 

AND SENIOR FELLOW, R STREET INSTITUTE 

Mr. MOYLAN. Thank you, Mr. Chairman and Madam Ranking 

Member, Members of the Subcommittee, for the invitation to testify 

today. 

My name is Andrew Moylan. I am Executive Director and Senior 

Fellow of the R Street Institute. We are a pragmatic, non-profit, 

non-partisan think tank that strives for free markets and limited, 

effective government, and it is in pursuit of those goals that I testify before you today regarding concerns that we have about H.R. 

707, the ‘‘Restoring America’s Wire Act,’’ and what questions it 

raises about the appropriate scope of Federal law. 

My testimony today is focused not on the propriety of gambling 

per se, as is some of the other witnesses, but instead on articulating a conception of limited government and Federalism as it relates to gambling legislation. In such a Federalist system, states 

carry most of the responsibility to exercise powers that are rightfully theirs under the Constitution, and Federal power is appropriately constrained to genuinely national or interstate matters. 

So while my conservative and Libertarian brethren hold a wide 

range of views on the social implications of gambling, we share a 

broad consensus that the Federal Government is too large and too 

powerful, in no small part due to a decades-long trend of ever-expanding assertions of power by Congress and a compliant Judiciary 

that has validated most of those assertions, and it is this troubling 

trend rather than the activity of gambling itself which motivates 

my comments today. 

Much of my professional work has been devoted to protecting 

limited government in the Internet age, including matters on which 

I have previously testified to the Judiciary Committee, like Internet sales tax law. 

The Internet is indeed unlimited in its scope, but government 

power, even in this modern age, ought to be limited and respectful 

of borders, both the tangible geographic borders that delineate one 

sovereign state from the next, and the conceptual borders that delineate truly national interstate issues from state and local ones, 

and it is in that vein that I note potential concerns with the bill 

before you today. 

While ostensibly expanding the 1961 Wire Act such that it covers 

all forms of gambling, as opposed to just sports betting, and specifying the inclusion of Internet transmission as prohibited, it appears also to go a step further than that; and also in the plain language of the Wire Act itself and the closely related Unlawful Internet Gambling Enforcement Act, or UIGEA. Specifically, its prohibition on all wire or Internet gambling transmissions, including those 

conducted over the Internet, in states that may have chosen to license and regulate gambling, is at odds with the basic principles 

of Federalism and the more narrowly targeted language of the 

original Wire Act and UIGEA. 

While there are valid policy-based criticisms of each, both the 

Wire Act and UIGEA were written to help states in their own law 
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enforcement pursuits and more carefully circumscribed to cover 

only genuinely international or interstate activity, and they did 

this by effectively exempting intrastate gambling and transmissions between entities and states where that behavior was 

legal. 

By appearing to extend to wholly intrastate conduct, the Restoring America’s Wire Act may well empower the Federal Government 

in a way that we think is unwise, and it is problematic for two reasons. First is that it impedes upon an area of law that is traditionally reserved for the states, the general police power to regulate 

conduct within their own borders. And second, it potentially establishes a dangerous precedent in suggesting that mere use of a communication platform like the Internet subjects all users and all activity to the reach of the Federal Government no matter its location 

or its nature. 

So given decades, even centuries of eroding limits on Commerce 

Clause power, it is incumbent upon Congress to exercise restraint 

in its application, and I think this could be readily achieved by 

modifying the language of Restoring America’s Wire Act to more 

closely resemble that in UIGEA, which carefully exempted intrastate payments and those between states with legal gambling. It 

even went so far as to exempt so-called intermediate routing from 

qualifying as intrastate, since the path of an electronic signal is incidental to the conduct in question. 

There are indeed areas where Congress is properly within its 

rights to legislate under the Commerce Clause. In my written testimony I refer to several examples of Federal bills that would prevent states from exercising cross-border authority in such a way as 

to cannibalize interstate commerce, the very problem that led to 

the downfall of the Articles of Confederation and the drafting of the 

Constitution. 

But there are innumerable instances where the Commerce 

Clause is cited as granting Federal authority to regulate conduct 

which is entirely intrastate and even non-commercial in nature. 

And as written, the Restoring America’s Wire Act we think is a 

problematic use of Commerce Clause power that threatens to substitute the judgment of the Federal Government for that of states, 

which are the rightful holders of power to regulate intrastate activity. 

And so if limited government is to have any meaning in the 21st 

century and beyond, we believe that Congress must exercise restraint in those claims of power and that in its current form the 

bill is problematic in that regard. 

Thank you. 

[The prepared statement of Mr. Moylan follows:] 
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Mr. CHAFFETZ. Thank you. 

Ms. Aftab, please, you are now recognized for 5 minutes. 

TESTIMONY OF PARRY AFTAB, ESQ., FOUNDER 

AND EXECUTIVE DIRECTOR, WIREDSAFETY, INC. 

Ms. AFTAB. Thank you very much, Mr. Chairman and Ranking 

Members of both the Judiciary Committee and the Subcommittee 

here. 

I don’t have a stake in gambling. I have a stake in protecting 

people online. The last time I testified before this Subcommittee 

was several years ago on radicalization of the Internet, and that is 

when I informed you that terrorists were recruiting our teens online from suburban areas where they were bored. I have testified 

before Congress on cyber-bullying, child sexual exploitation, child 

pornography, and child privacy. So my stake in this is to make sure 

that whatever happens, our kids and consumers are safer. 

So, I agree there are lots of problems. There are terrorists who 

are using online gambling, and there is money laundering going on, 

and there is malicious code that can be downloaded, but that is not 

happening in New Jersey, Delaware, or Nevada. It is happening 

currently with all of the offshore gambling sites, or many of the offshore gambling sites that are not covered by our laws, that we 

have been frustrated in trying to police over the years. 

In this case and the reason it is a little different is once you legalize online gambling with an interstate model, you now have 

partners in trying to shut down the illegal sites. So the providers 

who are licensed within a state have a stake in making sure that 

those who are offshore, those who are not subject to regulation, will 

follow what they need to do. 

I have looked long and hard at these issues, and I have surveyed 

the regulators in Delaware, New Jersey, and Nevada. We had done 

a white paper when I testified at the last hearing on online gambling, and we looked at best practices around the world. I picked 

up the phone and I called the top regulators in each of those states 

and I said are you keeping kids off? Are you having problems? 

What is your experience? Is the geolocation working properly? And 

I got very good responses from them. I was, frankly, a little surprised. 

It is not perfect. There were three kids who had gotten on to online gambling in Nevada, two during the test period. They had 

used their parents’ account. One had used his older brother’s account. It is a little like when we used to send somebody into a liquor store to buy beer when we were underage, and they would 

come out and nobody broke the law. I think that we are starting 

to see some of that here. 

We have had a lot of fraud over the years. I have had a lot of 

senior citizens who called me who had gotten into gambling offshore, and everyone was happy to take their money, but they 

weren’t so happy to give it back. 

When we talk about terrorists and money laundering, you need 

to recognize that in the three states that are handling traditional 

gaming games—and Nevada is just doing poker and the other two 

are doing other games in connection with online gambling—they 
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are very careful to make sure that you don’t get paid your winnings 

until the right reports are made to the IRS about those winnings. 

Now, I don’t know a great deal about financing terrorists and 

money laundering, but I don’t think a lot of them want to sign up 

with the kind of identity controls that are put into these states and 

then have to file something with the IRS before the money goes 

back to an account that has already been authenticated. 

So I deal with a lot of issues of online crimes and risks against 

everyone, and it always comes down to verification and authentication. And the different hoops that people have to jump through to 

prove that they are in the state, that they have a valid bank account that has been approved under all of the Federal laws that 

have to, under the Know Your Customer rules on making sure that 

not just the IP address, which is the old-fashioned way of doing 

things that has been spoofed over the years, but that you can’t 

even log on with a remote technology that lets you get into your 

computer when you are home because the technology that is used 

by the providers in these three states will block anything that is 

using remote access. It will block anything that is a little off, and 

it is actually incredibly accurate and is becoming more accurate because everyone has a stake in knowing where you are. 

You will see that there was a recent article about Four Square 

and Twitter wanting to know exactly where you are so they can advertise to you. That is the same technology that is being used to 

find out where you are. So whether you are using your GPS plus 

an IP and triangulation, whether it is knowing that you have been 

trying to get in from other places in the past, we have seen very 

good compliance and really the state-of-the-art issues on authentication and verification of your location and knowing that you are 

who you are. 

Is it bullet-proof? No. But I think that the lotteries will be able 

to learn a great deal from the providers that come from more of the 

commercial gaming, and I think that their best practices will improve. 

Thank you. 

[The prepared statement of Ms. Aftab follows:] 
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Mr. CHAFFETZ. I thank the gentle woman. 

I will now recognize the Chairman of the full Committee, the 

gentleman from Virginia, Mr. Goodlatte, for 5 minutes. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

I am going to go right down the line. I appreciate all your testimony, and I have a few brief, straightforward questions. 

The first one is, what is your position on H.R. 707, the bill introduced by the gentleman from Utah? Are you in favor of it? Are you 

against it? And either way, is there a key issue or a few issues that 

would make a difference to you? 

So, we will start with you, Professor Kindt. 

Mr. KINDT. I would tend to be in favor of this bill, and I think 

it should be actually stronger and more extensive. We need to keep 

the Internet gambling genie in the bottle. The U.S. National Gambling Impact Study Commission said keep this—— 

Mr. GOODLATTE. I am going to keep you short just because I have 

a bunch of questions I want to ask. 

Mr. KINDT. Yes, sir. 

Mr. GOODLATTE. Mr. Bernal? 

Mr. BERNAL. We support the bill. 

Mr. GOODLATTE. Mr. Fagan? 

Mr. FAGAN. I again support the bill. I prefer to see it worded a 

little differently, but as a compromise it certainly is much better 

than not having a bill. 

Mr. GOODLATTE. Mr. Moylan? 

Mr. MOYLAN. I would oppose the bill for both Federalism concerns and also some practical ones, which we can get into. 

Mr. GOODLATTE. You mentioned some. Is it repairable, or is 

it—— 

Mr. MOYLAN. I think it is repairable from a Federalism perspective in the sense that there is a consistent application of Federal 

power as it relates to Federalism that relates to intrastate conduct, 

legitimately, genuinely intrastate conduct. When I mention practical concern, my own view—I didn’t focus on gambling in my testimony. It is not my expertise. But my own view is that gambling, 

while a problem, is not something that is likely to bump other priorities from a law enforcement perspective. 

Mr. GOODLATTE. Got it. 

Ms. Aftab? 

Ms. AFTAB. I oppose the RAWA. I think that it just puts kids 

back into the crosshairs of the risks that we are facing in gambling. 

Mr. GOODLATTE. All right. Let me now ask you what your take 

is on the argument that states should be allowed to permit Internet 

gambling within their own borders, and what about non-Internet 

gambling, for example in a brick-and-mortar casino? Mr. Kindt? 

Mr. KINDT. I think all gambling—— 

Mr. GOODLATTE. Should states be allowed to permit gambling 

within their own borders on the Internet? 

Mr. KINDT. Mr. Chairman, I think all gambling is economically 

problematic. You are not creating anything. There are opportunity 

costs. There is no product being created, artificial risk. 

With regard to can it be kept within borders, I don’t think technologically that is possible. 

Mr. GOODLATTE. Mr. Bernal? 
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Mr. BERNAL. We strongly think states should not be sponsoring 

Internet gambling at the state level, and anyone who has any 

doubt—— 

Mr. GOODLATTE. Do you think the Federal Government should 

stop them, or do you think that is the responsibility of each state? 

Mr. BERNAL. The Federal Government should step in and stop 

state governments from cheating and exploiting their citizens, yes. 

Mr. GOODLATTE. Mr. Fagan? 

Mr. FAGAN. Likewise. As a matter of policy, states should not 

have commercial gambling, whether Internet or otherwise. As a 

matter of Federal policy, the use of the Internet to gamble necessarily implicates Federal interests, so states shouldn’t be allowed 

to do that. But as a matter of constitutional law, a state can choose 

to have gambling within its borders and set up its own intrastate 

Internet of sorts. 

Mr. GOODLATTE. Including on the Internet? 

Mr. FAGAN. Well, if it is on the Internet, it would be unwise because—— 

Mr. GOODLATTE. Within their state borders, they can do it on the 

Internet just like they do in brick and mortars. 

Mr. FAGAN. They have the right to do that if they can keep it 

within their borders. 

Mr. GOODLATTE. Okay. Mr. Moylan? 

Mr. MOYLAN. I think that states are well within their power to 

regulate gambling into or out of existence such as they see fit. I 

have my own preferences in that regard, but it is pretty clear to 

me that they have the authority to do so, and we have seen a wide 

range in states’ approaches to that issue that bears that out. 

Mr. GOODLATTE. Do you think the Federal Government should 

step in and protect a state that does not want Internet gambling 

from bleeding into its state, if you will, from states that do have 

it on the Internet? 

Mr. MOYLAN. Sure. I think that there is a genuine role to be 

played for Congress to address intrastate transmissions, as we discussed. The original Wire Act was in that vein. It was attempting 

to help states enforce their own laws. Their powers essentially end 

at their borders, and so they lacked the ability to enforce these 

intrastate transmissions, and that is why they turned to the Federal Government for help. 

Mr. GOODLATTE. Ms. Aftab? 

Ms. AFTAB. I think that the Federal role in being able to set up 

standards and enforce those standards so that geolocation is actually working so it is not moving across the borders is very important. 

Mr. GOODLATTE. Okay. Let me ask one more question, because 

I have a few seconds left. Do you see a difference between gambling 

via online poker and sports betting versus playing the lottery? Mr. 

Kindt? 

Mr. KINDT. Yes. Sports gambling and Internet gambling are the 

crack cocaine of creating new addicted gamblers and opening up 

vast new areas of—— 

Mr. GOODLATTE. You are more troubled by that than by online 

Internet lottery? 
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Mr. KINDT. I am troubled by lotteries, but I am more troubled 

by the sports gambling. 

Mr. GOODLATTE. Mr. Bernal? 

Mr. BERNAL. When governments are in the business of sponsoring gambling, we oppose that practice. Of the ones you mentioned, online poker, is really a sliver of the whole business. Those 

who lobby for this, just let us play poker, poker is a tiny amount 

of their business model. It makes people feel good. People have an 

association with cards, but that is a very minor piece of this. 

Mr. GOODLATTE. Got it. 

Mr. Fagan? 

Mr. FAGAN. All the different types of gambling you suggest, if 

permitted online by states, are all subject to being basically 

slottified. They will be converted to essentially slot machine-type 

addictive behaviors, generating increased speed of play, people 

staying online as long as possible to play, even though they 

shouldn’t do that. 

Again, individual states within their borders have the right—— 

Mr. GOODLATTE. I am out of time, and I want to give Mr. Moylan 

and Ms. Aftab, if the Chairman will permit, a chance to answer. 

Mr. MOYLAN. If I understand your question—— 

Mr. GOODLATTE. Do you see a difference between gambling via 

online poker and sports betting versus playing the lottery? 

Mr. MOYLAN. I don’t have particularly greater concern as it relates to the online conduct that you described as opposed to in-person. I think that wraps it up for you. 

Mr. GOODLATTE. Ms. Aftab? 

Ms. AFTAB. And I see the difference between sports betting but 

not poker and lottery. Sports betting has always been handled 

under the Wire Act. It is addressed. But I think that lotteries and 

poker and online slot machines are all in the same class. 

Mr. GOODLATTE. Do you think that when we had a telephone as 

the only way of communicating, which is what we had when the 

Wire Act was written, do you think that it was contemplated—we 

knew that people would call up and say I want to put a bet on certain sports contests. But do you think somebody would call up on 

the phone back in 1964 and say put $50 on red and spin the roulette wheel and tell me whether or not I won? 

Ms. AFTAB. I think it is like poker. 

Mr. GOODLATTE. Probably not, right? 

Ms. AFTAB. I will tell you what all my cards are and I will win 

if you believe me. 

Mr. GOODLATTE. So there is a problem there in the fact that 

some are trying to draw a distinction between the two, when there 

really isn’t that big a distinction. 

Ms. AFTAB. Well, I think that lotteries—I have been in states 

that allow it and—— 

Mr. GOODLATTE. No, I am saying lotteries on one side, but you 

have sports betting and you have casino gambling on the other 

side. 

Ms. AFTAB. Yes, and I don’t think there is a difference between 

casino games only because Congress has already acted under the 

Wire Act in connection with the wire and the kinds of things we 

are seeing with racketeering. We are talking about licensed gam-
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bling providers here under certain regulation, and I think it is different. 

Mr. GOODLATTE. Control within the state borders. 

Ms. AFTAB. As long as it is within the state borders, and you can 

keep it within the state borders. 

Mr. GOODLATTE. Right. Thank you very much. 

Thank you, Mr. Chairman. 

Ms. AFTAB. And keep kids off. 

Mr. CHAFFETZ. I thank the gentleman. 

I now recognize the Ranking Member of the Subcommittee, Ms. 

Jackson Lee, for 5 minutes. 

Ms. JACKSON LEE. Thank you very much, Mr. Chairman. 

Again, this is a very important discussion. 

Let me go first to Mr. Moylan and ask on the question dealing 

with both Federalism and states’ rights, the Chairman’s question 

or theme in his remarks, Mr. Goodlatte, about bleeding into other 

states. I know that you are framing your discussion around the 

question of states’ rights. Some have a system of online that they 

have regulated. 

How would you answer the question of bleeding into other 

states? 

Mr. MOYLAN. It is a good question, and I think that the answer 

to it is—and first of all, this is a question that we face in any number of areas, not just as it relates to gambling. But states have 

remedies at their disposal, and there is Federal law at the disposal 

of prosecutors today to address that conduct. If a state chose to ban 

gambling within its borders, it could do so on both an institutional 

level and an individual level. And on the Federal level, the interstate transmission of those bets are, by and large, already illegal 

under UIGEA and the Wire Act. 

So I think that the tools are there to be able to prosecute that. 

Whether states choose to do that is, of course, a separate question. 

I am sure they are less eager about doing so with individuals than 

they are institutional purveyors of it. But the tools are there, in my 

estimation. 

Ms. JACKSON LEE. And why don’t you expand a little bit on general police powers that individual states have and how that would 

impact your discussion? 

Mr. MOYLAN. Well, from a sort of broad perspective, discussing 

Federalism and the Constitution, police powers are reserved to the 

states. There have been many court cases that have tested this, 

and it is the reason that we have to assert what is the nexus under 

which the Federal Government involves itself in an issue. 

So in this case, the very clear nexus is to the extent that there 

are interstate transmissions or issues in-between two states or 

international issues. But when we are talking about intrastate conduct, and to the extent that it is genuinely intrastate, those are by 

and large reserved to the states, and in the absence of reserving 

those powers to the states, I think that we worry, the R Street Institute does very much, about what that implies for the role of the 

Federal Government and the size of the Federal Government moving forward. 

Ms. JACKSON LEE. One of the things is we have all found ourselves on the side of states’ rights at one time or another. 
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Let me ask a question of Ms. Aftab, and as I do that I will ask 

the Chairman to submit into the record a letter from the National 

Fraternal Order of Police. I ask unanimous consent to place this 

into the record. 

Mr. CHAFFETZ. Without objection, so ordered. 

Ms. JACKSON LEE. Thank you. 

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Ms. JACKSON LEE. Ms. Aftab, I have made my point clear, my 

concern for children and the ultimate impact. Why don’t you respond to two points, one the question of children who are making 

decisions that may not be the best for them and without good judgment. They are children, and it is no reflection on how good their 

parents are. We know technology finds its way into bedrooms, little 

bedrooms, and on all of the new devices that are coming out all the 

time. Number one. 

Number two, how do we respond to the question that an unregulated process draws a lot of horror stories, particularly in the 

money laundering, offshore gambling that no one has control of, 

and that may draw innocent persons who desire to gamble and 

then find themselves in a worse position, being involved in unregulated processes? 

Ms. AFTAB. Thank you very much, Ranking Member. I was a 

member of the Internet Safety Technology Task Force. It was from 

the Harvard Berkman Center, and we were charged by the Attorneys General to look at age verification and kids online, and it was 

basically to see how we could tell how old somebody was for the 

privacy laws that were put in place and inappropriate content. 

What we recognized was you can never identify a kid, but you 

can identify an adult. So these technologies require that you have 

bank accounts. They require that you show government-issued 

identification. They look at these. They go through databases. A lot 

of them are using IDology, which is being used by a lot of the big 

companies out there and has been providing information to the 

FTC and advice to the FTC over the years. 

So what you have to do is prove that you are an adult and prove 

that you are who you are, and prove that you live where you are, 

and all of the databases out there that are collecting information 

about us have to agree. If anything doesn’t agree, you are kicked 

out. If they find that you are using technology on your computer 

that allows you to get to it remote, you are kicked out. If they find 

that there is any question about what is going on, you are kicked 

out. 

Ms. JACKSON LEE. Are you suggesting, if I might, that other 

states would have the ability to use the technology, or are using 

the technology? 

Ms. AFTAB. They are already using it, and it is actually very 

good. 

Ms. JACKSON LEE. And let me conclude by just simply saying you 

are suggesting that the offshore operators are not following—— 

Ms. AFTAB. They are not doing anything. They don’t want to 

keep kids out. Kids have a lot of money. 

Ms. JACKSON LEE. Thank you so very much. 

Thank you, Mr. Chairman. I yield back. 

Mr. CHAFFETZ. I thank you. 

We have some critical votes on the floor. We are dealing with the 

budget, and these are multi-trillion-dollar votes. So the Chair finds 

that we are going to go into recess. If Members wish to ask further 

questions, it is the intention to open this back up and come back 

into session here for this hearing within about 10 minutes of the 

last vote. So it is probably no sooner than at least 6:30, but it is 

Congress, so anything bad can happen. 
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So, with that, the Committee will stand in recess. 

[Recess.] 

Mr. CHAFFETZ. The Committee will now come to order. With 

votes closed on the floor and two Members present, we will continue, and I am going to recognize myself for 5 minutes. 

I would like to kind of go down the line and ask a few questions 

and keep this confined. I have a few concerns. 

The Attorney General nominee, Loretta Lynch, stated, when 

asked a question in her confirmation hearing, she said, ‘‘I am not 

aware of any statute or regulation that gives OLC opinions the 

force of law,’’ OLC being Office of Legal Counsel within the Department of Justice. 

Do you agree that the OLC opinion of December 23rd, 2011, does 

not carry the force of law? 

We can start with Professor Kindt and go on down the line. I 

would appreciate it. 

Mr. KINDT. I would concur with that, that it doesn’t carry the 

force of law. It is simply an interpretation. It could be read differently by another attorney general. 

Mr. CHAFFETZ. Thank you. 

Mr. BERNAL. Absolutely, I agree that it doesn’t have the force of 

law, and I think the best example is they released it the day before 

Christmas Eve. That tells you all you need to know. 

Mr. CHAFFETZ. Mr. Fagan? 

Mr. FAGAN. It does not have the force of law—— 

Mr. CHAFFETZ. Microphone, if you could, please, sir? 

Mr. FAGAN. Clearly, it does not have the force of law. It is simply 

a lawyer’s opinion and justifies a decision of non-prosecution on 

DOJ’s part. 

Mr. CHAFFETZ. Mr. Moylan? 

Mr. MOYLAN. We are going to go four for four. It does not carry 

the force of law and it is merely their own interpretation of it. 

Mr. CHAFFETZ. Do you believe, Mr. Moylan, that the states and 

others are taking risks by believing that it does carry the force of 

law? 

Mr. MOYLAN. I think states are certainly taking a risk if they are 

acting in contravention to stated policy of the Justice Department. 

That in and of itself doesn’t tell you what the law is or what courts 

would say about it, but it certainly puts them at risk of their own 

institutions, of their own individuals facing prosecution under Federal law. 

Mr. CHAFFETZ. Ms. Aftab? 

Ms. AFTAB. It doesn’t carry force of law, but the Federal courts 

have ruled in the same way that sporting events and contests 

should be read together. So, although it doesn’t, some Federal 

courts have taken the position that it does. 

Mr. CHAFFETZ. The FBI has issued a couple of letters of deep 

concern about the ability to police this. We have this from attorneys general, we have it from the FBI, we have it from a number 

of different law enforcement organizations. 

Mr. Moylan, how do you answer their concerns about the regulation and the policing of these types of online schemes? 

Mr. MOYLAN. Sure. I think it is perfectly fair to have concerns 

about whether or not the laws that are on the books are sufficient 
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to be able to enforce what states’ prerogatives are. I think what my 

contention is is that the laws that are necessary to do that are generally on the books; that we have, by and large, bans certainly as 

it relates to UIGEA interstate payment processing. The Wire Act 

itself obviously deals with a class that this bill would attempt to 

change of intrastate transactions, and states have their own prerogative inside their borders to establish a law as they see fit. So 

the question is really in these cross-border issues. 

Mr. CHAFFETZ. We are getting to the heart of what one of my 

deep concerns is. I believe that this bill is a states’ rights issue, 

that the State of Utah does not want gambling within its borders. 

That is our long-held position. We don’t have lotteries. We don’t 

have Indian gaming. We don’t have any sort of gaming whatsoever, 

and it is na?ve at best to think that you can suddenly just create 

these fictitious borders because of technology and prohibit them 

coming into the State of Utah. 

I mean, you give me a good 16-year-old and in about 5 minutes 

he can figure out how to spoof this or put some virtual private network out there. You can sign up for this for a few bucks, and I 

don’t care if you are 13 years old and live in Provo, Utah. It is fiction for anybody to believe that they can just virtually create these 

borders. We have videos of people going and doing this for gaming, 

for lotteries. It is a serious, serious problem. 

Does anybody really believe on this panel, does anybody really 

believe that technology can prohibit a 16-year-old from getting on 

a VPN or creating some sort of technological way and really prohibit gaming within the State of Utah? Does anybody believe that? 

Ms. AFTAB. I do. 

Mr. CHAFFETZ. Why? 

Ms. AFTAB. I do. The providers in the three states that we are 

looking at prohibit any VPN. If there is a sign that one is being 

used on your computer—— 

Mr. CHAFFETZ. Really? And who is the VPN police? 

Ms. AFTAB. The VPN police are the providers who are doing the 

geolocation. 

Mr. CHAFFETZ. Really? 

Ms. AFTAB. Now, I can’t talk for the lotteries, and I looked for 

the others, and there is always an exception to things, but this 

technology is getting a lot better. So that 16-year-old won’t be able 

to spoof them, and they won’t be able to do the rest as long as everyone is doing the best that they are doing now, which I have 

seen. 

There may be an exception. There is always an exception. I told 

you we used to send people in to buy beer for us. But I think that 

what we will have is better than what exists now, which is nothing 

that will stop them from gambling off the Caribbean sites and the 

rest in Utah and in every place else. 

Mr. CHAFFETZ. There are payment plans and other things, but I 

think it is foolish at best to assume that this technology is suddenly going to create this virtual border. 

My time has expired. I will now recognize the gentleman from 

Texas, Mr. Poe, for 5 minutes. 

Mr. POE. I want to thank the Chairman for allowing everybody 

to come back. 
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I appreciate all of y’all, including the spectators, for being back 

here after 7 o’clock tonight. It just shows that this is important to 

a lot of people for a lot of reasons. 

I will try not to take very long. First, without objection, I am 

going to introduce the testimony of Michelle Minton, a Consumer 

Policy Fellow at the Competitive Enterprise Institute, for the 

record. 

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Mr. POE. I have some questions for all of y’all. That is plural for 

‘‘y’all’’ if you are from Texas. [Laughter.] 

Let me just try to explain what I am thinking. I think it is a concern of many Members as well. 

The Ranking Member said it best. We are all for states’ rights 

sometimes, and I try to be for states’ rights all the time. Federalism is an issue that is important to me. In Texas we have horse 

racing, we have dog racing, we have state-sponsored lottery which 

doesn’t raise money for the education system even though it is supposed to. The reservations have casinos, and if people want to, they 

drive as fast as they can on the weekends to Louisiana where they 

have a lot of casinos. 

By adding Internet gaming in the state, the word ‘‘Internet,’’ and 

I think the debate is over the issue since it is the Internet, then 

the government, the Federal Government, has the authority to regulate it. 

So do you agree or disagree, Mr. Moylan? 

I have several questions. I will ask all of you the same question, 

but I will ask them to him first, and then if we are out of time, 

then I will just submit them to you in writing and you can answer 

them in writing so we are not here all night. 

Do you think that if something is on the Internet, therefore the 

Federal Government, under the guise of the Commerce Clause, can 

regulate that activity? 

Mr. MOYLAN. Yes. I think that it is a very problematic construction to say that any activity, any conduct on the Internet whatsoever is, per se, interstate. It effectively eviscerates the Commerce 

Clause as any kind of real limitation moving forward. We see now 

what the Internet looks like today. Think of what it might look like 

20 years from now in the way that it might expand and help people 

connect in other ways. 

So to think that the mere use of the Internet, in and of itself, 

justifies Federal intervention, whether or not the conduct has any 

other transmission across state lines of a non-incidental nature, I 

think is hugely problematic. 

Mr. POE. But isn’t that what we are saying with this legislation, 

that because it is on the Internet and the activity may cross state 

lines, therefore the Federal Government has the authority to regulate it? 

Mr. MOYLAN. Right, that is essentially what underlies it. I mention in my written testimony that there are three words in RAWA 

itself that make that very clear. When it is adding basically Internet transmissions into the definition of the Wire Act, what it does 

is it says incidentally or otherwise, and that also makes clear that, 

for example, what led to that OLC memo in 2011, the states that 

were attempting to allow online sales for their lotteries that have 

this intermediate routing of a payment processor that happens to 

be in another state, but you have a purchaser and a seller that are 

in the same state, that that would constitute interstate for the purposes of Federal regulations. 

So I think that that is a huge problem; and, yes, that is something that underpins at the heart of this bill. 

Mr. POE. The types of gaming activity that I mentioned other 

than Internet gaming, that is a state issue? 
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Mr. MOYLAN. By and large, gambling activity is a state issue, 

sure. 

Mr. POE. Horse racing and dog racing, casinos, and the state lottery—I think that covers all of them—aren’t those just state 

issues? 

Mr. MOYLAN. And there are exemptions that exist in RAWA for 

several of those things, which I think puts the lie to the fact that 

all gambling is, in and of itself, pernicious, the fact that we have 

legislation on the Federal level and at the state level that exempts 

these kinds of activities that you mentioned. 

Mr. POE. I don’t think the issue is whether or not the government should regulate gaming because it is bad. I think we tried 

that with prohibition, or demon rum, as my grandmother used to 

call it, and we see where that got us. That is what she called it. 

So that is a concern to me. It is a concern that the regulations 

themselves may cause more crime offshore than what we have now. 

So it is your answer that this is something that if the State of 

Texas wants to have intrastate Internet gaming, that they should 

be allowed to and the Federal Government shouldn’t prohibit it because other states don’t like it in their states? 

Mr. MOYLAN. Yes, I think that is precisely my position, that 

states have within their power today to determine their own fate 

as it relates to gambling, and they should continue to have that 

power. It is a power that is justly reserved to them under our system as we have it today, and this bill is problematic in that regard 

because it would take from them that ability because of this, as you 

mentioned, this sort of treatment of any kind of conduct on the 

Internet as inherently interstate. 

Mr. POE [presiding]. I will have the same questions for all of you, 

but I will put them in writing so you can submit it in writing. 

I will recognize the Ranking Member, Ms. Jackson Lee, who I 

just quoted. 

Ms. JACKSON LEE. Mr. Richmond, I am willing to yield to you for 

a moment—we were almost closing—so that you can raise your 

questions, if I might, and then follow him, Mr. Chairman? He has 

not asked any questions. 

Mr. POE. I recognize the gentleman from Louisiana, Mr. Richmond—— 

Ms. JACKSON LEE. Thank you. 

Mr. POE [continuing]. If he wishes to ask questions. 

Mr. RICHMOND. Thank you, Mr. Chairman, and I will make it 

short. 

I have been a bunch of places on this issue, but as of late I have 

a quick concern, and it has probably been answered. But my question now would be how does this affect my Louisiana lottery, Mega 

Ball and all of those, which we as a legislature, when I was in the 

legislature, decided to dedicate those funds to education, to teacher 

pay? And for a state that is now facing a $1.6 billion budget deficit, 

to lose any other revenue that is helping pay for a free tuition program for college or for a teacher’s education becomes a major concern. So can someone tell me how it affects the Louisiana lottery? 

Mr. KINDT. Let me address that, if I may, Representative. Going 

back to Illinois, which was one of the first states to legalize the lottery, allegedly to help education, we were one of the first states to 
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get riverboat gambling, then land-based casinos. We are now putting video lottery terminals everywhere throughout the state, at 

convenience stops, at very low tax rates. They are not being taxed 

the way other states are being taxed. And the reason is because, 

as I indicated in my testimony, gambling lobbyists are virtually 

dictating economic policy in the State of Illinois, and this has had 

a terrible effect. I put this in Law Review articles 20 years ago, 

when we were discussing this at the Illinois legislature and looking 

at what this was going to cause. 

I would also indicate that I happen to chair the Faculty and Staff 

Benefits Committee at the University of Illinois. We are seeing 

widespread reduction on tax on our pensions, on education, on social services, and a very large component of that is the gambling 

issue, not just the lotteries but beyond the lotteries, of the money 

that is being misdirected to gambling interests. 

Ms. AFTAB. I think the simple answer is, as written, your lottery 

goes offline. 

Mr. RICHMOND. Does anybody disagree with the fact that the lottery will go offline? 

Mr. BERNAL. I don’t disagree with that, but I guess the policy 

question is not so much what happens to your lottery but to the 

constituents of Louisiana. Is there less inequality and unfairness in 

Louisiana if the lottery isn’t taking their money through online 

venues? Because what the Louisiana lottery is, or any other lottery 

that you have in this country, is it is taking money from the less 

well-off and giving it to the haves. So the evidence is overwhelming 

that it is an incredible wealth transfer. It is creating inequality in 

our country, and it is creating it in your state. 

Mr. RICHMOND. So your position would be because it is online as 

opposed to brick and mortar? 

Mr. BERNAL. It is building on—the Louisiana lottery, part of the reason you have a deficit, a $1.6 billion deficit, is things like the 

lottery was supposed to fill your budget gaps. But the truth is it 

has been a failed public policy. 

Mr. RICHMOND. No. Actually, my Republican governor did a billion dollars in tax breaks with no pay-for. 

Mr. BERNAL. I understand. [Laughter.] 

Understood. But the point is that the lotteries, not just in your 

state, sir, but all across this country, have not produced the revenues that they were promised. What they have done is they have 

made everyday people poorer. They have created an incredible 

amount of inequality, and they go to the heart of the financial inequality in our country today. Gambling is the public voice of government in Louisiana and every other state. 

Mr. RICHMOND. Well, let me close with this question. I didn’t 

want to take up all the time, and it was so nice of Ms. Jackson Lee 

to yield. But as you go into casinos, brick-and-mortar casinos, you 

will see people who obviously are in there that can’t afford, at least 

in your opinion, can’t afford to lose whatever they are gambling 

and certainly shouldn’t be sitting at the high-stakes slot. 

So what becomes the difference? That they can get up and go? 

Mr. BERNAL. From our perspective, lotteries and casinos, that is 

all part of an extension of government. Yes, absolutely. The people 

playing the slot machines, losing their paychecks, absolutely, that 
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is contributing to the inequality and unfairness in your state as 

well. 

Mr. KINDT. If I might add, we have done studies throughout the 

years, over the last 20 years, that show that the social and economic costs to the state are at least three dollars or more for every 

one dollar in tax revenues coming into the lottery and other gambling taxation. 

So it is a slow descent, and as I said, in Illinois we are facing $111 billion in unfunded liabilities plus the same type of budget 

deficit that you are talking about in Louisiana, and a large part of 

that is because of this gambling. 

Mr. RICHMOND. Thank you. 

And thank you, Mr. Chairman. I yield back. 

Mr. POE. The Chair will recognize the gentle lady from Texas for 

brief questions. 

Ms. JACKSON LEE. Thank you very much, Mr. Chairman. 

And again, I want to thank the Chairman of this Committee for 

working with me on the importance of this hearing, and the Chairman of the full Committee, and the Ranking Member of the full 

Committee as well. 

Let me thank the witnesses and offer one or two points that I 

think should be the obvious, that we have three very strong witnesses for this legislation, it appears. I think woven into your support of it is, of course, your assessment of the, if you will, ills of 

gambling and the addiction that occurs in some individuals and the 

drastic societal results of its use. I believe that this Committee, 

which deals with the law, should also be concerned about those societal ills. 

I hope that as we proceed in reviewing this legislation, marking 

it up, we might find common ground on addressing how our approach should actually be. I think the question that you have 

made, Mr. Moylan, for those of us who take special pains to look 

at the Constitution and assess the infrastructure between the Federal Government and state government are troubled and want to 

determine how this concern of the societal ills matches with the 

very age-old debate on Federal and state relationships and Federal 

jurisdiction and states’ rights. I think the point that you have made 

is that the state can contain itself, can provide those firewalls 

against other states that may not be so inclined. But how do you 

stop the states that are inclined from being able to do so? 

I will just use an example, Mr. Chairman. When we were dealing 

with the question of the bricks and mortar issue with online purchases versus the issue of bricks and mortar stores, that was somewhat of a state issue as well, online versus bricks and mortar, how 

do you balance the guys who build buildings and sell goods versus 

those online. So I think that is a great concern to me. 

And then finally, Ms. Aftab, if I might just get you again to state 

for the record—and then I have some letters to put into the 

record—state for the record again the process that you have discerned that protects children and counters or blocks the offshore 

criminal activity that is going on unregulated and that draws many 

of our citizens to ruin, if you will, because it is unregulated, it is 

untested, it is not secure. So if you would talk about the children, 

and I will conclude on that. 
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Ms. AFTAB. There are multiple steps that are brought in to make 

sure that you are dealing with an adult, not that it is a child but 

that it is an adult. So they go through age verification, they look 

at government I.D.s, they look at public records, they look at private records, and they make sure all along that everything matches 

and that you are who you say you are, and when you say you are 

living at some place, you really are at that place. 

There is nothing at all that is happening with most of the rogue 

operators outside of the United States. They are not paying on 

bets. They don’t care who you are. Kids have a lot of babysitting 

money and birthday money and Christmas money, and they are 

using it to gamble, and they are not getting their money back. I 

have gotten phone calls and people who have reached out to us 

over the years, and there is nothing I can do. 

If we can have licensed providers, they will help police it because 

they paid a lot of money for the ability to do so within the state. 

They will help identify the outliers and law enforcement will be 

able to do something about it. Not all. It is the Internet, after all. 

But if you give them things that are safe, private, and keep the 

kids off in fair games, and they don’t have malicious code, people 

would prefer to be there than in the rogue sites offline. 

Ms. JACKSON LEE. Again, I thank the witnesses. 

Mr. Chairman, I am going to yield back. 

Thank you so very much for that explanation on the record. 

I would like to submit into the record and ask unanimous consent for a letter from the National Governors’ Association dated 

May 9, 2014; a report from the State of New Jersey dated January 

2, 2015, ‘‘New Jersey Internet Gaming One Year Anniversary: 

Achievements to Date and Goals for the Future.’’ This letter concerns the position of the National Governors’ Association, the previous letter. I ask unanimous consent again. This letter was dated 

January 2, 2015. And then a letter from the Democratic Governors 

dated March 17, 2015, on the same issue, the Restoration of America’s Wire Act 2015. 

Mr. POE. Without objection, they all will made a part of the 

record. 

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Mr. POE. Yield back? 

Ms. JACKSON LEE. Yield back. 

Mr. POE. Just a couple of other questions. I think I have made 

it clear as to my biggest concern, the Federalism issue, the states 

having the duty, obligation, and right to determine gaming as a 

general rule. 

Turning to another question, it is very brief, the criminal element issue. I am a former judge. I don’t like crooks, outlaws, whatever you want to call them, of any type. 

Will this legislation, Ms. Aftab, will this legislation encourage or 

discourage or have no effect on the criminal element, in your opinion? 

Ms. AFTAB. My opinion, if you outlaw the legal means of doing 

this, then the only means out there are the criminal sites and the 

criminal operations. So they will go underground, they will go offshore. The more you put in to try to regulate what they are doing 

here without giving them an avenue, the more likely it is that you 

are going to be dealing with more racketeering and criminal elements. We have seen it, we are going to see more of it, and these 

days criminals don’t just fall into the type they used to have in 

Texas when you used to wear your six shooters. Now we are seeing 

a lot that are terrorist activities and raising money, and I think 

that it is a great deal of money that can be made and that is being 

gambled by people in the United States, and we have an obligation 

to our consumers and to our children to ensure that we are managing what is happening with them and we don’t leave them to, 

willy nilly, people who don’t care about them at all. 

Mr. POE. Are you aware of the fact that the National Order of 

Police is opposed to this legislation? 

Ms. AFTAB. I am not, and I would love to see what it is. I am 

not surprised that they are opposed to the legislation in some 

areas. It is a very complicated argument. If anyone ever said the 

Internet safety charity that has been protecting people for 20 years 

is now coming out and saying please legalize online gambling, my 

mother would put me out in the woodshed somewhere. But it is 

bringing together a lot of strange bedfellows, and we need to recognize in the end national security, our kids, money, all of the things 

that we need to do can only be done if we take control. Giving up 

control to the rest of the world is not what Americans do. 

Mr. POE. I want to thank all the witnesses again for being here 

for such a long period of time, and also for your testimony and expertise, and the spectators as well for showing your interest. 

This Subcommittee is adjourned. 

[Whereupon, at 7:23 p.m., the Subcommittee was adjourned.] 

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