I 

108TH CONGRESS 

1ST SESSION H. R. 2143

To prevent the use of certain bank instruments for unlawful Internet 

gambling, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 19, 2003

Mr. BACHUS (for himself, Mr. OXLEY, and Ms. HOOLEY of Oregon) introduced the following bill; which was referred to the Committee on Financial Services 

A BILL

To prevent the use of certain bank instruments for unlawful 

Internet gambling, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Unlawful Internet 

5 Gambling Funding Prohibition Act’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds as follows: 

8 (1) Internet gambling is primarily funded 

9 through personal use of bank instruments, including 

10 credit cards and wire transfers. 
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1 (2) The National Gambling Impact Study Com2 mission in 1999 recommended the passage of legisla3 tion to prohibit wire transfers to Internet gambling 

4 sites or the banks which represent them. 

5 (3) Internet gambling is a major cause of debt 

6 collection problems for insured depository institu7 tions and the consumer credit industry. 

8 (4) Internet gambling conducted through off9 shore jurisdictions has been identified by United 

10 States law enforcement officials as a significant 

11 money laundering vulnerability. 

12 SEC. 3. POLICIES AND PROCEDURES REQUIRED TO PRE13 VENT PAYMENTS FOR UNLAWFUL INTERNET 

14 GAMBLING. 

15 (a) REGULATIONS.—Before the end of the 6-month 

16 period beginning on the date of the enactment of this Act, 

17 the Federal functional regulators shall prescribe regula18 tions requiring any designated payment system to estab19 lish policies and procedures reasonably designed to iden20 tify and prevent restricted transactions in any of the fol21 lowing ways: 

22 (1) The establishment of policies and proce23 dures that—

24 (A) allow the payment system and any per25 son involved in the payment system to identify 
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1 restricted transactions by means of codes in au2 thorization messages or by other means; and 

3 (B) block restricted transactions identified 

4 as a result of the policies and procedures devel5 oped pursuant to clause (i).

6 (2) The establishment of policies and proce7 dures that prevent the acceptance of the products or 

8 services of the payment system in connection with a 

9 restricted transaction. 

10 (b) REQUIREMENTS FOR POLICIES AND PROCE11 DURES.—In prescribing regulations pursuant to sub12 section (a), the Federal functional regulators shall—

13 (1) identify types of policies and procedures, in14 cluding nonexclusive examples, which would be 

15 deemed to be ‘‘reasonably designed to identify’’ and 

16 ‘‘reasonably designed to block’’ or to ‘‘prevent the 

17 acceptance of the products or services’’ with respect 

18 to each type of transaction, such as, should credit 

19 card transactions be so designated, identifying trans20 actions by a code or codes in the authorization mes21 sage and denying authorization of a credit card 

22 transaction in response to an authorization message; 

23 (2) to the extent practical, permit any partici24 pant in a payment system to choose among alter25 native means of identifying and blocking, or other-
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1 wise preventing the acceptance of the products or 

2 services of the payment system or participant in con3 nection with, restricted transactions; and 

4 (3) consider exempting restricted transactions 

5 from any requirement subsection (a) if the Federal 

6 functional regulators find that it is not reasonably 

7 practical to identify and block, or otherwise prevent, 

8 such transactions. 

9 (c) COMPLIANCE WITH PAYMENT SYSTEM POLICIES

10 AND PROCEDURES.—A creditor, credit card issuer, finan11 cial institution, operator of a terminal at which an elec12 tronic fund transfer may be initiated, money transmitting 

13 business, or international, national, regional, or local net14 work utilized to effect a credit transaction, electronic fund 

15 transfer, or money transmitting service, or a participant 

16 in such network, meets the requirement of subsection (a) 

17 if—

18 (1) such person relies on and complies with the 

19 policies and procedures of a designated payment sys20 tem of which it is a member or participant to—

21 (A) identify and block restricted trans22 actions; or 

23 (B) otherwise prevent the acceptance of 

24 the products or services of the payment system, 
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1 member, or participant in connection with re2 stricted transactions; and 

3 (2) such policies and procedures of the des4 ignated payment system comply with the require5 ments of regulations prescribed under subsection 

6 (a). 

7 (d) ENFORCEMENT.—

8 (1) IN GENERAL.—This section shall be en9 forced by the Federal functional regulators and the 

10 Federal Trade Commission under applicable law in 

11 the manner provided in section 505(a) of the 

12 Gramm-Leach-Bliley Act. 

13 (2) FACTORS TO BE CONSIDERED.—In consid14 ering any enforcement action under this subsection 

15 against any payment system, or any participant in 

16 a payment system that is a creditor, credit card 

17 issuer, financial institution, operator of a terminal at 

18 which an electronic fund transfer may be initiated, 

19 money transmitting business, or international, na20 tional, regional, or local network utilized to effect a 

21 credit transaction, electronic fund transfer, or money 

22 transmitting service, or a participant in such net23 work, the Federal functional regulators and the Fed24 eral Trade Commission shall consider the following 

25 factors: 
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1 (A) The extent to which such person is ex2 tending credit or transmitting funds knowing

3 the transaction is in connection with unlawful 

4 Internet gambling. 

5 (B) The history of such person in extend6 ing credit or transmitting funds knowing the 

7 transaction is in connection with unlawful 

8 Internet gambling. 

9 (C) The extent to which such person has 

10 established and is maintaining policies and pro11 cedures in compliance with regulations pre12 scribed under this subsection. 

13 (D) The feasibility that any specific rem14 edy prescribed can be implemented by such per15 son without substantial deviation from normal 

16 business practice. 

17 (E) The costs and burdens the specific 

18 remedy will have on such person. 

19 SEC. 4. DEFINITIONS. 

20 For purposes of this Act, the following definitions 

21 shall apply: 

22 (1) RESTRICTED TRANSACTION.—The term ‘‘re23 stricted transaction’’ means any transaction or 

24 transmittal to any person engaged in the business of 

25 betting or wagering, in connection with the partici-
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1 pation of another person in unlawful Internet gam2 bling, of—

3 (A) credit, or the proceeds of credit, ex4 tended to or on behalf of such other person (in5 cluding credit extended through the use of a 

6 credit card); 

7 (B) an electronic fund transfer or funds 

8 transmitted by or through a money transmit9 ting business, or the proceeds of an electronic 

10 fund transfer or money transmitting service, 

11 from or on behalf of the other person; 

12 (C) any check, draft, or similar instrument 

13 which is drawn by or on behalf of the other per14 son and is drawn on or payable at or through 

15 any financial institution; or 

16 (D) the proceeds of any other form of fi17 nancial transaction as the Federal functional 

18 regulators may prescribe by regulation which 

19 involves a financial institution as a payor or fi20 nancial intermediary on behalf of or for the 

21 benefit of the other person. 

22 (2) BETS OR WAGERS.—The term ‘‘bets or wa23 gers’’—

24 (A) means the staking or risking by any 

25 person of something of value upon the outcome 
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1 of a contest of others, a sporting event, or a 

2 game subject to chance, upon an agreement or 

3 understanding that the person or another per4 son will receive something of greater value than 

5 the amount staked or risked in the event of a 

6 certain outcome; 

7 (B) includes the purchase of a chance or 

8 opportunity to win a lottery or other prize 

9 (which opportunity to win is predominantly sub10 ject to chance); 

11 (C) includes any scheme of a type de12 scribed in section 3702 of title 28, United 

13 States Code; 

14 (D) includes any instructions or informa15 tion pertaining to the establishment or move16 ment of funds in an account by the bettor or 

17 customer with the business of betting or wager18 ing; and 

19 (E) does not include—

20 (i) any activity governed by the secu21 rities laws (as that term is defined in sec22 tion 3(a)(47) of the Securities Exchange 

23 Act of 1934) for the purchase or sale of se24 curities (as that term is defined in section 

25 3(a)(10) of such Act); 
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1 (ii) any transaction conducted on or 

2 subject to the rules of a registered entity 

3 or exempt board of trade pursuant to the 

4 Commodity Exchange Act;

5 (iii) any over-the-counter derivative 

6 instrument; 

7 (iv) any other transaction that—

8 (I) is excluded or exempt from 

9 regulation under the Commodity Ex10 change Act; or 

11 (II) is exempt from State gaming 

12 or bucket shop laws under section 

13 12(e) of the Commodity Exchange Act 

14 or section 28(a) of the Securities Ex15 change Act of 1934; 

16 (v) any contract of indemnity or guar17 antee; 

18 (vi) any contract for insurance; 

19 (vii) any deposit or other transaction 

20 with a depository institution (as defined in 

21 section 3(c) of the Federal Deposit Insur22 ance Act); 

23 (viii) any participation in a simulation 

24 sports game or an educational game or 

25 contest that—
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1 (I) is not dependent solely on the 

2 outcome of any single sporting event 

3 or nonparticipant’s singular individual 

4 performance in any single sporting 

5 event; 

6 (II) has an outcome that reflects 

7 the relative knowledge and skill of the 

8 participants with such outcome deter9 mined predominantly by accumulated 

10 statistical results of sporting events; 

11 and 

12 (III) offers a prize or award to a 

13 participant that is established in ad14 vance of the game or contest and is 

15 not determined by the number of par16 ticipants or the amount of any fees 

17 paid by those participants; and 

18 (ix) any lawful transaction with a 

19 business licensed or authorized by a State. 

20 (3) DESIGNATED PAYMENT SYSTEM DE21 FINED.—The term ‘‘designated payment system’’ 

22 means any system utilized by any creditor, credit 

23 card issuer, financial institution, operator of a ter24 minal at which an electronic fund transfer may be 

25 initiated, money transmitting business, or inter-
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1 national, national, regional, or local network utilized 

2 to effect a credit transaction, electronic fund trans3 fer, or money transmitting service, or any partici4 pant in such network, that the Federal functional 

5 regulators determine, by regulation or order, could 

6 be utilized in connection with, or to facilitate, any 

7 restricted transaction. 

8 (4) FEDERAL FUNCTIONAL REGULATOR.—The 

9 term ‘‘Federal functional regulator’’ has the same 

10 meaning as in section 509(2) of the Gramm-Leach11 Bliley Act. 

12 (5) INTERNET.—The term ‘‘Internet’’ means 

13 the international computer network of interoperable 

14 packet switched data networks. 

15 (6) UNLAWFUL INTERNET GAMBLING.—The 

16 term ‘‘unlawful Internet gambling’’ means to place, 

17 receive, or otherwise transmit a bet or wager by any 

18 means which involves the use, at least in part, of the 

19 Internet where such bet or wager is unlawful under 

20 any applicable Federal or State law in the State in 

21 which the bet or wager is initiated, received, or oth22 erwise made. 

23 (7) OTHER TERMS.—

24 (A) CREDIT; CREDITOR; AND CREDIT

25 CARD.—The terms ‘‘credit’’, ‘‘creditor’’, and 
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1 ‘‘credit card’’ have the meanings given such 

2 terms in section 103 of the Truth in Lending 

3 Act. 

4 (B) ELECTRONIC FUND TRANSFER.—The 

5 term ‘‘electronic fund transfer’’—

6 (i) has the meaning given such term 

7 in section 903 of the Electronic Fund 

8 Transfer Act; and 

9 (ii) includes any fund transfer covered 

10 by Article 4A of the Uniform Commercial 

11 Code, as in effect in any State. 

12 (C) FINANCIAL INSTITUTION.—The term 

13 ‘‘financial institution’’—

14 (i) has the meaning given such term 

15 in section 903 of the Electronic Fund 

16 Transfer Act; and 

17 (ii) includes any financial institution, 

18 as defined in section 509(3) of the 

19 Gramm-Leach-Bliley Act. 

20 (D) MONEY TRANSMITTING BUSINESS AND

21 MONEY TRANSMITTING SERVICE.—The terms 

22 ‘‘money transmitting business’’ and ‘‘money 

23 transmitting service’’ have the meanings given 
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1 such terms in section 5330(d) of title 31, 

2 United States Code.

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