19–006

108TH CONGRESS REPT. 108–51 " HOUSE OF REPRESENTATIVES ! 1st Session Part 2

UNLAWFUL INTERNET GAMBLING FUNDING

PROHIBITION ACT

MAY 22, 2003.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. SENSENBRENNER, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

together with 

DISSENTING VIEWS 

[To accompany H.R. 21] 

[Including cost estimate of the Congressional Budget Office]

The Committee on the Judiciary, to whom was referred the bill 

(H.R. 21) to prevent the use of certain bank instruments for unlawful Internet gambling, and for other purposes, having considered 

the same, reports favorably thereon with an amendment and recommends that the bill as amended do pass.

CONTENTS 

Page 

The Amendment ...................................................................................................... 2

Purpose and Summary ............................................................................................ 7

Background and Need for the Legislation ............................................................. 7

Hearings ................................................................................................................... 8

Committee Consideration ........................................................................................ 8

Vote of the Committee ............................................................................................. 9

Committee Oversight Findings ............................................................................... 10

New Budget Authority and Tax Expenditures ...................................................... 10

Congressional Budget Office Cost Estimate .......................................................... 10

Performance Goals and Objectives ......................................................................... 14

Constitutional Authority Statement ...................................................................... 14

Section-by-Section Analysis and Discussion .......................................................... 14

Changes in Existing Law Made by the Bill, as Reported ..................................... 17

Markup Transcript .................................................................................................. 18

Dissenting Views ..................................................................................................... 71

2

The amendment is as follows: 

Strike all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Unlawful Internet Gambling Funding Prohibition 

Act’’. 

SEC. 2. FINDINGS. 

The Congress finds as follows: 

(1) Internet gambling is primarily funded through personal use of bank instruments, including credit cards and wire transfers. 

(2) The National Gambling Impact Study Commission in 1999 recommended the passage of legislation to prohibit wire transfers to Internet gambling sites or the banks which represent them. 

(3) Internet gambling is a major cause of debt collection problems for insured depository institutions and the consumer credit industry. 

(4) Internet gambling conducted through offshore jurisdictions has been 

identified by United States law enforcement officials as a significant money 

laundering vulnerability. 

SEC. 3. PROHIBITION ON ACCEPTANCE OF ANY BANK INSTRUMENT FOR UNLAWFUL INTERNET GAMBLING. 

(a) IN GENERAL.—No person engaged in the business of betting or wagering may 

knowingly accept, in connection with the participation of another person in unlawful 

Internet gambling—

(1) credit, or the proceeds of credit, extended to or on behalf of such other 

person (including credit extended through the use of a credit card); 

(2) an electronic fund transfer or funds transmitted by or through a money 

transmitting business, or the proceeds of an electronic fund transfer or money 

transmitting service, from or on behalf of the other person; 

(3) any check, draft, or similar instrument which is drawn by or on behalf 

of the other person and is drawn on or payable at or through any financial institution; or 

(4) the proceeds of any other form of financial transaction as the Secretary 

may prescribe by regulation which involves a financial institution as a payor 

or financial intermediary on behalf of or for the benefit of the other person. 

(b) DEFINITIONS.—For purposes of this Act, the following definitions shall apply: 

(1) BETS OR WAGERS.—The term ‘‘bets or wagers’’—

(A) means the staking or risking by any person of something of value 

upon the outcome of a contest of others, a sporting event, or a game subject 

to chance, upon an agreement or understanding that the person or another 

person will receive something of greater value than the amount staked or 

risked in the event of a certain outcome; 

(B) includes the purchase of a chance or opportunity to win a lottery 

or other prize (which opportunity to win is predominantly subject to 

chance); 

(C) includes any scheme of a type described in section 3702 of title 28, 

United States Code; 

(D) includes any instructions or information pertaining to the establishment or movement of funds in an account by the bettor or customer with 

the business of betting or wagering; and 

(E) does not include—

(i) any activity governed by the securities laws (as that term is defined in section 3(a)(47) of the Securities Exchange Act of 1934) for the 

purchase or sale of securities (as that term is defined in section 3(a)(10) 

of such Act); 

(ii) any transaction conducted on or subject to the rules of a registered entity or exempt board of trade pursuant to the Commodity Exchange Act;

(iii) any over-the-counter derivative instrument; 

(iv) any other transaction that—

(I) is excluded or exempt from regulation under the Commodity 

Exchange Act; or 

(II) is exempt from State gaming or bucket shop laws under 

section 12(e) of the Commodity Exchange Act or section 28(a) of the 

Securities Exchange Act of 1934; 

(v) any contract of indemnity or guarantee; 

(vi) any contract for insurance; 

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(vii) any deposit or other transaction with a depository institution 

(as defined in section 3(c) of the Federal Deposit Insurance Act); and 

(viii) any participation in a simulation sports game or an educational game or contest that— (I) is not dependent solely on the outcome of any single sporting event or nonparticipant’s singular individual performance in 

any single sporting event; 

(II) has an outcome that reflects the relative knowledge and 

skill of the participants with such outcome determined predominantly by accumulated statistical results of sporting events; and 

(III) offers a prize or award to a participant that is established 

in advance of the game or contest and is not determined by the 

number of participants or the amount of any fees paid by those 

participants. 

(2) BUSINESS OF BETTING OR WAGERING.—The term ‘‘business of betting or 

wagering’’ does not include, other than for purposes of subsection (e), any creditor, credit card issuer, insured depository institution, financial institution, operator of a terminal at which an electronic fund transfer may be initiated, money 

transmitting business, or international, national, regional, or local network utilized to effect a credit transaction, electronic fund transfer, stored value product 

transaction, or money transmitting service, or any participant in such network, 

or any interactive computer service or telecommunications service.

(3) DESIGNATED PAYMENT SYSTEM DEFINED.—The term ‘‘designated payment 

system’’ means any system utilized by any creditor, credit card issuer, financial 

institution, operator of a terminal at which an electronic fund transfer may be 

initiated, money transmitting business, or international, national, regional, or 

local network utilized to effect a credit transaction, electronic fund transfer, or 

money transmitting service, or any participant in such network, that the Secretary, in consultation with the Board of Governors of the Federal Reserve System and the Attorney General, determines, by regulation or order, could be utilized in connection with, or to facilitate, any restricted transaction. 

(4) INTERNET.—The term ‘‘Internet’’ means the international computer network of interoperable packet switched data networks. 

(5) INTERACTIVE COMPUTER SERVICE.—The term ‘‘interactive computer service’’ has the same meaning as in section 230(f) of the Communications Act of 

1934. 

(6) RESTRICTED TRANSACTION.—The term ‘‘restricted transaction’’ means 

any transaction or transmittal involving any credit, funds, instrument, or proceeds described in any paragraph of subsection (a) which the recipient is prohibited from accepting under subsection (a). 

(7) UNLAWFUL INTERNET GAMBLING.—The term ‘‘unlawful Internet gambling’’ means to place, receive, or otherwise transmit a bet or wager by any 

means which involves the use, at least in part, of the Internet where such bet 

or wager is unlawful under any applicable Federal or State law in the State in 

which the bet or wager is initiated, received, or otherwise made. 

(8) OTHER TERMS.—

(A) CREDIT; CREDITOR; AND CREDIT CARD.—The terms ‘‘credit’’, ‘‘creditor’’, and ‘‘credit card’’ have the meanings given such terms in section 103 

of the Truth in Lending Act. 

(B) ELECTRONIC FUND TRANSFER.—The term ‘‘electronic fund transfer’’—

(i) has the meaning given such term in section 903 of the Electronic Fund Transfer Act; and 

(ii) includes any fund transfer covered by Article 4A of the Uniform 

Commercial Code, as in effect in any State. 

(C) FINANCIAL INSTITUTION.—The term ‘‘financial institution’’ has the 

meaning given such term in section 903 of the Electronic Fund Transfer 

Act. 

(D) MONEY TRANSMITTING BUSINESS AND MONEY TRANSMITTING SERVICE.—The terms ‘‘money transmitting business’’ and ‘‘money transmitting 

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

United States Code. 

(E) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of the 

Treasury. 

(c) CIVIL REMEDIES.—

(1) JURISDICTION.—The district courts of the United States shall have original and exclusive jurisdiction to prevent and restrain violations of this section 

by issuing appropriate orders in accordance with this section, regardless of 

whether a prosecution has been initiated under this section.

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(2) PROCEEDINGS.— (A) INSTITUTION BY FEDERAL GOVERNMENT.— (i) IN GENERAL.—The United States, acting through the Attorney 

General, may institute proceedings under this subsection to prevent or 

restrain a violation of this section. 

(ii) RELIEF.—Upon application of the United States under this subparagraph, the district court may enter a preliminary injunction or an 

injunction against any person to prevent or restrain a violation of this 

section, in accordance with Rule 65 of the Federal Rules of Civil Procedure. 

(B) INSTITUTION BY STATE ATTORNEY GENERAL.— (i) IN GENERAL.—The attorney general of a State (or other appropriate State official) in which a violation of this section allegedly has 

occurred or will occur may institute proceedings under this subsection 

to prevent or restrain the violation. 

(ii) RELIEF.—Upon application of the attorney general (or other appropriate State official) of an affected State under this subparagraph, 

the district court may enter a preliminary injunction or an injunction 

against any person to prevent or restrain a violation of this section, in 

accordance with Rule 65 of the Federal Rules of Civil Procedure. 

(C) INDIAN LANDS.—

(i) IN GENERAL.—Notwithstanding subparagraphs (A) and (B), for 

a violation that is alleged to have occurred, or may occur, on Indian 

lands (as that term is defined in section 4 of the Indian Gaming Regulatory Act)—

(I) the United States shall have the enforcement authority provided under subparagraph (A); and 

(II) the enforcement authorities specified in an applicable Tribal-State compact negotiated under section 11 of the Indian Gaming 

Regulatory Act shall be carried out in accordance with that compact. 

(ii) RULE OF CONSTRUCTION.—No provision of this section shall be 

construed as altering, superseding, or otherwise affecting the application of the Indian Gaming Regulatory Act. 

(3) EXPEDITED PROCEEDINGS.—In addition to any proceeding under paragraph (2), a district court may, in exigent circumstances, enter a temporary restraining order against a person alleged to be in violation of this section upon 

application of the United States under paragraph (2)(A), or the attorney general 

(or other appropriate State official) of an affected State under paragraph (2)(B), 

in accordance with Rule 65(b) of the Federal Rules of Civil Procedure. 

(4) LIMITATION RELATING TO INTERACTIVE COMPUTER SERVICES.—

(A) IN GENERAL.—Relief granted under this subsection against an interactive computer service shall—

(i) be limited to the removal of, or disabling of access to, an online 

site violating this section, or a hypertext link to an online site violating 

this section, that resides on a computer server that such service controls or operates; except this limitation shall not apply if the service is 

subject to liability under this section pursuant to subsection (e); 

(ii) be available only after notice to the interactive computer service 

and an opportunity for the service to appear are provided; 

(iii) not impose any obligation on an interactive computer service 

to monitor its service or to affirmatively seek facts indicating activity 

violating this section; 

(iv) specify the interactive computer service to which it applies; and 

(v) specifically identify the location of the online site or hypertext 

link to be removed or access to which is to be disabled. 

(B) COORDINATION WITH OTHER LAW.—An interactive computer service 

that does not violate this section shall not be liable under section 1084 of 

title 18, except this limitation shall not apply if an interactive computer 

service has actual knowledge and control of bets and wagers and—

(i) operates, manages, supervises, or directs an Internet website at 

which unlawful bets or wagers may be placed, received, or otherwise 

made or at which unlawful bets or wagers are offered to be placed, received, or otherwise made; or 

(ii) owns or controls, or is owned or controlled by, any person who 

operates, manages, supervises, or directs an Internet website at which 

unlawful bets or wagers may be placed, received, or otherwise made or 

at which unlawful bets or wagers are offered to be placed, received, or 

otherwise made. 

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(5) FACTORS TO BE CONSIDERED IN CERTAIN CASES.—In considering granting 

relief under this subsection against any payment system, or any participant in 

a payment system that is a creditor, credit card issuer, financial institution, operator of a terminal at which an electronic fund transfer may be initiated, 

money transmitting business, or international, national, regional, or local network utilized to effect a credit transaction, electronic fund transfer, or money 

transmitting service, or a participant in such network, the court shall consider 

the following factors: 

(A) The extent to which such person is extending credit or transmitting 

funds knowing the transaction is in connection with unlawful Internet gambling. 

(B) The history of such person in extending credit or transmitting funds 

knowing the transaction is in connection with unlawful Internet gambling. 

(C) The extent to which such person has established and is maintaining 

policies and procedures in compliance with regulations prescribed under 

subsection (f). 

(D) The feasibility that any specific remedy prescribed in the order 

issued under this subsection can be implemented by such person without 

substantial deviation from normal business practice. 

(E) The costs and burdens the specific remedy will have on such person. 

(6) NOTICE TO REGULATORS AND FINANCIAL INSTITUTIONS.—Before initiating 

any proceeding under paragraph (2) with respect to a violation or potential violation of this section by any creditor, credit card issuer, financial institution, operator of a terminal at which an electronic fund transfer may be initiated, 

money transmitting business, or international, national, regional, or local network utilized to effect a credit transaction, electronic fund transfer, or money 

transmitting service, or any participant in such network, the Attorney General 

of the United States or an attorney general of a State (or other appropriate 

State official) shall—

(A) notify such person, and the appropriate regulatory agency (as determined in accordance with subsection (f)(5)) for such person, of such violation or potential violation and the remedy to be sought in such proceeding; 

and 

(B) allow such person 30 days to implement a reasonable remedy for 

the violation or potential violation, consistent with the factors described in 

paragraph (5) and in conjunction with such action as the appropriate regulatory agency may take. 

(d) CRIMINAL PENALTY.—

(1) IN GENERAL.—Whoever violates this section shall be fined under title 18, 

United States Code, or imprisoned for not more than 5 years, or both. 

(2) PERMANENT INJUNCTION.—Upon conviction of a person under this subsection, the court may enter a permanent injunction enjoining such person from 

placing, receiving, or otherwise making illegal bets or wagers or sending, receiving, or inviting information assisting in the placing of bets or wagers. 

(e) CIRCUMVENTIONS PROHIBITED.—Notwithstanding subsection (b)(2), a creditor, credit card issuer, financial institution, operator of a terminal at which an electronic fund transfer may be initiated, money transmitting business, or international, 

national, regional, or local network utilized to effect a credit transaction, electronic 

fund transfer, or money transmitting service, or any participant in such network, 

or any interactive computer service or telecommunications service, may be liable 

under this section if such creditor, issuer, institution, operator, business, network, 

or participant has actual knowledge and control of bets and wagers and—

(1) operates, manages, supervises, or directs an Internet website at which 

unlawful bets or wagers may be placed, received, or otherwise made or at which 

unlawful bets or wagers are offered to be placed, received, or otherwise made; 

or 

(2) owns or controls, or is owned or controlled by, any person who operates, 

manages, supervises, or directs an Internet website at which unlawful bets or 

wagers may be placed, received, or otherwise made or at which unlawful bets 

or wagers are offered to be placed, received, or otherwise made.

(f) POLICIES AND PROCEDURES TO IDENTIFY AND PREVENT RESTRICTED TRANSACTIONS IN PAYMENT FOR UNLAWFUL INTERNET GAMBLING.—

(1) REGULATIONS.—Before the end of the 6-month period beginning on the 

date of the enactment of this Act, the Secretary of the Treasury, in consultation 

with the Board of Governors of the Federal Reserve System and the Attorney 

General, shall prescribe regulations requiring any designated payment system 

to establish policies and procedures reasonably designed to identify and prevent 

restricted transactions in any of the following ways: 

(A) The establishment of policies and procedures that—

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(i) allow the payment system and any person involved in the payment system to identify restricted transactions by means of codes in 

authorization messages or by other means; and 

(ii) block restricted transactions identified as a result of the policies 

and procedures developed pursuant to clause (i).

(B) The establishment of policies and procedures that prevent the acceptance of the products or services of the payment system in connection 

with a restricted transaction. 

(2) REQUIREMENTS FOR POLICIES AND PROCEDURES.—In prescribing regulations pursuant to paragraph (1), the Secretary shall—

(A) identify types of policies and procedures, including nonexclusive examples, which would be deemed to be ‘‘reasonably designed to identify’’ and 

‘‘reasonably designed to block’’ or to ‘‘prevent the acceptance of the products 

or services’’ with respect to each type of transaction, such as, should credit 

card transactions be so designated, identifying transactions by a code or 

codes in the authorization message and denying authorization of a credit 

card transaction in response to an authorization message; 

(B) to the extent practical, permit any participant in a payment system 

to choose among alternative means of identifying and blocking, or otherwise 

preventing the acceptance of the products or services of the payment system 

or participant in connection with, restricted transactions; and 

(C) consider exempting restricted transactions from any requirement 

under paragraph (1) if the Secretary finds that it is not reasonably practical 

to identify and block, or otherwise prevent, such transactions. 

(3) COMPLIANCE WITH PAYMENT SYSTEM POLICIES AND PROCEDURES.—A creditor, credit card issuer, financial institution, operator of a terminal at which an 

electronic fund transfer may be initiated, money transmitting business, or international, national, regional, or local network utilized to effect a credit transaction, electronic fund transfer, or money transmitting service, or a participant 

in such network, meets the requirement of paragraph (1) if—

(A) such person relies on and complies with the policies and procedures 

of a designated payment system of which it is a member or participant to—

(i) identify and block restricted transactions; or 

(ii) otherwise prevent the acceptance of the products or services of 

the payment system, member, or participant in connection with restricted transactions; and 

(B) such policies and procedures of the designated payment system 

comply with the requirements of regulations prescribed under paragraph 

(1). 

(4) NO LIABILITY FOR BLOCKING OR REFUSING TO HONOR RESTRICTED TRANSACTIONS.—A person that is subject to a regulation prescribed or order issued 

under this subsection and blocks, or otherwise refuses to honor, a restricted 

transaction, or as a member of a designated payment system relies on the policies and procedures of the payment system, in an effort to comply with this section shall not be liable to any party for such action. 

(5) ENFORCEMENT.—This subsection shall be enforced by the Federal functional regulators and the Federal Trade Commission under applicable law in 

the manner provided in section 505(a) of the Gramm-Leach-Bliley Act. 

SEC. 4. INTERNET GAMBLING IN OR THROUGH FOREIGN JURISDICTIONS. 

(a) IN GENERAL.—In deliberations between the United States Government and 

any other country on money laundering, corruption, and crime issues, the United 

States Government should—

(1) encourage cooperation by foreign governments and relevant international fora in identifying whether Internet gambling operations are being 

used for money laundering, corruption, or other crimes; 

(2) advance policies that promote the cooperation of foreign governments, 

through information sharing or other measures, in the enforcement of this Act; 

and 

(3) encourage the Financial Action Task Force on Money Laundering, in its 

annual report on money laundering typologies, to study the extent to which 

Internet gambling operations are being used for money laundering. 

(b) REPORT REQUIRED.—The Secretary of the Treasury shall submit an annual 

report to the Congress on the deliberations between the United States and other 

countries on issues relating to Internet gambling. 

SEC. 5. AMENDMENTS TO GAMBLING PROVISIONS. 

(a) AMENDMENT TO DEFINITION.—Section 1081 of title 18, United States Code, 

is amended—

7

1 National Gambling Impact Study Commission, Final Report, 5–1, (1999). 2Testimony of Deputy Assistant Attorney General John G. Malcolm before the House Subcommittee on Crime, Terrorism, and Homeland Security on April 29, 2003, page 2. 

(1) by designating the five undesignated paragraphs that begin with ‘‘The 

term’’ as paragraphs (1) through (5), respectively; and 

(2) in paragraph (5), as so designated—

(A) by striking ‘‘wire communication’’ and inserting ‘‘communication’’; 

(B) by inserting ‘‘satellite, microwave,’’ after ‘‘cable,’’; and 

(C) by inserting ‘‘(whether fixed or mobile)’’ after ‘‘connection’’. 

(b) INCREASE IN PENALTY FOR UNLAWFUL WIRE TRANSFERS OF WAGERING INFORMATION AND CONFORMING AMENDMENT.—Section 1084(a) of title 18, United States 

Code, is amended—

(1) by striking ‘‘two years’’ and inserting ‘‘5 years’’; and 

(2) by striking ‘‘wire’’ each place it appears.

PURPOSE AND SUMMARY

Under current Federal law, it is unclear that using the Internet 

to operate a gambling business is illegal. H.R. 21, the ‘‘Unlawful 

Internet Gambling Funding Prohibition Act,’’ is intended to provide 

State and Federal authorities with the means to enforce current 

statutes and clarify that those statutes make gambling over the 

Internet illegal. This bill creates a new crime—accepting financial 

instruments, such as credit cards or electronic fund transfers, for 

debts incurred in illegal Internet gambling. Because the perpetrators of this crime are off-shore and beyond the reach of U.S. law 

enforcement tactics, the bill enables State attorneys general and 

Federal enforcement authorities to request that injunctions be 

issued against any party, including financial institutions, Internet 

service providers, and computer software providers, to assist in the 

prevention or restraint of this crime. Finally, this bill allows Federal bank regulators to create rules requiring financial institutions 

to use designated methods to block or filter illegal Internet gambling transactions. 

BACKGROUND AND NEED FOR THE LEGISLATION

Over the last few years, gambling websites have proliferated on 

the Internet. What was once a cottage industry has become an extremely lucrative and large business. The Internet gambling industry’s revenues grew from $445 million in 1997 1 to an estimated 

$4.2 billion in 2003 2. Industry analysts estimate that it could soon 

easily become a $10 billion a year industry. 

On-line casino operators envision the day when the Internet will 

provide access to a ‘‘virtual-strip’’—where gamblers who are tired 

of one casino can simply ‘‘walk’’ down the virtual boardwalk to a 

different casino. There are currently over 1,800 gambling sites on 

the Internet, offering everything from sports betting to blackjack. 

Most of these virtual casinos are organized and operated from tropical off-shore locations, where the operators feel free from both 

State and Federal interference. Among the most popular locales are 

Antigua, St. Martin, and Costa Rica. 

This legislation brings the current law up to date with Internet 

technology by clarifying Federal law so that there is no question 

that operating an Internet gambling business is illegal. It does not, 

however, supersede the traditional leadership roles of States in enforcing gambling laws within their borders. It addresses a growing 

problem that no single State, or collection of States, can adequately 

8

3 National Gambling Impact Study Commission, Final Report, 3–1, (1999). 

address. Because of the uniquely interstate and international nature of the Internet, H.R. 21 is necessary. At the same time, H.R. 

21 provides the States and the Federal Government with the needed tools to limit and regulate Internet gambling. 

Since the founding of our country, the Federal Government has 

left gambling regulation to the States. In 1996, Congress created 

the National Gambling Impact Study Commission (NGISC) to examine the issue of gambling in America. The NGISC concluded 

that States are best equipped to regulate gambling within their 

own borders, and recommended that Congress continue to defer to 

the States in this respect.3

The Federal Government has largely deferred to the authority of 

States to determine the type and amount of gambling permitted. 

For over 100 years, Congress has acted to assist States in enforcing 

their respective policies on gambling when development in technology, such as the Internet, have compromised the effectiveness of 

State gambling laws. 

State attorneys general have been frustrated in their attempts to 

prevent Internet gambling from permeating their borders. Some 

have attempted to charge Internet gambling providers with violations of State consumer fraud laws, but jurisdictional issues and 

other problems have thwarted these efforts. Attorneys general report that citizens often are unaware that gambling on the Internet 

is illegal, even if those same persons are aware that their home 

State does not allow gambling. 

In addition, the Department of Justice recently testified that 

Internet gambling serves as a vehicle for money laundering activities and can be exploited by terrorists to launder money. On-line 

casinos are a particularly inviting target because, in addition to 

using the gambling that on-line casinos offer as a way to hide or 

transfer money, on-line casinos offer a broad array of financial 

services to their customers, such as providing credit accounts, fund 

transmittal services, check cashing services, and currency exchange 

services. 

HEARINGS

The Committee’s Subcommittee on Crime, Terrorism, and Homeland Security held a legislative hearing on H.R. 21 on April 29, 

2003. The Subcommittee also heard testimony on a related bill, 

H.R. 1223, at those hearings. Testimony was received from four 

witnesses. The witnesses were: Rep. James A. Leach; Mr. John G. 

Malcolm, Deputy Assistant Attorney General, Criminal Division, 

U.S. Department of Justice; Mr. Jeffrey A. Modisett, former Indiana State Attorney General; and Mr. William Hornbuckle, President & Chief Operating Officer, MGM Mirage Online. 

COMMITTEE CONSIDERATION

On May 6, 2003, the Subcommittee on Crime, Terrorism, and 

Homeland Security met in open session and ordered favorably reported the bill H.R. 21, by a voice vote, a quorum being present. 

On May 14, 2003, the Committee met in open session and ordered 

9

favorably reported the bill H.R. 21 with an amendment by a recorded vote of 16 to 15, a quorum being present. 

VOTE OF THE COMMITTEE

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the Committee notes that the following 

rollcall votes occurred during the Committee’s consideration of H.R. 

21. 

1. An amendment was offered by Mr. Cannon to strike language 

in the bill which states that a bet or wager does not include ‘‘any 

lawful transaction with a business licensed or authorized by a 

State.’’ The amendment was agreed to by a rollcall vote of 16 to 15.

ROLLCALL NO. 1 

Ayes Nays Present 

Mr. Hyde ............................................................................................................

Mr. Coble ........................................................................................................... X

Mr. Smith .......................................................................................................... X

Mr. Gallegly .......................................................................................................

Mr. Goodlatte .................................................................................................... X

Mr. Chabot ........................................................................................................ X

Mr. Jenkins ........................................................................................................ X

Mr. Cannon ....................................................................................................... X

Mr. Bachus ........................................................................................................ X

Mr. Hostettler .................................................................................................... X

Mr. Green .......................................................................................................... X

Mr. Keller ........................................................................................................... X

Ms. Hart ............................................................................................................ X

Mr. Flake ...........................................................................................................

Mr. Pence .......................................................................................................... X

Mr. Forbes .........................................................................................................

Mr. King ............................................................................................................ X

Mr. Carter .......................................................................................................... X

Mr. Feeney ......................................................................................................... X

Mrs. Blackburn .................................................................................................. X

Mr. Conyers ....................................................................................................... X

Mr. Berman ....................................................................................................... X

Mr. Boucher .......................................................................................................

Mr. Nadler ......................................................................................................... X

Mr. Scott ........................................................................................................... X

Mr. Watt ............................................................................................................ X

Ms. Lofgren ....................................................................................................... X

Ms. Jackson Lee ................................................................................................ X

Ms. Waters ........................................................................................................ X

Mr. Meehan ....................................................................................................... X

Mr. Delahunt .....................................................................................................

Mr. Wexler ......................................................................................................... X

Ms. Baldwin ...................................................................................................... X

Mr. Weiner ......................................................................................................... X

Mr. Schiff .......................................................................................................... X

Ms. Sa ́nchez ...................................................................................................... X

Mr. Sensenbrenner, Chairman .......................................................................... X

Total ................................................................................................ 16 15

2. Final Passage. The motion to report favorably the bill, H.R. 21, 

as amended, was agreed to by a rollcall vote of 16 to 15.

ROLLCALL NO. 2 

Ayes Nays Present 

Mr. Hyde ............................................................................................................

10

ROLLCALL NO. 2—Continued

Ayes Nays Present 

Mr. Coble ........................................................................................................... X

Mr. Smith ..........................................................................................................

Mr. Gallegly .......................................................................................................

Mr. Goodlatte .................................................................................................... X

Mr. Chabot ........................................................................................................ X

Mr. Jenkins ........................................................................................................ X

Mr. Cannon ....................................................................................................... X

Mr. Bachus ........................................................................................................ X

Mr. Hostettler .................................................................................................... X

Mr. Green .......................................................................................................... X

Mr. Keller ........................................................................................................... X

Ms. Hart ............................................................................................................ X

Mr. Flake ........................................................................................................... X

Mr. Pence .......................................................................................................... X

Mr. Forbes .........................................................................................................

Mr. King ............................................................................................................ X

Mr. Carter .......................................................................................................... X

Mr. Feeney ......................................................................................................... X

Mrs. Blackburn .................................................................................................. X

Mr. Conyers ....................................................................................................... X

Mr. Berman ....................................................................................................... X

Mr. Boucher .......................................................................................................

Mr. Nadler ......................................................................................................... X

Mr. Scott ........................................................................................................... X

Mr. Watt ............................................................................................................ X

Ms. Lofgren ....................................................................................................... X

Ms. Jackson Lee ................................................................................................ X

Ms. Waters ........................................................................................................ X

Mr. Meehan ....................................................................................................... X

Mr. Delahunt .....................................................................................................

Mr. Wexler ......................................................................................................... X

Ms. Baldwin ...................................................................................................... X

Mr. Weiner ......................................................................................................... X

Mr. Schiff .......................................................................................................... X

Ms. Sa ́nchez ...................................................................................................... X

Mr. Sensenbrenner, Chairman .......................................................................... X

Total ................................................................................................ 16

COMMITTEE OVERSIGHT FINDINGS

In compliance with clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives, the Committee reports that the findings 

and recommendations of the Committee, based on oversight activities under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated in the descriptive portions of this report. 

NEW BUDGET AUTHORITY AND TAX EXPENDITURES

Clause 3(c)(2) of House rule XIII is inapplicable because this legislation does not provide new budgetary authority or increased tax 

expenditures. 

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, the Committee sets forth, with respect to 

the bill, H.R. 21, the following estimate and comparison prepared 

by the Director of the Congressional Budget Office under section 

402 of the Congressional Budget Act of 1974:

11

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, May 16, 2003. 

Hon. F. JAMES SENSENBRENNER, Jr., Chairman, 

Committee on the Judiciary, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed revised cost estimate for H.R. 21, the Unlawful 

Internet Gambling Funding Prohibition Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contacts are Mark Hadley (for Federal costs), who can be reached at 226–2860, and Cecil McPherson 

(for the impact on the private sector), who can be reached at 226– 2940. 

Sincerely, 

DOUGLAS HOLTZ-EAKIN.

Enclosure

cc: Honorable John Conyers, Jr. 

Ranking Member 

H.R. 21—Unlawful Internet Gambling Funding Prohibition Act. 

SUMMARY

H.R. 21 would prohibit gambling businesses from accepting credit cards, checks, or other bank instruments from gamblers who illegally bet over the Internet. The bill also would require financial institutions to take steps to identify and block gambling-related 

transactions that are transmitted through their payment systems. 

The Office of the Comptroller of the Currency (OCC), the Board of 

Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS), 

and the National Credit Union Administration (NCUA) would enforce the provisions of H.R. 21 as they apply to financial institutions. 

CBO estimates that implementing this legislation would result in 

no significant cost to the Federal Government. The bill could affect 

direct spending and revenues, but CBO estimates that any impact 

on direct spending and revenues would not be significant. 

H.R. 21 would create no new intergovernmental mandates as defined in the Unfunded Mandates Reform Act (UMRA) and would 

impose no costs on State, local, or tribal governments. The bill 

would impose a private-sector mandate, but CBO estimates that 

the direct costs of the mandate would fall well below the annual 

threshold established in UMRA ($117 million in 2003, adjusted annually for inflation) in any of the next 5 years. 

ESTIMATED COST TO THE FEDERAL GOVERNMENT

CBO estimates that the Government would incur no significant 

costs under H.R. 21. CBO estimates that implementing H.R. 21 

would increase administrative costs of the Department of Justice, 

but any such costs would be negligible. The bill also would have a 

small effect on the operating costs of the FDIC and the Federal Reserve System. Finally, the bill would have a negligible effect on the 

collection and spending of criminal penalties. 

12

BASIS OF ESTIMATE

The bill would have only minor budgetary effects, as described 

below. 

Spending Subject to Appropriation 

Because H.R. 21 would establish new Federal crimes relating to 

Internet gambling, the Federal Government would be able to pursue cases that it otherwise would not be able to prosecute. CBO expects, however, that most cases would be pursued under existing 

State laws. Therefore, we estimate that any increase in Federal 

costs for law enforcement, court proceedings, or prison operations 

would not be significant. Any such additional costs would be subject to the availability of appropriated funds. 

H.R. 21 would require the Department of the Treasury to submit 

an annual report on deliberations with other countries on issues related to Internet gambling. CBO estimates that preparing and completing the report would cost less than $100,000 a year, subject to 

the availability of appropriated funds. 

Direct Spending and Revenues 

The NCUA, the OTS, and the OCC charge fees to cover all their 

administrative costs; therefore, any additional spending by those 

agencies to implement the bill would have no net budgetary effect. 

That is not the case with the FDIC, however, which uses deposit 

insurance premiums paid by banks to cover the expenses it incurs 

to supervise State-chartered institutions. (Under current law, CBO 

estimates that the vast majority of thrift institutions insured by 

the FDIC would not pay any premiums for most of the 2004–2013 

period.) 

The bill would cause a small increase in FDIC spending but 

would not affect its premium income. In total, CBO estimates that 

H.R. 21 would increase direct spending and offsetting receipts of 

the NCUA, OTS, OCC, and FDIC by less than $500,000 a year over 

the 2004–2013 period. 

Budgetary effects on the Federal Reserve are recorded as 

changes in revenues (governmental receipts). Based on information 

from the Federal Reserve, CBO estimates that enacting H.R. 21 

would reduce such revenues by less than $500,000 a year. 

Because those prosecuted and convicted under the bill could be 

subject to criminal fines, the Federal Government might collect additional fines if the bill is enacted. Collections of such fines are recorded in the budget as governmental receipts (i.e., revenues), 

which are deposited in the Crime Victims Fund and spent in subsequent years. Any additional collections are likely to be negligible 

because of the small number of cases involved. Because any increase in direct spending would equal the amount of fines collected 

(with a lag of 1 year or more), the additional direct spending also 

would be negligible. 

ESTIMATED IMPACT ON STATE AND LOCAL GOVERNMENTS

Although H.R. 21 would prohibit gambling businesses from accepting credit card payments and other bank instruments from 

gamblers who bet illegally over the Internet, the bill would not create a new intergovernmental mandate as defined in UMRA. Under 

13

current Federal and State law, gambling businesses are generally 

prohibited from accepting bets or wagers over the Internet. Thus, 

H.R. 21 does not contain a new mandate relative to current law 

and would impose no costs on State, local, or tribal governments. 

ESTIMATED IMPACT ON THE PRIVATE SECTOR

H.R. 21 would impose a new Federal mandate on the private sector. The bill would require designated payment systems to establish policies and procedures designed to identify and prevent transactions in connection with unlawful Internet gambling. Designated 

payment systems are defined in the bill to include any system utilized by businesses such as creditors, credit card issuers, or financial institutions to effect a credit transaction, an electronic fund 

transfer, or other transfer of funds. Information provided by representatives of the financial services industry indicates that such 

transactions can currently be identified through the use of codes. 

Most financial institutions are currently able to identify and block 

restricted transactions by using the coding system. Thus, CBO estimates that the private sector’s cost to comply with the mandate 

would be small. There also could be direct savings to those entities 

subject to the mandate as the bill limits their liability arising from 

their compliance with the requirement. CBO estimates that the 

total direct costs for private-sector mandates in this bill would fall 

well below the annual threshold established in UMRA ($117 million in 2003, adjusted annually for inflation). 

Although section 3 would prohibit gambling businesses from accepting credit card payments and other bank instruments from 

gamblers who bet illegally over the Internet, those provisions 

would not create a new private-sector mandate as defined in 

UMRA. Under current Federal and State law, gambling businesses 

are generally prohibited from accepting bets or wagers over the 

Internet. Thus, those provisions do not contain a new mandate relative to current law. 

PREVIOUS ESTIMATE

On May 15, 2003, CBO transmitted a cost estimate for H.R. 21, 

as reported by the House Committee on Financial Services on 

March 27, 2003. The two versions of the bill are similar, and the 

cost estimates are identical. 

Both versions of the bill contain identical private-sector mandates, for which CBO estimates that the total direct costs would 

fall well below the annual threshold for private-sector mandates established in UMRA. 

ESTIMATE PREPARED BY: 

Federal Spending: Lanette J. Walker and Mark Hadley (226–2860) 

Federal Revenues: Mark Booth (226–2680) 

Impact on State, Local, and Tribal Governments: Victoria Heid 

Hall (225–3220) 

Impact on the Private Sector: Cecil McPherson (226–2940) 

ESTIMATE APPROVED BY: 

Peter H. Fontaine 

Deputy Assistant Director for Budget Analysis 

14

PERFORMANCE GOALS AND OBJECTIVES

H.R. 21 does not authorize funding. Therefore, clause 3(c)(4) of 

rule XIII of the Rules of the House of Representatives is inapplicable. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds the authority for this legislation in article I, section 8 of the Constitution. 

SECTION-BY-SECTION ANALYSIS AND DISCUSSION

Section 1. Short title 

This Act may be cited as the ‘Unlawful Internet Gambling Funding Prohibition Act.’’

Section 2. Findings 

The Congressional findings note that: (1) Internet gambling is 

primarily funded through the use of personal banking instruments 

and plays a large role in the creation of ultimately uncollectible 

personal debt; and (2) Internet gambling is susceptible to abuse by 

money launderers. 

Section 3. Prohibition on acceptance of any bank instrument for 

Internet gambling 

Subsection (a) creates a new crime that prohibits a gambling 

business from accepting bank instruments in connection with unlawful Internet gambling. Covered instruments include credit 

cards, electronic fund transfers, and checks. 

Subsection (b)(1) defines the term ‘‘bets or wagers’’ as the staking 

or risking by any person of something of value upon the outcome 

of a contest of others, a sporting event, or a game subject to chance 

with the agreement that the winner will receive something of 

greater value than the amount staked or risked. This subsection 

clarifies that the term ‘‘bets or wagers’’ does not include a bona fide 

business transaction governed by the securities laws; a transaction 

subject to the Commodity Exchange Act; an over-the-counter derivative instrument and any other transaction exempt from State 

gaming or bucket shop laws pursuant to the Commodity Exchange 

Act or Securities Exchange Act; a contract of indemnity or guarantee; a contract for life, health, or accident insurance; a deposit 

with a depository institution; or certain participation in a simulation sports game or education game. 

It is the view of the Committee that the term ‘‘bets or wagers’’ does not include participation in a simulation sports game or educational game or contest that: (1) is not dependent solely on the 

outcome of any single sporting event or nonparticipant’s singular 

individual performance in any single sporting event; (2) has an outcome that reflects the knowledge and skill of the participants, with 

an outcome determined predominantly by accumulated statistical 

results of sporting events; and (3) offers a prize or award established in advance of the game and not determined by the number 

of participants. This exclusion is intended to cover ‘‘fantasy sports 

league games’’ which are simulation sports games in which the outVerDate Jan 31 2003 18:38 May 27, 2003 Jkt 019010 PO 00000 Frm 00014 Fmt 6659 Sfmt 6601 E:\HR\OC\HR51P2.XXX HR51P2
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come is determined using the results of actual sporting events, and 

the outcome reflects the relative knowledge and skill of the participants in determining those results. It is the view of the Committee 

that fantasy sport leagues operated in this manner are not gambling. It is important to note, however, that this exclusion from the 

definition of a bet or wager is not intended to change the legality 

of fantasy sports league games or contests under the laws of any 

State, or under any other applicable Federal law. 

The Committee recognizes that many computer and video games 

played on the Internet are based predominantly on skill, and are 

not intended to be included within the definition of ‘‘bets or wagers.’’ Also, such computer and video games, including those that 

feature real sports teams and/or teams that are members of an 

amateur or professional sports organization, do not involve the 

staking or risking by any person of something of value. The Committee intends that the courts will continue to perform their traditional functions in determining whether games are ‘‘bets or wagers.’’ It is the view of the Committee that the definition of ‘‘bets or wagers’’ does not include: (1) information exchanged via private network if the information is used only to monitor gaming device play, 

display prize amounts, provide security information, and provide 

other accounting information; (2) news reporting or analysis of wagering activity; and (3) posting or reporting of educational information on how to make a bet or wager or the nature of betting or wagering. Furthermore, it is the view of the Committee that information exchanged via a linked progressive game accounting system 

that does not accept bets or wagers and that does not affect game 

outcome is not included in the definition of the term ‘‘bets or wagers.’’ Subsection (b)(2) excludes from the term ‘‘business of betting or 

wagering’’ any creditor, credit card issuer, insured depository institution, financial institution, operator of a terminal at which an 

electronic fund transfer may be initiated, money transmitting business, or international, national, regional, or local network utilized 

to effect a credit transaction, electronic fund transfer, stored value 

product transaction, or money transmitting service, or any participant in such network, or any interactive computer service or telecommunications service, unless such entity has actual knowledge 

and control of bets and wagers and operates or is controlled by an 

entity that operates an unlawful Internet gambling site. Subsection 

(b) also defines the terms ‘‘designated payment system,’’ ‘‘Internet,’’

‘‘interactive computer service,’’ ‘‘restricted transaction’’ and ‘‘unlawful Internet gambling.’’

Subsection (c) authorizes the Attorney General of the United 

States and State Attorneys General to pursue civil remedies, including a preliminary injunction or permanent injunction against 

any person to prevent or restrain a violation of this Act. It clarifies 

that the Act does not alter, supersede, or otherwise affect the Indian Gaming Regulatory Act; generally limits the liability of an 

interactive computer service to the removal or disabling of access 

to an online site violating this section, upon proper notice; clarifies 

that an interactive computer service not liable under this Act is not 

liable under the Wire Act unless it has actual knowledge and control of bets and wagers, and operates or is controlled by an entity 

16

that operates, an unlawful Internet gambling site; sets out factors 

to be considered by a court in deciding whether to issue an injunction against any payment system; and provides for notice to bank 

regulators and institutions to allow violations to be addressed 

through the bank regulatory process before the injunction process 

is triggered. 

Subsection (d) authorizes criminal penalties, including fines or 

imprisonment for not more than 5 years or both. 

Subsection (e) provides that, notwithstanding the safe harbor 

provided in subsection (b)(2), a financial intermediary (creditor, 

credit card issuer, financial institution, operator of a terminal at 

which an electronic fund transfer may be initiated, money transmitting business, or national, regional, or local network), or interactive computer service or telecommunications service that has actual knowledge and control of bets and wagers, and operates or is 

controlled by an entity that operates, an unlawful Internet gambling site can be held liable under this section. 

Subsection (f) requires the Secretary of the Treasury, in conjunction with the Federal Reserve and the U.S. Attorney General, to 

prescribe regulations within 6 months requiring any payment system to establish policies and procedures reasonably designed to 

identify restricted transactions, block restricted transactions, or 

prevent restricted transactions from entering its system; and provides that a payment system is not liable for blocking or refusing 

a restricted transaction in an attempt to comply with the Act’s enforcement. The Federal functional regulators and the Federal 

Trade Commission are given the authority to enforce this subsection. 

Section 4. Internet gambling in or through foreign jurisdictions 

Section 4 provides that, in deliberations between the U.S. Government and any other country on money laundering, corruption, 

and crime issues, the U.S. Government should encourage cooperation by foreign governments in identifying whether Internet gambling operations are being used for money laundering, corruption, 

or other crimes, advance policies that promote the cooperation by 

foreign governments in the enforcement of this Act, and encourage 

the Financial Action Task Force on Money Laundering to study the 

extent to which Internet gambling operations are being used for 

money laundering. It also requires the Secretary of the Treasury to 

submit an annual report to Congress on the deliberations between 

the United States and other countries on issues relating to Internet 

gambling. 

Section 5. Amendments to gambling provisions 

Section 5 makes certain amendments to definitions under sections 1081 and 1084 of title 18, the Federal Wire Act, and increases 

the penalty for unlawful transfers of wagering information. The 

term ‘‘wire communication facility’’ under the current law would 

now read ‘‘communication facility’’ and includes transmissions by 

satellite and microwave as covered means of communication. The 

Committee intends that this definition will cover all present and 

future forms of communication. 

17

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, 

existing law in which no change is proposed is shown in roman):

CHAPTER 50 OF TITLE 18, UNITED STATES CODE

CHAPTER 50—GAMBLING 

* * * * * * *

§ 1081. Definitions 

As used in this chapter: 

(1) The term ‘‘gambling ship’’ means a vessel used principally for the operation of one or more gambling establishments. Such term does not include a vessel with respect to 

gambling aboard such vessel beyond the territorial waters of 

the United States during a covered voyage (as defined in section 4472 of the Internal Revenue Code of 1986 as in effect on 

January 1, 1994). 

(2) The term ‘‘gambling establishment’’ means any common 

gaming or gambling establishment operated for the purpose of 

gaming or gambling, including accepting, recording, or registering bets, or carrying on a policy game or any other lottery, 

or playing any game of chance, for money or other thing of 

value. 

(3) The term ‘‘vessel’’ includes every kind of water and air 

craft or other contrivance used or capable of being used as a 

means of transportation on water, or on water and in the air, 

as well as any ship, boat, barge, or other water craft or any 

structure capable of floating on the water. 

(4) The term ‘‘American vessel’’ means any vessel documented or numbered under the laws of the United States; and 

includes any vessel which is neither documented or numbered 

under the laws of the United States nor documented under the 

laws of any foreign country, if such vessel is owned by, chartered to, or otherwise controlled by one or more citizens or residents of the United States or corporations organized under the 

laws of the United States or of any State. 

(5) The term ‘‘øwire¿ communication facility’’ means any 

and all instrumentalities, personnel, and services (among other 

things, the receipt, forwarding, or delivery of communications) 

used or useful in the transmission of writings, signs, pictures, 

and sounds of all kinds by aid of wire, cable, satellite, microwave, or other like connection (whether fixed or mobile) between the points of origin and reception of such transmission. 

* * * * * * *

§ 1084. Transmission of wagering information; penalties 

(a) Whoever being engaged in the business of betting or wagering knowingly uses a øwire¿ communication facility for the transVerDate Jan 31 2003 18:38 May 27, 2003 Jkt 019010 PO 00000 Frm 00017 Fmt 6659 Sfmt 6601 E:\HR\OC\HR51P2.XXX HR51P2
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mission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting 

event or contest, or for the transmission of a øwire¿ communication 

which entitles the recipient to receive money or credit as a result 

of bets or wagers, or for information assisting in the placing of bets 

or wagers, shall be fined under this title or imprisoned not more 

than øtwo¿ 5 years, or both. 

* * * * * * *

MARKUP TRANSCRIPT

BUSINESS MEETING 

WEDNESDAY, MAY 14, 2003

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:01 a.m., in Room 

2141, Rayburn House Office Building, Hon. F. James Sensenbrenner, Jr. [Chairman of the Committee] presiding. 

[Intervening business.] 

Chairman SENSENBRENNER. The second item on the agenda is 

the adoption of H.R. 21, the ‘‘Unlawful Internet Gambling Funding 

Prohibition Act.’’

The Chair recognizes the gentleman from North Carolina, Mr. 

Coble, the Chairman of the Subcommittee on Crime, Terrorism, 

and Homeland Security, for a motion. 

Mr. COBLE. Mr. Chairman, the Subcommittee on Crime, Terrorism, and Homeland Security reports in favor of the bill H.R. 21, 

and moves its favorable recommendation to the full House. 

Chairman SENSENBRENNER. Without objection, H.R. 21 will be 

considered as read, and open for amendment at any point. 

[The bill, H.R. 21, follows:]

19

1

I

108TH CONGRESS

1ST SESSION H. R. 21

To prevent the use of certain bank instruments for unlawful Internet

gambling, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JANUARY 7, 2003

Mr. LEACH (for himself, Mr. OXLEY, Mr. ROGERS of Michigan, Mr. PICKERING, Mr. NORWOOD, Mr. GOODLATTE, Mr. BACHUS, Mrs. KELLY, Mr.

WOLF, Mr. SPRATT, Mr. OSBORNE, Mr. PITTS, Mr. BERRY, and Mr.

GILLMOR) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on the

Judiciary, for a period to be subsequently determined by the Speaker, in

each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

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:


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1 (1) Internet gambling is primarily funded

2 through personal use of bank instruments, including

3 credit cards and wire transfers.

4 (2) The National Gambling Impact Study Com5 mission in 1999 recommended the passage of legisla6 tion to prohibit wire transfers to Internet gambling

7 sites or the banks which represent them.

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

9 collection problems for insured depository institu10 tions and the consumer credit industry.

11 (4) Internet gambling conducted through off12 shore jurisdictions has been identified by United

13 States law enforcement officials as a significant

14 money laundering vulnerability.

15 SEC. 3. PROHIBITION ON ACCEPTANCE OF ANY BANK IN16 STRUMENT FOR UNLAWFUL INTERNET GAM17 BLING.

18 (a) IN GENERAL.—No person engaged in the busi19 ness of betting or wagering may knowingly accept, in con20 nection with the participation of another person in unlaw21 ful Internet gambling—

22 (1) credit, or the proceeds of credit, extended to

23 or on behalf of such other person (including credit

24 extended through the use of a credit card);


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1 (2) an electronic fund transfer or funds trans2 mitted by or through a money transmitting business,

3 or the proceeds of an electronic fund transfer or

4 money transmitting service, from or on behalf of the

5 other person;

6 (3) any check, draft, or similar instrument

7 which is drawn by or on behalf of the other person

8 and is drawn on or payable at or through any finan9 cial institution; or

10 (4) the proceeds of any other form of financial

11 transaction as the Secretary may prescribe by regu12 lation which involves a financial institution as a

13 payor or financial intermediary on behalf of or for

14 the benefit of the other person.

15 (b) DEFINITIONS.—For purposes of this Act, the fol16 lowing definitions shall apply:

17 (1) BETS OR WAGERS.—The term ‘‘bets or

18 wagers’’—

19 (A) means the staking or risking by any

20 person of something of value upon the outcome

21 of a contest of others, a sporting event, or a

22 game subject to chance, upon an agreement or

23 understanding that the person or another per24 son will receive something of greater value than


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1 the amount staked or risked in the event of a

2 certain outcome;

3 (B) includes the purchase of a chance or

4 opportunity to win a lottery or other prize

5 (which opportunity to win is predominantly sub6 ject to chance);

7 (C) includes any scheme of a type de8 scribed in section 3702 of title 28, United

9 States Code;

10 (D) includes any instructions or informa11 tion pertaining to the establishment or move12 ment of funds in an account by the bettor or

13 customer with the business of betting or wager14 ing; and

15 (E) does not include—

16 (i) any activity governed by the secu17 rities laws (as that term is defined in sec18 tion 3(a)(47) of the Securities Exchange

19 Act of 1934) for the purchase or sale of se20 curities (as that term is defined in section

21 3(a)(10) of such Act);

22 (ii) any transaction conducted on or

23 subject to the rules of a registered entity

24 or exempt board of trade pursuant to the

25 Commodity Exchange Act;


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1 (iii) any over-the-counter derivative

2 instrument;

3 (iv) any other transaction that—

4 (I) is excluded or exempt from

5 regulation under the Commodity Ex6 change Act; or

7 (II) is exempt from State gaming

8 or bucket shop laws under section

9 12(e) of the Commodity Exchange Act

10 or section 28(a) of the Securities Ex11 change Act of 1934;

12 (v) any contract of indemnity or guar13 antee;

14 (vi) any contract for insurance;

15 (vii) any deposit or other transaction

16 with a depository institution (as defined in

17 section 3(c) of the Federal Deposit Insur18 ance Act);

19 (viii) any participation in a simulation

20 sports game or an educational game or

21 contest that—

22 (I) is not dependent solely on the

23 outcome of any single sporting event

24 or nonparticipant’s singular individual


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•HR 21 IH

1 performance in any single sporting

2 event;

3 (II) has an outcome that reflects

4 the relative knowledge and skill of the

5 participants with such outcome deter6 mined predominantly by accumulated

7 statistical results of sporting events;

8 and

9 (III) offers a prize or award to a

10 participant that is established in ad11 vance of the game or contest and is

12 not determined by the number of par13 ticipants or the amount of any fees

14 paid by those participants; and

15 (ix) any lawful transaction with a

16 business licensed or authorized by a State.

17 (2) BUSINESS OF BETTING OR WAGERING.—

18 The term ‘‘business of betting or wagering’’ does not

19 include, other than for purposes of subsection (e),

20 any creditor, credit card issuer, insured depository

21 institution, financial institution, operator of a ter22 minal at which an electronic fund transfer may be

23 initiated, money transmitting business, or inter24 national, national, regional, or local network utilized

25 to effect a credit transaction, electronic fund transVerDate Jan 31 2003 18:38 May 27, 2003 Jkt 019010 PO 00000 Frm 00024 Fmt 6659 Sfmt 6601 E:\HR\OC\HR51P2.XXX HR51P2

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1 fer, stored value product transaction, or money

2 transmitting service, or any participant in such net3 work, or any interactive computer service or tele4 communications service.

5 (3) DESIGNATED PAYMENT SYSTEM DE6 FINED.—The term ‘‘designated payment system’’

7 means any system utilized by any creditor, credit

8 card issuer, financial institution, operator of a ter9 minal at which an electronic fund transfer may be

10 initiated, money transmitting business, or inter11 national, national, regional, or local network utilized

12 to effect a credit transaction, electronic fund trans13 fer, or money transmitting service, or any partici14 pant in such network, that the Secretary, in con15 sultation with the Board of Governors of the Federal

16 Reserve System and the Attorney General, deter17 mines, by regulation or order, could be utilized in

18 connection with, or to facilitate, any restricted trans19 action.

20 (4) INTERNET.—The term ‘‘Internet’’ means

21 the international computer network of interoperable

22 packet switched data networks.

23 (5) INTERACTIVE COMPUTER SERVICE.—The

24 term ‘‘interactive computer service’’ has the same


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1 meaning as in section 230(f) of the Communications

2 Act of 1934.

3 (6) RESTRICTED TRANSACTION.—The term ‘‘re4 stricted transaction’’ means any transaction or

5 transmittal involving any credit, funds, instrument,

6 or proceeds described in any paragraph of subsection

7 (a) which the recipient is prohibited from accepting

8 under subsection (a).

9 (7) UNLAWFUL INTERNET GAMBLING.—The

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

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

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

13 Internet where such bet or wager is unlawful under

14 any applicable Federal or State law in the State in

15 which the bet or wager is initiated, received, or oth16 erwise made.

17 (8) OTHER TERMS.—

18 (A) CREDIT; CREDITOR; AND CREDIT

19 CARD.—The terms ‘‘credit’’, ‘‘creditor’’, and

20 ‘‘credit card’’ have the meanings given such

21 terms in section 103 of the Truth in Lending

22 Act.

23 (B) ELECTRONIC FUND TRANSFER.—The

24 term ‘‘electronic fund transfer’’—


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1 (i) has the meaning given such term

2 in section 903 of the Electronic Fund

3 Transfer Act; and

4 (ii) includes any fund transfer covered

5 by Article 4A of the Uniform Commercial

6 Code, as in effect in any State.

7 (C) FINANCIAL INSTITUTION.—The term

8 ‘‘financial institution’’ has the meaning given

9 such term in section 903 of the Electronic

10 Fund Transfer Act.

11 (D) MONEY TRANSMITTING BUSINESS AND

12 MONEY TRANSMITTING SERVICE.—The terms

13 ‘‘money transmitting business’’ and ‘‘money

14 transmitting service’’ have the meanings given

15 such terms in section 5330(d) of title 31,

16 United States Code.

17 (E) SECRETARY.—The term ‘‘Secretary’’

18 means the Secretary of the Treasury.

19 (c) CIVIL REMEDIES.—

20 (1) JURISDICTION.—The district courts of the

21 United States shall have original and exclusive juris22 diction to prevent and restrain violations of this sec23 tion by issuing appropriate orders in accordance

24 with this section, regardless of whether a prosecu25 tion has been initiated under this section.


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1 (2) PROCEEDINGS.—

2 (A) INSTITUTION BY FEDERAL GOVERN3 MENT.—

4 (i) IN GENERAL.—The United States,

5 acting through the Attorney General, may

6 institute proceedings under this subsection

7 to prevent or restrain a violation of this

8 section.

9 (ii) RELIEF.—Upon application of the

10 United States under this subparagraph,

11 the district court may enter a preliminary

12 injunction or an injunction against any

13 person to prevent or restrain a violation of

14 this section, in accordance with Rule 65 of

15 the Federal Rules of Civil Procedure.

16 (B) INSTITUTION BY STATE ATTORNEY

17 GENERAL.—

18 (i) IN GENERAL.—The attorney gen19 eral of a State (or other appropriate State

20 official) in which a violation of this section

21 allegedly has occurred or will occur may in22 stitute proceedings under this subsection to

23 prevent or restrain the violation.

24 (ii) RELIEF.—Upon application of the

25 attorney general (or other appropriate


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11

•HR 21 IH

1 State official) of an affected State under

2 this subparagraph, the district court may

3 enter a preliminary injunction or an in4 junction against any person to prevent or

5 restrain a violation of this section, in ac6 cordance with Rule 65 of the Federal

7 Rules of Civil Procedure.

8 (C) INDIAN LANDS.—

9 (i) IN GENERAL.—Notwithstanding

10 subparagraphs (A) and (B), for a violation

11 that is alleged to have occurred, or may

12 occur, on Indian lands (as that term is de13 fined in section 4 of the Indian Gaming

14 Regulatory Act)—

15 (I) the United States shall have

16 the enforcement authority provided

17 under subparagraph (A); and

18 (II) the enforcement authorities

19 specified in an applicable Tribal-State

20 compact negotiated under section 11

21 of the Indian Gaming Regulatory Act

22 shall be carried out in accordance

23 with that compact.

24 (ii) RULE OF CONSTRUCTION.—No

25 provision of this section shall be construed


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•HR 21 IH

1 as altering, superseding, or otherwise af2 fecting the application of the Indian Gam3 ing Regulatory Act.

4 (3) EXPEDITED PROCEEDINGS.—In addition to

5 any proceeding under paragraph (2), a district court

6 may, in exigent circumstances, enter a temporary re7 straining order against a person alleged to be in vio8 lation of this section upon application of the United

9 States under paragraph (2)(A), or the attorney gen10 eral (or other appropriate State official) of an af11 fected State under paragraph (2)(B), in accordance

12 with Rule 65(b) of the Federal Rules of Civil Proce13 dure.

14 (4) LIMITATION RELATING TO INTERACTIVE

15 COMPUTER SERVICES.—

16 (A) IN GENERAL.—Relief granted under

17 this subsection against an interactive computer

18 service shall—

19 (i) be limited to the removal of, or dis20 abling of access to, an online site violating

21 this section, or a hypertext link to an on22 line site violating this section, that resides

23 on a computer server that such service

24 controls or operates; except this limitation

25 shall not apply if the service is subject to


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•HR 21 IH

1 liability under this section pursuant to sub2 section (e);

3 (ii) be available only after notice to

4 the interactive computer service and an op5 portunity for the service to appear are pro6 vided;

7 (iii) not impose any obligation on an

8 interactive computer service to monitor its

9 service or to affirmatively seek facts indi10 cating activity violating this section;

11 (iv) specify the interactive computer

12 service to which it applies; and

13 (v) specifically identify the location of

14 the online site or hypertext link to be re15 moved or access to which is to be disabled.

16 (B) COORDINATION WITH OTHER LAW.—

17 An interactive computer service that does not

18 violate this section shall not be liable under sec19 tion 1084 of title 18, except this limitation shall

20 not apply if an interactive computer service has

21 actual knowledge and control of bets and wa22 gers and—

23 (i) operates, manages, supervises, or

24 directs an Internet website at which unlaw25 ful bets or wagers may be placed, received,


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•HR 21 IH

1 or otherwise made or at which unlawful

2 bets or wagers are offered to be placed, re3 ceived, or otherwise made; or

4 (ii) owns or controls, or is owned or

5 controlled by, any person who operates,

6 manages, supervises, or directs an Internet

7 website at which unlawful bets or wagers

8 may be placed, received, or otherwise made

9 or at which unlawful bets or wagers are of10 fered to be placed, received, or otherwise

11 made.

12 (5) FACTORS TO BE CONSIDERED IN CERTAIN

13 CASES.—In considering granting relief under this

14 subsection against any payment system, or any par15 ticipant in a payment system that is a creditor, cred16 it card issuer, financial institution, operator of a ter17 minal at which an electronic fund transfer may be

18 initiated, money transmitting business, or inter19 national, national, regional, or local network utilized

20 to effect a credit transaction, electronic fund trans21 fer, or money transmitting service, or a participant

22 in such network, the court shall consider the fol23 lowing factors:

24 (A) The extent to which such person is ex25 tending credit or transmitting funds knowing


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•HR 21 IH

1 the transaction is in connection with unlawful

2 Internet gambling.

3 (B) The history of such person in extend4 ing credit or transmitting funds knowing the

5 transaction is in connection with unlawful

6 Internet gambling.

7 (C) The extent to which such person has

8 established and is maintaining policies and pro9 cedures in compliance with regulations pre10 scribed under subsection (f).

11 (D) The feasibility that any specific rem12 edy prescribed in the order issued under this

13 subsection can be implemented by such person

14 without substantial deviation from normal busi15 ness practice.

16 (E) The costs and burdens the specific

17 remedy will have on such person.

18 (6) NOTICE TO REGULATORS AND FINANCIAL

19 INSTITUTIONS.—Before initiating any proceeding

20 under paragraph (2) with respect to a violation or

21 potential violation of this section by any creditor,

22 credit card issuer, financial institution, operator of a

23 terminal at which an electronic fund transfer may be

24 initiated, money transmitting business, or inter25 national, national, regional, or local network utilized


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•HR 21 IH

1 to effect a credit transaction, electronic fund trans2 fer, or money transmitting service, or any partici3 pant in such network, the Attorney General of the

4 United States or an attorney general of a State (or

5 other appropriate State official) shall—

6 (A) notify such person, and the appro7 priate regulatory agency (as determined in ac8 cordance with subsection (f)(5)) for such per9 son, of such violation or potential violation and

10 the remedy to be sought in such proceeding;

11 and

12 (B) allow such person 30 days to imple13 ment a reasonable remedy for the violation or

14 potential violation, consistent with the factors

15 described in paragraph (5) and in conjunction

16 with such action as the appropriate regulatory

17 agency may take.

18 (d) CRIMINAL PENALTY.—

19 (1) IN GENERAL.—Whoever violates this section

20 shall be fined under title 18, United States Code, or

21 imprisoned for not more than 5 years, or both.

22 (2) PERMANENT INJUNCTION.—Upon convic23 tion of a person under this subsection, the court

24 may enter a permanent injunction enjoining such

25 person from placing, receiving, or otherwise making


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17

•HR 21 IH

1 illegal bets or wagers or sending, receiving, or invit2 ing information assisting in the placing of bets or

3 wagers.

4 (e) CIRCUMVENTIONS PROHIBITED.—Notwith5 standing subsection (b)(2), a creditor, credit card issuer,

6 financial institution, operator of a terminal at which an

7 electronic fund transfer may be initiated, money transmit8 ting business, or international, national, regional, or local

9 network utilized to effect a credit transaction, electronic

10 fund transfer, or money transmitting service, or any par11 ticipant in such network, or any interactive computer serv12 ice or telecommunications service, may be liable under this

13 section if such creditor, issuer, institution, operator, busi14 ness, network, or participant has actual knowledge and

15 control of bets and wagers and—

16 (1) operates, manages, supervises, or directs an

17 Internet website at which unlawful bets or wagers

18 may be placed, received, or otherwise made or at

19 which unlawful bets or wagers are offered to be

20 placed, received, or otherwise made; or

21 (2) owns or controls, or is owned or controlled

22 by, any person who operates, manages, supervises,

23 or directs an Internet website at which unlawful bets

24 or wagers may be placed, received, or otherwise


I21.AAR
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18

•HR 21 IH

1 made or at which unlawful bets or wagers are of2 fered to be placed, received, or otherwise made.

3 (f) POLICIES AND PROCEDURES TO IDENTIFY AND

4 PREVENT RESTRICTED TRANSACTIONS IN PAYMENT FOR

5 UNLAWFUL INTERNET GAMBLING.—

6 (1) REGULATIONS.—Before the end of the 6-

7 month period beginning on the date of the enact8 ment of this Act, the Secretary of the Treasury, in

9 consultation with the Board of Governors of the

10 Federal Reserve System and the Attorney General,

11 shall prescribe regulations requiring any designated

12 payment system to establish policies and procedures

13 reasonably designed to identify and prevent re14 stricted transactions in any of the following ways:

15 (A) The establishment of policies and pro16 cedures that—

17 (i) allow the payment system and any

18 person involved in the payment system to

19 identify restricted transactions by means of

20 codes in authorization messages or by

21 other means; and

22 (ii) block restricted transactions iden23 tified as a result of the policies and proce24 dures developed pursuant to clause (i).


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•HR 21 IH

1 (B) The establishment of policies and pro2 cedures that prevent the acceptance of the

3 products or services of the payment system in

4 connection with a restricted transaction.

5 (2) REQUIREMENTS FOR POLICIES AND PROCE6 DURES.—In prescribing regulations pursuant to

7 paragraph (1), the Secretary shall—

8 (A) identify types of policies and proce9 dures, including nonexclusive examples, which

10 would be deemed to be ‘‘reasonably designed to

11 identify’’ and ‘‘reasonably designed to block’’ or

12 to ‘‘prevent the acceptance of the products or

13 services’’ with respect to each type of trans14 action, such as, should credit card transactions

15 be so designated, identifying transactions by a

16 code or codes in the authorization message and

17 denying authorization of a credit card trans18 action in response to an authorization message;

19 (B) to the extent practical, permit any par20 ticipant in a payment system to choose among

21 alternative means of identifying and blocking,

22 or otherwise preventing the acceptance of the

23 products or services of the payment system or

24 participant in connection with, restricted trans25 actions; and


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20

•HR 21 IH

1 (C) consider exempting restricted trans2 actions from any requirement under paragraph

3 (1) if the Secretary finds that it is not reason4 ably practical to identify and block, or otherwise

5 prevent, such transactions.

6 (3) COMPLIANCE WITH PAYMENT SYSTEM POLI7 CIES AND PROCEDURES.—A creditor, credit card

8 issuer, financial institution, operator of a terminal at

9 which an electronic fund transfer may be initiated,

10 money transmitting business, or international, na11 tional, regional, or local network utilized to effect a

12 credit transaction, electronic fund transfer, or money

13 transmitting service, or a participant in such net14 work, meets the requirement of paragraph (1) if—

15 (A) such person relies on and complies

16 with the policies and procedures of a designated

17 payment system of which it is a member or par18 ticipant to—

19 (i) identify and block restricted trans20 actions; or

21 (ii) otherwise prevent the acceptance

22 of the products or services of the payment

23 system, member, or participant in connec24 tion with restricted transactions; and


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21

•HR 21 IH

1 (B) such policies and procedures of the

2 designated payment system comply with the re3 quirements of regulations prescribed under

4 paragraph (1).

5 (4) NO LIABILITY FOR BLOCKING OR REFUSING

6 TO HONOR RESTRICTED TRANSACTIONS.—A person

7 that is subject to a regulation prescribed or order

8 issued under this subsection and blocks, or otherwise

9 refuses to honor, a restricted transaction, or as a

10 member of a designated payment system relies on

11 the policies and procedures of the payment system,

12 in an effort to comply with this section shall not be

13 liable to any party for such action.

14 (5) ENFORCEMENT.—This subsection shall be

15 enforced by the Federal functional regulators and

16 the Federal Trade Commission under applicable law

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

18 Gramm-Leach-Bliley Act.

19 SEC. 4. INTERNET GAMBLING IN OR THROUGH FOREIGN

20 JURISDICTIONS.

21 (a) IN GENERAL.—In deliberations between the

22 United States Government and any other country on

23 money laundering, corruption, and crime issues, the

24 United States Government should—


I21.AAV
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22

•HR 21 IH

1 (1) encourage cooperation by foreign govern2 ments and relevant international fora in identifying

3 whether Internet gambling operations are being used

4 for money laundering, corruption, or other crimes;

5 (2) advance policies that promote the coopera6 tion of foreign governments, through information

7 sharing or other measures, in the enforcement of

8 this Act; and

9 (3) encourage the Financial Action Task Force

10 on Money Laundering, in its annual report on

11 money laundering typologies, to study the extent to

12 which Internet gambling operations are being used

13 for money laundering.

14 (b) REPORT REQUIRED.—The Secretary of the

15 Treasury shall submit an annual report to the Congress

16 on the deliberations between the United States and other

17 countries on issues relating to Internet gambling.

18 SEC. 5. AMENDMENTS TO GAMBLING PROVISIONS.

19 (a) AMENDMENT TO DEFINITION.—Section 1081 of

20 title 18, United States Code, is amended—

21 (1) by designating the five undesignated para22 graphs that begin with ‘‘The term’’ as paragraphs

23 (1) through (5), respectively; and

24 (2) in paragraph (5), as so designated—


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•HR 21 IH

1 (A) by striking ‘‘wire communication’’ and

2 inserting ‘‘communication’’;

3 (B) by inserting ‘‘satellite, microwave,’’

4 after ‘‘cable,’’; and

5 (C) by inserting ‘‘(whether fixed or mo6 bile)’’ after ‘‘connection’’.

7 (b) INCREASE IN PENALTY FOR UNLAWFUL WIRE

8 TRANSFERS OF WAGERING INFORMATION.—Section

9 1084(a) of title 18, United States Code, is amended by

10 striking ‘‘two years’’ and inserting ‘‘5 years’’.

Æ


I21.AAX
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Chairman SENSENBRENNER. And the Chair recognizes the gentleman from North Carolina to strike the last word. 

Mr. COBLE. I thank the Chairman. 

Mr. Chairman, H.R. 21, the ‘‘Unlawful Internet Gambling Funding Prohibition Act,’’ introduced by Congressman Jim Leach, addresses a serious concern for many Americans; that is, the problem 

of Internet gambling. 

It is now estimated that 4.2 billion is wagered over the Internet each year. This is an increase from $445 million just 6 years ago. 

There are currently more than 1,800 Internet gambling sites, and 

the total dollar amount wagered worldwide is expected to reach 10 

billion in the near future. 

The most troubling aspect of Internet gambling is the relative 

ease of accessibility for our Nation’s children. The anonymous nature of the Internet makes it almost impossible to prevent underage gamblers from using their parents’ credit cards, or even their 

own in some cases, to log on to a Web site. 

Another group of people particularly susceptible to Internet gambling are America’s problem gamblers. The National Council of 

Problem Gambling estimates that there are currently 11 million 

Americans directly suffering from gambling problems. High rates of 

financial debt, unemployment, bankruptcy, divorce, homelessness, 

and suicide are all associated with problem gambling. Virtual casinos and their video game structure have been labeled the crack cocaine of gambling. These facilities are open 24 hours a day, 7 days 

a week, all within a person’s own home. By making gambling more 

convenient, it can do nothing but make the problem worse, it seems 

to me. 

In addition to the social problems associated with Internet gambling, these Internet sites also offer organized crime groups a very 

simple opportunity to launder the proceeds of their criminal activities. Because of the lack of oversight or regulations and the high 

degree of anonymity, money laundering through Internet gambling 

sites is already a major concern to our Nation’s law enforcement 

agencies. 

Federal law is currently unclear as to whether or not all types 

of Internet gambling is illegal. H.R. 21 is intended to make it crystal clear that operating a gambling business on the Internet is, in 

fact, illegal. 

This bill creates a new crime of accepting financial instruments 

such as credit cards or electronic fund transfers for debts incurred 

in illegal Internet gambling. 

Also, because the perpetrators of this crime are offshore and beyond the reach of U.S. law enforcement tactics, the bill enables 

State and Federal attorneys general to request that injunctions be 

issued to any party, such as financial institutions and Internet 

service providers, to assist in the prevention or restraint of this 

crime. 

Finally, the bill allows Federal bank regulators to create rules requiring financial institutions to use designated methods to block or 

filter illegal Internet gambling transactions. 

Mr. Speaker, I urge my colleagues to support this legislation, and 

I yield back the balance of my time. 

Chairman SENSENBRENNER. The gentleman from Michigan. 

Mr. CONYERS. Thank you, Mr. Chairman. 

43

This is our annual Internet gambling bill that we have to deal 

with on a yearly basis. And in this ritual, the Congress considers 

a bill that is supposed to prohibit Internet gambling, but actually 

expands it. 

By the way, to my friend from Carolina, Mr. Coble, didn’t the Department of Justice have some reservations about this bill? I yield. 

Mr. COBLE. Not known to me, Mr. Conyers. Perhaps they did, 

but I am not aware of it. 

Mr. CONYERS. Did they testify before this Subcommittee? They 

testified, and they pointed out it would permit more gambling. 

Now, the bill has a different name, but it is the same game. 

While proponents—you know, we talk about the evils of gambling. 

Did Bennett testify before your Subcommittee, Mr. Chairman—

Subcommittee Chairman? Did Bill Bennett testify before your Subcommittee? 

Mr. COBLE. He did not. 

Mr. CONYERS. He didn’t. Okay. Proponents talk about the evils 

of gambling, and they expand it yet for horse racing, dog racing. 

And the bill explicitly carves out for any lawful transaction within 

a business license or authorized by the State—that translates into 

horse racing, dog racing, on Internet sites—it doesn’t require that 

these businesses be licensed for Internet gambling, just any kind 

of license will do. 

Now, we dealt with this last year, and it is back again in a new 

form. 

Now, what about lotteries? Boy, there I am proud to join with the 

Free Congress Foundation, the Traditional Values Coalition, that 

say that this bill will expand gambling. And so this is a critical 

issue here. Either at the hearings, which we are so happy to have 

at the Subcommittee level, either supports that it expands gambling or it doesn’t. The United States Department of Justice suggested that in its present form, it would. So all we are saying is 

this: Instead of imposing an Internet gambling prohibition that will 

drive many Internet gambling operations offshore—that is the 

problem we have here—into the hands of the unscrupulous, why 

don’t we in the Committee set an example by examining the feasibility of strictly licensing and regulating the on-line gaming industry? A gambling industry will ensure that gaming companies play 

fair and drive out the disreputable operators in the field. It also, 

incidentally—if anybody cares anymore—it preserves States rights. 

The rules should be simple. If the State does not want to allow 

gambling in its borders, a licensed operator should exclude the 

State’s residents from being able to gamble on its Web site. That 

is why we have another bill, 1223, that will create a national Internet gambling licensing regulation study commission to go into this. 

Now, the R’s and the D’s in this Committee have stood together 

against those who wanted to regulate the Internet and restrict its 

boundaries, and so I hope we don’t head down that road to break 

up this bipartisan opposition that we have enjoyed in the previous 

years. 

Thank you, Mr. Chairman. 

Chairman SENSENBRENNER. The gentleman’s time has expired. 

Are there other amendments? The gentleman from Utah, Mr. Cannon. 

44

Mr. CANNON. Thank you, Mr. Chairman. I have an amendment 

at the desk. 

Chairman SENSENBRENNER. The clerk will report the amendment. 

The CLERK. Amendment to H.R. 21 offered by Mr. Cannon: 

Page 6, strike line 15 and all that follows through line 16. 

Make appropriate clerical and technical changes. 

[The amendment follows:]

Chairman SENSENBRENNER. The gentleman from Utah is recognized for 5 minutes. 

Mr. CANNON. Thank you, Mr. Chairman. 

I would like to start off by just pointing out that I am against 

gambling, I don’t like gambling, and agree with the expression of 

the Chairman of the Crime Subcommittee as to the vices that are 

associated with gambling, including youth gambling, people who 

get addicted and carried away. Did I hear that this bill was called 

the Bennett bill earlier today somewhere, Mr. Chairman? 

There are all kinds of problems with gambling. Utah is one of 

only two States left in the Union that prohibits all forms of gambling. Hawaii is the only one. We are feeling a little bit in the minority in Utah, and it is my determination to protect Utah from the 

invasion of gambling outside and in particular on the Internet. 

It is my view that whatever we do in this body should limit gambling. There are some disagreements on that, I understand, but in 

my view is that we ought to be limiting gambling. And, secondly, 

where we can’t limit it, we ought to be thinking in terms of regulation. And, in fact, while there are difficulties in regulating offshore 

entities, there are entities offshore that want to be regulated and 

therefore subject themselves to the jurisdiction of the United States 

and, therefore, prosecution of illegality and crime. 

Now, there are a couple problems with this bill, and I don’t want 

to mix them up in my amendment. I have passed out letters from 

several people that I will come to in a moment, but the opposition 

to the bill breaks down to a couple of things. 

The first is the burden that this bill would create on the Internet. I agree with that, and the statements of people that believe 

that this bill would be a burden on the Internet. I encourage you 

to read the letters that we passed out and that I will make part 


Cannon.eps
45

of the record shortly. That is very important to me, so I oppose the 

underlying bill. 

But, secondly, as I read this bill and several other people read 

it, this bill—the section that I am striking, III(b)(1)(e)(ix), on page 

6, lines 15 and 16, specifically exempt from the definition of bets 

or wagers any lawful transaction with a business license or authorized by the State. This would exempt, in my view, horse racing, dog 

racing, lotteries, and in some cases casino-style wagers. 

In support of that view—actually, in support of the bill we have, 

the New York Thoroughbred Breeders, Inc., which would like this 

bill because they view it as, I believe—in fact, Mr. Chairman, I 

would like to make four letters part of the record. 

Chairman SENSENBRENNER. Without objection. 

[The material referred to follows:]

46


Sheldon.eps
47


FCF1.eps
48


FCF2.eps
49


AFTR.eps
50


Chamber1.eps
51


Chamber2.eps
52

Mr. CANNON. And request to do that. 

The second letter is from the Conservative Free Congress Foundation. And the gist of this letter is that, first of all, there are— this section creates carveouts for horse racing, dog racing, and jai 

alai; and, secondly, that it is not good to regulate commerce on the 

Internet. The Chamber of Commerce focuses on the enforcement 

mechanism, and points out that electronic checks or electronic debt 

transactions don’t have the same system that credit cards have 

today, and that the current bill would encumber the development 

of those transactions. 

The Traditional Values Coalition focuses with clarity on the 

carveouts. 

And then, finally, a letter from the Americans for Tax Reform opposes this on the basis that it creates additional costs on financial 

institutions, and also that it chooses winners and losers in Internet 

commerce. 

The U.S. Department of Justice and the National Association of 

Attorneys General have concerns about the carveout. In testimony 

before the Senate Banking Committee, John Malcomb of the U.S. 

Department of Justice testified that the aforementioned section 

was one of the reasons DOJ could not endorse Senate 627, which 

is nearly identical to H.R. 21. Testifying on behalf of the National 

Association of Attorneys General, Richard Blumenthal, the Attorney General of Connecticut, warned that under that bill the exceptions could swallow the rule. In testimony before the House Judiciary Committee, when asked if that section of H.R. 21 would allow 

lotteries to go on-line, Malcomb responded: Absolutely. 

H.R. 21 is not really an Internet gambling prohibition bill. In 

fact, it is an Internet gambling industrial policy bill, defining a favored class of State-sponsored Internet gambling. Last year, during 

consideration of a similar bill in the 107th Congress, the Judiciary 

Committee voted overwhelmingly against allowing carveouts in 

Internet gaming legislation. 

Chairman. SENSENBRENNER. The gentleman’s time has expired. 

Mr. CANNON. Thank you, Mr. Chairman. I yield back. 

Chairman SENSENBRENNER. The gentleman from Florida, Mr. 

Keller. 

Mr. KELLER. Thank you, Mr. Chairman. I move to strike the last 

word. 

Chairman SENSENBRENNER. The gentleman is recognized for 5 

minutes. 

Mr. KELLER. Mr. Cannon’s amendment I believe is very well-intentioned. In fact, the last time around, I tell you that I voted in 

favor of it. This time, however, I am going to vote against it, and 

I will tell you why. 

First, I think it makes this bill unnecessarily controversial. Second, it interferes with States’ rights. And, third, most importantly—for me anyway—is that this bill will have the effect, albeit 

unintentionally, of killing this legislation. And we don’t have to 

guess, because last year after we put this in the bill, the legislation 

was never even brought to a floor vote based on its controversial 

nature. 

I want to see this legislation pass. I am a big fan of Mr. Cannon 

both personally and in terms of his legislative prowess, and I am 

certain that his heart is in the right place. But as a practical matVerDate Jan 31 2003 18:38 May 27, 2003 Jkt 019010 PO 00000 Frm 00052 Fmt 6659 Sfmt 6601 E:\HR\OC\HR51P2.XXX HR51P2
53

ter, because I want to see this pass, I am going to vote no, and I 

would urge other people to consider doing the same. 

Mr. CANNON. Would the gentleman yield? 

Mr. KELLER. I will. 

Mr. CANNON. I thank the gentleman. I don’t know if this will kill 

the legislation or not. Last year, the sponsor, in the Judiciary Committee, of the bill congratulated me for making the bill more conservative. I think that that is clearly the case. 

There is an alternative to the bill and the way we are doing it. 

And, if it can’t be passed without the carveouts, then it probably 

shouldn’t be passed. I think the only thing we can really do that 

makes a difference is to regulate. And I don’t know how to did that 

yet. And so Mr. Conyers and I have introduced a bill that would 

propose a study for doing that. I think the weight of the problems 

of this bill are greater than any good that might come out of it, and 

I will tell you that from my perspective and from the State of 

Utah—we don’t have anyone here from Hawaii, but I suspect the 

feeling would be the same there—this is insidious. The section that 

I am moving to strike is either irrelevant—in other words, it won’t 

kill the bill to take it out—or it is insidious. If it is insidious, then 

it ought to come out for the sake of Utah and Hawaii and all the 

other States that want to limit gambling around the country. 

Thank you, And I yield back. 

Mr. KELLER. Mr. Cannon, and just to reclaim my time. I certainly respect what you have to say. I guess it just comes down to 

the fact that ultimately I would rather have 90 percent of a loaf 

of bread than no loaf, frankly. And, with that, I will yield back. 

Chairman SENSENBRENNER. The gentleman from Florida, Mr. 

Wexler. 

Mr. WEXLER. Thank you, Mr. Chairman. And I move to strike 

the last word. 

Chairman SENSENBRENNER. The gentleman is recognized for 5 

minutes. 

Mr. WEXLER. Thank you. 

I, too, am a big fan of Mr. Cannon, and I very much appreciate 

his candor at the beginning of the explanation of his amendment, 

which is, he very rightfully says he does not like gambling. 

[11:00 a.m.] 

Mr. WEXLER. And Mr. Cannon rightfully points out that the 

State which he represents is apparently one of two, as I understand it, that specifically prohibit gambling in the context that he 

speaks of. The issue is not whether Mr. Cannon or any one of us 

likes or doesn’t like gambling. If I understand Mr. Cannon’s 

amendment correctly, the issue is whether we are going to make 

a policy that says Americans cannot use credit cards for behavior 

that is entirely legal. That is the question. 

I think smoking is awful, but I would never suggest that Americans shouldn’t be able to use credit cards to purchase cigarettes because I happen to think it is a bad thing. Or I wouldn’t argue that 

somebody shouldn’t be able to use a credit card to purchase alcohol 

because I may think alcohol may not be the right thing or there 

is a list, God knows, we could all come up with of behaviors that 

people may find objectionable. 

The issue here is whether or not Congress is going to make a policy that says Americans cannot use credit cards to engage in a beVerDate Jan 31 2003 18:38 May 27, 2003 Jkt 019010 PO 00000 Frm 00053 Fmt 6659 Sfmt 6601 E:\HR\OC\HR51P2.XXX HR51P2
54

havior which in their State is legal. That is the only issue. And Mr. 

Cannon, very honestly and deliberately, says he believes that because gambling is bad we as a national legislature should prohibit 

Americans from using credit cards for a——

Mr. CANNON. Would the gentleman yield? That is not exactly 

what I am saying. The underlying bill prohibits using credit cards, 

and I agree with everything the gentleman has said up to this 

point. I am only suggesting—I don’t like that. I would associate 

myself with your comments up to this point. In my amendment, all 

we are doing is limiting the extension of this bill to the State of 

Utah. In other words, the amendment I am making either removes 

an irrelevant piece of this bill or removes a piece of this bill which 

is insidious. 

Mr. Keller’s comment that this amendment makes the bill controversial. If the gentleman doesn’t want to limit credit card access 

to gambling, then he would want to support my bill if he believes 

that Mr. Keller is correct that my amendment would make the bill 

more controversial. 

I yield back. 

Mr. WEXLER. If I may retake my time for just a quick moment. 

As I understand the bill, if any State prohibits a behavior or activity, then this bill would not give people the right to engage in it. 

Only activity which is legal under a State’s law, that is the activity 

in which that an individual can engage in. In Utah, if it is already 

illegal, it would seem to me already under this bill, Mr. Cannon, 

you and the people of Utah have nothing to worry about. 

Mr. GOODLATTE. Would the gentleman yield? I thank the gentleman for yielding. The gentleman from Florida is exactly right. 

This has no impact on the people of the State of Utah because the 

State of Utah, as the gentleman correctly notes, is one of two 

States that don’t allow any type of gambling. So the language he 

seeks to strike, which says any lawful transaction with a business 

licensed or authorized by a State, clearly does not affect the State 

of Utah. 

Mr. WEXLER. I yield to Mr. Cannon. He wanted time. 

Mr. CANNON. Thank you. If that was the case then there 

wouldn’t be a question about making the bill more controversial 

with my amendment. 

Mr. WEXLER. Retaking my time, yes, because it seems that your 

amendment would make it so that in other States where there is, 

in fact, legal activity it would prohibit the use of credit cards by 

those citizens. 

Mr. CANNON. No, no. That is the underlying bill that does that. 

Mr. WEXLER. No. The underlying bill allows credit card use if it 

is for a legal activity already sanctioned in the State. If it is not 

sanctioned, then you can’t do it anyway. 

Mr. CONYERS. Could I ask my friend, have you seen page 3 of 

this bill in which casinos can’t use credit cards? And I will read it 

to you just in case you may not have seen it. Means the staking 

or risking by any person or something of value upon the outcome 

of a contest, a sporting event, now catch this, or a game subject to 

chance. And so you are absolutely right, Mr. Cannon, that what we 

are doing for one we are now not doing for the others. We are saying that casinos where it is lawful can’t use credit cards. Now so 

55

much for people smoking and not being able to use credit cards and 

gamblers not being able to—— Chairman SENSENBRENNER. Gentleman’s time has expired. 

Mr. CONYERS.—what is wrong with casinos? Why do casinos get 

discriminated? 

Chairman SENSENBRENNER. The gentleman from North Carolina, 

Mr. Coble. 

Mr. COBLE. Mr. Chairman, I want to associate myself with the 

glowing comments that have been directed in the direction of Mr. 

Cannon. I also am an avid fan of Mr. Cannon, however, I oppose 

this amendment. Not unlike much legislation that comes before us, 

Mr. Chairman, conclusions are oftentimes subject to interpretation. 

It is my belief that Mr. Wexler and Mr. Goodlatte are on the 

money. It is my belief—no pun intended—maybe I should strike 

that. 

Chairman SENSENBRENNER. Would the gentleman yield? Do you 

have a license from North Carolina for that? 

Mr. COBLE. We will strike that previous word. I believe Mr. 

Wexler and Mr. Goodlatte are correct in that if this bill passes in 

its present form, I believe that gambling would still be unlawful in 

Utah. Now I think Mr. Cannon probably does not agree with that, 

but I oppose the amendment further because it would strike the 

provision of the bill that states that the term ‘‘bets or wages’’ does 

not include any lawful transaction with a business licensed or authorized by a State. This provision is duplicative of the actual definition of unlawful Internet gambling as it appears on page 8 of the 

bill which is defined as a bet or wager that is unlawful under any 

applicable Federal or State law. 

I am told that some groups feel that this is a carve-out in their 

favor from the prohibition set forth in the bill. I believe that those 

groups are misinterpreting current law and with or without this 

provision will have to contend with the prohibitions of the Wire 

Act. Contrary to what some have said, this subsection does not 

serve as a loophole for the expansion of gambling. 

First, the provision requires a State to authorize or license the 

business. This requires action by the States so that Internet gambling sites do not justify their existence with the fact that a State 

does not specifically forbid that activity. 

Second, the transaction must be lawful to fall under the exemption. In other words, the authorization or license must be consistent with State and Federal law. For example, in order not to 

violate the Wire Act, a State that wants to sell lottery tickets online would have to show that nobody outside of that State is able 

to purchase those tickets online. And I believe, Mr. Chairman, with 

current technology this is practically impossible. I believe the language that the gentleman seeks to strike simply preserves the ability of States to regulate gambling. Because of this I would ask my 

colleagues to oppose the amendment. 

Mr. CANNON. Mr. Coble, would you yield for a question? We had 

testimony the other day that indicated that MGM could limit the 

place from which people were placing bets, at least with current 

technology. Are you suggesting by your comments that no State lottery could go online because of the prohibition—because they would 

have an almost impossible time proving that no one in Utah could 

place a bet on a lottery from, say, Tennessee? 

56

Mr. COBLE. With current technology, yeah. 

Mr. CANNON. In other words, you are saying that Tennessee will 

not go online with its lottery because Tennessee cannot prove that 

it cannot prohibit people in Utah from betting? 

Mr. COBLE. That is my belief. 

Mr. CANNON. With all due respect, I don’t want this law to turn 

on technology or the lack thereof. I don’t think that we can rely on 

that. I think if this is duplicative, as you just said, then it ought 

to come out. I don’t see a purpose for it if it is duplicative. If it is 

not duplicative then we are going to have judges and appeals 

courts determining what this actually means from their own light 

instead of the light we are trying to shine here. If this does what 

I believe it does, which is create carveouts, it ought to go, or at 

least we want to be clear about that as they vote. If it is duplicative then it ought to go. 

Mr. COBLE. Let me reclaim. I think what I have tried to make 

clear is the fact that I think this bill in its present form preserves 

the right for States to regulate gambling. And with that I yield 

back. 

Chairman SENSENBRENNER. The question is on the adoption——

Mr. GOODLATTE. Mr. Chairman. 

Chairman SENSENBRENNER. Gentleman from Virginia, Mr. Goodlatte. 

Mr. GOODLATTE. Mr. Chairman, I move to strike the last word. 

Chairman SENSENBRENNER. The gentleman is recognized for 5 

minutes. 

Mr. GOODLATTE. Thank you, Mr. Chairman. I will be brief. I 

want to associate myself with the remarks of the Chairman of the 

Subcommittee, the gentleman from Florida, in opposition to this 

amendment. Now it is noteworthy that both gentlemen from Florida voted for a Cannon amendment when a different bill came before this Committee last year, but therein lies the key. This is a 

very different piece of legislation than the legislation that I brought 

before the Committee last year. This is the legislation that came 

from the Financial Services Committee passed by Mr. Oxley and 

Mr. Leach. They strongly opposed this amendment because they 

know that it gets back to the problems everybody told me they had 

with my bill last time. 

We don’t need to jump back into that thicket. We need to address 

this legislation. It has an incredibly wide basis of support. The gentleman cited some letters he made a part of the record which were 

conflicting. Some of those folks like Free Congress don’t want any 

regulation on the Internet. Others like the Traditional Values want 

total regulation on the Internet. These are the groups, however, 

who support this specific bill and not the Cannon amendment: The 

National Collegiate Athletic Association, Major League Baseball, 

the Family Research Council, the United Methodist Church, the 

American Family Association, SBC, the United States Telephone 

Association, American Express, Morgan Stanley, Citigroup, Securities Industries Association, Christian Coalition, the National Football League, the Federal Law Enforcement Officers Association, the 

Family Foundation, Focus on the Family, Southern Baptist Convention, Presbyterian Church, Net Coalition.com, Qwest, Allegiance 

Telecom, the AARP, Household Finance, eBay, MBNA and ConVerDate Jan 31 2003 18:38 May 27, 2003 Jkt 019010 PO 00000 Frm 00056 Fmt 6659 Sfmt 6601 E:\HR\OC\HR51P2.XXX HR51P2
57

cerned Women for America. That is an amazingly broad based support for this legislation. 

Don’t spoil it by throwing it back into the thicket that I had you 

in in the last Congress. And believe me, I have learned from that. 

If you do, then suddenly you have this whole issue of whether or 

not certain groups, whether it is horses or dogs or jai alai or State 

lotteries 

Or casinos or Indians, you name it, whatever the group is, if they 

think that their current view of the law is affected by removing the 

right of the States to regulate gambling, which this bill preserves, 

they are going to be off of the sidelines and again involved in this 

thicket. We don’t need to go there with this kind of broad based 

support for the current bill. 

I urge my colleagues to oppose the amendment and support the 

underlying bill. 

Chairman SENSENBRENNER. Question is on the amendment offered by the gentleman from Utah, Mr. Cannon. Those in favor will 

say aye. Opposed no. The ayes appear to have it. 

Mr. CANNON. I ask for a rollcall. 

Chairman SENSENBRENNER. The question is on the Cannon 

amendment. Those in favor will as your name is called, answer 

aye. Those opposed no, and the Clerk will call the roll. 

The CLERK. Mr. Hyde. 

[no response.] 

The CLERK. Mr. Coble. 

Mr. COBLE. No. 

The CLERK. Mr. Coble votes no. 

Mr. Smith. 

Mr. SMITH. No. 

The CLERK. Mr. Smith votes no. 

Mr. Gallegly. 

[no response.] 

The CLERK. Mr. Goodlatte. 

Mr. GOODLATTE. No. 

The CLERK. Mr. Goodlatte votes no. 

Mr. Chabot. 

[no response.] 

The CLERK. Mr. Jenkins. 

[no response.] 

The CLERK. Mr. Cannon. 

Mr. CANNON. Aye. 

The CLERK. Mr. Cannon votes aye. 

Mr. Bachus. 

Mr. BACHUS. No. 

The CLERK. Mr. Bachus votes no. 

Mr. Hostettler. 

Mr. HOSTETTLER. Aye. 

The CLERK. Mr. Hostettler votes aye. 

Mr. Green. 

Mr. GREEN. Aye. 

The CLERK. Mr. Green votes aye. 

Mr. Keller. 

Mr. KELLER. No. 

The CLERK. Mr. Keller votes no. 

Ms. Hart. 

58

[no response.] 

The CLERK. Mr. Flake. 

[no response.] 

The CLERK. Mr. Pence. 

Mr. PENCE. No. 

The CLERK. Mr. Pence votes no. 

Mr. Forbes. 

[No response.] 

The CLERK. Mr. King. 

Mr. KING. No. 

The CLERK. Mr. King votes no. 

Mr. Carter. 

Mr. CARTER. No. 

The CLERK. Mr. Carter votes no. 

Mr. Feeney. 

Mr. FEENEY. No. 

The CLERK. Mr. Feeney votes no. 

Mrs. Blackburn. 

Mrs. BLACKBURN. Aye. 

The CLERK. Mrs. Blackburn votes aye. 

Mr. Conyers. 

Mr. CONYERS. Aye. 

The CLERK. Mr. Conyers votes aye. 

Mr. Berman. 

[no response.] 

The CLERK. Mr. Boucher. 

[no response.] 

The CLERK. Mr. Nadler. 

Mr. NADLER. No. 

The CLERK. Mr. Nadler votes no. 

Mr. Scott. 

Mr. SCOTT. No. 

The CLERK. Mr. Scott votes no. 

Mr. Watt. 

Mr. WATT. Aye. 

The CLERK. Mr. Watt votes aye. 

Ms. Lofgren. 

Ms. LOFGREN. Aye. 

The CLERK. Ms. Lofgren votes aye. 

Ms. Jackson Lee. 

Ms. JACKSON LEE. Aye. 

The CLERK. Ms. Jackson Lee votes aye. 

Ms. Waters. 

[no response.] 

The CLERK. Mr. Meehan. 

Mr. MEEHAN. Aye. 

The CLERK. Mr. Meehan votes aye. 

Mr. Delahunt. 

[no response.] 

The CLERK. Mr. Wexler. 

Mr. WEXLER. No. 

The CLERK. Mr. Wexler votes no. 

Ms. Baldwin. 

Ms. BALDWIN. Aye. 

The CLERK. Ms. Baldwin votes aye. 

59

Mr. Weiner. 

Mr. WEINER. Aye. 

The CLERK. Mr. Weiner votes aye. 

Mr. Schiff. 

Mr. SCHIFF. No. 

The CLERK. Mr. Schiff votes no. 

Ms. Sa ́nchez. 

Ms. SA ́ NCHEZ. Aye. 

The CLERK. Ms. Sa ́nchez votes aye. 

Mr. Chairman. 

Chairman SENSENBRENNER. Aye. 

The CLERK. Mr. Chairman votes aye. 

Chairman SENSENBRENNER. Additional Members wish to cast or 

change their vote? 

Gentleman from Ohio, Mr. Chabot. 

Mr. CHABOT. No. 

The CLERK. Mr. Chabot, no. 

Chairman SENSENBRENNER. Gentleman from Tennessee, Mr. 

Jenkins. 

Mr. JENKINS. Aye. 

The CLERK. Mr. Jenkins, aye. 

The CLERK. Gentlewoman from Pennsylvania, Ms. Hart. 

Ms. HART. No. 

The CLERK. Ms. Hart, no. 

Chairman SENSENBRENNER. Gentleman from California, Mr. Berman. 

Mr. BERMAN. Aye. 

The CLERK. Mr. Berman, aye. 

Chairman SENSENBRENNER. Further Members who wish to cast 

or change their votes? If not, the Clerk will report. 

Gentlewoman from California, Ms. Waters. 

Mr. NADLER. Mr. Chairman. 

Chairman SENSENBRENNER. Are there further Members? Gentlewoman from California, Ms. Waters. 

Ms. WATERS. Aye. 

The CLERK. Ms. Waters, aye. 

Chairman SENSENBRENNER. Further Members wish to cast or 

change their vote? If not, the Clerk will report. 

The CLERK. Mr. Chairman, there are 16 ayes and 15 nays. 

Chairman SENSENBRENNER. And the amendment is agreed to. 

Are there further amendments? 

Ms. JACKSON LEE. Mr. Chairman, I have an amendment at the 

desk. Amendment No. 1. 

Chairman SENSENBRENNER. The Clerk will report the amendment. 

The CLERK. Amendment to H.R. 21 offered by Ms. Jackson Lee. 

Unlawful Internet gambling, strike section 3. 

[The amendment follows:]


Lee1.eps
60

Chairman SENSENBRENNER. Gentlewoman is recognized for 5 

minutes. 

Ms. JACKSON LEE. Specifically, Mr. Chairman, thank you very 

much. And might I say that I am in support of understanding the 

impact of Internet gambling and would encourage this Committee 

at the appropriate time to support the Conyers-Cannon legislation 

that would allow us to do so. I think it is appropriate to note that 

I have been on record in supporting the concept and this bill in the 

past. I have no, if you will, skepticism of now approaching it from 

a different perspective and to also ask to move this bill or this theory along by supporting the legislation of Conyers-Cannon, but because I think we will gain a further understanding. 

But this amendment in particular strikes all of section 3. 

[The prepared statement of Ms. Jackson Lee follows:]

PREPARED STATEMENT OF THE HONORABLE SHEILA JACKSON LEE, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF TEXAS

Mr. Chairman and Mr. Ranking Member, I have serious reservations about H.R. 

21, the ‘‘Unlawful Internet Gambling Funding Act’’ because I believe that this legislation is premature, should be opposed by all of my colleague, or in the alternative, 

should be subjected to copious amendments. 

I have reservations about H.R. 21 because while I believe very strongly that internet gambling should be heavily regulated, I am not convinced that the bans proposed in H.R. 21 are the most prudent course of action at this time. 

We have several options that we should consider before imposing bans. For example, I believe the legislative option proposed by my distinguished colleague, and 

Ranking Member of the full Judiciary Committee, John Conyers in H.R. 1223 should 

be given our full consideration before imposing the bans in H.R. 21. Congressman 

Conyers recommend that we conduct further inquiries into the best ways to regulate 

the Internet gambling issue instead of rushing to ban portions of it. 

H.R. 21 prohibits Internet gambling businesses from accepting bets from credit 

cards, electronic fund transfers, money transmitting business transfers, and instruments or transactions drawn through financial institutions. It also grants Federal 

district courts jurisdiction over violations of bill, requires the Secretary of the Treasury to prescribe regulations on payment systems and policies to prevent restricted 

transactions, and calls for U.S. and foreign governments to cooperate to prevent 

money laundering and other crimes. 

The issue of Internet gambling is always debated vigorously. The Internet gambling industry receives wagers amounting to an estimated $4.2 billion dollars per 

year through 1,800 internet gambling sites. Internet gambling has a high likelihood 

of causing personal bankruptcy, provides a fertile ground for fraud and money laundering, is difficult for states to regulate, and offers an addictive and appealing gambling outlet for children. 

I was an original co-sponsor of H.R. 3215, an internet gambling bill considered 

in the last Congress, because of my grave concern that children and teenage gamblers, who have wide access to the Internet, will abuse the Internet for gambling. 

A study released by the American Psychological Association finds that pathological 

gambling is more prevalent among youths than adults. Between five and eight percent of young Americans and Canadians have a serious gambling problem, compared 

with one to three percent of adults. The study went on to say that with gambling 

becoming more accessible in U.S. society, it will be important to be able to intervene 

in children’s and adolescent’s lives before the activity can develop into a problem 

behavior. 

Many Internet gambling sites require bare minimum information from gamblers 

to participate. Security on bets placed over the Internet has proven ineffective. And 

unlike traditional regulated casinos, Internet operators have no demonstrated ability or requirement to verify a participant’s age or identification. Also, an Internet 

gambling site can easily take a person’s money, shut down their sites, and move on. 

Gambling over the Internet, particularly because of the danger it poses to our 

children, is an industry that I feel is in dire need of heavy regulation. Particularly, 

given the fact that the majority of our citizens and children have access to computers and the Internet, we must ensure that laws are in place to eliminate the potential harm of Internet gambling. 

I will propose two amendments to H.R. 21 specifically geared toward protecting 

children from the dangers of internet gambling. 

61

While I am concerned about the impact of Internet gambling and support rigorous 

regulation, I am also concerned that we have insufficient data to reach a conclusion 

at this time. For example, I recently met with representatives of Sure Fire Commerce, an on-line payment processing company that represents Internet gaming 

merchants. According to Sure Fire’s records, they receive approximately 60,000 complaints yearly from customers who found unrecognized charges on their credit cards. 

Of those 60,000 unrecognized charges an average of only 5 have been for underage 

gambling. While I find one incident of underage gambling unacceptable, Sure Fire’s statistics suggest that more study into the impact of Internet gambling is necessary. 

Additionally, there is also evidence that passing H.R. 21, and banning certain 

Internet gambling funding mechanisms, will worsen the problems of underage internet gambling. If U.S. financial institutions are prohibited from processing Internet 

gambling bets, habitual gamblers and children will be forced to make the bets 

through foreign financial institutions that are far less regulated. The global scope 

of the Internet makes these foreign financial institutions readily accessible. By passing H.R. 21 prematurely, we may not reduce the incidence of underage gambling 

or habitual gambling at all. We may simply force children and gambling addicts to 

use less credible betting outlets. 

Mr. Chairman and Mr. Ranking Member, I strongly believe that gambling is a 

protected individual freedom and personal choice. I also believe that the Congress 

should pass legislation that strictly regulates the gambling industry to prevent underage gambling, habitual gambling, and also money laundering. However, I feel 

that regulating such as massive industry should not be done without a comprehensive analysis to determine the most prudent regulations. For, these reasons I believe 

that H.R. 21 is premature, and I encourage my colleagues reconsider passing this 

legislation without ample amendment.

Mr. Chairman, the Committee is not in order. 

Chairman SENSENBRENNER. The gentlewoman is correct. The 

meeting will be in order. 

Ms. JACKSON LEE. The amendment strikes all of section 3. It 

leaves section 4, Internet gambling in or through foreign jurisdictions, United States and international countries cooperate to prevent money laundering. It leaves section 5, amendments to gambling provisions, increases penalty for unlawful wire transfers. This 

amendment removes the loophole riddled portion of the bill that 

creates significant new hardships on financial institutions, has 

troubling implications for Internet privacy and is probably unworkable. 

It leaves in place a simple amendment to the Wire Act, which is 

the current law banning the interstate transmission of bets or 

wages that makes clear that any bet that is illegal under current 

law over the telephone is also illegal on the Internet regardless of 

whether Internet wage passes through a wire, is wireless, satellite 

based on whatever. But what this does is of course manages to get 

us to where we would like to be, and that is to get a better understanding of this problem of Internet gambling and to allow this bill 

not to be shackled, if you will, with some of the aspects that have 

been controversial in the bill. 

I ask my colleagues to support it. 

[The prepared statement of Ms. Jackson Lee follows:]

PREPARED STATEMENT OF THE HONORABLE SHEILA JACKSON LEE, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF TEXAS

Mr. Chairman, I propose this amendment to H.R. 21 to strike Section 3 of the 

bill which contains the provisions prohibiting persons engaged in betting or wagering businesses from accepting credit, the proceeds of credit, electronic funds transfers, checks, drafts, or similar instruments, in connection with the participation of 

another person in unlawful Internet gambling. 

With Section 3 stricken, the bill would be streamlined to include only the provisions in Sections 4 and 5 dealing with encouraging cooperation between the United 

States and foreign countries in investigating Internet gambling operations as a possible avenue for money laundering, corruption, and other crimes. The amended bill 

62

would also advance policies to promote international cooperation, and encourage annual reports from the Financial Action Task Force on Money Laundering, and the 

Secretary of the Treasury to address international efforts to prevent money laundering through Internet gambling sites. Finally, the amended bill will amend the 

gambling provisions and increase the penalty for unlawful wire transfers of wagering information from two years to five years. 

I propose this amendment because the provisions of Section 3 of the bill have not 

been adequately researched. There remains substantial disagreement and debate 

about whether the bans proposed in H.R. 21 will actually do more to encourage unlawful Internet gambling than to prevent it. There is ample evidence that if H.R. 

21 is passed, Internet gamblers will be forced to place bets on websites based overseas. The overseas websites are fertile ground for unscrupulous businesses and may 

result in higher incidence of gambling addiction, gambling by minors, and money 

laundering. The provisions in Section 3 should be stricken and the most prudent 

means of regulating Internet gambling should be researched before an outright ban 

on the use of instruments from financial institutions is passed. 

For these reasons, Mr. Speaker, I propose this amendment to H.R. 21.

Chairman SENSENBRENNER. Gentlewoman yields back. The Chair 

recognizes himself for 5 minutes in opposition to the amendment. 

This amendment basically strikes the guts of the bill, which is the 

prohibition on the use of credit cards for unlawful Internet gambling. I don’t think we wish to have credit cards being used willynilly for any kind of gambling, whether it is lawful or unlawful. I 

would hope that this amendment would be defeated. 

I yield back the balance of my time. 

The question is on the Jackson Lee amendment. Those in favor 

will say aye. Opposed no. Noes appear to have it. The noes have 

it. 

Ms. JACKSON LEE. I have another amendment at the desk. 

Chairman SENSENBRENNER. The Clerk will report the second 

amendment. 

The CLERK. Amendment to H.R. 21 offered by Ms. Jackson Lee. 

Delete all language in section 3, subpart (a)(1). The deleted language reads one, credit or the proceeds of credit extended to or on 

behalf of such other person, including credit extended through the 

use of a credit card. Strike this language in full. 

[The amendment follows:]

Chairman SENSENBRENNER. Gentlewoman is recognized for 5 

minutes. 

Ms. JACKSON LEE. Mr. Chairman, this amendment specifically 

goes to what I think is the crux of the problem of this particular 

bill, and it removes credit cards from the scope of H.R. 21 because 

it does not make sense when credit cards can be an effective tool 


Lee2.eps
63

of age verification if minors are using it. It does not make sense 

in essence to utilize or have the bill structured as it is. In the Children’s Online Privacy Protection Act Congress allowed credit cards 

as a method of age verification to restrict access by minors to adult 

Web sites. Clearly I believe—I am not sure the intent to allegedly 

bring down the utilization of financial structures such as a credit 

card system to decrease access to gambling. You are also decreasing the access to information, to tracking, to utilizing financial 

products that might actually help solve the problem as opposed to 

enhance the problem. Certainly what you do is you keep us from 

being able to track overusage, abuse and certainly the use by minors. 

I think it is important for this aspect of the bill to be stricken, 

and I ask my colleagues to support it. 

[The prepared statement of Ms. Jackson Lee follows:]

PREPARED STATEMENT OF THE HONORABLE SHEILA JACKSON LEE, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF TEXAS

Mr. Chairman, I propose this amendment to H.R. 21 to protect minors from the 

dangers of Internet gambling. This amendment removes credit card transactions 

from the scope of the bill. 

As H.R. 21 is presently drafted, no betting or wagering businesses may knowingly 

accept credit cards, proceeds of credit, electronic fund transfers, monies transmitted 

through a money-transmitting business, or a check or similar draft, in connection 

with another person’s participation in unlawful Internet gambling. 

Allowing credit cards to be used in Internet gambling transactions helps to protect 

minors. Credit cards, unlike the other methods of payment prohibited in H.R. 21, 

provide safeguards that help to insure that minors do not engage in Internet gambling. For example, acquiring a credit card requires the individual to verify he or 

she has reached the age of 18. Credit cards are an effective method of verifying age 

because minors are not issued their own accounts. Credit card companies may also 

conduct a background or credit check to confirm the individual is of age. The procedures help to deter minors from using credit cards to gamble. 

In fact, in previous legislation passed by Congress to protect children from harmful Internet sites, credit cards were used as a deterrent. In the Children’s Online 

Privacy Protection Act (‘‘COPPA’’) Congress specifically allowed the use of credit 

cards as a method of age verification in order to restrict access by minors to 

websites containing adult material. By prohibiting the use of credit cards, H.R. 21 

ties the hands of law enforcement agencies and federal regulatory agencies like the 

FTC to ensure sufficient controls to identify minors who may attempt to gamble online. 

There are also transactional safeguards available from credit card companies that 

will help prevent Internet gambling by minors. For example, several of the major 

credit card companies have a coding system that tracks the type of merchandise 

that is being sold by a merchant. 

Mr. Speaker, Mr. Ranking Member, the age verification and merchandise tracking 

safeguards provided by credit cards are not sufficient alone to cure the problem of 

minors engaging in Internet gambling. However, these safeguards are a step in the 

right direction and they will prevent some minors from using Internet gambling 

websites. If we pass this legislation without amendment, H.R. 21 will eliminate the 

one proven method of effectively preventing children from accessing Internet gambling websites. For these reasons, I propose that H.R. 21 be amended so that credit 

cards can be used by betting and wagering businesses.

Chairman SENSENBRENNER. Gentlewoman yields back. 

Ms. JACKSON LEE. I yield back. 

Chairman SENSENBRENNER. The Chair recognizes himself for 5 

minutes in opposition of the amendment. This amendment is narrower but just as bad as her previous amendment. It allows for the 

use of credit cards to pay for unlawful gambling. I don’t think we 

should encourage that and I would really encourage my people on 

my left to complain about credit card companies passing out too 

many credit cards when the bankruptcy bill came up, to at least 

64

restrict the use of credit cards so they can’t be used to run up unlawful gambling debt. 

Yield back the balance of my time and urge a no vote on the 

amendment. 

The question is on the amendment by the gentlewoman from 

Texas, Ms. Jackson Lee. Those in favor will say aye. Opposed no. 

Noes appear to have it. The noes have it. The amendment is not 

agreed to. 

Are there further amendments? Gentleman from Virginia, Mr. 

Scott. 

Mr. SCOTT. Mr. Chairman, I have an amendment at the desk. 

Chairman SENSENBRENNER. The Clerk will report the amendment. 

[The amendment follows:]

Mr. SCOTT. Mr. Chairman, the amendment was drawn to the 

previous version of the bill. I ask unanimous consent that line 18 

be changed to line 20. 

Chairman SENSENBRENNER. Without objection. The gentleman is 

recognized for 5 minutes. 

Mr. SCOTT. Did the Clerk report the amendment, Mr. Chairman? 

Chairman SENSENBRENNER. The Clerk will report the amendment. 

The CLERK. Amendment to H.R. 21 offered by Mr. Scott of Virginia. Page 2, line 20, after ‘‘person’’ insert ‘‘may knowingly offer 

and no person.’’

Chairman SENSENBRENNER. The gentleman is recognized for 5 

minutes. 

Mr. SCOTT. Thank you, Mr. Chairman, and I appreciate you convening the markup. Mr. Chairman, I believe that gambling should 

be tightly regulated. It has traditionally been primarily a State regulatory responsibility. It should continue to be so in my judgment, 

although I think it is also appropriate for the Federal Government 

to have a role to assist the States in the total regulatory scheme. 

While I can appreciate the need to update the ability of the Department of Justice to address illegal gambling in today’s context, 

I am concerned that this bill, similar to the bills in the last several 

Congresses which have attempted to control Internet gambling, 

will not be likely to be effective in doing so. 

Mr. Chairman, this bill is not about prohibiting Internet gambling, it is only about regulating how you can bet on the Internet 

and then it is only affected in the United States Internet gambling 


Scott.eps
65

market. It is not about reducing Internet gambling because foreign 

sites are not affected. 

Regulating anything on the Internet is problematic even when it 

is desirable. Most law enforcement is jurisdiction dependent. The 

Internet has no specific jurisdiction. As a result, I suspect that 

even if we are successful in closing down businesses physically located in the United States or even in countries we can get to cooperate, because of the nature of the Internet and electronic funds 

transfers we have no way to control the activities physically located 

in other countries. Therefore, the approach in H.R. 21 will be ultimately ineffective. 

Furthermore, a gambling Web site can simply code an Internet 

gambling transaction as another type of transaction and thereby 

evade the primary enforcement mechanism in this bill. Or an 

eCash or electronic payment system can relocate to another country and thereby evade any enforcement of the provisions of the bill. 

Mr. Chairman, I fear that the illegal Internet gambling, money 

laundering, fraud and other problems will only be encouraged by 

removing the transparent credit card process. This will bring about 

the development of less transparent processes where such illegal 

activities can flourish. 

Mr. Chairman, we should not overestimate the cooperation we 

will get from other countries. Presently over 50 nations allow some 

form of gambling online and that number is likely to grow. So even 

if we are successful in getting cooperation from most countries, we 

would be simply increasing profit opportunities for uncooperative 

countries, especially those without diplomatic relations with the 

United States. The net result will be flourishing Internet gambling 

exclusively run by businesses over which the Department of Justice 

has no control. 

To have any chance to be effective in prosecuting illegal gambling over the Internet, you have to prosecute individuals. This bill 

does not. Prosecuting individuals for illegal Internet gambling 

would be effective because the technology of the Internet would be 

in the Government’s favor since activities of illegal gambling would 

lead a trail leading directly back to the gambler. So long as individuals can gamble over the Internet with impunity a market will be 

provided for them, which the regulatory scheme in this bill will not 

be able to stop. If we prohibit domestic firms from supplying this 

demand, it will be supplied by foreign companies who are totally 

unregulated beyond any consumer protections and beyond the 

reach of the United States taxing authorities. 

Accordingly, Mr. Chairman, I offer an amendment to make individuals subject to the prohibitions of the bill as well as gambling 

businesses to ensure that the bill has some chance of accomplishing 

its goal of restricting gambling over the Internet. 

Thank you, Mr. Chairman. I yield back the balance of my time. 

Chairman SENSENBRENNER. The gentleman from North Carolina, 

Mr. Coble. 

Mr. COBLE. Thank you, Mr. Chairman. I rise to oppose—— Chairman SENSENBRENNER. The gentleman is recognized for 5 

minutes. 

Mr. COBLE.—the amendment of my good friend from Virginia, 

which would criminalize the activity of individual betters who gamble online in addition to the activities of gambling businesses. AlVerDate Jan 31 2003 18:38 May 27, 2003 Jkt 019010 PO 00000 Frm 00065 Fmt 6659 Sfmt 6601 E:\HR\OC\HR51P2.XXX HR51P2
66

though I am in favor, Mr. Chairman and colleagues, of prohibiting 

gambling on the Internet, I do not believe the testimony that we 

heard at the hearing would support this amendment. The consensus seems to be that not only from the witnesses but also from 

the authors of various legislative proposals that the most effective 

way to prohibit Internet gambling is to effectively shut down the 

gambling businesses or sites themselves. And I believe the bill before us to date accomplishes that goal. 

If this measure is enacted into law and it proves to be ineffective 

in prohibiting all lines of gambling, I would certainly be willing to 

examine the issue of whether or not criminalizing the acts of individuals is necessary. For the time being, however, I believe that the 

provision of the bill will make the most effective use of the limited 

law enforcement resources that the country has. These same resources it would take to prevent one individual from gambling online could be better used, it seems to me, to prevent an entire online gambling business or gambling site from operating and thereby prevent thousands of people from accessing that site. 

As we heard at the hearing, the problem of Internet gambling is 

a complex problem in light of the fact that this amendment could 

be placing undue burden on Federal law enforcement agencies and 

the fact that the States will still have the option of prosecuting an 

individual better under its own State laws. I do not think it would 

be wise to adopt this amendment at this time and urge my colleagues to oppose it. 

Chairman SENSENBRENNER. Question is on the amendment offered by the gentleman from Virginia, Mr. Scott. Those in favor will 

say aye. Opposed no. Noes appear to have it. The noes have it, and 

the amendment is not agreed to. 

Mr. SCOTT. Mr. Chairman, recorded vote. 

Chairman SENSENBRENNER. A recorded vote is requested. Those 

in favor of the Scott amendment will as their name is called answer aye. Those opposed no. And the Clerk will call the roll. 

The CLERK. Mr. Hyde. 

[no response.] 

The CLERK. Mr. Coble. 

Mr. COBLE. No. 

The CLERK. Mr. Coble votes no. 

Mr. Smith. 

[no response.] 

The CLERK. Mr. Gallegly. 

[no response.] 

The CLERK. Mr. Goodlatte. 

Mr. GOODLATTE. No. 

The CLERK. Mr. Goodlatte votes no. 

Mr. Chabot. 

Mr. CHABOT. No. 

The CLERK. Mr. Chabot votes no. 

Mr. Jenkins. 

[no response.] 

The CLERK. Mr. Cannon. 

Mr. CANNON. No. 

Mr. SCOTT. Mr. Chairman, ask unanimous consent that the recorded vote be eviscerated. 

67

Chairman SENSENBRENNER. Without objection, so ordered and 

the recorded vote is eviscerated. 

Are there further amendments. There are no further amendments? 

A reporting quorum is present. The question is on reporting the 

bill H.R. 21 favorably, as amended. Those in favor will say aye. Opposed no. 

Chairman SENSENBRENNER. The noes appear to have it. 

Mr. GOODLATTE. I ask for a recorded vote. 

Chairman SENSENBRENNER. Recorded vote is ordered. Those in 

favor of reporting H.R. 21 favorably, as amended, will as your 

name is called answer aye. Those opposed no. And the Clerk will 

call the roll. 

The CLERK. Mr. Hyde. 

[no response.] 

The CLERK. Mr. Coble. 

Mr. COBLE. Aye. 

The CLERK. Mr. Coble votes aye. 

Mr. Smith. 

[no response.] 

The CLERK. Mr. Gallegly. 

[no response.] 

The CLERK. Mr. Goodlatte. 

Mr. GOODLATTE. Aye. 

The CLERK. Mr. Goodlatte votes aye. 

Mr. Chabot. 

Mr. CHABOT. Aye. 

The CLERK. Mr. Chabot votes aye. 

Mr. Jenkins. 

Mr. JENKINS. Aye. 

The CLERK. Mr. Jenkins votes aye. 

Mr. Cannon. 

Mr. CANNON. No. 

The CLERK. Mr. Cannon votes no. 

Mr. Bachus. 

Mr. BACHUS. Aye. 

The CLERK. Mr. Bachus votes aye. 

Mr. Hostettler. 

Mr. HOSTETTLER. Aye. 

The CLERK. Mr. Hostettler votes aye. 

Mr. Green. 

Mr. GREEN. Aye. 

The CLERK. Mr. Green votes aye. 

Mr. Keller. 

Mr. KELLER. Aye. 

The CLERK. Mr. Keller votes aye. 

Ms. Hart. 

Ms. HART. Aye. 

The CLERK. Ms. Hart votes aye. 

Mr. Flake. 

Mr. FLAKE. No. 

The CLERK. Mr. Flake votes no. 

Mr. Pence. 

Mr. PENCE. Aye. 

The CLERK. Mr. Pence votes aye. 

68

Mr. Forbes. 

[No response.] 

The CLERK. Mr. King. 

Mr. KING. Aye. 

The CLERK. Mr. King votes aye. 

Mr. Carter. 

Mr. CARTER. Aye. 

The CLERK. Mr. Carter votes aye. 

Mr. Feeney. 

Mr. FEENEY. Aye. 

The CLERK. Mr. Feeney votes aye. 

Mrs. Blackburn. 

Mrs. BLACKBURN. Aye. 

The CLERK. Mrs. Blackburn votes aye. 

Mr. Conyers. 

Mr. CONYERS. No. 

The CLERK. Mr. Conyers votes no. 

Mr. Berman. 

Mr. BERMAN. No. 

The CLERK. Mr. Berman votes no. 

Mr. Boucher. 

[no response.] 

The CLERK. Mr. Nadler. 

Mr. NADLER. No. 

The CLERK. Mr. Nadler votes no. 

Mr. Scott. 

Mr. SCOTT. No. 

The CLERK. Mr. Scott votes no. 

Mr. Watt. 

Mr. WATT. No. 

The CLERK. Mr. Watt votes no. 

Ms. Lofgren. 

Ms. LOFGREN. Pass. 

The CLERK. Ms. Lofgren passes. 

Ms. Jackson Lee. 

Ms. JACKSON LEE. No. 

The CLERK. Ms. Jackson Lee votes no. 

Ms. Waters. 

Ms. WATERS. No. 

The CLERK. Ms. Waters votes no. 

Mr. Meehan. 

Mr. MEEHAN. No. 

The CLERK. Mr. Meehan votes no. 

Mr. Delahunt. 

[no response.] 

The CLERK. Mr. Wexler. 

Mr. WEXLER. No. 

The CLERK. Mr. Wexler votes no. 

Ms. Baldwin. 

Ms. BALDWIN. No. 

The CLERK. Ms. Baldwin votes no. 

Mr. Weiner. 

Mr. WEINER. No. 

The CLERK. Mr. Weiner votes no. 

Mr. Schiff. 

69

Mr. SCHIFF. No. 

The CLERK. Mr. Schiff votes no. 

Ms. Sa ́nchez. 

Ms. SA ́ NCHEZ. No. 

The CLERK. Ms. Sa ́nchez votes no. 

Mr. Chairman. 

Chairman SENSENBRENNER. Aye. 

The CLERK. Mr. Chairman votes aye. 

Further Members who wish to cast or change their votes? Gentlewoman from California, Ms. Lofgren. 

Ms. LOFGREN. Aye. 

The CLERK. Ms. Lofgren, aye. 

Chairman SENSENBRENNER. Further Members who wish to cast 

or change their votes? If not, the Clerk will report. 

The CLERK. Mr. Chairman, there are 16 ayes and 15 noes. 

Chairman SENSENBRENNER. And the motion to report favorably 

is agreed to. 

I thank the Members of the Committee for their vigorous debate. 

The business for this—without objection, the Chairman is authorized to move to go to conference pursuant to House rules. Without 

objection, the staff is directed to make any technical and conforming changes. Without objection, the bill will be reported to the 

House in the form of a single amendment in the nature of a substitute incorporating the amendment adopted here today. And all 

Members will be given 2 days, as provided by the House rules, in 

which to submit additional dissenting, supplemental or minority 

views. And the Committee stands adjourned. 

[Whereupon, at 11:35 a.m., the Committee was adjourned.] 

(71)

1 H.R. 21, subsection 3(a). 

2 H.R. 21, subsection (3)(c). 

3 H.R. 21, subsection (3)(c)(4). 

4Such wagering was legal if it was a ‘‘lawful transaction with a business licensed or authorized by a State.’’ 5Letter from R. Bruce Josten to Chairman Sensenbrenner dated May 13, 2003. 

DISSENTING VIEWS

Although we are opposed to illegal gambling, whether done over 

the Internet or otherwise, we cannot support the legislation reported by the Judiciary Committee because the enforcement mechanisms will likely be ineffective. We question the wisdom of spending valuable prosecutorial resources on attempting to shut down 

Internet gambling sites—an endeavor which ultimately is likely to 

be futile. 

H.R. 21 makes it unlawful for a person engaged in a gambling 

business knowingly to accept, with respect to the transmission of 

bets or wagers, credit, electronic fund transfers, checks and other 

similar financial instruments.1 By prohibiting the payment of credit, electronic funds, checks and other similar instruments to Internet gambling businesses, H.R. 21 deputizes the financial services 

industry to be the primary enforcers of the law. 

In order to ensure compliance, the bill authorizes law enforcement to obtain injunctive or declaratory relief to restrain or prevent any person from paying or assisting in the payment of bets 

or wagers in interstate commerce.2 Such relief, when granted 

against an interactive computer service, is limited to the removal 

of, or disabling of access to, an online site violating the law or a 

hypertext link to an online site violating the law, that resides on 

a computer server that such service controls or operates.3

The version of H.R. 21 that the Committee initially considered 

would have created an unfair situation in which Internet betting 

was legal for certain types of gambling (e.g. horse racing, lotteries, 

and dog racing 4), but illegal for other types of Internet gambling 

(e.g. charitable gaming and Tribal gaming). At markup, however, 

the Committee adopted an amendment offered by Rep. Cannon 

that would make it illegal for any gambling business knowingly to 

accept financial instruments, thereby eliminating the bill’s preferences for certain types of gambling interests. 

Credit card companies such as Visa and Master Card have raised 

concerns with the bill in the past because it could subject them to 

injunctions in numerous jurisdictions that require different—or 

even conflicting—remedies to prevent the payment of Internet bets 

or wagers. The result will be a hodge-podge of inconsistent court 

orders, rather than a cohesive enforcement scheme. 

In addition, the U.S. Chamber of Commerce has expressed concerns about the bill.5 They are concerned that the bill’s prohibition 

on accepting financial instruments for ‘‘unlawful Internet gambling’’ is unduly vague and, as such, will subject the financial servVerDate Jan 31 2003 18:38 May 27, 2003 Jkt 019010 PO 00000 Frm 00071 Fmt 6601 Sfmt 6601 E:\HR\OC\HR51P2.XXX HR51P2
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6Testimony of Mark MacCarthy, Senior Vice President of Public Policy, Visa U.S.A., Inc., before the Subcommittee on Oversight and Investigations of the Committee on Financial Services, 

107th Congress, 2nd Sess. (July 12, 2001). 7 Id. 

ices industry to criminal liability without sufficient notice of the 

law. We agree that the law governing what constitutes ‘‘unlawful 

Internet gambling’’ is not well settled. 

Also, relying on financial institutions to enforce the law will likely be ineffective. Credit card companies have a limited ability to 

block financial transactions to illegal Internet gambling businesses. 

The companies rely on a merchant coding system to ascertain the 

nature of particular transactions, but this system has limitations. 

First, it depends on the merchant to accurately code a transaction. 

There are obvious incentives for many Internet gambling merchants to falsify their merchant identification.6

More significantly, the Chamber also contends the coding system 

applies only when an online gambler uses a credit card to transact 

business directly with an online gambling merchant. Often times, 

an Internet gambler will use electronic cash and account funding 

systems to create a pool of electronically available funds. Thus, a 

cardholder could use his or her credit card to purchase ‘‘e-cash’’ on 

a web site that does not, itself, offer gambling, but allows that ecash to be used on another web site that does offer gambling. The 

credit card coding system would not capture these transactions as 

Internet gambling.7 And if the e-cash website is offshore, it could 

be beyond the reach of U.S. law enforcement. 

Additionally, the bill does not make it illegal for an individual to 

place an Internet bet. Rather, the bill only criminalizes an Internet 

gambling business which accepts bets or wagers or accepts credit 

or other types of financial instruments. As such, the bill leaves out 

the most effective enforcement mechanism—targeting individual 

bettors. This legislation, therefore, has little or no deterrent value. 

Offshore gambling sites will evade any restrictions easily, and individual bettors will continue to seek out these sites and gamble free 

from any fear of any legal consequences. 

CONCLUSION

Although the intent of this legislation is laudable, we believe conscripting credit card companies to enforce our criminal laws is ineffective and will set a bad precedent regarding the Internet. In addition, criminalizing only the Internet gambling business without 

placing any penalty on the individual bettor further weakens the 

enforcement scheme of the bill. In the end, it is unlikely that this 

legislation will successfully halt Internet gambling.

JOHN CONYERS, JR. 

MELVIN L. WATT. 

SHEILA JACKSON LEE. 

TAMMY BALDWIN. 

ANTHONY D. WEINER. 

LINDA T. SA ́ NCHEZ.

Æ