I 

110TH CONGRESS 

1ST SESSION H. R. 2046 

To amend title 31, United States Code, to provide for the licensing of 

Internet gambling facilities by the Director of the Financial Crimes 

Enforcement Network, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 26, 2007 

Mr. FRANK of Massachusetts (for himself, Mr. PAUL, Mr. WEXLER, Mr. ACKERMAN, Mr. CLAY, Mr. GUTIERREZ, Mr. CAPUANO, Mr. WATT, Ms. 

BERKLEY, Ms. CARSON, Mr. KING of New York, and Mr. ISRAEL) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on Energy and Commerce, 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 amend title 31, United States Code, to provide for the 

licensing of Internet gambling facilities by the Director 

of the Financial Crimes Enforcement Network, 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 ‘‘Internet Gambling Reg5 ulation and Enforcement Act of 2007’’. 


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1 SEC. 2. FEDERAL LICENSING REQUIREMENT FOR INTER2 NET GAMBLING OPERATORS. 

3 (a) IN GENERAL.—Chapter 53 of Title 31, United 

4 States Code, is amended by adding at the end the fol5 lowing new Subchapter: 

6 ‘‘SUBCHAPTER V—REGULATION OF LAWFUL 

7 INTERNET GAMBLING 

8 ‘‘§ 5381. Congressional findings and purpose 

9 ‘‘(a) FINDINGS.—The Congress finds the following: 

10 ‘‘(1) Internet gambling is a $13,000,000,000 

11 and growing industry worldwide. 

12 ‘‘(2) Gambling is a popular activity domesti13 cally, with some form of gambling being permitted 

14 in nearly every State. 

15 ‘‘(3) Internet gambling is a licensed, regulated 

16 activity in more than 50 countries, providing billions 

17 of dollars in tax revenue to those countries. 

18 ‘‘(4) The global gaming market grossed about 

19 $258,000,000,000 in 2005, with online revenues rep20 resenting an estimated 5.0 percent. North American 

21 residents accounted for an estimated 47 percent of 

22 the global gross gaming yield in 2005. 

23 ‘‘(5) A licensing and regulatory regime for 

24 Internet gambling in the United States is needed to 

25 provide appropriate protections against underage 

26 gambling, compulsive gambling, money laundering, 


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1 and fraud for those citizens who choose to gamble 

2 online. 

3 ‘‘(6) Licensing and regulating Internet gam4 bling in the United States would provide additional 

5 tax revenues, and would reduce tax avoidance. 

6 ‘‘§ 5382. Definitions 

7 ‘‘For purposes of this subchapter, the following defi8 nitions shall apply: 

9 ‘‘(1) DIRECTOR.—The term ‘director’ means 

10 the Director of the Financial Crimes Enforcement 

11 Network. 

12 ‘‘(2) BET OR WAGER.—The term ‘bet or wager’ 

13 shall have the same meaning as in section 5362(1). 

14 ‘‘(3) LICENSEE.—The term ‘licensee’ shall 

15 mean an Internet gambling operator licensed by the 

16 Director in accordance with this subchapter. 

17 ‘‘(4) STATE.—The term ‘State’ means any 

18 State of the United States, the District of Columbia, 

19 or any commonwealth, territory, or other possession 

20 of the United States. 

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

22 the international computer network of interoperable 

23 packet switched data networks. 


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1 ‘‘(6) SPORTING LEAGUE.—The term ‘sporting 

2 league’ shall mean any sporting association, whether 

3 professional, scholastic, or amateur. 

4 ‘‘(7) OPERATE AN INTERNET GAMBLING FACIL5 ITY.—The term ‘operate an Internet gambling facil6 ity’ means the direction, management, supervision, 

7 or control of an Internet site through which bets or 

8 wagers are placed, accepted, or otherwise made, 

9 whether by telephone, Internet or other wire commu10 nication. 

11 ‘‘(8) INDIAN LANDS AND INDIAN TRIBE.—The 

12 terms ‘Indian lands’ and ‘Indian tribe’ have the 

13 same meanings as in section 4 of the Indian Gaming 

14 Regulatory Act. 

15 ‘‘§ 5383. Establishment and administration of licens16 ing program 

17 ‘‘(a) FINCEN REQUIREMENTS.—Subject to the over18 sight and direction of the Secretary of the Treasury, the 

19 Director shall prescribe such regulations as may be nec20 essary to administer and enforce the requirements under 

21 this subchapter. 

22 ‘‘(b) INTERNET GAMBLING LICENSING PROGRAM.— 

23 No person shall engage in the business of Internet betting 

24 or wagering in the United States without a license issued 

25 by the Director in accordance with this subchapter. 


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1 ‘‘(c) APPLICATION FOR LICENSE.— 

2 ‘‘(1) IN GENERAL.—Any person seeking author3 ity to engage in the business of betting or wagering 

4 in the United States may apply for a license issued 

5 by the Director. 

6 ‘‘(2) INFORMATION REQUIRED.—Any applica7 tion for a license under this subchapter shall contain 

8 such information as may be required by the Direc9 tor, including— 

10 ‘‘(A) a complete financial statements of the 

11 applicant; 

12 ‘‘(B) documentation showing the corporate 

13 structure of the applicant and all related busi14 nesses and affiliates; and 

15 ‘‘(C) a certification that the applicant 

16 agrees to be subject to United States jurisdic17 tion and all applicable United States laws relat18 ing to Internet gambling activities. 

19 ‘‘(d) REVIEW OF LICENSEES.— 

20 ‘‘(1) IN GENERAL.—After the filing of a com21 plete application, the Director shall evaluate the gen22 eral fitness of the applicant on the basis of such fac23 tors as the Director determines to be appropriate. 

24 ‘‘(2) FACTORS.—The factors taken into account 

25 by the Director under paragraph (1) shall include— 


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1 ‘‘(A) the financial condition of the appli2 cant; 

3 ‘‘(B) the business experience and record of 

4 the applicant, including the applicant’s compli5 ance with similar laws and requirements in for6 eign jurisdictions; 

7 ‘‘(C) if the applicant is an individual, a 

8 background check to determine if the individual 

9 has any criminal record; and 

10 ‘‘(D) if the applicant is a corporation, 

11 partnership, or other business entity, such 

12 background check shall occur with respect to 

13 the president or other chief executive of the cor14 poration, partnership, or other business entity 

15 and other partners or senior executives and di16 rectors of the corporation, partnership, or enti17 ty, as determined appropriate by the Director, 

18 in the Director’s sole discretion. 

19 ‘‘(e) ASSESSMENTS FOR ADMINISTRATIVE EX20 PENSES.— 

21 ‘‘(1) IN GENERAL.— 

22 ‘‘(A) IN GENERAL.—The cost of admin23 istering this subchapter with respect to each li24 censee, including the cost of any review or ex25 amination of a licensee to ensure compliance 


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1 with the terms of the license and this sub2 chapter, shall be assessed by the Director 

3 against the licensee institution by written notice 

4 in an amount appropriate to meet the Direc5 tor’s expenses in carrying out such administra6 tion, review, or examination. 

7 ‘‘(B) DISPOSITION.—Amounts assessed by 

8 the Director as user fees under subparagraph 

9 (A) shall— 

10 ‘‘(i) be maintained by the Director for 

11 solely for use in accordance with clause 

12 (ii); 

13 ‘‘(ii) be available to the Director to 

14 cover all expenses incurred by the Director 

15 in carrying out this subchapter; and 

16 ‘‘(iii) not be construed to be Govern17 ment Funds or appropriated monies, or 

18 subject to apportionment for the purposes 

19 of chapter 15 or any other authority. 

20 ‘‘(C) HEARING.—Any licensee against 

21 whom an assessment is assessed under this 

22 paragraph shall be afforded an agency hearing 

23 if such person submits a request for such hear24 ing within 20 days after the issuance of the no25 tice of assessment. 


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1 ‘‘(D) COLLECTION.— 

2 ‘‘(i) REFERRAL.—If any licensee fails 

3 to pay an assessment under this paragraph 

4 after the assessment has become final, the 

5 Director shall recover the amount assessed 

6 by action in the appropriate United States 

7 district court. 

8 ‘‘(ii) APPROPRIATENESS OF ASSESS9 MENT NOT REVIEWABLE.—In any civil ac10 tion under clause (i), the validity and ap11 propriateness of the assessment shall not 

12 be subject to review. 

13 ‘‘(2) DIRECT AND EXCLUSIVE OBLIGATION OF

14 LICENSEE.—The user fee shall be the direct and ex15 clusive obligation of the licensee and may not be de16 ducted from amounts available as deposits to any 

17 person placing a bet. 

18 ‘‘(f) APPROVAL OF LICENSE.—The Director shall 

19 grant licenses under this subchapter if, in the Director’s 

20 sole discretion, the applicant meets the criteria set by the 

21 Director and is generally fit to engage in the business of 

22 Internet gambling. 

23 ‘‘(g) SAFEGUARDS REQUIRED OF LICENSEE.—No 

24 person shall receive or retain a license under this section 


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1 unless the person implements and maintains the following 

2 requirements with respect to any Internet bet or wager: 

3 ‘‘(1) Appropriate safeguards to ensure that the 

4 individual placing a bet or wager is 18 years of age 

5 or older. 

6 ‘‘(2) Appropriate safeguards to ensure that the 

7 individual placing a bet or wager is physically lo8 cated in a jurisdiction that permits Internet gam9 bling at the time the bet or wager is placed. 

10 ‘‘(3) Appropriate mechanisms to ensure that all 

11 taxes relating to Internet gambling due to Federal 

12 and State governments and to Indian tribes from 

13 persons engaged in Internet gambling are collected 

14 at the time of any payment of any proceeds of Inter15 net gambling. 

16 ‘‘(4) Appropriate mechanisms to ensure that all 

17 taxes relating to Internet gambling due to Federal 

18 and State governments and to Indian tribes from 

19 any licensee are collected as required by law. 

20 ‘‘(5) Appropriate safeguards to combat fraud 

21 and money laundering as may be prescribed by regu22 lations issued by the Director or a designee of the 

23 Director. 

24 ‘‘(6) Appropriate safeguards to combat compul25 sive Internet gambling. 


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1 ‘‘(7) Appropriate safeguards to protect the pri2 vacy and security of any person engaged in Internet 

3 gambling. 

4 ‘‘(8) Appropriate mechanisms to ensure that 

5 any assessment under subsection (e) is paid to the 

6 Director. 

7 ‘‘(9) Such other requirements as the Director 

8 may establish by regulation or order. 

9 ‘‘(h) LICENSES DENIED.— 

10 ‘‘(1) IN GENERAL.—No license shall be granted 

11 to any individual who has been convicted under the 

12 laws of any foreign country, the United States, or 

13 any State for any criminal violation involving gam14 bling laws, financial markets, or financial laws, in15 cluding any money laundering, fraud, privacy, or in16 formation security law. 

17 ‘‘(2) APPLICABILITY TO BUSINESS ENTITIES.— 

18 If an applicant for a license is a corporation, part19 nership, or other business entity, paragraph (1) shall 

20 apply with respect to each partner, officer, or direc21 tor of such corporation, partnership, or entity. 

22 ‘‘(i) TERM AND RENEWAL OF LICENSE.— 

23 ‘‘(1) TERM.—Any license issued under this sec24 tion shall be issued for a 1-year term beginning on 

25 the date of issuance. 


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1 ‘‘(2) RENEWAL.—Licenses may be renewed in 

2 accordance with the requirements prescribed by the 

3 Director pursuant to this subchapter. 

4 ‘‘(j) REVOCATION OF LICENSE.— 

5 ‘‘(1) IN GENERAL.—Any license granted under 

6 this subchapter shall be terminated or revoked by 

7 the Director if— 

8 ‘‘(A) the licensee fails to comply with any 

9 provision of this subchapter; or 

10 ‘‘(B) the licensee, or in any case in which 

11 the licensee the licensee is a corporation, part12 nership, or other business entity, any officer, 

13 partner, or director of that corporation, part14 nership, or other entity, is convicted of a crime 

15 involving the payments system, financial mar16 kets, or Internet gambling laws of the United 

17 States or of the jurisdiction in which the li18 censee is located. 

19 ‘‘(2) FINAL ACTION.—Any revocation of a li20 cense under paragraph (1) shall be treated as a final 

21 action by the Director. 

22 ‘‘(k) COMPLIANCE WITH FEDERAL LAWS.—Licens23 ees shall be required to comply with anti-money laun24 dering, anti-fraud, anti-terrorism, and such other regulaVerDate Aug 31 2005 00:18 May 01, 2007 Jkt 059200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H2046.IH H2046

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1 tions, requirements, and limitations as may be prescribed 

2 by the Director. 

3 ‘‘(l) ADMINISTRATIVE PROVISIONS.— 

4 ‘‘(1) GENERAL POWERS OF DIRECTOR.—Sub5 ject to the oversight and direction of the Secretary 

6 of the Treasury, the Director may— 

7 ‘‘(A) require a class of licensees to main8 tain appropriate procedures to ensure compli9 ance with this subchapter and regulations pre10 scribed under this subchapter; 

11 ‘‘(B) examine any licensee and any books, 

12 papers, records, or other data of licensees rel13 evant to any recordkeeping or reporting require14 ments imposed by the Director under this sub15 chapter; 

16 ‘‘(C) summon a licensee or an applicant 

17 for a license, an officer or employee of a li18 censee or any such applicant (including a 

19 former officer or employee), or any person hav20 ing possession, custody, or care of the reports 

21 and records required by the Director under this 

22 subchapter, to appear before the Director or a 

23 designee of the Director at a time and place 

24 named in the summons and to produce such 

25 books, papers, records, or other data, and to 


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1 give testimony, under oath, as may be relevant 

2 or material to any investigation in connection 

3 with the enforcement of this subchapter or any 

4 application for a license under this subchapter. 

5 ‘‘(2) ADMINISTRATIVE ASPECTS OF SUM6 MONS.— 

7 ‘‘(A) PRODUCTION AT DESIGNATED

8 SITE.—A summons issued pursuant to this sub9 section may require that books, papers, records, 

10 or other data stored or maintained at any place 

11 be produced at any business location of a li12 censee or applicant for a license or any des13 ignated location in any State or in any territory 

14 or other place subject to the jurisdiction of the 

15 United States not more than 500 miles distant 

16 from any place where the licensee or applicant 

17 for a license operates or conducts business in 

18 the United States. 

19 ‘‘(B) NO LIABILITY FOR EXPENSES.—The 

20 United States shall not be liable for any ex21 pense incurred in connection with the produc22 tion of books, papers, records, or other data 

23 under this subsection. 

24 ‘‘(C) SERVICE OF SUMMONS.—Service of a 

25 summons issued under this subsection may be 


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1 by registered mail or in such other manner cal2 culated to give actual notice as the Director 

3 may prescribe by regulation. 

4 ‘‘(3) CONTUMACY OR REFUSAL.— 

5 ‘‘(A) REFERRAL TO ATTORNEY GEN6 ERAL.—In case of contumacy by a person 

7 issued a summons under this subsection or a 

8 refusal by such person to obey such summons 

9 or to allow the Director to conduct an examina10 tion, the Director shall refer the matter to the 

11 Secretary of the Treasury for referral to the At12 torney General. 

13 ‘‘(B) JURISDICTION OF COURT.—The At14 torney General may invoke the aid of any court 

15 of the United States within the jurisdiction of 

16 which— 

17 ‘‘(i) the investigation which gave rise 

18 to the summons or the examination is 

19 being or has been carried on; 

20 ‘‘(ii) the person summoned is an in21 habitant; or 

22 ‘‘(iii) the person summoned carries on 

23 business or may be found, 

24 to compel compliance with the summons. 


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1 ‘‘(C) COURT ORDER.—The court may issue 

2 an order requiring the person summoned to ap3 pear before the Director or a delegate of the 

4 Director to produce books, papers, records, and 

5 other data, to give testimony as may be nec6 essary to explain how such material was com7 piled and maintained, to allow the Director to 

8 examine the business of a licensee, and to pay 

9 the costs of the proceeding. 

10 ‘‘(D) FAILURE TO COMPLY WITH ORDER.— 

11 Any failure to obey the order of the court may 

12 be punished by the court as a contempt thereof. 

13 ‘‘(E) SERVICE OF PROCESS.—All process 

14 in any case under this subsection may be served 

15 in any judicial district in which such person 

16 may be found. 

17 ‘‘§ 5384. Financial institutions 

18 ‘‘(a) INVESTMENT BANKING.—No person shall be 

19 held liable for engaging in investment banking activities 

20 for or on behalf of a licensee or involving a licensee, if 

21 such activities are performed in compliance with this sub22 chapter, the Sarbanes-Oxley Act, the Securities Act of 

23 1933 Act, the Securities Exchange Act of 1934, and any 

24 other applicable laws governing securities. 


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1 ‘‘(b) PAYMENT AND TRANSACTION PROCESSING.— 

2 No person shall be held liable for engaging in payments 

3 processing activities for or on behalf of a licensee or involv4 ing a licensee, if such activities are performed in compli5 ance with this subchapter. 

6 ‘‘(c) FINANCIAL INSTITUTIONS.—No financial insti7 tution shall be held liable for engaging in financial activi8 ties and transactions for or on behalf of a licensee or in9 volving a licensee, if such activities are performed in com10 pliance with this subchapter and with applicable Federal, 

11 State, and foreign banking laws and regulations. 

12 ‘‘§ 5385. Prohibition and limitation of licenses in 

13 States and Indian lands 

14 ‘‘(a) STATE OPT OUT.— 

15 ‘‘(1) IN GENERAL.—No Internet gambling li16 censee may engage, under any license issued under 

17 this subchapter, in the business of Internet betting 

18 or wagering in any State which prohibits such busi19 ness within such State if the Governor or other chief 

20 executive officer of such State informs the Director 

21 of such prohibition before the end of the 90-day pe22 riod beginning on the date of the enactment of the 

23 Internet Gambling Regulation and Enforcement Act 

24 of 2007, or in accordance with paragraph (3), until 

25 such time as any notice of any subsequent repeal of 


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1 such prohibition becomes effective under paragraph 

2 (3). 

3 ‘‘(2) LIMITATIONS IMPOSED BY STATES.—No 

4 Internet gambling licensee may engage, under any li5 cense issued under this subchapter, in the business 

6 of conducting any particular types of gambling ac7 tivities or other contests in any State which pro8 hibits or limits such particular types of gambling ac9 tivities or other contests if the Governor or other 

10 chief executive officer of such State informs the Di11 rector of such prohibition or limitation, in a manner 

12 which clearly identifies the nature and extent of such 

13 prohibition or limitation, before the end of the 90- 

14 day period beginning on the date of the enactment 

15 of the Internet Gambling Regulation and Enforce16 ment Act of 2007, or in accordance with paragraph 

17 (3), until such time as any notice of any amendment 

18 or repeal of such specific prohibition or limitation 

19 becomes effective under paragraph (3). 

20 ‘‘(3) CHANGES TO STATE LIMITATIONS.—The 

21 establishment, repeal, or amendment by any State of 

22 any prohibition or limitation referred to in para23 graph (1) or (2) after the end of the 90-day period 

24 beginning on the date of the enactment of the Inter25 net Gambling Regulation and Enforcement Act of 


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1 2007 shall apply, for purposes of this subchapter, 

2 with respect to the business of Internet betting or 

3 wagering in such State by any licensee beginning on 

4 the first January 1 that occurs after the end of the 

5 30-day period beginning on the later of— 

6 ‘‘(A) the date a notice of such establish7 ment, repeal, or amendment is provided by the 

8 Governor or other chief executive officer of such 

9 State in writing to the Director; or 

10 ‘‘(B) the effective date of such establish11 ment, repeal, or amendment. 

12 ‘‘(b) INDIAN TRIBE OPT OUT.— 

13 ‘‘(1) IN GENERAL.—No Internet gambling li14 censee may engage, under any license issued under 

15 this subchapter, in the business of Internet betting 

16 or wagering within the tribal lands of any Indian 

17 tribe which prohibits such business within such trib18 al lands if the principal chief or other chief executive 

19 officer of such Indian tribe informs the Director of 

20 such prohibition before the end of the 90-day period 

21 beginning on the date of the enactment of the Inter22 net Gambling Regulation and Enforcement Act of 

23 2007, or in accordance with paragraph (3), until 

24 such time as any notice of any repeal or amendment 


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1 of such prohibition becomes effective under para2 graph (3). 

3 ‘‘(2) LIMITATIONS IMPOSED BY INDIAN

4 TRIBES.—No Internet gambling licensee may en5 gage, under any license issued under this sub6 chapter, in the business of conducting any particular 

7 types of gambling activities or other contests in the 

8 tribal lands of any Indian tribe which prohibits or 

9 limits such particular types of gambling activities or 

10 other contests if the principal chief or other chief ex11 ecutive officer of such Indian tribe informs the Di12 rector of such prohibition or limitation, in a manner 

13 which clearly identifies the nature and extent of such 

14 prohibition or limitation, before the end of the 90- 

15 day period beginning on the date of the enactment 

16 of the Internet Gambling Regulation and Enforce17 ment Act of 2007, or in accordance with paragraph 

18 (3), until such time as any notice of any amendment 

19 or repeal of such specific prohibition or limitation 

20 becomes effective under paragraph (3). 

21 ‘‘(3) CHANGES TO INDIAN TRIBE LIMITA22 TIONS.—The establishment, repeal, or amendment 

23 by any Indian tribe of any prohibition or limitation 

24 referred to in paragraph (1) or (2) after the end of 

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1 actment of the Internet Gambling Regulation and 

2 Enforcement Act of 2007 shall apply, for purposes 

3 of this subchapter, with respect to the business of 

4 Internet betting or wagering in the tribal lands of 

5 such Indian tribe by any licensee beginning on the 

6 first January 1 that occurs after the end of the 30- 

7 day period beginning on the later of— 

8 ‘‘(A) the date a notice of such establish9 ment, repeal, or amendment is provided by the 

10 principal chief or other chief executive officer of 

11 such Indian tribe in writing to the Director; or 

12 ‘‘(B) the effective date of such establish13 ment, repeal, or amendment. 

14 ‘‘(c) ENFORCING STATE AND INDIAN TRIBE LIMITA15 TIONS.— 

16 ‘‘(1) IN GENERAL.—The Director shall take ef17 fective measures to ensure that any licensee under 

18 this subchapter, as a condition of the license, com19 plies with any limitation or prohibition imposed by 

20 any State or Indian tribe to which the licensee is 

21 subject under paragraph (1), (2) or (3) of subsection 

22 (a) or (b), as the case may be. 

23 ‘‘(2) VIOLATIONS.—It shall be a violation of 

24 this subchapter for any licensee knowingly to accept 

25 bets or wagers, or engage in any Internet gambling 


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1 activity within any State or in the tribal lands of 

2 any Indian tribe for which a notice is in effect under 

3 paragraph (1), (2), or (3) of subsection (a) or (b), 

4 as the case may be. 

5 ‘‘(d) INTERMEDIATE ROUTING.—The intermediate 

6 routing of electronic data shall not determine the location 

7 or locations in which a bet or wager is initiated, received 

8 or otherwise made. 

9 ‘‘§ 5386. Sporting leagues may prohibit internet gam10 bling on league activities 

11 ‘‘(a) SPORTING LEAGUE OPT-OUT.—No Internet 

12 gambling licensee may engage, under any license issued 

13 under this subchapter, in the business of Internet betting 

14 or wagering in connection with any sport event or contest 

15 of any sporting league which prohibits such business if the 

16 chief executive officer of such sporting league informs the 

17 Director of such prohibition before the end of the 90-day 

18 period beginning on the date of the enactment of the 

19 Internet Gambling Regulation and Enforcement Act of 

20 2007, or in accordance with subsection (c), until such time 

21 as any notice of any repeal of such prohibition becomes 

22 effective under paragraph (3). 

23 ‘‘(b) ESTABLISHMENT OR REPEAL OF SPORTING.— 

24 The establishment or repeal by any sporting league of any 

25 prohibition referred to in subsection (a) after the end of 


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1 the 90-day period beginning on the date of the enactment 

2 of the Internet Gambling Regulation and Enforcement Act 

3 of 2007 shall apply, for purposes of this subchapter, with 

4 respect to the business of Internet betting or wagering in 

5 connection with any sport event or contest of such sport6 ing league by any licensee beginning on the first January 

7 1 that occurs after the end of the 30-day period beginning 

8 on the later of— 

9 ‘‘(1) the date a notice of such establishment or 

10 repeal is provided by the chief executive officer of 

11 such sporting league in writing to the Director; or 

12 ‘‘(2) the effective date of such establishment or 

13 repeal. 

14 ‘‘(c) VIOLATION OF SPORTING LEAGUE LIMITA15 TION.— 

16 ‘‘(1) IN GENERAL.—The Director shall take ef17 fective measures to ensure that any licensee under 

18 this subchapter, as a condition of the license, com19 plies with any prohibition imposed by any sporting 

20 league to which the licensee is subject under sub21 section (a) or (b). 

22 ‘‘(2) VIOLATIONS.—It shall be a violation of 

23 this subchapter for any licensee knowingly to engage 

24 in the business of Internet betting or wagering in 

25 connection with any sport event or contest of any 


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1 sporting league for which a notice is in effect under 

2 subsection (a) or (b). 

3 ‘‘§ 5387. Safe harbors 

4 ‘‘It shall be a defense against any prosecution or en5 forcement action under any Federal or State law against 

6 any person possessing a valid license under this sub7 chapter that the activity is authorized under and has been 

8 carried out lawfully under the terms of this subchapter. 

9 ‘‘§ 5388. Criminal penalties 

10 ‘‘(a) IN GENERAL.—Whoever knowingly violates any 

11 provision of this subchapter shall be fined under title 18, 

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

13 ‘‘(b) PERMANENT INJUNCTION.—Upon conviction of 

14 a person under this section, the court may enter a perma15 nent injunction enjoining such person from placing, receiv16 ing, or otherwise making bets or wagers or sending, receiv17 ing, or inviting information assisting in the placing of bets 

18 or wagers. 

19 ‘‘§ 5389. Rules of construction 

20 ‘‘(a) NO EFFECT ON OTHER LAW.—No provision of 

21 this subchapter shall be construed as altering, limiting, or 

22 extending any Federal or State law or Tribal-State com23 pact prohibiting, permitting, or regulating gambling with24 in the United States. 


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1 ‘‘(b) COORDINATION WITH CERTAIN GAMBLING

2 LAWS.—No provision of this chapter shall be construed 

3 as permitting any bet or wager that would otherwise vio4 late any provision of— 

5 ‘‘(1) the Interstate Horse Racing Act; 

6 ‘‘(2) the Professional and Amateur Sports Pro7 tection Act; 

8 ‘‘(3) the Gambling Devices Transportation Act; 

9 or 

10 ‘‘(4) the Indian Gaming Regulatory Act.’’. 

11 (b) TECHNICAL AND CONFORMING AMENDMENT.— 

12 Section 310(b)(2) of title 31, United States Code is 

13 amended— 

14 (1) by redesignating subparagraphs (J) and (K) 

15 as subparagraphs (K) and (L), respectively; and 

16 (2) by inserting after subparagraph (I) the fol17 lowing new subparagraph: 

18 ‘‘(J) Administer the requirements of sub19 chapter V of chapter 53.’’ 

20 (c) CLERICAL AMENDMENT.—The table of sections 

21 for chapter 53 of title 31, United States Code, is amended 

22 by adding at the end the following: 

‘‘SUBCHAPTER V—REGULATION OF LAWFUL INTERNET GAMBLING

‘‘5381. Congressional findings and purpose. 

‘‘5382. Definitions. 

‘‘5383. Establishment and administration of licensing program. 

‘‘5384. Financial institutions. 

‘‘5385. Prohibition and limitation of licenses in States and Indian lands. 

‘‘5386. Sporting leagues may prohibit Internet gambling on league activities. 


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‘‘5387. Safe harbors. 

‘‘5388. Criminal penalties. 

‘‘5389. Rules of construction.’’. 

1 SEC. 3. REPORT REQUIRED. 

2 (a) IN GENERAL.—Before the end of the 1-year pe3 riod beginning on the effective date of the regulations pre4 scribed under section 4(a), and annually thereafter, the 

5 Director shall submit a report to the Congress on the li6 censing and regulation of Internet gambling operators. 

7 (b) INFORMATION REQUIRED.—Each report sub8 mitted under subsection (a) shall include the following in9 formation: 

10 (1) A comprehensive statement regarding the 

11 limitations imposed by the States, Indian tribes, and 

12 sporting leagues. 

13 (2) Relevant statistical information on appli14 cants and licenses. 

15 (3) The amount of licensing and user fees col16 lected during the period covered by the report. 

17 (4) Information on regulatory or enforcement 

18 actions undertaken during the period. 

19 (5) Any other information that may be useful 

20 to the Congress in evaluating the effectiveness of the 

21 Act in meeting its purpose, including the provision 

22 of protections against underage gambling, compul23 sive gambling, money laundering, and fraud, and in 

24 combating tax avoidance relating to online gambling. 


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1 SEC. 4. EFFECTIVE DATE. 

2 (a) REGULATIONS.—The Director of the Financial 

3 Crimes Enforcement Network shall prescribe such regula4 tions as may appropriate to implement subchapter V of 

5 chapter 53 of title 31, United States Code (as added by 

6 section 2(a) of this Act) and shall publish such regulations 

7 in final form in the Federal Register before the end of 

8 the 180-day period beginning on the date of the enactment 

9 of this Act. 

10 (b) SCOPE OF APPLICATION.—The amendment made 

11 by section 2(a) shall apply after the end of the 90-day 

12 period beginning on the date of the publication of the reg13 ulations in final form in accordance with subsection (a). 

Æ 


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