19–006

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

UNLAWFUL INTERNET GAMBLING FUNDING PROHIBITION 

ACT

MARCH 27, 2003.—Ordered to be printed 

Mr. OXLEY, from the Committee on Financial Services, 

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 Financial Services, 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, report favorably thereon without amendment and 

recommend that the bill do pass.

CONTENTS 

Page 

Purpose and Summary ............................................................................................ 2

Background and Need for Legislation .................................................................... 2

Hearings ................................................................................................................... 5

Committee Consideration ........................................................................................ 5

Committee Votes ...................................................................................................... 5

Committee Oversight Findings ............................................................................... 5

Performance Goals and Objectives ......................................................................... 5

New Budget Authority, Entitlement Authority, and Tax Expenditures ............. 5

Committee Cost Estimate ....................................................................................... 6

Congressional Budget Office Cost Estimate .......................................................... 6

Federal Mandates Statement ................................................................................. 8

Advisory Committee Statement .............................................................................. 8

Constitutional Authority Statement ...................................................................... 8

Applicability to Legislative Branch ........................................................................ 8

Section-by-Section Analysis .................................................................................... 8

Changes in Existing Law Made by the Bill, as Reported ..................................... 10

Minority, Additional, or Dissenting Views ............................................................ 12

2

PURPOSE AND SUMMARY

H.R. 21 prohibits the acceptance of any bank instrument for unlawful Internet gambling. It defines certain terms for purposes of 

the Act; establishes civil remedies, criminal penalties, and regulatory enforcement authorities; encourages cooperation by foreign 

governments in the enforcement of the Act; and requires the Secretary of the Treasury to report annually to Congress on deliberations between the United States and other countries on issues relating to Internet gambling. Its primary purpose is to give U.S. law 

enforcement a new, more effective tool for combating offshore Internet gambling sites that illegally extend their services to U.S. residents via the Internet. 

BACKGROUND AND NEED FOR LEGISLATION

The Committee has established a comprehensive hearing and 

markup record on Internet gambling, most particularly in the 

107th Congress. In addition to the extensive debate at the Committee’s October 11, 2001 markup of H.R. 3004, the Financial AntiTerrorism Act of 2001, Internet gambling was addressed at the 

Committee’s October 3, 2001 hearing on terrorism and money laundering. At that hearing, the Federal Bureau of Investigation (FBI), 

the Department of Justice, and a money laundering expert testified 

that Internet gambling serves as a vehicle for money laundering 

and can be exploited by terrorists for that purpose. The FBI also 

testified about pending litigation linking organized crime to money 

laundering and Internet gambling. 

At two hearings held in July, 2001 by the Subcommittee on Oversight and Investigations and the Subcommittee on Financial Institutions and Consumer Credit, witnesses discussed the legal status 

of Internet gambling, the social and financial challenges it poses, 

and legislative options for addressing those challenges. 

Many legal experts, including officials from the Department of 

Justice, State attorneys general, and others involved in law enforcement hold the view that Internet gambling is generally prohibited under various Federal statutes. Among them, the Federal Wire 

Act (18 U.S.C. 1084 et seq.) criminalizes the knowing use of a wire 

communication facility by a gambling establishment for the transmission of bets and wagers in interstate or foreign commerce. 

Conventional forms of gambling activities, such as casino wagering, State lotteries, slot machines and horseracing, legal in many 

jurisdictions, are regulated by the individual States. However, 

these activities are subject to intense scrutiny and a myriad of licensing and other operational requirements. Virtually all States 

prohibit the operation of gambling businesses not expressly permitted by their respective constitutions or special legislation. Internet gambling currently constitutes illegal gambling activity in all 

50 States. Although in June of 2001 the Nevada legislature authorized the Nevada Gaming Commission to legalize on-line, Internet 

gambling operations if and when such operations can be conducted 

in compliance with Federal law, the Gaming Commission believes 

that such compliance cannot be ensured at present. 

Because Internet gambling is generally held to be illegal under 

Federal and State law, most of the estimated 2,000 Internet gambling sites today operate from offshore locations in the Caribbean 

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and elsewhere. As such, they operate effectively beyond the reach 

of U.S. regulators and law enforcement, as well as the statutory 

anti-money laundering regimes that apply to U.S.-based casinos. 

These ‘‘virtual casinos’’ advertise the ease of opening betting accounts mainly through the use of credit cards and alternative payment systems. Internet gambling sites are not only vulnerable to 

criminal exploitation by money launderers; they also can easily 

abuse a customer’s credit card information or manipulate the odds 

of a particular wager to the casino’s advantage. 

At the Oversight Subcommittee’s hearing on July 12, 2001, the 

American Gaming Association-representing commercial casinos and 

their supporters in the United States, addressed some of the practical problems associated with Internet gambling, including the difficulty of subjecting Internet operations to the kinds of regulation 

currently applied to U.S.-based casinos. According to the AGA, its 

major concern is that offshore Internet gambling sites ‘‘frustrate 

important state policies, including restrictions on the availability of 

gaming within each State.’’ The AGA went on to say: ‘‘* * * unregulated Internet gambling that exists today allows an unlicensed, 

untaxed, unsupervised operator to engage in wagering that is otherwise subject to stringent federal and state regulatory controls. 

These controls are vital to preserving the honesty, integrity and 

fairness that those in the gaming industry today have worked so 

hard for so long to bring about.’’ The AGA further reported that it 

does not believe the technology for exercising such controls with respect to Internet gambling is yet available. 

Testifying from a State perspective, the New Jersey Director of 

Gaming Enforcement also noted that offshore Internet gambling 

operations provide no tax revenue or jobs to States, unlike Stateregulated casinos. 

In addition to the legal and economic challenges cited above, 

problem gambling-including problem Internet gambling-can lead to 

personal and family hardships, such as lost savings, excessive debt, 

bankruptcy, foreclosed mortgages, and divorce. In particular, Internet gambling is proving to be a serious problem for many college 

students. The National Collegiate Athletic Association (NCAA) at 

the July, 2001 hearings underscored the vulnerability of young people to losing large sums through Internet gambling. According to 

a Nellie Mae survey cited by the NCAA, 78 percent of college students have credit cards, nearly a third have four or more credit 

cards, and one in ten will graduate with balances over $7,000. One 

student reportedly lost $10,000 on Internet sports gambling over a 

three-month period. And, in another case, a student reportedly lost 

$5,000 on a single Internet wager on the Super Bowl and was 

forced to drop out of school. Further, current events show that not 

just student athletes, but professional athletes can be caught by 

the lure of Internet gambling, as the sports pages have detailed the 

roughly $500,000 owed by Washington Capitals hockey star 

Jaromir Jagr to a Caribbean Internet betting site. 

The New Jersey Director of Gaming Enforcement testified that 

the State of New Jersey had filed a suit against certain offshore 

casinos found to be taking online bets from minors in that State. 

Witnesses from the National Council on Problem Gambling and the 

Compulsive Gambling Center testified about the problems associated with compulsive or pathological gambling, and the Christian 

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Coalition, in a letter to a Member of the Committee, echoed concerns about the impact of gambling on families and society and, in 

particular, the impact of Internet gambling on the poor, youth, and 

those who are already compulsive gamblers. 

Because of the pervasive legal, economic and social challenges 

posed by the rapid growth of Internet gambling, the National Gambling Impact Study Commission unanimously recommended in its 

1999 final report that the Federal government prohibit, with no 

new exemptions, all Internet gambling not already authorized by 

law. The Commission also recommended that legislation be adopted 

to prohibit wire transfers to Internet gambling sites or to the banks 

which represent them, and called on the government to develop enforcement strategies that include credit card providers and money 

transfer agencies that facilitate Internet gambling. 

H.R. 21, the Unlawful Internet Gambling Funding Prohibition 

Act, builds on the recommendations of the National Gambling Impact Study Commission by prohibiting gambling businesses from 

accepting credit cards or other bank instruments in connection 

with unlawful Internet gambling. Because of the anticipated difficulty in enforcing this prohibition offshore, the legislation also authorizes the Attorney General (or appropriate State officials) to 

seek an injunction against any person to prevent or restrain a violation of this bill, including to prohibit banks and other financial 

service providers from processing any credit card transaction or 

other financial instrument with a specified illegal Internet gambling site. The bill provides for the Secretary of the Treasury, in 

conjunction with the Federal Reserve and the U.S. Attorney General, to prescribe regulations reasonably designed to identify, block 

or prevent unlawful Internet gambling transactions, and provides 

that a payment system is not liable for blocking or refusing a restricted transaction in an attempt to comply with the bill’s enforcement. It is intended to provide regulatory flexibility so that compliance may be achieved through coding of transactions or—for those 

financial instruments for which coding is not viable—through alternative methods consistent with the bill’s goals. The bill is identical 

to H.R. 556, which passed the House of Representatives by voice 

vote in the 107th Congress. It is similar to provisions incorporated 

in the 107th Congress in the Committee-reported version of H.R. 

3004, the Financial Anti-Terrorism Act of 2001, as well as to legislation adopted by the House Banking Committee in the 106th Congress (H.R. 4419). 

H.R. 21 is not intended to spell out which activities are legal and 

which are illegal under the bill; rather, it relies on the substantive 

laws in effect at the time a case is brought under the legislation, 

and law enforcement’s interpretation of the underlying law. It 

would not in general apply to a computer or video game that does 

not involve the staking or risking of something of value, nor to a 

game of skill played, created or distributed over the Internet. 

H.R. 21 is not intended to impose new burdens on financial institutions to identify which offshore gambling sites may be engaged 

in unlawful activities. Rather, the legislation contemplates a mechanism whereby banks and other financial service providers will be 

provided, pursuant to an injunction, with the names of specific 

Internet gambling sites to which payments are to be prohibited. 

The obligation of financial institutions pursuant to such an injuncVerDate Jan 31 2003 14:49 Mar 31, 2003 Jkt 019006 PO 00000 Frm 00004 Fmt 6659 Sfmt 6601 E:\HR\OC\HR051P1.XXX HR051P1
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tion would be similar in effect to their obligations under certain 

other U.S. laws, such as those administered by the Office of Foreign Assets Control (OFAC) barring financial transactions with terrorists and drug kingpins. The bill recognizes that many credit 

card companies and credit card banks are taking steps to identify, 

block or prevent Internet gambling transactions, and allows for enforcement of this bill by the Federal bank regulators prior to the 

issuance of an injunction. 

HEARINGS

No hearings were held on this legislation in the 108th Congress. 

COMMITTEE CONSIDERATION

The Committee on Financial Services met in open session on 

March 13, 2003 and ordered H.R. 21, the Unlawful Internet Gambling Funding Prohibition Act, reported to the House with a favorable recommendation by a voice vote, a quorum being present. 

COMMITTEE VOTES

Clause 3(b) of rule XIII of the Rules of the House of Representatives requires the Committee to list the record votes on the motion 

to report legislation and amendments thereto. No record votes were 

taken in conjunction with the consideration of this legislation. A 

motion by Mr. Oxley to report the bill to the House with a favorable recommendation was agreed to by a voice vote. 

COMMITTEE OVERSIGHT FINDINGS

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

of Representatives, the Committee made findings that are reflected 

in this report. 

PERFORMANCE GOALS AND OBJECTIVES

Pursuant to clause 3(c)(4) of rule XIII of the Rules of the House 

of Representatives, the Committee establishes the following performance related goals and objectives for this legislation: 

Using authority granted by this legislation, the Attorney General, and the Federal functional regulators and the Federal Trade 

Commission under applicable law (section 505(a) of the GrammLeach-Bliley Act), will reduce the availability of illegal offshore 

Internet gambling in the United States. 

NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX

EXPENDITURES

In compliance with clause 3(c)(2) of rule XIII of the Rules of the 

House of Representatives, the Committee adopts as its own the estimate of budget authority, entitlement authority, or tax expenditures or revenues contained in the cost estimate prepared by the 

Director of the Congressional Budget Office pursuant to section 402 

of the Congressional Budget Act of 1974. 

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COMMITTEE COST ESTIMATE

The Committee adopts as its own the cost estimate prepared by 

the Director of the Congressional Budget Office pursuant to section 

402 of the Congressional Budget Act of 1974. 

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

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

of Representatives, the following is the cost estimate provided by 

the Congressional Budget Office pursuant to section 402 of the 

Congressional Budget Act of 1974:

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, March 27, 2003. 

Hon. MICHAEL G. OXLEY, Chairman, Committee on Financial Services, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed 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 Ken Johnson and 

Mark Hadley. 

Sincerely, 

DOUGLAS HOLTZ-EAKIN, 

Director. 

Enclosure. 

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 or private-sector 

mandates as defined in the Unfunded Mandates Reform Act 

(UMRA) and would impose no costs on state, local, or tribal governments. 

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, 

7

the bill would have a negligible effect on the collection and spending of criminal penalties.

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 2002–2006 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. 

Becaue 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 one year or more), the additional direct spending also 

would be negligible. 

Intergovernmental and private-sector impact: 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 intergovernVerDate Jan 31 2003 14:49 Mar 31, 2003 Jkt 019006 PO 00000 Frm 00007 Fmt 6659 Sfmt 6602 E:\HR\OC\HR051P1.XXX HR051P1
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mental or 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, H.R. 

21 does not contain a new mandate relative to current law and 

would impose no costs on state, local, or tribal governments. 

Estimate prepared by: Federal spending: Ken Johnson and Mark 

Hadley; federal revenues: Mark Booth; impact on state, local, and 

tribal governments: Victoria Heid Hall; impact on the private sector: Jean Talarico. 

Estimate approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis.

FEDERAL MANDATES STATEMENT

The Committee adopts as its own the estimate of Federal mandates prepared by the Director of the Congressional Budget Office 

pursuant to section 423 of the Unfunded Mandates Reform Act. 

ADVISORY COMMITTEE STATEMENT

No advisory committees within the meaning of section 5(b) of the 

Federal Advisory Committee Act were created by this legislation. 

CONSTITUTIONAL AUTHORITY STATEMENT

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

of Representatives, the Committee finds that the Constitutional 

Authority of Congress to enact this legislation is provided by Article 1, section 8, clause 1 (relating to the defense and general welfare of the United States), and clause 3 (relating to the power to 

regulate foreign and interstate commerce). 

APPLICABILITY TO LEGISLATIVE BRANCH

The Committee finds that the legislation does not relate to the 

terms and conditions of employment or access to public services or 

accommodations within the meaning of section 102(b)(3) of the Congressional Accountability Act. 

SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title 

This section provides the short title of the bill, the ‘‘Unlawful 

Internet Gambling Funding Prohibition Act.’’

Section 2. Findings 

This section provides certain Congressional findings. In particular, Congress finds 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 

This section prohibits a gambling business from accepting bank 

instruments in connection with unlawful Internet gambling. CovVerDate Jan 31 2003 14:49 Mar 31, 2003 Jkt 019006 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\HR051P1.XXX HR051P1
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ered instruments include credit cards, electronic fund transfers, 

and checks. 

Subsection (b) 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 ‘‘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; certain participation in a simulation sports game 

or education game; or a lawful transaction with a business licensed 

or authorized by a State. Paragraph (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 that 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 and State Attorneys General to pursue civil remedies, including a preliminary injunction or injunction against any person to prevent or restrain a 

violation of this legislation. It clarifies that the bill 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 bill 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 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 five 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 

10

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 six 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 bill’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 legislation, 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 section 

1081 of Title 18, the Federal Wire Act, and increases the penalty 

for unlawful wire transfers of wagering information.

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 italic, 

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). 

11

(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 wire communication facility for the transmission 

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 wire 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. 

* * * * * * *

(12)

DISSENTING VIEWS 

H.R. 21 limits the ability of individual citizens to use bank instruments, including credit cards or checks, to finance Internet 

gambling. This legislation should be rejected by Congress since the 

federal government has no constitutional authority to ban or even 

discourage any form of gambling. 

In addition to being unconstitutional, H.R. 21 is likely to prove 

ineffective at ending Internet gambling. Instead, this bill will ensure that gambling is controlled by organized crime. History, from 

the failed experiment of prohibition to today’s futile ‘‘war on drugs,’’

shows that the government cannot eliminate demand for something 

like Internet gambling simply by passing a law. Instead, H.R. 21 

will force those who wish to gamble over the Internet to patronize 

suppliers willing to flaunt the ban. In many cases, providers of 

services banned by the government will be members of criminal organizations. Even if organized crime does not operate Internet 

gambling enterprises their competitors are likely to be controlled 

by organized crime. After all, since the owners and patrons of 

Internet gambling cannot rely on the police and courts to enforce 

contracts and resolve other disputes, they will be forced to rely on 

members of organized crime to perform those functions. Thus, the 

profits of Internet gambling will flow into organized crime. Furthermore, outlawing an activity will raise the price vendors are 

able to charge consumers, thus increasing the profits flowing to organized crime from Internet gambling. It is bitterly ironic that a 

bill masquerading as an attack on crime will actually increase organized crime’s ability to control and profit from Internet gambling! 

In conclusion, H.R. 21 violates the constitutional limits on federal power. Furthermore, laws such as H.R. 21 are ineffective in 

eliminating the demand for vices such as Internet gambling; instead, they ensure that these enterprises will be controlled by organized crime. Therefore I urge my colleagues to reject H.R. 21, the 

Internet Gambling Prohibition Act.

RON PAUL.

Æ