```

[House Report 108-51]
[From the U.S. Government Publishing Office]

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

                          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 
Anti-Terrorism 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 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 State-regulated 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 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 injunction 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 
Gramm-Leach-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.

                        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, 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 
intergovernmental 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. 
Covered 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 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

           *       *       *       *       *       *       *

Sec. 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 ``[wire] 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.

           *       *       *       *       *       *       *

Sec. 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 [two] 5 years, or both.

           *       *       *       *       *       *       *

                            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.

                                

```