II 

110TH CONGRESS 

2D SESSION S. 3616 

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

Internet skill game facilities, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 26 (legislative day, SEPTEMBER 17), 2008 

Mr. MENENDEZ introduced the following bill; which was read twice and 

referred to the Committee on Banking, Housing, and Urban Affairs 

A BILL 

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

licensing of Internet skill game facilities, 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 Skill Game 

5 Licensing and Control Act of 2008’’. 

6 SEC. 2. FEDERAL LICENSING REQUIREMENT FOR INTER7 NET GAMBLING OPERATIONS. 

8 (a) IN GENERAL.—Chapter 53 of title 31, United 

9 States Code, is amended by adding at the end the fol10 lowing: 


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1 ‘‘SUBCHAPTER V—REGULATION OF INTERNET 

2 SKILL GAME FACILITIES 

3 ‘‘§ 5381. Definitions 

4 ‘‘In this subchapter: 

5 ‘‘(1) BET OR WAGER.—The term ‘bet or wager’ 

6 has the meaning given the term in section 5362. 

7 ‘‘(2) INDIAN LANDS AND INDIAN TRIBE.—The 

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

9 meaning given such terms in section 4 of the Indian 

10 Gaming Regulatory Act (25 U.S.C. 2703). 

11 ‘‘(3) INTERNET.—The term ‘Internet’ has the 

12 meaning given the term in section 5362. 

13 ‘‘(4) INTERNET SKILL GAME.—The term ‘Inter14 net skill game’ means an Internet-based game that 

15 uses simulated cards, dice, or tiles in which success 

16 is predominantly determined by the skill of the play17 ers, including poker, bridge, and mahjong. 

18 ‘‘(5) INTERNET SKILL GAME FACILITY.—The 

19 term ‘Internet skill game facility’ means an Internet 

20 site through which a permitted bet or wager is 

21 placed, accepted, or otherwise made, whether trans22 mitted by telephone, Internet, or other electronic 

23 communication. 

24 ‘‘(6) LICENSEE.—The term ‘licensee’ means a 

25 person that operates an Internet skill game facility 


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1 under a license issued by the Secretary under this 

2 subchapter. 

3 ‘‘(7) NON-HOUSE-BANKED GAME.—The term 

4 ‘non-house-banked game’ means a game— 

5 ‘‘(A) that— 

6 ‘‘(i) consists of players playing against 

7 each other and not against the operator of 

8 the game; and 

9 ‘‘(ii) provides for payouts, if any, that 

10 are drawn from the players’ pool and not 

11 from the operator of the game; and 

12 ‘‘(B) may be operated by an Internet skill 

13 game facility in which the operator retains a 

14 percentage of the players’ pool or receives a 

15 fixed fee as compensation. 

16 ‘‘(8) OPERATES AN INTERNET SKILL GAME FA17 CILITY.—The term ‘operates an Internet skill game 

18 facility’ means directs, manages, supervises, or con19 trols an Internet skill game facility. 

20 ‘‘(9) PERMITTED BET OR WAGER.—The term 

21 ‘permitted bet or wager’ means a bet or wager made 

22 with respect to the outcome of an Internet skill 

23 game that is a non-house-banked game. 

24 ‘‘(10) SECRETARY.—The term ‘Secretary’ 

25 means the Secretary of the Treasury. 


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1 ‘‘(11) STATE.—The term ‘State’ means any 

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

3 or any commonwealth, territory, or other possession 

4 of the United States. 

5 ‘‘§ 5382. Establishment and administration of licens6 ing program 

7 ‘‘(a) LICENSE REQUIRED.—Beginning 6 months 

8 after the issuance of the first license under this sub9 chapter, it shall be unlawful for a person to operate an 

10 Internet skill game facility in interstate or foreign com11 merce without a license issued to such person by the Sec12 retary under this subchapter. 

13 ‘‘(b) APPLICATIONS FOR LICENSE.— 

14 ‘‘(1) APPLICATION.—A person seeking a license 

15 to operate an Internet skill game facility in inter16 state or foreign commerce shall submit to the Sec17 retary an application therefore in such form and in 

18 such manner as the Secretary considers appropriate. 

19 ‘‘(2) ELEMENTS.—Each application submitted 

20 under paragraph (1) shall include such information 

21 as the Secretary considers appropriate, including the 

22 following: 

23 ‘‘(A) Complete financial information about 

24 the applicant. 


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1 ‘‘(B) Documentation showing the corporate 

2 structure of the applicant and all related busi3 nesses and affiliates. 

4 ‘‘(C) The names of all persons directly or 

5 indirectly interested in the business of the ap6 plicant and the nature of such interest. 

7 ‘‘(D) A certification by the applicant, 

8 agreeing to be subject to United States jurisdic9 tion and all applicable United States laws relat10 ing to Internet skill games or gambling activi11 ties. 

12 ‘‘(3) WAIVER OF PRIVILEGE.—Any applicant 

13 may claim any privilege afforded by the Constitution 

14 of the United States in refusing to answer questions 

15 by the Secretary. A claim of privilege with respect 

16 to any testimony or evidence pertaining to an appli17 cation may constitute sufficient grounds for denial 

18 of a license under this subchapter. 

19 ‘‘(c) REVIEW OF APPLICANTS AND LICENSEES.— 

20 ‘‘(1) IN GENERAL.—The Secretary may not 

21 issue a license to an applicant under this subchapter 

22 unless the Secretary has determined, after evalu23 ating the factors described in paragraph (2), that 

24 the applicant is qualified for such license. 


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1 ‘‘(2) FACTORS.—The factors to be evaluated by 

2 the Secretary under paragraph (1) shall include the 

3 following: 

4 ‘‘(A) The honesty and integrity of the ap5 plicant. 

6 ‘‘(B) The business probity and relevant ex7 perience of the applicant. 

8 ‘‘(C) The financial condition of the appli9 cant. 

10 ‘‘(D) Whether the applicant has adequate 

11 financial capabilities from suitable sources. 

12 ‘‘(E) The applicant’s record of compliance 

13 with laws and requirements related to Internet 

14 skill gaming in foreign jurisdictions. 

15 ‘‘(3) BACKGROUND CHECKS.—In evaluating an 

16 applicant under paragraph (1), the Secretary shall— 

17 ‘‘(A) if the applicant is an individual, carry 

18 out a background check to determine if the in19 dividual has a criminal record; and 

20 ‘‘(B) if the applicant is a corporation, part21 nership, or other business entity, carry out a 

22 background check to determine if the president 

23 or other chief executive of the applicant and 

24 other partners or senior executives and direcVerDate Aug 31 2005 02:35 Oct 02, 2008 Jkt 069200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3616.IS S3616

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1 tors of the applicant, as determined appropriate 

2 by the Secretary, have a criminal record. 

3 ‘‘(4) MONITORING.—The Secretary shall mon4 itor continuously each licensee and all other persons 

5 having a material involvement directly or indirectly 

6 with the operation of the Internet skill gaming facil7 ity of such licensee to ensure that— 

8 ‘‘(A) a license issued under this subchapter 

9 is held only by a person whom the Secretary 

10 considers qualified to operate an Internet skill 

11 game facility; and 

12 ‘‘(B) the operation of an Internet skill 

13 game facility by a licensee has no material in14 volvement of any person whom the Secretary 

15 considers unqualified or unsuitable for such op16 eration. 

17 ‘‘(d) APPROVAL OF LICENSE.— 

18 ‘‘(1) IN GENERAL.—The Secretary shall issue a 

19 license under this subchapter to an applicant if the 

20 Secretary determines, after considering the factors 

21 described in subsection (c)(2), that the applicant is 

22 qualified to operate an Internet skill gaming facility. 

23 ‘‘(2) BURDEN OF PROOF.—An applicant for a 

24 license under this subchapter has the burden of 


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1 proving that the applicant is qualified and suitable 

2 for such license. 

3 ‘‘(e) DENIAL, RESTRICTION, OR REVOCATION OF LI4 CENSES.— 

5 ‘‘(1) DENIAL.—The Secretary may not issue a 

6 license under this subchapter to an applicant who 

7 has been convicted under the laws of any foreign 

8 country, the United States, or any State for any 

9 criminal violation involving gambling laws, laws re10 lating to financial markets, or financial laws, includ11 ing any provisions of law relating to money laun12 dering, fraud, privacy, or information security. 

13 ‘‘(2) CONDITIONS, LIMITATIONS, AND RESTRIC14 TIONS.—The Secretary may provide any condition, 

15 limitation, or restriction on a license issued under 

16 this subchapter that the Secretary considers reason17 able to ensure the integrity and fairness of Internet 

18 skill game facilities. 

19 ‘‘(3) REVOCATION.—The Secretary shall termi20 nate or revoke a license issued to a licensee under 

21 this subchapter if the licensee— 

22 ‘‘(A) fails to comply with any provision of 

23 this subchapter; or 

24 ‘‘(B) is convicted of a crime involving the 

25 payments system, financial markets, or Internet 


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1 gambling laws of the United States or of the ju2 risdiction in which the licensee is located. 

3 ‘‘(4) APPLICABILITY TO BUSINESS ENTITIES.— 

4 If a licensee or applicant for a license under this 

5 subchapter is a corporation, partnership, or other 

6 business entity, paragraphs (1) and (3) shall apply 

7 with respect to each partner, officer, or director of 

8 such corporation, partnership, or entity. 

9 ‘‘(5) FINAL ACTION.—An action by the Sec10 retary under this subsection shall be treated as a 

11 final action by the Secretary. 

12 ‘‘(f) TERM AND RENEWAL OF LICENSE.— 

13 ‘‘(1) TERM.—Each license issued by the Sec14 retary under this subchapter shall be issued for a 1- 

15 year term beginning on the date of issuance. 

16 ‘‘(2) RENEWAL.—The Secretary may renew a 

17 license issued under this subchapter in accordance 

18 with such requirements as the Secretary shall pre19 scribe to ensure the continued compliance of licens20 ees with the provisions of this subchapter. 

21 ‘‘(g) SAFEGUARDS AND REQUIREMENTS.— 

22 ‘‘(1) SAFEGUARDS.—No person shall receive or 

23 retain a license under this subchapter unless the 

24 person implements and maintains the following safeVerDate Aug 31 2005 02:35 Oct 02, 2008 Jkt 069200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S3616.IS S3616

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1 guards and mechanisms with respect to any per2 mitted bet or wager: 

3 ‘‘(A) Reasonable safeguards to ensure that 

4 each individual placing a permitted bet or 

5 wager is 18 years of age or older. 

6 ‘‘(B) Reasonable safeguards to ensure that 

7 each individual placing a permitted bet or 

8 wager is physically located in a jurisdiction that 

9 permits the operation of an Internet skill game 

10 facility at the time the permitted bet or wager 

11 is placed. 

12 ‘‘(C) Reasonable mechanisms to ensure 

13 that all taxes relating to Internet skill games 

14 payable to Federal and State governments and 

15 to Indian tribes from persons engaged in Inter16 net skill games are collected at the time of any 

17 payment of any proceeds of Internet skill 

18 games. 

19 ‘‘(D) Reasonable mechanisms to ensure 

20 that all taxes relating to Internet skill games 

21 payable to Federal and State governments and 

22 to Indian tribes are collected as required by 

23 law. 

24 ‘‘(E) Reasonable safeguards to prevent 

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1 scribed by regulations promulgated by the Sec2 retary. 

3 ‘‘(F) Reasonable safeguards to prevent or 

4 mitigate social problems that some individuals 

5 may experience related to playing Internet skill 

6 games. 

7 ‘‘(G) Reasonable safeguards to protect the 

8 privacy and security of any individual partici9 pating in an Internet skill game. 

10 ‘‘(H) Reasonable mechanisms to ensure 

11 that any assessment required under subsection 

12 (h) is paid to the Secretary. 

13 ‘‘(I) Such other safeguards and mecha14 nisms as the Secretary may establish by regula15 tion or order. 

16 ‘‘(2) REQUIREMENTS.—No person may receive 

17 or retain a license under this subchapter unless the 

18 person complies with anti-money laundering, anti19 fraud, anti-terrorism, and such other regulations, re20 quirements, and limitations as may be prescribed by 

21 the Secretary. 

22 ‘‘(h) ASSESSMENTS FOR ADMINISTRATIVE EX23 PENSES.— 

24 ‘‘(1) IN GENERAL.— 


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1 ‘‘(A) COSTS.—The cost of administering 

2 this subchapter with respect to each licensee, 

3 including the cost of any review or examination 

4 of a licensee to ensure compliance with the 

5 terms of the license and this subchapter, shall 

6 be assessed by the Secretary against the respec7 tive licensee by written notice in an amount ap8 propriate to meet the expenses of the Secretary 

9 in carrying out such administration, review, or 

10 examination. 

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

12 the Secretary as user fees under subparagraph 

13 (A)— 

14 ‘‘(i) shall be maintained by the Sec15 retary solely for use in accordance with 

16 clause (ii); 

17 ‘‘(ii) shall be available to the Sec18 retary to cover all expenses incurred by the 

19 Secretary in carrying out this subchapter; 

20 and 

21 ‘‘(iii) may not be construed to be Gov22 ernment funds or appropriated monies, or 

23 subject to apportionment for the purposes 

24 of chapter 15 or any other authority. 


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1 ‘‘(C) HEARING.—Any licensee notified of 

2 an assessment under this paragraph shall be 

3 granted a hearing by the Secretary if the li4 censee submits a request for such hearing not 

5 later than 20 days after the date on which the 

6 notice of such assessment is issued. 

7 ‘‘(D) COLLECTION.— 

8 ‘‘(i) REFERRAL.—If the licensee fails 

9 to pay an assessment under this paragraph 

10 after the assessment has become final, the 

11 Secretary shall recover the amount as12 sessed by action in an appropriate United 

13 States district court. 

14 ‘‘(ii) APPROPRIATENESS OF ASSESS15 MENT NOT REVIEWABLE.—In any civil ac16 tion under clause (i), the validity and ap17 propriateness of the assessment shall not 

18 be subject to review. 

19 ‘‘(2) DIRECT AND EXCLUSIVE OBLIGATION OF

20 LICENSEE.—An assessment on a licensee under 

21 paragraph (1)— 

22 ‘‘(A) shall be the direct and exclusive obli23 gation of the licensee; and 


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1 ‘‘(B) may not be deducted from amounts 

2 available as deposits to any person placing a 

3 permitted bet or wager. 

4 ‘‘(i) REGULATIONS.— 

5 ‘‘(1) IN GENERAL.—Not later than 180 days 

6 after the date of the enactment of this subchapter, 

7 the Secretary shall prescribe such regulations, safe8 guards, and testing mechanisms as may be necessary 

9 to administer and enforce the provisions of this sub10 chapter. 

11 ‘‘(2) CHANGES.—The Secretary may revise or 

12 repeal the regulations prescribed under this sub13 section as the Secretary determines necessary to en14 sure the integrity and fairness of Internet skill game 

15 facilities. 

16 ‘‘(j) ADMINISTRATIVE PROVISIONS.— 

17 ‘‘(1) GENERAL POWERS OF SECRETARY.—The 

18 Secretary may— 

19 ‘‘(A) require a class of licensees to main20 tain appropriate procedures to ensure compli21 ance with this subchapter and regulations pre22 scribed under this subchapter; 

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

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1 ments imposed by the Secretary under this sub2 chapter; and 

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

4 for a license, an officer or employee of a li5 censee or any such applicant (including a 

6 former officer or employee), or any person hav7 ing possession, custody, or care of the reports 

8 and records required by the Secretary under 

9 this subchapter to appear before the Secretary 

10 or a designee of the Secretary at a time and 

11 place named in the summons and to produce 

12 such books, papers, records, or other data, and 

13 to give testimony, under oath, as may be rel14 evant or material to any investigation in con15 nection with the enforcement of this subchapter 

16 or any application for a license under this sub17 chapter. 

18 ‘‘(2) ADMINISTRATIVE ASPECTS OF SUM19 MONS.— 

20 ‘‘(A) PRODUCTION AT DESIGNATED

21 SITE.—A summons issued pursuant to this sub22 section may require that books, papers, records, 

23 or other data stored or maintained at any place 

24 be produced at any business location of a li25 censee or applicant for a license or any desVerDate Aug 31 2005 02:35 Oct 02, 2008 Jkt 069200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\S3616.IS S3616

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1 ignated location in any State or in any territory 

2 or other place subject to the jurisdiction of the 

3 United States not more than 500 miles distant 

4 from any place where the licensee or applicant 

5 for a license operates or conducts business in 

6 the United States. 

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

8 United States shall not be liable for any ex9 pense incurred in connection with the produc10 tion of books, papers, records, or other data 

11 under this subsection. 

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

13 summons issued under this subsection may be 

14 by registered mail or in such other manner cal15 culated to give actual notice as the Secretary 

16 may prescribe by regulation. 

17 ‘‘(3) CONTUMACY OR REFUSAL.— 

18 ‘‘(A) REFERRAL TO ATTORNEY GEN19 ERAL.—In case of contumacy by a person 

20 issued a summons under this subsection or a 

21 refusal by such person to obey such summons 

22 or to allow the Secretary to conduct an exam23 ination, the Secretary shall refer the matter to 

24 the Attorney General. 


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1 ‘‘(B) JURISDICTION OF COURT.—The At2 torney General may invoke the aid of any court 

3 of the United States within the jurisdiction of 

4 which— 

5 ‘‘(i) the investigation which gave rise 

6 to the summons or the examination is 

7 being or has been carried on; 

8 ‘‘(ii) the person summoned is an in9 habitant; or 

10 ‘‘(iii) the person summoned carries on 

11 business or may be found, 

12 to compel compliance with the summons. 

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

14 an order requiring the person summoned to ap15 pear before the Secretary or a delegate of the 

16 Secretary to produce books, papers, records, 

17 and other data, to give testimony as may be 

18 necessary to explain how such material was 

19 compiled and maintained, to allow the Secretary 

20 to examine the business of a licensee, and to 

21 pay the costs of the proceeding. 

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

23 Any failure to obey the order of the court may 

24 be punished by the court as a contempt thereof. 


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

2 in any case under this subsection may be served 

3 in any judicial district in which such person 

4 may be found. 

5 ‘‘§ 5383. Financial institutions 

6 ‘‘(a) INVESTMENT BANKING.—A person may not be 

7 held liable for engaging in investment banking activities 

8 involving a licensee if such activities are performed in com9 pliance with— 

10 ‘‘(1) the provisions of this subchapter; 

11 ‘‘(2) the provisions of the Sarbanes-Oxley Act 

12 of 2002 (15 U.S.C. 7201 et seq.); 

13 ‘‘(3) the provisions of the Securities Act of 

14 1933 (15 U.S.C. 77a et seq.); 

15 ‘‘(4) the provisions of the Securities Exchange 

16 Act of 1934 (15 U.S.C. 78a et seq.); and 

17 ‘‘(5) any other applicable provision of law that 

18 governs securities. 

19 ‘‘(b) PAYMENT AND TRANSACTION PROCESSING.—A 

20 person may not be held liable for engaging in payments 

21 processing activities involving a licensee if such activities 

22 are performed in compliance with the provisions of this 

23 subchapter. 

24 ‘‘(c) FINANCIAL INSTITUTIONS.—A financial institu25 tion may not be held liable for engaging in financial activiVerDate Aug 31 2005 02:35 Oct 02, 2008 Jkt 069200 PO 00000 Frm 00018 Fmt 6652 Sfmt 6201 E:\BILLS\S3616.IS S3616

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1 ties and transactions involving a licensee if such activities 

2 are performed in compliance with— 

3 ‘‘(1) the provisions of this subchapter; and 

4 ‘‘(2) applicable provisions of Federal, State, and 

5 foreign banking laws. 

6 ‘‘§ 5384. Prohibition and limitation of licenses in 

7 States and on Indian lands 

8 ‘‘(a) STATE AND INDIAN TRIBE OPT OUT.— 

9 ‘‘(1) IN GENERAL.—A licensee may not accept 

10 a permitted bet or wager from an individual phys11 ically located in any State or on tribal lands of any 

12 Indian tribe that prohibits permitted bets or wagers 

13 within such State or tribal lands if the Governor, or 

14 other chief executive officer of such State, or head 

15 of the tribal government of such Indian tribe in16 forms the Secretary of such prohibition before the 

17 end of the 90-day period beginning on the date of 

18 the enactment of the Internet Skill Game Licensing 

19 and Control Act of 2008, or in accordance with 

20 paragraph (3), until such time as any notice of any 

21 subsequent repeal of such prohibition becomes effec22 tive under paragraph (3). 

23 ‘‘(2) LIMITATIONS IMPOSED BY STATES OR IN24 DIAN TRIBES.—A licensee may not accept a per25 mitted bet or wager with respect to a particular type 


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1 of Internet skill game in any State or tribal lands 

2 of any Indian tribe that prohibits such permitted bet 

3 or wager with respect to such particular type of 

4 Internet skill game if the Governor, or other chief 

5 executive officer of such State, or head of the tribal 

6 government of such Indian tribe informs the Sec7 retary of such prohibition, in a manner that clearly 

8 identifies the nature and extent of such prohibition, 

9 before the end of the 90-day period beginning on the 

10 date of the enactment of the Internet Skill Game Li11 censing and Control Act of 2008, or in accordance 

12 with paragraph (3), until such time as any notice of 

13 any amendment or repeal of such specific prohibition 

14 becomes effective under paragraph (3). 

15 ‘‘(3) CHANGES TO STATE OR INDIAN TRIBE

16 LIMITATIONS.—The establishment, repeal, or amend17 ment by any State or Indian tribe of any prohibition 

18 or limitation referred to in paragraph (1) or (2) 

19 after the end of the 90-day period beginning on the 

20 date of the enactment of the Internet Skill Game Li21 censing and Control Act of 2008 shall apply, for 

22 purposes of this subchapter, with respect to oper23 ating an Internet skill game facility in such State or 

24 on the tribal lands of such Indian tribe by any li25 censee beginning on the first January 1 that occurs 


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1 after the end of the 30-day period beginning on the 

2 later of— 

3 ‘‘(A) the date on which written notice of 

4 such establishment, repeal, or amendment is 

5 provided to the Secretary by the Governor, or 

6 other chief executive officer of such State, or 

7 the head of the tribal government of such In8 dian tribe; or 

9 ‘‘(B) the effective date of such establish10 ment, repeal, or amendment. 

11 ‘‘(b) REGULATION OF INTERNET SKILL GAMING BY

12 STATES AND INDIAN TRIBES.— 

13 ‘‘(1) IN GENERAL.—A State or Indian tribe 

14 may establish a requirement relating to the regula15 tion of an Internet skill game facility if such require16 ment— 

17 ‘‘(A) applies only to the people in such 

18 State or on the tribal lands of such Indian 

19 tribe; and 

20 ‘‘(B) such requirement provides protection 

21 for players of Internet skill games that exceeds 

22 the protection provided such players under this 

23 subchapter. 

24 ‘‘(2) ADDITIONAL LIMITATIONS IMPOSED BY

25 STATES OR INDIAN TRIBES.—No licensee may accept 


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1 a permitted bet or wager from an individual phys2 ically located in any State or tribal lands of any In3 dian tribe unless the licensee adheres to those the 

4 requirements established by such State or Indian 

5 tribe under paragraph (1). 

6 ‘‘(3) CHANGES TO STATE OR INDIAN TRIBE

7 LIMITATIONS.—The establishment, repeal, or amend8 ment of any requirement referred to in paragraph 

9 (1) by any State or any Indian tribe after the end 

10 of the 90-day period beginning on the date of the 

11 enactment of the Internet Skill Game Licensing and 

12 Control Act of 2008 shall apply, for purposes of this 

13 subchapter, with respect to offering an Internet skill 

14 game facility in such State or Indian tribe by any 

15 licensee beginning on the first January 1 that occurs 

16 after the end of the 30-day period beginning on the 

17 later of— 

18 ‘‘(A) the date a notice of such establish19 ment, repeal, or amendment is provided by the 

20 Governor, or other chief executive officer of 

21 such State, or head of the tribal government of 

22 such Indian tribe in writing to the Secretary; or 

23 ‘‘(B) the effective date of such establish24 ment, repeal, or amendment. 


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1 ‘‘(c) ENFORCING STATE AND INDIAN TRIBE LIMITA2 TIONS.— 

3 ‘‘(1) IN GENERAL.—The Secretary shall take 

4 effective measures to ensure that each licensee com5 plies, as a condition of the license, with any limita6 tion or prohibition imposed by any State or Indian 

7 tribe to which the licensee is subject under sub8 sections (a) and (b). 

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

10 this subchapter for a licensee to accept knowingly a 

11 permitted bet or wager from an individual physically 

12 located in a State or in the tribal lands of an Indian 

13 tribe for which a notice is in effect under subsection 

14 (a) or (b) without complying with all of the prohibi15 tions, limitations, and requirements imposed by such 

16 State or Indian tribe under such subsections. 

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

18 routing of electronic data shall not determine the location 

19 or locations in which a permitted bet or wager is initiated, 

20 received, or otherwise made. 

21 ‘‘§ 5385. Sporting events or contests 

22 ‘‘(a) CONSTRUCTION.—No provision of this sub23 chapter may be construed to permit a bet or wager in con24 nection with a sporting event or contest of a sporting 

25 league. 


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1 ‘‘(b) PROHIBITION ON FACILITATION BY LICENSEES

2 OF BETS OR WAGERS RELATING TO SPORTING

3 EVENTS.— 

4 ‘‘(1) PROHIBITION.—A licensee may not, as a 

5 condition of its license, facilitate a bet or wager in 

6 connection with a sporting event or contest of a 

7 sporting league. 

8 ‘‘(2) ENFORCEMENT.—The Secretary shall take 

9 effective measures to enforce the provisions of para10 graph (1). 

11 ‘‘§ 5386. Safe harbor 

12 ‘‘It shall be a defense against any prosecution or en13 forcement action under any Federal or State law against 

14 a licensee that the activity for which the defendant is being 

15 prosecuted is authorized under, and has been carried out 

16 in accordance with, the provisions of this subchapter. 

17 ‘‘§ 5387. Criminal penalties 

18 ‘‘(a) IN GENERAL.—Any person who knowingly vio19 lates any provision of this subchapter shall be fined under 

20 title 18, imprisoned for not more than 5 years, or both. 

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

22 a person under this section, the court may permanently 

23 enjoin such person from operating an Internet skill game 

24 facility. 


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1 ‘‘§ 5388. Rules of construction 

2 ‘‘(a) NO EFFECT ON PRIOR LAW.—No provision of 

3 this subchapter may be construed as altering or limiting 

4 any Federal or State law or Tribal-State compact that 

5 permitted or regulated Internet skill gaming in the United 

6 States before the date of the enactment of the Internet 

7 Skill Game Licensing and Control Act of 2008. 

8 ‘‘(b) COORDINATION WITH CERTAIN GAMBLING

9 LAWS.—No provision of this subchapter may be construed 

10 as permitting any bet or wager that would otherwise vio11 late any provision of— 

12 ‘‘(1) the Interstate Horse Racing Act of 1978 

13 (15 U.S.C. 3001 et seq.); 

14 ‘‘(2) chapter 178 of title 28; 

15 ‘‘(3) the Gambling Devices Transportation Act 

16 (15 U.S.C. 1171 et seq.); or 

17 ‘‘(4) the Indian Gaming Regulatory Act (25 

18 U.S.C. 2701 et seq.). 

19 ‘‘§ 5389. Periodic reports by licensees 

20 ‘‘(a) IN GENERAL.—Each licensee shall submit to the 

21 Secretary, at intervals prescribed by the Secretary, a re22 port on the operations of the licensee for the most recent 

23 period for which such report is submitted. 

24 ‘‘(b) CONTENTS.—Each report submitted by a li25 censee under subsection (a) shall include, for the most reVerDate Aug 31 2005 02:35 Oct 02, 2008 Jkt 069200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\S3616.IS S3616

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1 cent period for which the report is submitted to the Sec2 retary, the following: 

3 ‘‘(1) A comprehensive statement describing the 

4 limitations imposed on the licensee by any State, In5 dian tribe, or sporting league. 

6 ‘‘(2) Such other information as the Secretary 

7 considers appropriate. 

8 ‘‘(c) STANDARDIZATION OF REPORTING.—The Sec9 retary shall prescribe, with respect to reports required 

10 under subsection (a)— 

11 ‘‘(1) standard forms for reporting financial con12 dition, results of operations, and other relevant fi13 nancial information about licensees; 

14 ‘‘(2) a uniform code of accounts and accounting 

15 classifications to assure consistency, comparability, 

16 and effective disclosure of financial information; and 

17 ‘‘(3) the intervals at which licensees shall sub18 mit such reports. 

19 ‘‘§ 5390. Annual reports by Secretary 

20 ‘‘(a) IN GENERAL.—Not later than 18 months after 

21 the date of the issuance of the first license under this sub22 chapter and annually thereafter, the Secretary shall sub23 mit to Congress a report on the licensing and regulation 

24 of operators of Internet skill game facilities. 


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1 ‘‘(b) CONTENTS.—Each report required by sub2 section (a) shall include, for the 1-year period ending on 

3 the date on which such report is submitted to Congress, 

4 the following: 

5 ‘‘(1) Relevant statistical information on applica6 tions for licenses under this subchapter and licenses 

7 issued under this subchapter. 

8 ‘‘(2) The amounts collected from licensees 

9 under section 5382(h). 

10 ‘‘(3) Information on regulatory or enforcement 

11 actions undertaken by the Secretary. 

12 ‘‘(4) Such other information as may be useful 

13 to Congress in evaluating the effectiveness of the 

14 provisions of this subchapter, including the effective15 ness of such provisions in— 

16 ‘‘(A) protecting against underage gam17 bling, social problems that some players may 

18 experience related to Internet skill game play, 

19 money laundering, and fraud; and 

20 ‘‘(B) preventing tax avoidance related to 

21 online activities.’’. 

22 (b) CONFORMING AMENDMENT.—Section 1084(a) of 

23 title 18, United States Code, is amended— 


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1 (1) by striking ‘‘Whoever’’ and inserting ‘‘(1) 

2 Except as provided in paragraph (2), any person 

3 who’’; and 

4 (2) by adding at the end the following: 

5 ‘‘(2)(A) The provisions of paragraph (1) shall not 

6 apply to a permitted bet or wager with respect to a li7 censee who operates an Internet skill game facility. 

8 ‘‘(B) In this paragraph, the terms ‘licensee’, ‘operates 

9 an Internet skill game facility’, and ‘permitted bet or 

10 wager’ have the meaning given such terms in section 5381 

11 of title 31.’’. 

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

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

14 by adding at the end the following: 

‘‘SUBCHAPTER V—REGULATION OF INTERNET SKILL GAME FACILITIES

‘‘Sec. 5381. Definitions. 

‘‘Sec. 5382. Establishment and administration of licensing program. 

‘‘Sec. 5383. Financial institutions. 

‘‘Sec. 5384. Prohibition and limitation of licenses in States and on Indian 

lands. 

‘‘Sec. 5385. Sporting events or contests. 

‘‘Sec. 5386. Safe harbor. 

‘‘Sec. 5387. Criminal penalties. 

‘‘Sec. 5388. Rules of construction. 

‘‘Sec. 5389. Periodic reports by licensees. 

‘‘Sec. 5390. Annual reports by Secretary.’’. 

Æ 


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