I
107TH CONGRESS
1ST SESSION
H. R. 556
To prevent the use of certain bank instruments for unlawful Internet
gambling, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 12, 2001
Mr. LEACH introduced the following bill; which was referred to the Committee
on Financial Services, and in addition to the Committee on the Judiciary,
for a period to be subsequently determined by the Speaker, in each case
for consideration of such provisions as fall within the jurisdiction of the
committee concerned
A BILL
To prevent the use of certain bank instruments for unlawful
Internet gambling, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Unlawful Internet
Gambling Funding Prohibition Act’’.
SEC. 2. FINDINGS.
The Congress finds as follows:
(1) Internet gambling is primarily funded
through personal use of bank instruments, including
credit cards and wire transfers.
(2) The National Gambling Impact Study Com-
mission in 1999 recommended the passage of legisla-
tion to prohibit wire transfers to Internet gambling
sites or the banks which represent them.
(3) Internet gambling is a major cause of debt
collection problems for insured depository institu-
tions and the consumer credit industry.
(4) Internet gambling conducted through off-
shore jurisdictions has been identified by United
States law enforcement officials as a significant
money laundering vulnerability.
SEC. 3. PROHIBITION ON ACCEPTANCE OF ANY BANK IN-
STRUMENT FOR UNLAWFUL INTERNET GAM-
BLING.
(a) IN GENERAL.—No person engaged in a gambling
business may knowingly accept, in connection with the
participation of another person in unlawful Internet
gambling—
(1) credit, or the proceeds of credit, extended to
or on behalf of such other person (including credit
extended through the use of a credit card);
(2) an electronic fund transfer or funds trans-
mitted by or through a money transmitting business,
or the proceeds of an electronic fund transfer or
money transmitting service, from or on behalf of the
other person;
(3) any check, draft, or similar instrument
which is drawn by or on behalf of the other person
and is drawn on or payable at or through any finan-
cial institution; or
(4) the proceeds of any other form of financial
transaction as the Secretary may prescribe by regu-
lation which involves a financial institution as a
payor or financial intermediary on behalf of or for
the benefit of the other person.
(b) DEFINITIONS.—For purposes of this Act, the fol-
lowing definitions shall apply:
(1) BETS
OR
WAGERS.—The term ‘‘bets or
wagers’’—
(A) means the staking or risking by any
person of something of value upon the outcome
of a contest of others, a sporting event, or a
game predominantly subject to chance, upon an
agreement or understanding that the person or
another person will receive something of greater
value than the amount staked or risked in the
event of a certain outcome;
(B) includes the purchase of a chance or
opportunity to win a lottery or other prize
(which opportunity to win is predominantly sub-
ject to chance);
(C) includes any scheme of a type de-
scribed in section 3702 of title 28; and
(D) does not include—
(i) any bona fide business transaction
governed by the securities laws (as that
term is defined in section 3(a)(47) of the
Securities Exchange Act of 1934) for the
purchase or sale at a future date of securi-
ties (as that term is defined in section
3(a)(10) of such Act);
(ii) any transaction on or subject to
the rules of a contract market designated
pursuant to section 5 of the Commodity
Exchange Act;
(iii) any over-the-counter derivative
instrument;
(iv) any contract of indemnity or
guarantee;
(v) any contract for life, health, or ac-
cident insurance; or
(vi) any participation in a simulation
sports game or an educational game or
contest that—
(I) is not dependent solely on the
outcome of any single sporting event
or nonparticipant’s singular individual
performance in any single sporting
event;
(II) has an outcome that reflects
the relative knowledge and skill of the
participants with such outcome deter-
mined predominantly by accumulated
statistical results of sporting events;
and
(III) offers a prize or award to a
participant that is established in ad-
vance of the game or contest and is
not determined by the number of par-
ticipants or the amount of any fees
paid by those participants.
(2) GAMBLING
BUSINESS.—The term ‘‘gam-
bling business’’ means—
(A) a business that is conducted at a gam-
bling establishment;
(B) a business that—
(i) involves—
(I) the placing, receiving, or oth-
erwise making of bets or wagers; or
(II) the offering to engage in the
placing, receiving, or otherwise mak-
ing of bets or wagers;
(ii) involves 1 or more persons who
conduct, finance, manage, supervise, direct,
or own all or part of such business; and
(iii) has been or remains in substan-
tially continuous operation for a period in
excess of 10 days or has a gross revenue
of $2,000 or more from such business dur-
ing any 24-hour period; and
(C) any agent who knowingly solicits for a
business described in subparagraph (A) or (B).
(3) INTERNET.—The term ‘‘Internet’’ means
the international computer network of interoperable
packet switched data networks.
(4) UNLAWFUL
INTERNET
GAMBLING.—The
term ‘‘unlawful Internet gambling’’ means to place,
receive, or otherwise make a bet or wager by any
means which involves the use, at least in part, of the
Internet where such bet or wager is unlawful under
any applicable Federal or State law in the State in
which the bet or wager is initiated, received, or oth-
erwise made.
(5) OTHER TERMS.—
(A) CREDIT; 
CREDITOR; 
AND
CREDIT
CARD.—The terms ‘‘credit’’, ‘‘creditor’’, and
‘‘credit card’’ have the meanings given such
terms in section 103 of the Truth in Lending
Act.
(B) ELECTRONIC FUND TRANSFER.—The
term ‘‘electronic fund transfer’’—
(i) has the meaning given such term
in section 903 of the Electronic Fund
Transfer Act; and
(ii) includes any fund transfer covered
by Article 4 of the Uniform Commercial
Code, as in effect in any State.
(C) FINANCIAL
INSTITUTION.—The term
‘‘financial institution’’ has the meaning given
such term in section 903 of the Electronic
Fund Transfer Act.
(D) MONEY TRANSMITTING BUSINESS AND
MONEY
TRANSMITTING
SERVICE.—The terms
‘‘money transmitting business’’ and ‘‘money
transmitting service’’ have the meanings given
such terms in section 5330(d) of title 31,
United States Code.
(E) SECRETARY.—The term ‘‘Secretary’’
means the Secretary of the Treasury.
(c) CIVIL REMEDIES.—
(1) JURISDICTION.—The district courts of the
United States shall have original and exclusive juris-
diction to prevent and restrain violations of this sec-
tion by issuing appropriate orders in accordance
with this section, regardless of whether a prosecu-
tion has been initiated under this section.
(2) PROCEEDINGS.—
(A) INSTITUTION
BY
FEDERAL
GOVERN-
MENT.—
(i) IN GENERAL.—The United States,
acting through the Attorney General, may
institute proceedings under this subsection
to prevent or restrain a violation of this
section.
(ii) RELIEF.—Upon application of the
United States under this subparagraph,
the district court may enter a preliminary
injunction or an injunction against any
person to prevent or restrain a violation of
this section, in accordance with Rule 65 of
the Federal Rules of Civil Procedure.
(B) INSTITUTION
BY
STATE
ATTORNEY
GENERAL.—
(i) IN GENERAL.—The attorney gen-
eral of a State (or other appropriate State
official) in which a violation of this section
allegedly has occurred or will occur may in-
stitute proceedings under this subsection to
prevent or restrain the violation.
(ii) RELIEF.—Upon application of the
attorney general (or other appropriate
State official) of an affected State under
this subparagraph, the district court may
enter a preliminary injunction or an in-
junction against any person to prevent or
restrain a violation of this section, in ac-
cordance with Rule 65 of the Federal
Rules of Civil Procedure.
(C) INDIAN LANDS.—Notwithstanding sub-
paragraphs (A) and (B), for a violation that is
alleged to have occurred, or may occur, on In-
dian lands (as that term is defined in section 4
of the Indian Gaming Regulatory Act)—
(i) the United States shall have the
enforcement authority provided under sub-
paragraph (A); and
(ii) the enforcement authorities speci-
fied in an applicable Tribal-State compact
negotiated under section 11 of the Indian
Gaming Regulatory Act shall be carried
out in accordance with that compact.
(3) EXPEDITED PROCEEDINGS.—
(A) IN GENERAL.—In addition to any pro-
ceeding under paragraph (2), a district court
may, in exigent circumstances, enter a tem-
porary restraining order against a person al-
leged to be in violation of this section upon ap-
plication of the United States under paragraph
(2)(A), or the attorney general (or other appro-
priate State official) of an affected State under
paragraph (2)(B), in accordance with Rule
65(b) of the Federal Rules of Civil Procedure.
(d) CRIMINAL PENALTY.—
(1) IN GENERAL.—Whoever violates this section
shall be fined under title 18, United States Code, or
imprisoned for not more than 5 years, or both.
(2) PERMANENT
INJUNCTION.—Upon convic-
tion of a person under this subsection, the court
may enter a permanent injunction enjoining such
person from placing, receiving, or otherwise making
bets or wagers or sending, receiving, or inviting in-
formation assisting in the placing of bets or wagers.
(e) 
SAFE
HARBOR
FOR
FINANCIAL
INTER-
MEDIARIES.—
(1) IN
GENERAL.—No 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 utilized to effect a credit trans-
action, electronic fund transfer, or money transmit-
ting service shall be liable under this section for the
involvement of such person, or the use of the facili-
ties of such person—
(A) in any credit transaction, electronic
fund transfer, or money transmitting service de-
scribed in subsection (a); or
(B) in drawing, paying, transferring, or
collecting any check, draft, or other instrument
described in subsection (a) or in any regulation
prescribed under such subsection.
(2) EXCEPTION FOR KNOWING PARTICIPATION
IN A GAMBLING BUSINESS.—Paragraph (1) shall not
apply with respect to any person referred to in such
paragraph which is a gambling business or which
knowingly participates in any activity referred to in
subparagraph (A) or (B) of such paragraph as an
agent or representative of a gambling business.
SEC. 4. INTERNET GAMBLING IN OR THROUGH FOREIGN
JURISDICTIONS.
(a) IN GENERAL.—In deliberations between the
United States Government and any other country on
money laundering, corruption, and crime issues, the
United States Government should—
(1) encourage cooperation by foreign govern-
ments and relevant international fora in identifying
whether Internet gambling operations are being used
for money laundering, corruption, or other crimes;
(2) advance policies that promote the coopera-
tion of foreign governments, through information
sharing or other measures, in the enforcement of
this Act; and
(3) encourage the Financial Action Task Force
on Money Laundering, in its annual report on
money laundering typologies, to study the extent to
which Internet gambling operations are being used
for money laundering.
(b) REPORT
REQUIRED.—The Secretary of the
Treasury shall submit an annual report to the Congress
on the deliberations between the United States and other
countries on issues relating to Internet gambling.
SEC. 5. ENFORCEMENT ACTIONS.
Section 8 of the Federal Deposit Insurance Act (12
U.S.C. 1818) is amended by adding at the end the fol-
lowing new subsection:
‘‘(x) DEPOSITORY INSTITUTION INVOLVEMENT
IN
INTERNET GAMBLING.—Notwithstanding section 3(e) of
the Unlawful Internet Gambling Funding Prohibition Act,
if any appropriate Federal banking agency determines
that any insured depository institution is engaged in any
of the following activities, the agency may issue an order
to such institution prohibiting such institution from con-
tinuing to engage in any of the following activities:
‘‘(1) Extending credit, or facilitating an exten-
sion of credit, electronic fund transfer, or money
transmitting service with the actual knowledge that
any person is violating section 3(a) of the Unlawful
Internet Gambling Funding Prohibition Act in con-
nection with such extension of credit, electronic fund
transfer, or money transmitting service.
‘‘(2) Paying, transferring, or collecting on any
check, draft, or other instrument drawn on any de-
pository institution with the actual knowledge that
any person is violating section 3(a) of the Unlawful
Internet Gambling Funding Prohibition Act in con-
nection with such check, draft, or other instru-
ment.’’.
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