IB 
Union Calendar No. 398 
111TH CONGRESS 
2D SESSION 
H. R. 2267 
[Report No. 111–656, Part I] 
To amend title 31, United States Code, to provide for the licensing of 
Internet gambling activities by the Secretary of the Treasury, to provide 
for consumer protections on the Internet, to enforce the tax code, and 
for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 6, 2009 
Mr. FRANK of Massachusetts (for himself, Mr. PAUL, Mr. GUTIERREZ, Mr. 
KING of New York, Mr. WATT, Mr. ACKERMAN, Mr. CAPUANO, Mr. CAR-
SON of Indiana, Mr. MCDERMOTT, Mr. DELAHUNT, Mr. MCGOVERN, Mr. 
WEXLER, Ms. BERKLEY, Mr. COHEN, Mr. PERRIELLO, and Mr. SABLAN) 
introduced the following bill; which was referred to the Committee on Fi-
nancial Services, and in addition to the Committees on Energy and Com-
merce and the Judiciary, for a period to be subsequently determined by 
the Speaker, in each case for consideration of such provisions as fall with-
in the jurisdiction of the committee concerned 
SEPTEMBER 29, 2010 
Reported from the Committee on Financial Services with an amendment 
[Strike out all after the enacting clause and insert the part printed in italic] 
SEPTEMBER 29, 2010 
Referral to the Committees on Energy and Commerce and the Judiciary 
extended for a period not to exceed November 19, 2010 
NOVEMBER 19, 2010 
Committee on the Judiciary discharged; referral to the Committee on Energy 
and Commerce extended for a period not to exceed November 30, 2010 
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NOVEMBER 30, 2010 
Additional sponsors: Mr. HASTINGS of Florida, Mr. GEORGE MILLER of Cali-
fornia, Mr. BISHOP of New York, Mr. SCOTT of Virginia, Mr. CROWLEY, 
Mr. MCMAHON, Mr. ROTHMAN of New Jersey, Mr. FILNER, Mrs. 
MCCARTHY of New York, Mr. RANGEL, Mr. MORAN of Virginia, Mr. 
DRIEHAUS, Mr. POLIS of Colorado, Mr. GRIJALVA, Mr. ISRAEL, Mr. 
RODRIGUEZ, Mr. HONDA, Mr. ANDREWS, Mr. PERLMUTTER, Mr. YOUNG 
of Alaska, Mr. FOSTER, Mr. BLUMENAUER, Mr. ABERCROMBIE, Mr. 
RYAN of Ohio, Mr. NADLER of New York, Mr. HODES, Mr. TOWNS, Mr. 
COURTNEY, Mr. TONKO, Mr. LOBIONDO, Mr. ADLER of New Jersey, Mr. 
MINNICK, Ms. LINDA T. SA´NCHEZ of California, Mr. CONYERS, Mr. 
THOMPSON of California, Mr. MAFFEI, Ms. MARKEY of Colorado, Mr. 
CARNAHAN, Mr. PASCRELL, Ms. WOOLSEY, Mr. MURPHY of Connecticut, 
Mr. CLAY, Mr. SCHIFF, Mr. THOMPSON of Mississippi, Mr. SMITH of 
Washington, Mr. LARSON of Connecticut, Mr. WELCH, Mr. WEINER, Mr. 
MELANCON, Mr. ENGEL, Mr. WILSON of Ohio, Ms. TITUS, Mr. OWENS, 
Mr. MURPHY of New York, and Mr. CAMPBELL 
NOVEMBER 30, 2010 
Committee on Energy and Commerce discharged; committed to the Committee 
of the Whole House on the State of the Union and ordered to be printed 
[For text of introduced bill, see copy of bill as introduced on May 6, 2009] 
A BILL 
To amend title 31, United States Code, to provide for the 
licensing of Internet gambling activities by the Secretary 
of the Treasury, to provide for consumer protections 
on the Internet, to enforce the tax code, and for other 
purposes. 
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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 ‘‘Internet Gambling Reg-
ulation, Consumer Protection, and Enforcement Act’’. 
SEC. 2. FEDERAL LICENSING REQUIREMENT FOR INTERNET 
GAMBLING OPERATORS. 
(a) IN GENERAL.—Chapter 53 of title 31, United 
States Code, is amended by adding at the end the following 
new subchapter: 
‘‘SUBCHAPTER V—REGULATION OF LAWFUL 
INTERNET GAMBLING 
‘‘§ 5381. Congressional findings 
‘‘The Congress finds the following: 
‘‘(1) Since the development of the Internet, mil-
lions of people have chosen to gamble online, and 
today Internet gambling is offered by operators lo-
cated in many different countries under a variety of 
licensing and regulatory regimes. 
‘‘(2) Despite the increasing use of the Internet 
for gambling by persons in the United States, there 
is no Federal or State regulatory regime in place to 
protect United States citizens who choose to engage in 
this interstate activity, or to oversee operators to es-
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tablish and enforce standards of integrity and fair-
ness. 
‘‘(3) In the United States, gambling activities, 
equipment, and operations have been subject to var-
ious forms of Federal and State control, regulation, 
and enforcement, with some form of gambling being 
permitted in nearly every State and by many Indian 
tribes. 
‘‘(4) Internet gambling in the United States 
should be controlled by a strict Federal, State, and 
tribal licensing and regulatory framework to protect 
underage and otherwise vulnerable individuals, to en-
sure the games are fair, to address the concerns of law 
enforcement, and to enforce any limitations on the ac-
tivity established by the States and Indian tribes. 
‘‘(5) An effective Federal, State, and tribal li-
censing system would ensure that licenses are issued 
only to Internet gambling operators which meet strict 
criteria to protect consumers, and which— 
‘‘(A) are in good financial and legal stand-
ing, and of good character, honesty, and integ-
rity; 
‘‘(B) utilize appropriate technology to deter-
mine the age and location of users; 
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‘‘(C) adopt and implement systems to pro-
tect minors and problem gamblers; 
‘‘(D) adopt and implement systems to en-
force any applicable Federal, State, and Indian 
tribe limitations on Internet gambling; and 
‘‘(E) have in place risk-based methods to 
identify and combat money laundering and 
fraud relating to Internet gambling, and to pro-
tect the privacy and security of users. 
‘‘(6) There is a need to extend the regulatory 
provisions of this Act to all persons, locations, equip-
ment, practices, and associations related to Internet 
gambling, with each State and Indian tribe having 
the ability to limit Internet gambling operators from 
offering Internet gambling to persons located within 
its territory by opting out of the provisions of this 
Act. 
‘‘§ 5382. Definitions 
‘‘For purposes of this subchapter, the following defini-
tions shall apply: 
‘‘(1) APPLICANT.—The term ‘applicant’ means 
any person who has applied for a license pursuant to 
this subchapter. 
‘‘(2) BET OR WAGER.—The term ‘bet or wager’ 
has the same meaning as in section 5362(1). 
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‘‘(3) ENFORCEMENT AGENT.—The term ‘enforce-
ment agent’ means any individual authorized by the 
Secretary to enforce the provisions of this subchapter 
and regulations prescribed under this subchapter. 
‘‘(4) INDIAN
LANDS
AND
INDIAN
TRIBE.—The 
terms ‘Indian lands’ and ‘Indian tribe’ have the same 
meanings as in section 4 of the Indian Gaming Regu-
latory Act. 
‘‘(5) INTERNET.—The term ‘Internet’ has the 
same meaning as in section 5362(5). 
‘‘(6) LICENSEE.—The term ‘licensee’ means an 
entity authorized to operate an Internet gambling fa-
cility in accordance with this subchapter. 
‘‘(7) OPERATE AN INTERNET GAMBLING FACIL-
ITY.—The term ‘operate an Internet gambling facil-
ity’ or ‘operation of an Internet gambling facility’ 
means the direction, management, supervision, or 
control of an Internet site through which bets or wa-
gers are initiated, received, or otherwise made, wheth-
er by telephone, Internet, satellite, or other wire or 
wireless communication. 
‘‘(8) SECRETARY.—The term ‘Secretary’ means 
the Secretary of the Treasury, or any person des-
ignated by the Secretary. 
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‘‘(9) STATE.—The term ‘State’ means any State 
of the United States, the District of Columbia, or any 
commonwealth, territory, or other possession of the 
United States. 
‘‘(10) SPORTING
EVENT.—The term ‘sporting 
event’ means any athletic competition, whether profes-
sional, scholastic, or amateur. 
‘‘§ 5383. Establishment and administration of licens-
ing program 
‘‘(a) TREASURY RESPONSIBILITIES.—The Secretary 
shall have responsibility for the following activities: 
‘‘(1) Exercising full regulatory jurisdiction 
over— 
‘‘(A) the operation of Internet gambling fa-
cilities by licensees; and 
‘‘(B) the licensure and regulation of all ap-
plicants, except to the extent that powers have 
been delegated to qualified State and tribal regu-
latory bodies pursuant to this subchapter. 
‘‘(2) Prescribing such regulations as may be nec-
essary to administer and enforce the requirements of 
this subchapter. 
‘‘(3) Employing enforcement agents with suffi-
cient training and experience to administer the re-
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quirements of this subchapter and the regulations pre-
scribed under this subchapter. 
‘‘(4) Enforcing the requirements of this sub-
chapter through all appropriate means provided 
under this subchapter and other provisions of law. 
‘‘(b) INTERNET GAMBLING LICENSING PROGRAM.— 
‘‘(1) LICENSING REQUIRED FOR CERTAIN INTER-
NET GAMBLING.—No person may operate an Internet 
gambling facility that knowingly accepts bets or wa-
gers from persons located in the United States with-
out a license issued by the Secretary in accordance 
with this subchapter. 
‘‘(2) AUTHORITY UNDER VALID LICENSE.—A li-
censee may accept bets or wagers from persons located 
in the United States, subject to the limitations set 
forth in this subchapter, so long as its license remains 
in good standing. 
‘‘(c) APPLICATION FOR LICENSE.— 
‘‘(1) IN GENERAL.—Any person seeking author-
ity to operate an Internet gambling facility offering 
services to persons in the United States may apply 
for a license issued by the Secretary. 
‘‘(2) INFORMATION REQUIRED.—Any application 
for a license under this subchapter shall contain such 
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information as may be required by the Secretary, in-
cluding the following: 
‘‘(A) The criminal and credit history of the 
applicant, any senior executive and director of 
the applicant, and any person deemed to be in 
control of the applicant. 
‘‘(B) The financial statements of the appli-
cant. 
‘‘(C) Documentation showing the corporate 
structure of the applicant and all related busi-
nesses and affiliates. 
‘‘(D) Documentation containing detailed 
evidence of the applicant’s plan for complying 
with all applicable regulations should a license 
be issued, with particular emphasis on the appli-
cant’s ability to— 
‘‘(i) protect underage and problem 
gamblers; 
‘‘(ii) ensure games are being operated 
fairly; and 
‘‘(iii) comply with and address the 
concerns of law enforcement. 
‘‘(E) Certification that the applicant agrees 
to submit to United States jurisdiction and all 
applicable United States laws relating to accept-
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ance by the applicant of bets or wagers over the 
Internet from persons located in the United 
States and all associated activities. 
‘‘(F) Certification that the applicant has es-
tablished a corporate entity or other separate 
business entity in the United States, a majority 
of whose officers are United States persons and, 
if there is a board of directors, that the board is 
majority-controlled by directors who are United 
States persons. 
‘‘(d) STANDARDS
FOR LICENSE ISSUANCE; SUIT-
ABILITY QUALIFICATIONS AND DISQUALIFICATION STAND-
ARDS.— 
‘‘(1) SUITABILITY FOR LICENSING STANDARDS.— 
‘‘(A) IN GENERAL.—No person shall be eli-
gible to obtain a license unless the Secretary or 
an appropriate State officer or agency has deter-
mined, upon completion of a background check 
and investigation, that the applicant, and any 
person deemed to be in control of the applicant, 
is suitable for licensing. 
‘‘(B) ASSOCIATES OF APPLICANTS.—If the 
applicant is a corporation, partnership, or other 
business entity, a background check and inves-
tigation shall occur with respect to the president 
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or other chief executive of the corporation, part-
nership, or other business entity and other part-
ners or senior executives and directors of the cor-
poration, partnership, or entity, as determined 
appropriate by the Secretary or any appropriate 
State or tribal officer or agency. 
‘‘(C) BACKGROUND CHECK AND INVESTIGA-
TION.—The Secretary shall establish standards 
and procedures for conducting background checks 
and investigations for purposes of this sub-
section. 
‘‘(2) SUITABILITY
FOR
LICENSING
STANDARDS 
DESCRIBED.—For purposes of this subchapter, an ap-
plicant and any other person associated with the ap-
plicant, as applicable, is suitable for licensing if the 
applicant demonstrates to the Secretary or appro-
priate State or tribal officer or agency by clear and 
convincing evidence that the applicant (or individual 
associated with the applicant, as applicable)— 
‘‘(A) is a person of good character, honesty, 
and integrity; 
‘‘(B) is a person whose prior activities, rep-
utation, habits, and associations do not— 
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‘‘(i) pose a threat to the public interest 
or to the effective regulation and control of 
the licensed activities; or 
‘‘(ii) create or enhance the dangers of 
unsuitable, unfair, or illegal practices, 
methods, and activities in the conduct of the 
licensed activities or the carrying on of the 
business and financial arrangements inci-
dental to such activities; 
‘‘(C) is capable of and likely to conduct the 
activities for which the applicant is licensed in 
accordance with the provisions of this subchapter 
and any regulations prescribed under this sub-
chapter; 
‘‘(D) has or guarantees acquisition of ade-
quate business competence and experience in the 
operation of Internet gambling facilities; and 
‘‘(E) has or will obtain sufficient financing 
for the nature of the proposed operation and 
from a suitable source. 
‘‘(3) UNSUITABLE FOR LICENSING.—An appli-
cant or any other person may not be determined to 
be suitable for licensing within the meaning of this 
subchapter if the applicant or such person— 
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‘‘(A) has failed to provide information and 
documentation material to a determination of 
suitability for licensing under paragraph (1); 
‘‘(B) has supplied information which is un-
true or misleading as to a material fact per-
taining to any such determination; 
‘‘(C) has been convicted of an offense pun-
ishable by imprisonment of more than 1 year; 
‘‘(D) is delinquent in filing any applicable 
Federal or State tax returns or in the payment 
of any taxes, penalties, additions to tax, or inter-
est owed to a State or the United States; 
‘‘(E) has, on or after the date of the enact-
ment of the Unlawful Internet Gambling En-
forcement Act of 2006— 
‘‘(i) knowingly participated in, or 
should have known they were participating 
in, any illegal Internet gambling activity, 
including the taking of an illegal Internet 
wager, the payment of winnings on an ille-
gal Internet wager, the promotion through 
advertising of any illegal Internet gambling 
website or service, or the collection of any 
payments to an entity operating an illegal 
Internet gambling website; or 
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‘‘(ii) knowingly been owned, operated, 
managed, or employed by, or should have 
known they were owned, operated, managed, 
or employed by, any person who was know-
ingly participating in, or should have 
known they were participating in, any ille-
gal Internet gambling activity, including 
the taking of an illegal Internet wager, the 
payment of winnings on an illegal Internet 
wager, the promotion through advertising of 
any illegal Internet gambling website or 
service, or the collection of any payments to 
an entity operating an illegal Internet gam-
bling website; 
‘‘(F) has— 
‘‘(i) received any assistance, financial 
or otherwise, from any person who has, be-
fore the date of the enactment of the Inter-
net Gambling Regulation, Consumer Protec-
tion, and Enforcement Act, knowingly ac-
cepted bets or wagers from a person located 
in the United States in violation of Federal 
or State law; or 
‘‘(ii) provided any assistance, financial 
or otherwise, to any person who has, before 
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the date of the enactment of the Internet 
Gambling Regulation, Consumer Protection, 
and Enforcement Act, knowingly accepted 
bets or wagers from a person located in the 
United States in violation of Federal or 
State law; 
‘‘(G) with respect to another entity that has 
accepted a bet or wager from any individual in 
violation of United States law, has purchased or 
otherwise obtained— 
‘‘(i) such entity; 
‘‘(ii) a list of the customers of such en-
tity; or 
‘‘(iii) any other part of the equipment 
or operations of such entity; 
‘‘(H) is listed on a State gambling excluded 
persons list; or 
‘‘(I) fails to certify in writing, under pen-
alty of perjury, that the applicant or other such 
person, and all affiliated business entities (in-
cluding all entities under common control), has 
through its entire history— 
‘‘(i) not committed an intentional fel-
ony violation of Federal or State gambling 
laws; and 
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‘‘(ii) used diligence to prevent any 
United States person from placing a bet on 
an Internet site in violation of Federal or 
State gambling laws. 
‘‘(4) APPEAL OF DETERMINATION.—With respect 
to any applicant or other person that the Secretary 
determines is not suitable for licensing within the 
meaning of this subchapter by reason of subpara-
graph (E) or (F) of paragraph (3), and where the 
Secretary has not determined that such applicant or 
person was acting in their capacity as a managerial 
employee of an Internet gambling website, the Sec-
retary shall establish an appeals process by which 
such applicant or person may appeal the Secretary’s 
determination. 
‘‘(5) ONGOING REQUIREMENT.—A licensee (and 
any other person who is required to be determined to 
be suitable for licensing in connection with such li-
censee) shall meet the standards necessary to be suit-
able for licensing throughout the term of the license. 
‘‘(6) PROTECTION OF THE PUBLIC TRUST.—The 
Secretary may take such action as is necessary to 
protect the public trust, including the implementation 
of such safeguards as may be necessary to ensure the 
operation of an Internet gambling facility licensed 
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under this subchapter is controlled only by persons 
who are suitable for licensing. 
‘‘(7) ENFORCEMENT ACTIONS.— 
‘‘(A) DETERMINATION
OF
UNSUITABILITY 
FOR CONTINUED LICENSURE.—If the Secretary 
finds that an individual owner or holder of a se-
curity of a licensee, or of a holding or inter-
mediary company of a licensee or any person 
with an economic interest in a licensee or a di-
rector, partner, or officer of a licensee is not suit-
able for licensing, the Secretary may determine 
that the licensee is not qualified to continue as 
a licensee. 
‘‘(B) ACTION TO PROTECT THE PUBLIC IN-
TEREST, INCLUDING
SUSPENSION.—If the Sec-
retary may determine that the licensee is not 
qualified to continue as a licensee, the Secretary 
shall propose action necessary to protect the pub-
lic interest, including, if deemed necessary, the 
suspension of the authority of the licensee to en-
gage in licensed activities. 
‘‘(C) IMPOSITION OF CONDITIONS INCLUD-
ING REMOVAL OF PARTIES.—Notwithstanding a 
determination under subparagraph (A), the Sec-
retary may allow a licensee to continue engaging 
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in licensed activities by imposing conditions on 
the licensee under penalty of revocation or sus-
pension of the authority of the licensee to engage 
in licensed activities, including— 
‘‘(i) the identification of any person 
determined to be unsuitable for licensing; 
and 
‘‘(ii) the establishment of appropriate 
safeguards to ensure such person is excluded 
from any interest in the licensed activities. 
‘‘(e) 
ASSESSMENTS
FOR
ADMINISTRATIVE
EX-
PENSES.— 
‘‘(1) USER FEES.— 
‘‘(A) IN
GENERAL.—The cost of admin-
istering this subchapter with respect to each li-
censee, including the cost of any review or exam-
ination of a licensee to ensure compliance with 
the terms of the license and this subchapter, shall 
be assessed by the Secretary against the licensee 
institution by written notice in an amount ap-
propriate to meet the Secretary’s expenses in car-
rying out such administration, review, or exam-
ination. 
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‘‘(B) DISPOSITION.—Amounts assessed by 
the Secretary as user fees under subparagraph 
(A) shall— 
‘‘(i) be maintained by the Secretary 
solely for use in accordance with clause (ii); 
‘‘(ii) be available to the Secretary to 
cover all expenses incurred by the Secretary 
in carrying out this subchapter; and 
‘‘(iii) not be construed to be Govern-
ment funds or appropriated monies, or sub-
ject to apportionment for the purposes of 
chapter 15 or any other authority. 
‘‘(C) 
HEARING.—Any 
licensee 
against 
whom an assessment is assessed under this para-
graph shall be afforded an agency hearing if 
such person submits a request for such hearing 
within 20 days after the issuance of the notice of 
assessment. 
‘‘(D) COLLECTION.— 
‘‘(i) REFERRAL.—If any licensee fails 
to pay an assessment under this paragraph 
after the assessment has become final, the 
Secretary shall recover the amount assessed 
by action in the appropriate United States 
district court. 
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‘‘(ii) APPROPRIATENESS
OF
ASSESS-
MENT NOT REVIEWABLE.—In any civil ac-
tion under clause (i), the validity and ap-
propriateness of the assessment shall not be 
subject to review. 
‘‘(2) DIRECT AND EXCLUSIVE OBLIGATION OF LI-
CENSEE.—The user fee shall be the direct and exclu-
sive obligation of the licensee and may not be de-
ducted from amounts available as deposits to any per-
son placing a bet. 
‘‘(f) APPROVAL
OF LICENSE.—The Secretary shall 
grant licenses under this subchapter if the applicant meets 
the criteria set by the Secretary set forth in this subchapter 
and in any regulations promulgated thereunder. 
‘‘(g) SAFEGUARDS REQUIRED OF LICENSEE.—No per-
son may operate an Internet gambling facility in accord-
ance with this subchapter unless the person maintains or 
requires mechanisms so that the following requirements, 
and the standards established under section 5384, are met 
with respect to any Internet bet or wager: 
‘‘(1) LEGAL AGE.—Appropriate safeguards to en-
sure that the individual placing a bet or wager is of 
legal age as defined by the law of the State or tribal 
area in which the individual is located at the time 
the bet or wager is placed. 
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