I 
108TH CONGRESS 
1ST SESSION 
H. R. 21
To prevent the use of certain bank instruments for unlawful Internet 
gambling, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 7, 2003
Mr. LEACH (for himself, Mr. OXLEY, Mr. ROGERS of Michigan, Mr. PICK-
ERING, Mr. NORWOOD, Mr. GOODLATTE, Mr. BACHUS, Mrs. KELLY, Mr. 
WOLF, Mr. SPRATT, Mr. OSBORNE, Mr. PITTS, Mr. BERRY, and Mr. 
GILLMOR) introduced the following bill; which was referred to the Com-
mittee 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 jurisdic-
tion 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 the busi-
ness of betting or wagering may knowingly accept, in con-
nection with the participation of another person in unlaw-
ful 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 wa-
gers’’—
(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 subject to chance, upon an agreement or 
understanding that the person or another per-
son 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, United 
States Code; 
(D) includes any instructions or informa-
tion pertaining to the establishment or move-
ment of funds in an account by the bettor or 
customer with the business of betting or wager-
ing; and 
(E) does not include—
(i) any activity governed by the secu-
rities laws (as that term is defined in sec-
tion 3(a)(47) of the Securities Exchange 
Act of 1934) for the purchase or sale of se-
curities (as that term is defined in section 
3(a)(10) of such Act); 
(ii) any transaction conducted on or 
subject to the rules of a registered entity 
or exempt board of trade pursuant to the 
Commodity Exchange Act;
(iii) any over-the-counter derivative 
instrument; 
(iv) any other transaction that—
(I) is excluded or exempt from 
regulation under the Commodity Ex-
change Act; or 
(II) is exempt from State gaming 
or bucket shop laws under section 
12(e) of the Commodity Exchange Act 
or section 28(a) of the Securities Ex-
change Act of 1934; 
(v) any contract of indemnity or guar-
antee; 
(vi) any contract for insurance; 
(vii) any deposit or other transaction 
with a depository institution (as defined in 
section 3(c) of the Federal Deposit Insur-
ance Act); 
(viii) 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; and 
(ix) any lawful transaction with a 
business licensed or authorized by a State. 
(2) BUSINESS
OF
BETTING
OR
WAGERING.—
The term ‘‘business of betting or wagering’’ does not 
include, other than for purposes of subsection (e), 
any creditor, credit card issuer, insured depository 
institution, financial institution, operator of a ter-
minal at which an electronic fund transfer may be 
initiated, money transmitting business, or inter-
national, national, regional, or local network utilized 
to effect a credit transaction, electronic fund trans-
fer, stored value product transaction, or money 
transmitting service, or any participant in such net-
work, or any interactive computer service or tele-
communications service.
(3) 
DESIGNATED
PAYMENT
SYSTEM
DE-
FINED.—The term ‘‘designated payment system’’ 
means any system utilized by any creditor, credit 
card issuer, financial institution, operator of a ter-
minal at which an electronic fund transfer may be 
initiated, money transmitting business, or inter-
national, national, regional, or local network utilized 
to effect a credit transaction, electronic fund trans-
fer, or money transmitting service, or any partici-
pant in such network, that the Secretary, in con-
sultation with the Board of Governors of the Federal 
Reserve System and the Attorney General, deter-
mines, by regulation or order, could be utilized in 
connection with, or to facilitate, any restricted trans-
action. 
(4) INTERNET.—The term ‘‘Internet’’ means 
the international computer network of interoperable 
packet switched data networks. 
(5) INTERACTIVE
COMPUTER
SERVICE.—The 
term ‘‘interactive computer service’’ has the same
meaning as in section 230(f) of the Communications 
Act of 1934. 
(6) RESTRICTED TRANSACTION.—The term ‘‘re-
stricted transaction’’ means any transaction or 
transmittal involving any credit, funds, instrument, 
or proceeds described in any paragraph of subsection 
(a) which the recipient is prohibited from accepting 
under subsection (a). 
(7) UNLAWFUL
INTERNET
GAMBLING.—The 
term ‘‘unlawful Internet gambling’’ means to place, 
receive, or otherwise transmit 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. 
(8) 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 4A 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.—
(i) IN
GENERAL.—Notwithstanding 
subparagraphs (A) and (B), for a violation 
that is alleged to have occurred, or may 
occur, on Indian lands (as that term is de-
fined in section 4 of the Indian Gaming 
Regulatory Act)—
(I) the United States shall have 
the enforcement authority provided 
under subparagraph (A); and 
(II) the enforcement authorities 
specified 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. 
(ii) RULE
OF
CONSTRUCTION.—No 
provision of this section shall be construed
as altering, superseding, or otherwise af-
fecting the application of the Indian Gam-
ing Regulatory Act. 
(3) EXPEDITED PROCEEDINGS.—In addition to 
any proceeding under paragraph (2), a district court 
may, in exigent circumstances, enter a temporary re-
straining order against a person alleged to be in vio-
lation of this section upon application of the United 
States under paragraph (2)(A), or the attorney gen-
eral (or other appropriate State official) of an af-
fected State under paragraph (2)(B), in accordance 
with Rule 65(b) of the Federal Rules of Civil Proce-
dure. 
(4) LIMITATION
RELATING
TO
INTERACTIVE 
COMPUTER SERVICES.—
(A) IN
GENERAL.—Relief granted under 
this subsection against an interactive computer 
service shall—
(i) be limited to the removal of, or dis-
abling of access to, an online site violating 
this section, or a hypertext link to an on-
line site violating this section, that resides 
on a computer server that such service 
controls or operates; except this limitation 
shall not apply if the service is subject to
liability under this section pursuant to sub-
section (e); 
(ii) be available only after notice to 
the interactive computer service and an op-
portunity for the service to appear are pro-
vided; 
(iii) not impose any obligation on an 
interactive computer service to monitor its 
service or to affirmatively seek facts indi-
cating activity violating this section; 
(iv) specify the interactive computer 
service to which it applies; and 
(v) specifically identify the location of 
the online site or hypertext link to be re-
moved or access to which is to be disabled. 
(B) COORDINATION WITH OTHER LAW.—
An interactive computer service that does not 
violate this section shall not be liable under sec-
tion 1084 of title 18, except this limitation shall 
not apply if an interactive computer service has 
actual knowledge and control of bets and wa-
gers and—
(i) operates, manages, supervises, or 
directs an Internet website at which unlaw-
ful bets or wagers may be placed, received,
or otherwise made or at which unlawful 
bets or wagers are offered to be placed, re-
ceived, or otherwise made; or 
(ii) owns or controls, or is owned or 
controlled by, any person who operates, 
manages, supervises, or directs an Internet 
website at which unlawful bets or wagers 
may be placed, received, or otherwise made 
or at which unlawful bets or wagers are of-
fered to be placed, received, or otherwise 
made. 
(5) FACTORS TO BE CONSIDERED IN CERTAIN 
CASES.—In considering granting relief under this 
subsection against any payment system, or any par-
ticipant in a payment system that is a creditor, cred-
it card issuer, financial institution, operator of a ter-
minal at which an electronic fund transfer may be 
initiated, money transmitting business, or inter-
national, national, regional, or local network utilized 
to effect a credit transaction, electronic fund trans-
fer, or money transmitting service, or a participant 
in such network, the court shall consider the fol-
lowing factors: 
(A) The extent to which such person is ex-
tending credit or transmitting funds knowing
the transaction is in connection with unlawful 
Internet gambling. 
(B) The history of such person in extend-
ing credit or transmitting funds knowing the 
transaction is in connection with unlawful 
Internet gambling. 
(C) The extent to which such person has 
established and is maintaining policies and pro-
cedures in compliance with regulations pre-
scribed under subsection (f). 
(D) The feasibility that any specific rem-
edy prescribed in the order issued under this 
subsection can be implemented by such person 
without substantial deviation from normal busi-
ness practice. 
(E) The costs and burdens the specific 
remedy will have on such person. 
(6) NOTICE TO REGULATORS AND FINANCIAL 
INSTITUTIONS.—Before initiating any proceeding 
under paragraph (2) with respect to a violation or 
potential violation of this section by any creditor, 
credit card issuer, financial institution, operator of a 
terminal at which an electronic fund transfer may be 
initiated, money transmitting business, or inter-
national, national, regional, or local network utilized
to effect a credit transaction, electronic fund trans-
fer, or money transmitting service, or any partici-
pant in such network, the Attorney General of the 
United States or an attorney general of a State (or 
other appropriate State official) shall—
(A) notify such person, and the appro-
priate regulatory agency (as determined in ac-
cordance with subsection (f)(5)) for such per-
son, of such violation or potential violation and 
the remedy to be sought in such proceeding; 
and 
(B) allow such person 30 days to imple-
ment a reasonable remedy for the violation or 
potential violation, consistent with the factors 
described in paragraph (5) and in conjunction 
with such action as the appropriate regulatory 
agency may take. 
(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
illegal bets or wagers or sending, receiving, or invit-
ing information assisting in the placing of bets or 
wagers. 
(e) 
CIRCUMVENTIONS
PROHIBITED.—Notwith-
standing subsection (b)(2), a creditor, credit card issuer, 
financial institution, operator of a terminal at which an 
electronic fund transfer may be initiated, money transmit-
ting business, or international, national, regional, or local 
network utilized to effect a credit transaction, electronic 
fund transfer, or money transmitting service, or any par-
ticipant in such network, or any interactive computer serv-
ice or telecommunications service, may be liable under this 
section if such creditor, issuer, institution, operator, busi-
ness, network, or participant has actual knowledge and 
control of bets and wagers and—
(1) operates, manages, supervises, or directs an 
Internet website at which unlawful bets or wagers 
may be placed, received, or otherwise made or at 
which unlawful bets or wagers are offered to be 
placed, received, or otherwise made; or 
(2) owns or controls, or is owned or controlled 
by, any person who operates, manages, supervises, 
or directs an Internet website at which unlawful bets 
or wagers may be placed, received, or otherwise
made or at which unlawful bets or wagers are of-
fered to be placed, received, or otherwise made.
(f) POLICIES AND PROCEDURES TO IDENTIFY AND 
PREVENT RESTRICTED TRANSACTIONS IN PAYMENT FOR 
UNLAWFUL INTERNET GAMBLING.—
(1) REGULATIONS.—Before the end of the 6-
month period beginning on the date of the enact-
ment of this Act, the Secretary of the Treasury, in 
consultation with the Board of Governors of the 
Federal Reserve System and the Attorney General, 
shall prescribe regulations requiring any designated 
payment system to establish policies and procedures 
reasonably designed to identify and prevent re-
stricted transactions in any of the following ways: 
(A) The establishment of policies and pro-
cedures that—
(i) allow the payment system and any 
person involved in the payment system to 
identify restricted transactions by means of 
codes in authorization messages or by 
other means; and 
(ii) block restricted transactions iden-
tified as a result of the policies and proce-
dures developed pursuant to clause (i).
(B) The establishment of policies and pro-
cedures that prevent the acceptance of the 
products or services of the payment system in 
connection with a restricted transaction. 
(2) REQUIREMENTS FOR POLICIES AND PROCE-
DURES.—In prescribing regulations pursuant to 
paragraph (1), the Secretary shall—
(A) identify types of policies and proce-
dures, including nonexclusive examples, which 
would be deemed to be ‘‘reasonably designed to 
identify’’ and ‘‘reasonably designed to block’’ or 
to ‘‘prevent the acceptance of the products or 
services’’ with respect to each type of trans-
action, such as, should credit card transactions 
be so designated, identifying transactions by a 
code or codes in the authorization message and 
denying authorization of a credit card trans-
action in response to an authorization message; 
(B) to the extent practical, permit any par-
ticipant in a payment system to choose among 
alternative means of identifying and blocking, 
or otherwise preventing the acceptance of the 
products or services of the payment system or 
participant in connection with, restricted trans-
actions; and
(C) consider exempting restricted trans-
actions from any requirement under paragraph 
(1) if the Secretary finds that it is not reason-
ably practical to identify and block, or otherwise 
prevent, such transactions. 
(3) COMPLIANCE WITH PAYMENT SYSTEM POLI-
CIES
AND
PROCEDURES.—A creditor, credit card 
issuer, financial institution, operator of a terminal at 
which an electronic fund transfer may be initiated, 
money transmitting business, or international, na-
tional, regional, or local network utilized to effect a 
credit transaction, electronic fund transfer, or money 
transmitting service, or a participant in such net-
work, meets the requirement of paragraph (1) if—
(A) such person relies on and complies 
with the policies and procedures of a designated 
payment system of which it is a member or par-
ticipant to—
(i) identify and block restricted trans-
actions; or 
(ii) otherwise prevent the acceptance 
of the products or services of the payment 
system, member, or participant in connec-
tion with restricted transactions; and
(B) such policies and procedures of the 
designated payment system comply with the re-
quirements of regulations prescribed under 
paragraph (1). 
(4) NO LIABILITY FOR BLOCKING OR REFUSING 
TO HONOR RESTRICTED TRANSACTIONS.—A person 
that is subject to a regulation prescribed or order 
issued under this subsection and blocks, or otherwise 
refuses to honor, a restricted transaction, or as a 
member of a designated payment system relies on 
the policies and procedures of the payment system, 
in an effort to comply with this section shall not be 
liable to any party for such action. 
(5) ENFORCEMENT.—This subsection shall be 
enforced by the Federal functional regulators and 
the Federal Trade Commission under applicable law 
in the manner provided in section 505(a) of the 
Gramm-Leach-Bliley Act. 
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. AMENDMENTS TO GAMBLING PROVISIONS. 
(a) AMENDMENT TO DEFINITION.—Section 1081 of 
title 18, United States Code, is amended—
(1) by designating the five undesignated para-
graphs that begin with ‘‘The term’’ as paragraphs 
(1) through (5), respectively; and 
(2) in paragraph (5), as so designated—
(A) by striking ‘‘wire communication’’ and 
inserting ‘‘communication’’; 
(B) by inserting ‘‘satellite, microwave,’’ 
after ‘‘cable,’’; and 
(C) by inserting ‘‘(whether fixed or mo-
bile)’’ after ‘‘connection’’. 
(b) INCREASE IN PENALTY FOR UNLAWFUL WIRE 
TRANSFERS
OF
WAGERING
INFORMATION.—Section 
1084(a) of title 18, United States Code, is amended by 
striking ‘‘two years’’ and inserting ‘‘5 years’’.
Æ