I
105TH CONGRESS
2D SESSION
H. R. 4350
To amend title 18, United States Code, to prohibit Internet gambling, and
for other purposes.
IN THE HOUSE OF REPRESENTATIVES
JULY 29, 1998
Mr. STEARNS (for himself, Mr. OXLEY, and Mr. LARGENT) introduced the
following bill; which was referred to the Committee on the Judiciary
A BILL
To amend title 18, United States Code, to prohibit 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 ‘‘Internet Gambling
Prohibition Act of 1998’’.
SEC. 2. DEFINITIONS.
Section 1081 of title 18, United States Code, is
amended—
(1) in the matter immediately following the
colon, by designating the first 5 undesignated para-
graphs as paragraphs (1) through (5), respectively,
and indenting each paragraph 2 ems to the right;
and
(2) by adding at the end the following:
‘‘(6) 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, sporting event of others,
or of any game of chance, upon an agreement
or understanding that the person or another
person will receive something of value based on
that 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; and
‘‘(D) does not include—
‘‘(i) a 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 (15
U.S.C. 78c(a)(47))) for the purchase or
sale at a future date of securities (as that
term is defined in section 3(a)(10) of the
Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(10)));
‘‘(ii) a transaction on or subject to the
rules of a contract market designated pur-
suant to section 5 of the Commodity Ex-
change Act (7 U.S.C. 7);
‘‘(iii) a contract of indemnity or guar-
antee;
‘‘(iv) a contract for life, health, or ac-
cident insurance; or
‘‘(v) participation in a game or con-
test, otherwise lawful under applicable
Federal or State law—
‘‘(I) that, by its terms or rules, is
not dependent on the outcome of any
single sporting event, any series or
sporting events, any tournament, or
the individual performance of 1 or
more athletes or teams in a single
sporting event;
‘‘(II) in which the outcome is de-
termined by accumulated statistical
results of games or contests involving
the performances of amateur or pro-
fessional athletes or teams; and
‘‘(III) in which the winner or
winners may receive a prize or award;
(otherwise known as a ‘fantasy sport
league’ or a ‘rotisserie league’) if such par-
ticipation is without charge to the partici-
pant or any charge to a participant is lim-
ited to a reasonable administrative fee.
‘‘(7) FOREIGN JURISDICTION.—The term ‘for-
eign jurisdiction’ means a jurisdiction of a foreign
country or political subdivision thereof.
‘‘(8) INFORMATION ASSISTING IN THE PLACING
OF A BET OR WAGER.—The term ‘information as-
sisting in the placing of a bet or wager’—
‘‘(A) means information that is intended
by the sender or recipient to be used by a per-
son engaged in the business of betting or wa-
gering to accept or place a bet or wager; and
‘‘(B) does not include—
‘‘(i) 
information 
concerning 
pari-
mutuel pools that is exchanged between or
among 1 or more racetracks or other pari-
mutuel wagering facilities licensed by the
State or approved by the foreign jurisdic-
tion in which the facility is located, and 1
or more parimutuel wagering facilities li-
censed by the State or approved by the for-
eign jurisdiction in which the facility is lo-
cated, if that information is used only to
conduct common pool parimutuel pooling
under applicable law;
‘‘(ii) information exchanged between
or among 1 or more racetracks or other
parimutuel wagering facilities licensed by
the State or approved by the foreign juris-
diction in which the facility is located, and
a support service located in another State
or foreign jurisdiction, if the information is
used only for processing bets or wagers
made with that facility under applicable
law;
‘‘(iii) information exchanged between
or among 1 or more wagering facilities
that are located within a single State and
are licensed and regulated by that State,
and any support service, wherever located,
if the information is used only for the pool-
ing or processing of bets or wagers made
by or with the facility or facilities under
applicable State law;
‘‘(iv) any news reporting or analysis
of wagering activity, including odds, racing
or event results, race and event schedules,
or categories of wagering; or
‘‘(v) any posting or reporting of any
educational information on how to make a
bet or wager or the nature of betting or
wagering.’’.
SEC. 3. PROHIBITION ON INTERNET GAMBLING.
(a) IN GENERAL.—Chapter 50 of title 18, United
States Code, is amended by adding at the end the follow-
ing:
‘‘§ 1085. Internet gambling
‘‘(a) DEFINITIONS.—In this section:
‘‘(1) CLOSED-LOOP
SUBSCRIBER-BASED
SERV-
ICE.—The term ‘closed-loop subscriber-based service’
means any information service or system that uses—
‘‘(A) a device or combination of devices—
‘‘(i) expressly authorized and operated
in accordance with the laws of a State for
the purposes described in subsection (e);
and
‘‘(ii) by which a person located within
a State must subscribe to be authorized to
place, receive, or otherwise make a bet or
wager, and must be physically located
within that State in order to be authorized
to do so;
‘‘(B) a customer verification system to en-
sure that all applicable Federal and State legal
and regulatory requirements for lawful gam-
bling are met; and
‘‘(C) appropriate data security standards
to prevent unauthorized access.
‘‘(2) GAMBLING
BUSINESS.—The term ‘gam-
bling business’ means a business that is conducted
at a gambling establishment, or that—
‘‘(A) involves—
‘‘(i) the placing, receiving, or other-
wise making of bets or wagers; or
‘‘(ii) offers to engage in placing, re-
ceiving, or otherwise making bets or wa-
gers;
‘‘(B) involves 1 or more persons who con-
duct, finance, manage, supervise, direct, or own
all or part of such business; and
‘‘(C) has been or remains in substantially
continuous operation for a period in excess of
10 days or has a gross revenue of $2,000 or
more during any 24-hour period.
‘‘(3) INTERACTIVE
COMPUTER
SERVICE.—The
term ‘interactive computer service’ means any infor-
mation service, system, or access software provider
that uses a public communication infrastructure or
operates in interstate or foreign commerce to provide
or enable computer access by multiple users to a
computer server, including specifically a service or
system that provides access to the Internet.
‘‘(4) INTERNET.—The term ‘Internet’ means
the international computer network of both Federal
and non-Federal interoperable packet switched data
networks.
‘‘(5) PERSON.—The term ‘person’ means any
individual, association, partnership, joint venture,
corporation, State or political subdivision thereof,
department, agency, or instrumentality of a State or
political subdivision thereof, or any other govern-
ment, organization, or entity.
‘‘(6) PRIVATE
NETWORK.—The term ‘private
network’ means a communications channel or chan-
nels, including voice or computer data transmission
facilities, that use either—
‘‘(A) private dedicated lines; or
‘‘(B) the public communications infrastruc-
ture, if the infrastructure is secured by means
of the appropriate private communications tech-
nology to prevent unauthorized access.
‘‘(7) STATE.—The term ‘State’ means a State
of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, or a commonwealth,
territory, or possession of the United States.
‘‘(b) GAMBLING.—
‘‘(1) PROHIBITION.—Subject to subsection (e),
it shall be unlawful for a person knowingly to use
the Internet or any other interactive computer serv-
ice—
‘‘(A) to place, receive, or otherwise make a
bet or wager with any person; or
‘‘(B) to send, receive, or invite information
assisting in the placing of a bet or wager with
the intent to send, receive, or invite information
assisting in the placing of a bet or wager.
‘‘(2) PENALTIES.—A person who violates para-
graph (1) shall be—
‘‘(A) fined in an amount that is not more
than the greater of—
‘‘(i) three times the greater of—
‘‘(I) the total amount that the
person is found to have wagered
through the Internet or other inter-
active computer service; or
‘‘(II) the total amount that the
person is found to have received as a
result of such wagering; or
‘‘(ii) $500;
‘‘(B) imprisoned not more than 3 months;
or
‘‘(C) both.
‘‘(c) GAMBLING BUSINESSES.—
‘‘(1) PROHIBITION.—Subject to subsection (e),
it shall be unlawful for a person engaged in a gam-
bling business knowingly to use the Internet or any
other interactive computer service—
‘‘(A) to place, receive, or otherwise make a
bet or wager; or
‘‘(B) to send, receive, or invite information
assisting in the placing of a bet or wager.
‘‘(2) PENALTIES.—A person engaged in a gam-
bling business who violates paragraph (1) shall be—
‘‘(A) fined in an amount that is not more
than the greater of—
‘‘(i) the amount that such person re-
ceived in bets or wagers as a result of en-
gaging in that business in violation of this
subsection; or
‘‘(ii) $20,000;
‘‘(B) imprisoned not more than 4 years; or
‘‘(C) both.
‘‘(d) PERMANENT INJUNCTIONS.—Upon conviction
of a person under this section, the court may, as an addi-
tional penalty, enter a permanent injunction enjoining the
transmission of bets or wagers or information assisting in
the placing of a bet or wager.
‘‘(e) EXCEPTIONS.—
‘‘(1) IN GENERAL.—Subject to paragraph (2),
the prohibitions in this section shall not apply to
any—
‘‘(A) otherwise lawful bet or wager that is
placed, received, or otherwise made wholly
intrastate for a State lottery or a racing or par-
imutuel activity, or a multi-State lottery oper-
ated jointly between 2 or more States in con-
junction with State lotteries, (if the lottery or
activity is expressly authorized, and licensed or
regulated, under applicable Federal or State
law) on—
‘‘(i) an interactive computer service
that uses a private network, if each person
placing or otherwise making that bet or
wager is physically located at a facility
that is open to the general public; or
‘‘(ii) a closed-loop subscriber-based
service that is wholly intrastate; or
‘‘(B) otherwise lawful bet or wager for
class II or class III gaming (as defined in sec-
tion 4 of the Indian Gaming Regulatory Act
(25 U.S.C. 2703)) that is placed, received, or
otherwise made on a closed-loop subscriber-
based service or an interactive computer service
that uses a private network, if—
‘‘(i) each person placing, receiving, or
otherwise making that bet or wager is
physically located on Indian land; and
‘‘(ii) all games that constitute class
III gaming are conducted in accordance
with an applicable Tribal-State compact
entered into under section 11(d) of the In-
dian Gaming Regulatory Act (25 U.S.C.
2701(d)) by a State in which each person
placing, receiving, or otherwise making
that bet or wager is physically located.
‘‘(2) INAPPLICABILITY OF EXCEPTION TO BETS
OR WAGERS MADE BY AGENTS OR PROXIES.—An ex-
ception under subparagraph (A) or (B) of paragraph
(1) shall not apply in any case in which a bet or
wager is placed, received, or otherwise made by the
use of an agent or proxy using the Internet or an
interactive computer service. Nothing in this para-
graph shall be construed to prohibit the owner oper-
ator of a parimutuel wagering facility that is li-
censed by a State from employing an agent in the
operation of the account wagering system owned or
operated by the parimutuel facility.
‘‘(f) STATE LAW.—Nothing in this section shall be
construed to create immunity from criminal prosecution
or civil liability under the law of any State.’’.
(b) TECHNICAL
AMENDMENT.—The analysis for
chapter 50 of title 18, United States Code, is amended
by adding at the end the following:
‘‘1085. Internet gambling.’’.
SEC. 4. CIVIL REMEDIES.
(a) IN GENERAL.—The district courts of the United
States shall have original and exclusive jurisdiction to pre-
vent and restrain violations of section 1085 of title 18,
may enter a temporary restraining order or an
injunction against any person to prevent a vio-
lation of section 1085 of title 18, United States
Code, as added by section 3, if the court deter-
mines, after notice and an opportunity for a
hearing, that there is a substantial probability
that such violation has occurred or will occur.
(B) INDIAN
LANDS.—With respect to a
violation of section 1085 of title 18, United
States Code, as added by section 3, that is al-
leged to have occurred, or may occur, on Indian
lands (as defined in section 4 of the Indian
Gaming Regulatory Act (25 U.S.C. 2703)), the
enforcement authority under subparagraph (A)
shall be limited to the remedies under the In-
dian Gaming Regulatory Act (25 U.S.C. 2701
et seq.), including any applicable Tribal-State
compact negotiated under section 11 of that
Act (25 U.S.C. 2710).
(3) ORDERS AND INJUNCTIONS AGAINST INTER-
NET
SERVICE
PROVIDERS.—Notwithstanding para-
graph (1) or (2), the following rules shall apply in
any proceeding instituted under this subsection in
which application is made for a temporary restrain-
ing order or an injunction against an interactive
computer service:
(A) SCOPE OF RELIEF.—
(i) If the violation of section 1085 of
title 18, United States Code, originates
with a customer of the interactive com-
puter service’s system or network, the
court may require the service to terminate
the specified account or accounts of the
customer, or of any readily identifiable
successor in interest, who is using such
service to place, receive or otherwise make
a bet or wager, engage in a gambling busi-
ness, or to initiate a transmission that vio-
lates such section 1085.
(ii) Any other relief ordered by the
court shall be technically feasible for the
system or network in question under cur-
rent conditions, reasonably effective in pre-
venting a violation of section 1085, of title
18, United States Code, and shall not un-
reasonably interfere with access to lawful
material at other online locations.
(iii) No relief shall be issued under
subparagraph (A)(ii) if the interactive
computer service demonstrates, after an
opportunity to appear at a hearing, that
such relief is not economically reasonable
for the system or network in question
under current conditions.
(B) CONSIDERATIONS.—In the case of an
application 
for 
relief 
under 
subparagraph
(A)(ii), the court shall consider, in addition to
all other factors that the court shall consider in
the exercise of its equitable discretion, wheth-
er—
(i) such relief either singularly or in
combination with such other injunctions
issued against the same service under this
subsection, would seriously burden the op-
eration of the service’s system network
compared with other comparably effective
means of preventing violations of section
1085 of title 18, United States Code;
(ii) in the case of an application for a
temporary restraining order or an injunc-
tion to prevent a violation of section 1085
of title 18, United States Code, by a gam-
bling business (as is defined in such sec-
tion 1085) located outside the United
States, the relief is more burdensome to
the service than taking comparably effec-
tive steps to block access to specific, identi-
fied sites used by the gambling business lo-
cated outside the United States; and
(iii) in the case of an application for
a temporary order or an injunction to pre-
vent a violation of section 1085 of title 18,
United States Code, as added by section 3,
relating to material or activity located
within the United States, whether less bur-
densome, but comparably effective means
are available to block access by a customer
of the service’s system or network to infor-
mation or activity that violates such sec-
tion 1085.
(C) FINDINGS.—In any order issued by the
court under this subsection, the court shall set
forth the reasons for its issuance, shall be spe-
cific in its terms, and shall describe in reason-
able detail, and not be reference to the com-
plaint or other document, the act or acts sought
to be restrained and the general steps to be
taken to comply with the order.
(4) EXPIRATION.—Any temporary restraining
order or preliminary injunction entered pursuant to
this subsection shall expire if, and as soon as, the
United States, or the attorney general (or other ap-
propriate State official) of the State, as applicable,
notifies the court that issued the injunction that the
United States or the State, as applicable, will not
seek a permanent injunction.
(c) EXPEDITED PROCEEDINGS.—
(1) IN GENERAL.—In addition to proceedings
under subsection (b), a district court may enter a
temporary restraining order against a person alleged
to be in violation of section 1085 of title 18, United
States Code, as added by section 3, upon application
of the United States under subsection (b)(1), or the
attorney general (or other appropriate State official)
of an affected State under subsection (b)(2), without
notice and the opportunity for a hearing, if the
United States or the State, as applicable, dem-
onstrates that there is probable cause to believe that
the transmission at issue violates section 1085 of
title 18, United States Code, as added by section 3.
(2) EXPIRATION.—A temporary restraining
order entered under this subsection shall expire on
the earlier of—
(A) the expiration of the 30-day period be-
ginning on the date on which the order is en-
tered; or
(B) the date on which a preliminary in-
junction is granted or denied.
(3) HEARINGS.—A hearing requested concern-
ing an order entered under this subsection shall be
held at the earliest practicable time.
(d) RULE OF CONSTRUCTION.—In the absence of
fraud or bad faith, no interactive computer service (as de-
fined in section 1085(a) of title 18, United States Code,
as added by section 3) shall be liable for any damages,
penalty, or forfeiture, civil or criminal, for any reasonable
course of action taken to comply with a court order issued
under subsection (b) or (c) of this section.
(e) PROTECTION OF PRIVACY.—Nothing in this Act
or the amendments made by this Act shall be construed
to authorize an affirmative obligation on an interactive
computer service—
(1) to monitor use of its service; or
(2) except as required by an order of a court,
to access, remove or disable access to material where
such material reveals conduct prohibited by this sec-
tion and the amendments made by this section.
(f) NO EFFECT ON OTHER REMEDIES.—Nothing in
this section shall be construed to affect any remedy under
section 1084 or 1085 of title 18, United States Code, as
amended by this Act, or under any other Federal or State
law. The availability of relief under this section shall not
depend on, or be affected by, the initiation or resolution
of any action under section 1084 or 1085 of title 18,
United States Code, as amended by this Act, or under any
other Federal or State law.
(g) CONTINUOUS JURISDICTION.—The court shall
have continuous jurisdiction under this section to enforce
section 1085 of title 18, United States Code, as added by
section 3.
SEC. 5. REPORT ON ENFORCEMENT.
Not later than 3 years after the date of enactment
of this Act, the Attorney General shall submit a report
to Congress that includes—
(1) an analysis of the problems, if any, associ-
ated with enforcing section 1085 of title 18, United
States Code, as added by section 3;
(2) recommendations for the best use of the re-
sources of the Department of Justice to enforce that
section; and
(3) an estimate of the amount of activity and
money being used to gamble on the Internet.
SEC. 6. REPORT ON COSTS.
Not later than 3 years after the date of enactment
of this Act, the Secretary of Commerce shall submit a re-
port to Congress that includes—
(1) an analysis of existing and potential meth-
ods or technologies for filtering or screening trans-
missions in violation of section 1085 of title 18,
United States Code, as added by section 3, that
originate outside of the territorial boundaries of any
State or the United States;
(2) a review of the effect, if any, on interactive
computer services of any court ordered temporary
restraining orders or injunctions imposed on those
services under this section;
(3) a calculation of the cost to the economy of
illegal gambling on the Internet, and other societal
costs of such gambling; and
(4) an estimate of the effect, if any, on the
Internet caused by any court ordered temporary re-
straining orders or injunctions imposed under this
Act.
SEC. 7. SEVERABILITY.
If any provision of this Act, an amendment made by
this Act, or the application of such provision or amend-
ment to any person or circumstance is held to be unconsti-
tutional, the remainder of this Act, the amendments made
by this Act, and the application of the provisions of such
to any person or circumstance shall not be affected there-
by.
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