IB
Union Calendar No. 220
107TH CONGRESS
2D SESSION
H. R. 556
[Report No. 107–339, Part I]
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
DECEMBER 13, 2001
Reported from the Committee on Financial Services with an amendment
[Strike out all after the enacting clause and insert the part printed in italic]
DECEMBER 13, 2001
Referral to the Committee on the Judiciary extended for a period ending not
later than December 21, 2001
DECEMBER 20, 2001
Referral to the Committee on the Judiciary extended for a period ending not
later than March 29, 2002
MARCH 29, 2002
Additional sponsors: Mr. PETRI, Mr. GREEN of Wisconsin, Mr. OXLEY, Mr.
LAFALCE, Mr. WOLF, Mr. BACHUS, and Mr. OWENS
MARCH 29, 2002
The Committee on the Judiciary 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 February 12, 2001]
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 Gam-
bling 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 institutions
and the consumer credit industry.
(4) Internet gambling conducted through offshore
jurisdictions has been identified by United States law
enforcement officials as a significant money laun-
dering vulnerability.
SEC. 3. PROHIBITION ON ACCEPTANCE OF ANY BANK IN-
STRUMENT FOR UNLAWFUL INTERNET GAM-
BLING.
(a) IN GENERAL.—No person engaged in the business
of betting or wagering may knowingly accept, in connection
with the participation of another person in unlawful Inter-
net gambling—
(1) credit, or the proceeds of credit, extended to
or on behalf of such other person (including credit ex-
tended 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 regula-
tion which involves a financial institution as a payor
or financial intermediary on behalf of or for the ben-
efit 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
subject to chance, upon an agreement or under-
standing 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 op-
portunity to win a lottery or other prize (which
opportunity to win is predominantly subject to
chance);
(C) includes any scheme of a type described
in section 3702 of title 28, United States Code;
(D) includes any instructions or informa-
tion pertaining to the establishment or movement
of funds in an account by the bettor or customer
with the business of betting or wagering; and
(E) does not include—
(i) any activity governed by the securi-
ties laws (as that term is defined in section
3(a)(47) of the Securities Exchange Act of
1934) for the purchase or sale of securities
(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 Com-
modity Exchange Act;
(iii) any over-the-counter derivative
instrument;
(iv) any other transaction that is ex-
empt from State gaming or bucket shop
laws under section 12(e) of the Commodity
Exchange Act or section 28(a) of the Securi-
ties Exchange 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 simula-
tion 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 partici-
pants or the amount of any fees paid
by those participants; and
(ix) any transaction authorized under
State law with a business licensed or au-
thorized by a State.
(2) BUSINESS OF BETTING OR WAGERING.—The
term ‘‘business of betting or wagering’’ does not in-
clude, other than for purposes of subsection (e), any
creditor, credit card issuer, insured depository insti-
tution, 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, stored
value product transaction, or money transmitting
service, or any participant in such network, or any
interactive computer service or telecommunications
service.
(3) INTERNET.—The term ‘‘Internet’’ means the
international computer network of interoperable pack-
et switched data networks.
(4) 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 Inter-
net 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 otherwise
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 4A of the Uniform Commercial
Code, as in effect in any State.
(C) FINANCIAL INSTITUTION.—The term ‘‘fi-
nancial 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 prosecution 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 sec-
tion.
(ii) RELIEF.—Upon application of the
United States under this subparagraph, the
district court may enter a preliminary in-
junction or an injunction against any per-
son 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 GEN-
ERAL.—
(i) IN GENERAL.—The attorney general
of a State (or other appropriate State offi-
cial) in which a violation of this section al-
legedly 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 sub-
paragraph, 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 Proce-
dure.
(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 pro-
vision of this section shall be construed as
altering, superseding, or otherwise affecting
the application of the Indian Gaming Regu-
latory Act.
(D) BANKING REGULATORS.—Before initi-
ating any proceeding under this paragraph with
respect to a violation or potential violation of
subsection (e) by an insured depository institu-
tion (as defined in section 3 of the Federal De-
posit Insurance Act), the Attorney General of the
United States or an attorney general of a State
(or other appropriate State official) shall—
(i) notify the appropriate Federal
banking agency (as defined in such section)
of such violation or potential violation; and
(ii) allow such agency a reasonable
time to issue an order to such insured de-
pository institution under section 8(x) of
the Federal Deposit Insurance 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.—No provision of this section
shall be construed as authorizing an injunction
against an interactive computer service (as defined in
section 230(f) of the Communications Act of 1934)
unless such interactive computer service is acting in
concert or participation with a person who violates
this section and such service receives actual notice of
the order.
(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 conviction
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 inviting information
assisting in the placing of bets or wagers.
(e) CIRCUMVENTIONS PROHIBITED.—Notwithstanding
subsection (b)(2), a creditor, credit card issuer, financial
institution, operator of a terminal at which an electronic
fund transfer may be initiated, money transmitting busi-
ness, or international, national, regional, or local network
utilized to effect a credit transaction, electronic fund trans-
fer, or money transmitting service, or any participant in
such network, or any interactive computer service or tele-
communications service, may be liable under this section
if such creditor, issuer, institution, operator, business, net-
work, 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 offered to be
placed, received, or otherwise made.
(f) ENFORCEMENT ACTIONS.—Section 8 of the Federal
Deposit Insurance Act (12 U.S.C. 1818) is amended by add-
ing at the end the following new subsection:
‘‘(x) DEPOSITORY
INSTITUTION
INVOLVEMENT
IN
INTERNET GAMBLING.—If any appropriate Federal bank-
ing agency determines that any insured depository institu-
tion is engaged in any of the following activities, the agency
may issue an order to such institution prohibiting such in-
stitution from continuing 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 depos-
itory institution with the actual knowledge that any
person is violating section 3(a) of the Unlawful Inter-
net Gambling Funding Prohibition Act in connection
with such check, draft, or other instrument.’’.
SEC. 4. INTERNET GAMBLING IN OR THROUGH FOREIGN JU-
RISDICTIONS.
(a) IN GENERAL.—In deliberations between the United
States Government and any other country on money laun-
dering, corruption, and crime issues, the United States Gov-
ernment 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 cooperation
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 Treas-
ury shall submit an annual report to the Congress on the
deliberations between the United States and other countries
on issues relating to Internet gambling.
Union Calendar No. 220
107TH CONGRESS
2D SESSION
H. R. 556
[Report No. 107–339, Part I]
A BILL
To prevent the use of certain bank instruments for
unlawful Internet gambling, and for other purposes.
MARCH 29, 2002
Committee discharged; committed to the Committee of
the Whole House on the State of the Union and or-
dered to be printed