IB 
Union Calendar No. 68
108TH CONGRESS 
1ST SESSION H. R. 2143
[Report No. 108–133] 
To prevent the use of certain bank instruments for unlawful Internet 
gambling, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 19, 2003
Mr. BACHUS (for himself, Mr. OXLEY, and Ms. HOOLEY of Oregon) intro-
duced the following bill; which was referred to the Committee on Finan-
cial Services 
JUNE 2, 2003 
Reported with an amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill, see copy of bill as introduced on May 19, 2003] 
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. POLICIES AND PROCEDURES REQUIRED TO PRE-
VENT PAYMENTS FOR UNLAWFUL INTERNET 
GAMBLING. 
(a) REGULATIONS.—Before the end of the 6-month pe-
riod beginning on the date of the enactment of this Act, 
the Federal functional regulators shall prescribe regulations 
requiring any designated payment system to establish poli-
cies and procedures reasonably designed to identify and 
prevent restricted transactions in any of the following ways: 
(1) The establishment of policies and procedures 
that—
(A) allow the payment system and any per-
son involved in the payment system to identify 
restricted transactions by means of codes in au-
thorization messages or by other means; and 
(B) block restricted transactions identified 
as a result of the policies and procedures devel-
oped pursuant to subparagraph (A).
(2) The establishment of policies and procedures 
that prevent the acceptance of the products or services 
of the payment system in connection with a restricted 
transaction. 
(b) REQUIREMENTS
FOR
POLICIES
AND
PROCE-
DURES.—In prescribing regulations pursuant to subsection 
(a), the Federal functional regulators shall—
(1) identify types of policies and procedures, in-
cluding nonexclusive examples, which would be 
deemed to be ‘‘reasonably designed to identify’’ and 
‘‘reasonably designed to block’’ or to ‘‘prevent the ac-
ceptance of the products or services’’ with respect to 
each type of transaction, 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 transaction in 
response to an authorization message; 
(2) to the extent practical, permit any partici-
pant in a payment system to choose among alter-
native 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 transactions; and 
(3) consider exempting restricted transactions 
from any requirement under subsection (a) if the Fed-
eral functional regulators find that it is not reason-
ably practical to identify and block, or otherwise pre-
vent, such transactions. 
(c) COMPLIANCE WITH PAYMENT SYSTEM POLICIES 
AND PROCEDURES.—A creditor, credit card issuer, finan-
cial institution, operator of a terminal at which an elec-
tronic fund transfer may be initiated, money transmitting 
business, or international, national, regional, or local net-
work utilized to effect a credit transaction, electronic fund 
transfer, or money transmitting service, or a participant 
in such network, meets the requirement of subsection (a) 
if—
(1) such person relies on and complies with the 
policies and procedures of a designated payment sys-
tem of which it is a member or participant to—
(A) identify and block restricted trans-
actions; or 
(B) otherwise prevent the acceptance of the 
products or services of the payment system, 
member, or participant in connection with re-
stricted transactions; and 
(2) such policies and procedures of the designated 
payment system comply with the requirements of reg-
ulations prescribed under subsection (a). 
(d) ENFORCEMENT.—
(1) IN GENERAL.—This section shall be enforced 
by the Federal functional regulators and the Federal 
Trade Commission under applicable law in the man-
ner provided in section 505(a) of the Gramm-Leach-
Bliley Act. 
(2) FACTORS TO BE CONSIDERED.—In consid-
ering any enforcement action under this subsection 
against any payment system, or any participant in 
a payment system that is 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, the Federal functional regulators and the Fed-
eral Trade Commission shall consider the following 
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 extending 
credit or transmitting funds knowing the trans-
action is in connection with unlawful Internet 
gambling. 
(C) The extent to which such person has es-
tablished and is maintaining policies and proce-
dures in compliance with regulations prescribed 
under this subsection. 
(D) The feasibility that any specific remedy 
prescribed can be implemented by such person 
without substantial deviation from normal busi-
ness practice. 
(E) The costs and burdens the specific rem-
edy will have on such person.
SEC. 4. DEFINITIONS. 
For purposes of this Act, the following definitions shall 
apply: 
(1) RESTRICTED TRANSACTION.—The term ‘‘re-
stricted transaction’’ means any transaction or trans-
mittal to any person engaged in the business of bet-
ting or wagering, in connection with the participa-
tion of another person in unlawful Internet gambling, 
of—
(A) credit, or the proceeds of credit, ex-
tended to or on behalf of such other person (in-
cluding credit extended through the use of a cred-
it card); 
(B) an electronic fund transfer or funds 
transmitted 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; 
(C) any check, draft, or similar instrument 
which is drawn by or on behalf of the other per-
son and is drawn on or payable at or through 
any financial institution; or 
(D) the proceeds of any other form of finan-
cial transaction as the Federal functional regu-
lators may prescribe by regulation which in-
volves a financial institution as a payor or fi-
nancial intermediary on behalf of or for the ben-
efit of the other person. 
(2) 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 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—
(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 sec-
tion 28(a) of the Securities 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 lawful transaction with a 
business licensed or authorized by a State.
(3) DESIGNATED PAYMENT SYSTEM DEFINED.—
The term ‘‘designated payment system’’ means any 
system utilized by any creditor, credit card issuer, fi-
nancial institution, operator of a terminal at which 
an electronic fund transfer may be initiated, money 
transmitting business, or international, national, re-
gional, or local network utilized to effect a credit 
transaction, electronic fund transfer, or money trans-
mitting service, or any participant in such network, 
that the Federal functional regulators determine, by 
regulation or order, could be utilized in connection 
with, or to facilitate, any restricted transaction. 
(4) FEDERAL
FUNCTIONAL
REGULATOR.—The 
term ‘‘Federal functional regulator’’ has the same 
meaning as in section 509(2) of the Gramm-Leach-
Bliley Act. 
(5) INTERNET.—The term ‘‘Internet’’ means the 
international computer network of interoperable pack-
et switched data networks. 
(6) 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