I
105TH CONGRESS
2D SESSION
H. R. 4427
To amend title 18 of the United States Code with respect to gambling
on the Internet, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
AUGUST 6, 1998
Mr. MCCOLLUM (for himself, Mr. GOODLATTE, and Mr. LOBIONDO) intro-
duced the following bill; which was referred to the Committee on the Ju-
diciary
A BILL
To amend title 18 of the United States Code with respect
to gambling on the Internet, 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 moving the indentation of each paragraph 2 ems
to the right;
(2) in paragraph (5), as so designated—
(A) by striking ‘‘wire communication’’ and
inserting ‘‘communication’’;
(B) by striking ‘‘transmission of writings’’
and inserting ‘‘transmission or receipt of data,
writings’’; and
(C) by striking ‘‘or other like’’ and all that
follows before the period and inserting ‘‘radio,
electromagnetic, photo-optical, photoelectric, or
other similar facility’’; and
(3) by adding at the end the following:
‘‘(6) The term ‘bets or wagers’—
‘‘(A) means the staking or risking by any
person of something of value (other than in a
de minimis amount) upon the outcome of a con-
test or game predominantly subject to chance,
upon an agreement or understanding 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
opportunity to win a lottery or other prize if the
opportunity to win is predominantly subject to
chance and the purchase requires a consider-
ation that is not in a de minimis amount; and
‘‘(C) 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 contract of indemnity or guar-
antee;
‘‘(iii) a contract for life, health, or ac-
cident insurance;
‘‘(iv) a transaction on or subject to
the rules of a contract market designated
pursuant to section 5 of the Commodity
Exchange Act (7 U.S.C. 7); or
‘‘(v) 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 in-
dividual performance;
‘‘(II) has an outcome that re-
flects the relative knowledge and skill
of the participants; 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.
‘‘(7) The term ‘information assisting in the
placing of bets or wagers’’ means information that
is—
‘‘(A) sent by a person engaged in the busi-
ness of betting or wagering that is necessary in
order for the recipient to place a bet or wager
by means of a communication facility being
used in interstate or foreign commerce; or
‘‘(B) intended by the sender to be used by
a person engaged in the business of betting or
wagering to accept or place a bet or wager.’’.
SEC. 3. TRANSMISSION OF WAGERING INFORMATION; PEN-
ALTIES.
(a) IN GENERAL.—Section 1084 of title 18, United
States Code, is amended by striking subsections (a)
through (d) and inserting the following:
‘‘(a) IN GENERAL.—
‘‘(1) PERSONS ENGAGED IN THE BUSINESS OF
BETTING OR WAGERING.—Whoever, being engaged
in the business of betting or wagering knowingly
uses a communication facility for the transmission
or receipt in interstate or foreign commerce of bets
or wagers, information assisting in the placing of
bets or wagers, or a communication that entitles the
transmitter or receiver to the opportunity to receive
money or credit as a result of bets or wagers made
using a communication facility in interstate or for-
eign commerce, shall be fined under this title or im-
prisoned not more than 4 years, or both.
‘‘(2) OTHER PERSONS.—Whoever (other than a
person described in paragraph (1) or a common car-
rier subject to the jurisdiction of the Federal Com-
munications Commission) knowingly uses a commu-
nication facility with the intent to initiate or receive
in interstate or foreign commerce the transmission
of bets or wagers, information assisting in the plac-
ing of bets or wagers, or a communication that enti-
tles the transmitter or receiver to the opportunity to
receive money or credit as a result of bets or wagers,
shall be fined under this title or imprisoned not
more than 6 months, or both.
‘‘(b) EXCEPTIONS.—
‘‘(1) NEWS REPORTING; LEGAL BETS AND WA-
GERS.—Nothing in this section shall be construed to
prohibit the transmission or receipt in interstate or
foreign commerce of—
‘‘(A) information for use in the news re-
porting or analysis of any wagering activity, in-
cluding odds, racing or event results, schedules,
or categories of wagering;
‘‘(B) educational material relating to bet-
ting or wagering;
‘‘(C) information assisting in the placing of
bets or wagers, or parimutuel bets or wagers
conducted by an interactive computer service, if
such betting or wagering—
‘‘(i) is legal in the State or foreign
country in which the transmission origi-
nates; and
‘‘(ii) is legal in each State and each
foreign country in which the sender in-
tends the transmission to be received for
the purposes of betting or wagering; or
‘‘(D) advertising, promotion, or other com-
munication by, or authorized by, anyone li-
censed to operate a gambling business in a
State.
‘‘(2) INTERACTIVE COMPUTER SERVICE.—Sub-
section (a) does not impose liability on an interactive
computer service provider whose facilities or services
are used by another person to engage in activity pro-
hibited by that subsection—
‘‘(A) arising out of the provider’s provision
of communications services, if—
‘‘(i) the communication was initiated
by or at the direction of a person other
than the provider;
‘‘(ii) the transmission, receipt, rout-
ing, or providing of connection is carried
out through an automatic process without
selection of the communicated information
by the provider; and
‘‘(iii) the provider does not select the
recipients of the information, except as an
automatic response; or
‘‘(B) if the provider does not intend the
use of its facility for a violation of this section,
and, with respect to material or information re-
siding on the provider’s system, the provider—
‘‘(i) complies with subsection (c)(2)
with respect to the particular material or
information at issue; and
‘‘(ii) makes available on its web site,
in a location accessible to the public, the
name address, phone number, and elec-
tronic mail address of an agent designated
to receive notices under subsection (c)(2).
‘‘(3) STATE LAW.—Nothing in this section shall
be construed to preempt any State law.’’.
‘‘(c) DUTIES OF COMMON CARRIERS AND INTER-
ACTIVE COMPUTER SERVICE PROVIDERS.—
‘‘(1) NOTICE TO COMMON CARRIERS.—If any
common carrier, subject to the jurisdiction of the
Federal Communications Commission, is notified in
writing by a Federal, State, or local law enforcement
agency, acting within its jurisdiction, that any facil-
ity furnished by it is being used or will be used for
the purpose of transmitting or receiving gambling
information in interstate or foreign commerce in vio-
lation of Federal, State, or local law, it shall dis-
continue or refuse, the leasing, furnishing, or main-
taining of such facility, after reasonable notice to the
subscriber, but no damages, penalty or forfeiture,
civil or criminal, shall be found against any common
carrier for any act done in compliance with any no-
tice received from a law enforcement agency.
‘‘(2) NOTICE
TO
INTERACTIVE
COMPUTER
SERVICE PROVIDERS.—If any interactive computer
service provider is notified by a Federal, State, or
local law enforcement agency, acting within its juris-
diction, through receipt of written or electronic no-
tice that a particular online site residing on the pro-
vider’s system or network is being used or will be
used for the purpose of engaging in the business of
betting or wagering or for displaying information as-
sisting in the placing of bets or wagers in interstate
or foreign commerce in violation of Federal, State,
or local law, the provider shall cease or refuse pro-
viding access to the material or information that al-
legedly violates this section residing at that online
site, but no civil or criminal liability shall be found
against any interactive computer service provider for
any act done in compliance with any notice received
from a law enforcement agency. Such notice shall
identify the business or information that allegedly
violates this section, and must—
‘‘(A) be supplied to a service provider’s
agent if one is designated under this section
and information regarding such designation is
readily available to the public; and
‘‘(B) provide information reasonably suffi-
cient to permit the provider to locate such ma-
terial or information.
‘‘(3) INJUNCTIVE RELIEF.—Except as provided
in paragraph (4), any State or local law enforcement
agency acting within its jurisdiction, may, following
the issuance of a notice under this subsection, in a
civil action, obtain an injunction or other appro-
priate relief preventing the use of the common car-
rier or interactive computer service provider for the
purpose of transmitting or receiving gambling infor-
mation in interstate or foreign commerce in violation
of State or local law.
‘‘(4) LIMITATION
ON
INJUNCTIVE
RELIEF
AGAINST AN INTERACTIVE COMPUTER SERVICE PRO-
VIDER.—In the case of any application for an in-
junction against an interactive computer service pro-
vider to prevent a violation by another person of this
section—