To amend subchapter IV of chapter 53 of title 31, United States Code, and section 1084 of title 18 of such Code to clarify the applicability of such provisions to games of skill, and establish certain requirements with respect to such games, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act shall be known as the ``Skill Game Protection Act''.

SEC. 2. CONGRESSIONAL FINDINGS.

    The Congress finds as follows:
            (1) Millions of Americans enjoy competing with other 
        players in a variety of games of skill, including bridge, mah-
        jong, backgammon, and poker, over the Internet, where the 
        operator provides the Internet venue for competition and 
        receives a fee for such service.
            (2) For some Americans, these games provide their primary 
        source of income.
            (3) While each of these games contains an element of 
        chance, over any substantial interval, a player's success at 
        any of these games is determined by that player's relative 
        level of skill and is widely recognized as such.
            (4) Games where success is predominantly determined by the 
        skill of the players involved, as a matter of law and of 
        policy, are distinct from the games of chance traditionally 
        described and addressed in Federal and State gambling statutes.
            (5) Despite the fact that the language in section 1084 of 
        title 18, United States Code, commonly referred to as the 
        ``Wire Act'', has been interpreted by Federal courts as 
        applying only to betting on sports, some in law enforcement 
        interpret the section as prohibiting the acceptance of both 
        sports and non-sports betting through a communications device.
            (6) The Federal Government should take appropriate steps to 
        ensure that, with respect to skill games--
                    (A) minors are prevented from playing for money;
                    (B) persons with compulsive behavior should be 
                identified and referred to treatment;
                    (C) operators of such games should not be 
                vulnerable to, or participate in criminal or terrorist 
                money laundering; and
                    (D) appropriate taxes are collected.

SEC. 3. CLARIFICATION.

    Section 1084 of title 18, United States Code, is amended by adding 
at the end the following new subsection: (f)
    ``(f) As used in this section, the term `bets or wagers' does not 
include operating, or participation in, poker, chess, bridge, mahjong 
or any other game where success is predominantly determined by a 
player's skill, to the extent that--
            ``(1) the game provides for competition only between and 
        among participants, and not against the person operating the 
        game; and
            ``(2) the operator is in compliance with regulations issued 
        pursuant to section 5368 of title 31, United States Code.''.

SEC. 4. SAFEGUARDS.

    (a) In General.--Subchapter IV of chapter 53 of title 31, United 
States Code, is amended by adding at the end the following new section:
``Sec. 5368. Games of skill
    ``Before the end of the 180-day period beginning on the date of the 
enactment of the Skill Game Protection Act, the Secretary shall 
prescribe regulations requiring each person who operates a game of 
skill on the Internet to maintain the following:
            ``(1) Appropriate safeguards to ensure that the individual 
        participant depositing funds is 18 years of age or older.
            ``(2) Appropriate safeguards to ensure that the individual 
        participant is physically located in a jurisdiction that does 
        not bar participation in the particular Internet games of skill 
        in which the individual participates at the time in the 
        individual participates.
            ``(3) Appropriate mechanisms to ensure that all taxes 
        relating to Internet games of skill due to Federal and State 
        governments and to Indian tribes from individual participants 
        are collected as required by at the time of any payment of any 
        proceeds of Internet games of skill.
            ``(4) Appropriate safeguards to combat fraud and money 
        laundering as may be prescribed by regulations issued by the 
        Secretary or a designee of the Secretary.
            ``(5) Appropriate safeguards to combat compulsive 
        participation in Internet games of skill.
            ``(6) Appropriate safeguards to protect the privacy and 
        security of any person engaged in Internet games of skill.''.
    (b) Clerical Amendment.--The table of sections for subchapter IV of 
chapter 53 of title 31, United States Code, is amended by inserting 
after the item relating to section 5367 the following new item:

``5368. Games of skill.''.

SEC. 5. RULES OF CONSTRUCTION.

    (a) Nonapplicability to Games of Skill.--Section 5362(1)(E) of 
title 31, United States Code, is amended--
            (1) by striking ``or'' at the end of clause (viii);
            (2) by striking the period at the end of clause (ix) and 
        inserting ``; or''; and
            (3) by adding at the end the following new clause:
                            ``(x) participation in any activity which 
                        does not constitute ``bets or wagers'' within 
                        the meaning of section 1084(f) of title 18 and 
                        is operated in compliance with the regulations 
                        issued pursuant to section 5368.''.
    (b) Nonapplicability to Non-Sports Wagering.--No provision of this 
Act, or amendment made by this Act to any other provision of law, shall 
be construed as implying that section 1084 of title 18, United States 
Code, applies or applied to non-sports wagering before or after the 
enactment of this Act.

Summary: Skill Game Protection Act - Amends federal criminal law to exempt from the prohibition against transmission of wagering information the operation or participation in poker, chess, bridge, mahjong or any other game where success is predominantly determined by a player's skill, to the extent that: (1) the game provides for competition only between and among participants, and not against the person operating the game; and (2) the operator is in compliance with federal regulations governing games of skill.

Amends federal law governing monetary transactions to instruct the Secretary of the Treasury to prescribe regulations requiring each person who operates a game of skill on the Internet to maintain specified safeguards, including: (1) that the individual participant depositing funds is 18 years of age or older; (2) that the individual participant is physically located in a jurisdiction that does not bar participation in the particular Internet games of skill in which the individual participates; and (3) that all taxes relating to Internet games of skill due to federal and state governments and to Indian tribes from individual participants are collected at the time of any payment of any proceeds of Internet games of skill.