House Backs Crackdown on Gambling on Internet

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Internet Gambling Revenues Soar By Kate Phillips
July 12, 2006

WASHINGTON — With bipartisan support and the Jack Abramoff lobbying scandal haunting Republican efforts to pass antigambling legislation, the House approved a crackdown on Internet wagering that would ban not only sports bets but also online poker and other games that have become increasingly popular.

Voting 317 to 93, the House approved a bill that would make it illegal for financial institutions or intermediaries to process payments to offshore casinos through bettors’ electronic funds, checks, debits and other e-wallet transactions. In addition, the bill updates the Wire Act of 1961, which forbade the transmission of betting over telephone lines, to specifically outlaw online gambling through any communication network. Criminal penalties would increase to a maximum of five years in prison, from two years.

Intensive lobbying, led previously by Mr. Abramoff and others, has swirled around various versions of the bill for years, with newcomers like celebrity poker players joining the fray this time around.

Both sides of the debate cited figures that showed how the online wagering business has skyrocketed, quadrupling to nearly $12 billion worldwide since legislation was first proposed to choke off its growth. A broad coalition of the major sports leagues, banking institutions, law enforcement, family values advocates and religious groups rallied on the bill’s behalf.

Its chances in the Senate for passage this year are unclear, given the Senate’s crowded work schedule and limited amount of time in session before the November elections.

Bob Stevenson, a spokesman for Senator Bill Frist of Tennessee, the majority leader, said on Tuesday that the Republican leadership hoped to bring a similar bill to the floor by the end of this year.

On the Democratic side, Senator Harry Reid of Nevada, the minority leader and a former Nevada gaming commissioner, has expressed reservations about the ability to regulate Internet gambling.

The Justice Department has always considered online gambling illegal, and the Bush administration expressed overall support for the House bill.

But while supporters and opponents of the bill expressed worries on Tuesday about the addiction and debt risks that Internet gambling posed, critics were quick to point out what they considered contradictions. The House bill spares Powerball and some other games, for example, and preserves states’ rights to regulate gambling individually. They also criticized efforts to regulate cyberspace, with its lack of state lines (or even international ones).

Representative Shelley Berkley, Democrat of Nevada, said the business of Internet gambling was projected to reach $25 billion by the end of the decade.

“There is nothing in this bill — nothing in this bill — that will shut down these offshore companies who operate legally in other countries,” Ms. Berkley said. “The very nature of a free World Wide Web will continue to make online gambling available.”

Others considered the legislation an infringement on individual rights to privacy through mouse-clicking at home. Representative Barney Frank, Democrat of Massachusetts, contended that the measure was a form of Prohibition. As long as individuals were not harming anyone else, Mr. Frank argued, they should be free to spend their money as they choose.

Some, including Ms. Berkley, who pushed unsuccessfully for an amendment that would strip out exemptions, sharply criticized what they called the bill’s “carve-outs” for the horse racing industry. Representative Robert W. Goodlatte, Republican of Virginia and a longstanding sponsor of the bill, insisted that horse racing was already regulated by the Interstate Horseracing Act.

Under the House measure, the dog-track industry would be barred from promoting interstate parimutuel wagering because it has no other law protecting it.

Other games will have to revise their rules, too. Players of fantasy sports games cannot bet on individual players or on team wins or losses, according to the House bill, but trying to guess online who is going to surpass Joe DiMaggio’s 56-game hitting streak will still be allowed.

The name most invoked on Tuesday was that of Mr. Abramoff, whose powerful lobbying on behalf of online lotteries and other clients killed earlier versions of the bill. Mr. Goodlatte bears “personal scars from influence peddlers,” said Representative Jim Leach, Republican of Iowa, the primary co-sponsor of this bill.

The previous measures died, Mr. Goodlatte said, “based on the misleading representations and the flow of enormous amounts of money by Jack Abramoff, he and others carrying his water, his dirty laundry.”

He continued, “Many in this House are very determined that they have the opportunity today to purge the smear on this Congress.”

Source: New York Times

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