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House Passes Internet Anti-Gambling Bill

Citing concerns about organized crime, the addictive nature of online gambling and a mandate to protect America's children from the evils of betting, the U.S. House of Representatives overwhelming voted Tuesday evening to support legislation that bans credit card and other electronic payments to offshore casinos.

The bill exempts state-sanctioned sites that endorse betting on horse and dog racing.

H.R. 2143, the Unlawful Internet Gambling Funding Prohibition Act, passed 319-104. An amendment to remove the exemption for the state-sanctioned sites failed on a much closer 237-186 vote. The bill contains no criminal or civil penalties for violations of the bill in a parliamentary move to keep the legislation outside the jurisdiction of the House Judiciary Committee.

Last month, the Judiciary Committee passed a similar bill but eliminated the exemptions for state-run lotteries and horse and dog track operators on an amendment championed by Rep. Chris Cannon (R.-Utah), who said he feared the exemptions could lead to legalized gambling in his home state and the fact he didn't want to get in the business of regulating credit card companies.

By almost all accounts, the amendment doomed the bill from House passage. Rep. Spencer Bachus (R.-Ala.) then introduced H.R. 2143, which restored the exemptions to state lotteries and racing venues. On May 21, the Financial Services Committee approved the bill on a voice vote.

The legislation is strongly supported by the White House, family groups, sports leagues and law enforcement agencies. In the 107th Congress, a similar bill passed the House but failed in the Senate.

"This does not expand gambling in any way," said Rep. Michael Oxley (R.-Ohio), chairman of the Financial Services Committee. "It's an important new tool to fight unlicensed, illegal Internet gambling."

Oxley has privately said he hopes to put in civil and criminal penalties to the ill if and when the Senate the passes its own version of an Internet anti-gambling bill sponsored by Sen. John Kyl (R.-Ariz.). The Senate Banking Committee heard testimony on the bill on March 18.

"This bill only requires financial institutions to establish procedures to identify and block payments to offshore sites," said Artur Davis (D.-Ala.)

Opposition to the bill seemed doomed when Democrats selected Darlene Hooley (D.-Ore.), who said upfront she supported the legislation, to lead the opposition debate.

"What this bill really does is take something already illegal and enforces the law," Holley said. "It cuts off the financial spigot to offshore Internet gambling sites."

Although the Internet is flooded with ads promoting offshore casinos, it is, according to most law enforcement officials, illegal for Americans to bet through the sites. The Justice Department contends existing laws already make all Internet gambling illegal for Americans.

The 1961 Wire Wager Act specifically prohibits the use of telephone lines for the purpose of placing a sporting bet. Since the Internet uses telephone lines, courts have ruled the Wire Act also covers Web sports wagering, but a recent federal appeals court decision said it was beyond the scope of the original law to include placing a casino bet online.

The feds are appealing the ruling, but even if a future court decision says the law does apply to online casinos, all of them are located offshore and beyond the jurisdiction of the U.S. That leaves the government with only two options: go after individual gamblers or convince the countries licensing offshore casinos and sports books to cease and desist. Neither seems likely.

Despite current laws, Americans are driving the growth of online gambling sites, which grew from about two dozen sites in 1995 to almost 2,000 locations in 2002. Last year, the sites are estimated to have pulled in more than $4 billion in revenue.