House Passes Ban on Internet Gambling

UPDATED: In the sharpest attempt yet to curb Internet gambling by Americans, the U.S. House of Representatives voted today to ban financial payments to offshore casinos.

On a vote of 317-93, lawmakers approved legislation that would force banks and credit card companies to cut off payments to the estimated 2,300 gambling sites located outside of U.S. jurisdiction.

The Unlawful Internet Gambling Enforcement Act of 2006 H.R. 4411 also updates the 1961 Wire Act, which currently outlaws sports wagering over the telephone, to cover all forms of online gambling from sports wagering to poker sites.

The bill exempts state-sanctioned online gambling on horse racing and lotteries.

“States have always had the right to approve and regulate gambling within their borders,” bill sponsor Bob Goodlatte (R-Va.) said. “This bill makes Internet gambling illegal except where regulated by the states.”

The bill would enhance criminal penalties for gambling sites settling wagers with financial instruments such as credit cards, checks, or fund transfers. It would also require federal agencies to establish regulations for blocking these transactions.

In addition, the bill increases the penalties for violations of the Wire Act from two years to five years of possible prison time.

“Offshore online gambling web sites are cash cows and the greed that propels these companies leads them to solicit bettors in the U.S. despite the fact that the Department of Justice already believes this activity is illegal,” Goodlatte said in a statement shortly after the vote.

The legislation now goes to the U.S. Senate, where there is no companion legislation and only a few weeks left on the 2006 calendar for the 109th Congress. Any bills not passed by both chambers will have to re-introduced in 2007.

The White House supports the legislation.

Democrats complained the “carve outs” for online horse racing and lotteries underscored the “hypocrisy” of the legislation.

“Millions of Americans will continue to gamble with offshore sites,” Rep. Shelly Berkley (D-Nev.) said. “This bill makes (gambling) illegal simply because they do it online. It’s ridiculous to think this will stop online gaming.”

Rep. Bobby Scott (D-Va.) added that the legislation would create an enforcement “nightmare” for credit card companies since it is often difficult to detect just what a credit card charge involves.

Rep. John Conyers (D-Mich.) taunted Republicans by urging them to vote to ban all types of online gambling.

“Let’s do it completely and not continue to fool the public,” he said.

Berkley then introduced an amendment to the bill that would ban all online gambling. It was defeated largely along party lines, 297-114.

“This is a tremendously important piece of legislation,” Rep. Tom Osborne (R-Neb.), the former head football coach at the University of Nebraska, said. “The proliferation of Internet gambling is fueling illegal gambling on college campuses.

Osborne added that “almost 35 percent” of male college athletes admit to engaging in some form of gambling.

Rep. Jim Leach (R-Iowa), a co-sponsor of the legislation said the Internet equals “crack cocaine for gamblers. Never before has it been easier to lose so much money so quickly so young.”

Rep. Darlene Hooley also took Osborne’s and Leach’s position that online gambling is creating addiction problems for young people.

“[Online gambling] is dramatically changing the face of [gambling] addition,” she said. “What we’re trying to do is enforce our own laws. This is a common sense approach by regulating payment systems.”

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