Bachus Bill Hinged on Sensenbrenner Amendment

11 June 2003

After hours of debate over cutting off funding to terrorist groups and protecting families and minors from the impact of gambling, the U.S House of Representatives passed HR 2143, the Unlawful Internet Gambling Funding Prohibition Act, on a vote of 319-104.

The bill, introduced by Rep. Spencer Bachus, R-Ala., is aimed at banning the use of credit cards, wire transfers, e-cash and other forms of payment for funding Internet gambling activities.

The bill's supporters argue that it's necessary to end billions of dollars going to offshore operators and to deter terrorist activities by creating another instrument to combat money laundering.

Those against the bill argue that it's unfair to create legislation that bans certain forms of Internet gambling and bans other forms, such as state lotteries and horse and dog racing. Opponents also question the effectiveness of a bill that contains no criminal or civil penalties. (The penalties were removed to keep the bill from going to the House Judiciary Committee, where it likely would have been killed.)

The hottest point of contention during the nearly three hours of debate was an amendment, introduced by Rep. James Sensenbrenner, R-Wisc., that would have removed carve-outs exempting certain forms of gambling. The amendment's passage could have changed the fate of the bill, but it ultimately failed.

Some of those in favor of the Sensenbrenner amendment are opponents of any expansion of gambling. Other backers argued that it was unfair to allow states to sell lottery tickets online, but not grant the same rights to Native American tribes that rely heavily on the gambling industry to bring funds to reservations.

Rep. Bachus and others against the amendment argued that it was a "poison pill" that would effectively kill the bill.

Last month, the House Judiciary Committee passed a similar bill but eliminated the exemptions for state-run lotteries and horse and dog track operators on an amendment introduced by Rep. Chris Cannon, R.-Utah, who said he feared the exemptions could lead to legalized gambling in his home state.

Cannon reiterated his fears during Tuesday evening's debate, pointing out that Utah is one of only two, the other being Hawaii, with a ban on all forms of gambling.

He also expressed concern over the possibility of the bill leading to Congress trying to regulate credit card companies in the future.

Rep. Michael Oxley, R.-Ohio, chairman of the Financial Services Committee and one of the chief supporters of the Bachus bill, said Cannon's concerns over expanding gambling were off target.

"This does not expand gambling in any way," Oxley said. "It's an important new tool to fight unlicensed, illegal Internet gambling."

With the amendment left out, the full bill was passed with relative ease, however, the bill still has a long way to go before becoming a law.

The Senate still has to take the issue up, and the bill could have a tough road ahead. Indian tribes, for example, are lobbying against it for stated reasons. The Interactive Gaming Council, the leading trade association for the I-gaming industry, will continue its lobbying efforts in hopes that it will be joined by the American Gaming Association (AGA), the lobbying arm for U.S. casinos.

The AGA was neutral on the Bachus bill before Tuesday's vote but its president, Frank Fahrenkopf, told the Associated Press that the issue will be revisited in light of the carve-outs.

"As you know, I have personal reservations about the ban," Fahrenkopf told the AP, "but that does not reflect my board's view."

The AGA stance has long been to treat all types of gambling equally and that states should have the right to decide what forms of gambling they want to regulate.

The lack of civil and criminal penalties in the bill could also raise eyebrows among the Senate leadership.

Oxley has indicated that he'd like to add civil and criminal penalties when the Senate passes its version, which was introduced earlier this year by Sen. John Kyl, R.-Ariz.

The Senate Banking Committee heard testimony on the Kyl bill on March 18. The longtime advocate of an I-gaming ban said the passage of the bill in the House marks a momentous event for his cause.

"Congress is as close as it has ever been to enacting an outright ban on unscrupulous Internet casino operations," Kyl said.

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