Cato Questions the Chairman

19 February 1998

Tom Bell, a Director of the Cato Institute, is staying on point on the issue of the Kyl bill. Here you'll find his astute questions to Rep. McCollum, Chairman of the House Subcommittee dealing with the companion bill in the House.

February 2, 1998

The Honorable Bill McCollum
House Judiciary Committee
House Office Building
Washington, DC 20515

Dear Mr. Chairman:
Thank you for soliciting my thoughts on the proper federal policy toward Internet gaming. I here offer some comments and questions for the deliberations of you and your colleagues.

  1. The Justice Department has stated that The Wire Act[1] already covers Internet gaming, but that enforcing the law "isn't one of our priorities."[2] Given that courts have hardly had a chance to apply existing laws to Internet gaming, should Congress rush to pass new and potentially unnecessary legislation?
  2. The Wire Act applies only to parties "engaged in the business of betting."[3] In contrast, H.R. 2380, The Internet Gambling Prohibition Act of 1996, would expand federal law to reach even individual amateur bettors. H.R. 2380 would thus for the first time make it a federal crime to telephone an old friend and casually bet a six-pack on the big game.
    • Given that the effects of Internet gaming remain highly speculative, how can Congress justify this vast expansion of criminal liability?
    • How can law enforcement officials apply H.R. 2380 without detailed, constant, and intrusive monitoring of citizens' Internet use?
  3. Rep. Bob Goodlatte has claimed that gaming laws "have been turned on their head" by the Internet because "[n]o longer do people have to leave the comfort of their homes" to access casinos.[4] In fact, however, nine states already allow their citizens to access professional gaming services via telephone.[5] Since many Americans already can use advanced telecommunications to gamble from home, does Congress have any factual basis for claiming that Internet gaming represents a wholly new and uniquely dangerous phenomenon?
  4. In mid-1996, the National Association of Attorneys General urged the Justice Department to prosecute Internet gaming. "The department does not agree that federal law should be amended so broadly as to cover the first-time bettor who loses $5," the Justice Department replied.[6] How can Congress deny that the Justice Department has already made clear its disapproval of laws like H.R. 2380?
  5. Outlawing Internet gaming services domestically will simply push business overseas. Federal law enforcement agents admit, however, that they cannot stop overseas gaming operations. "International Internet gambling? We can't do anything about it," Department of Justice spokesman John Russell said. "That's the bottom line."[7]
    • Does Congress propose to give extraterritorial effect to any ban on Internet gaming?
    • If so, how can federal authorities enforce such laws without violating the principles of international law that protect other countries' sovereignty?
    • If not, how can any ban on Internet gaming work?
  6. Section 3(b) of H.R. 2380 requires an interactive computer service provider, once given mere notice by law enforcement agents, to discontinue furnishing any facility that "is being used or will be used for the purpose of transmitting or receiving gambling information" in violation of law.
    • In contrast to telephone communications, which typically travel over circuit switched networks, Internet communications use packet switching. Each Internet message gets broken into discrete packets, which travel over various and unpredictable routes until received and reassembled at the message's destination. How can Internet service providers discriminate between illicit gaming information and all other Internet traffic?
    • Even if it is theoretically possible for Internet service providers to discriminate against gaming information, how will this intrusive new federal law affect the cost, efficiency, and security of Internet communications?
  7. History demonstrates the Founders embraced and defended gaming as part of their inalienable right to "the Pursuit of Happiness." The infamous Stamp Act, which triggered the shot at Concord "heard round the world," taxed playing cards and dice.[8] While drafting the Declaration of Independence, Thomas Jefferson relaxed by gambling on backgammon, cards, and bingo.[9] Benjamin Franklin--using his era's most advanced technology--printed a good portion of the colonies' playing cards.[10] George Washington regularly bet on horses, gambled in card games, and bought lottery tickets.[11] Washington managed public lotteries, as did Franklin and John Hancock.[12] Lotteries even helped pay for the first home of the U.S. Congress,[13] as well as for public buildings throughout the new U.S. capital.[14] How could the current Congress justify stripping the American people of rights that the Founders fought for, won, and exercised?

I thank you for soliciting my input and encourage you to share my comments and questions with your colleagues. I am currently working on a policy briefing on Internet gaming, and will plan to send you a draft in a few weeks. In the meantime, please feel free to contact me if I can be of further assistance in this matter.


Tom W. Bell
Telecommunications and Technology Studies
Cato Institute