Details on the HR 4419 Markup

29 June 2000
The House Banking Committee yesterday gave the thumbs-up the Leach-LaFalce "Internet Gambling Funding Prohibition Act" (HR 4419), a bill that would make it a crime to accept any U.S. financial instrument (e.g., check, credit card, wire transfer, etc.) as payment for "any gambling debt in which the transaction utilizes the Internet in any way."

Two amendments were essentially adopted: the "Manager's amendment," with incorporated changes suggested by Chairman Leach, and an amendment by Rep. John Sweeney (R-NY), who represents Saratoga Racetrack in New York State.

The Manager's amendment made two major modifications to the bill. First, the introduced version of HR 4419 would have required the Secretary of the Treasury to veto any IMF or World Bank assistance to any country that allowed Internet gambling operations--a provision that was of great concern to the White House. The Manager's amendment stripped it from the bill.

Second, the original bill would have required the Treasury Department to bar those countries that host Web gaming operations from using the U.S. check clearing system. The provision was also stricken because of objections from the Administration. (However, the underlying bill would still permit the Justice and Treasury Departments to block individual banks identified as assisting Internet gambling operators from the check clearing system.)

The final change was the adoption of the "Sweeney Amendment," which would exempt from the financial instrument ban any instrument used to place a bet that is legal under federal or state law. The scope of this change is broad enough to permit not only pari-mutuel wagering, but any type of gambling transaction that is legal "under any applicable Federal or State law in the state in which the bet or wager is initiated or received." Thus, in addition to pari-mutuel gambling, state lotteries would be exempted, as would be card rooms and online casinos that legally operate under state law.

The Sweeney carve-out would also allow an online gambling service to accept bets in a regulated state such as New York, from any out-of-state source, even in places like Utah and Hawaii.

The Sweeney amendment was adopted by the committee by voice vote, however, it's uncertain whether Rep. Leach (the chairman of the committee and the sponsor of the legislation) will make a strong push for the bill in its current form.