S 692 Internet - The Internet Gambling Prohibition Act (5/12/99)

IN THE SENATE OF THE UNITED STATES-106th Cong., 1st Sess.

S 692 IS

To prohibit Internet gambling, and for other purposes.

Referred to the Committee on ____________________________________ and ordered to be printed

Order to lie on the table and be printed

AMENDMENT IN THE NATURE OF A SUBSTITUTE intended to be proposed by Mr. KYL

Viz:

Strike all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE.

This Act may be cited as the `Internet Gambling Prohibition Act of 1999'.

SEC. 2. PROHIBITION ON INTERNET GAMBLING.

(a) IN GENERAL- Chapter 50 of title 18, United States Code, is amended by adding at the end the following:

`Sec. 1085. Internet gambling

`(a) DEFINITIONS- In this section:

`(1) BETS OR WAGERS- The term `bets or wagers'--

`(A) means the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game of chance, upon an agreement or understanding that the person or another person will receive something of value based on that outcome;

`(B) includes the purchase of a chance or opportunity to win a lottery or other prize (which opportunity to win is predominantly subject to chance);

`(C) includes any scheme of a type described in section 3702 of title 28, United States Code; and

`(D) does not include--

`(i) a bona fide business transaction governed by the securities laws (as that term is defined in section 3(a)(47) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(47))) for the purchase or sale at a future date of securities (as that term is defined in section 3(a)(10) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)));

`(ii) a transaction on or subject to the rules of a contract market designated pursuant to section 5 of the Commodity Exchange Act (7 U.S.C. 7);

`(iii) a contract of indemnity or guarantee; or

`(iv) a contract for life, health, or accident insurance.

`(2) CLOSED-LOOP SUBSCRIBER-BASED SERVICE- The term `closed-loop subscriber-based service' means any information service or system that uses--

`(A) a device or combination of devices--

`(i) expressly authorized and operated in accordance with the laws of a State, exclusively for placing, receiving, or otherwise making a bet or wager described in subsection (f)(1)(B); and

`(ii) by which a person located within any State must subscribe to be authorized to place, receive, or otherwise make a bet or wager, and must be physically located within that State in order to be authorized to do so;

`(B) an effective customer verification and age verification system, expressly authorized and operated in accordance with the laws of the State in which it is located, to ensure that all applicable Federal and State legal and regulatory requirements for lawful gambling are met; and

`(C) appropriate data security standards to prevent unauthorized access by any person who has not subscribed or who is a minor.

`(3) FOREIGN JURISDICTION- The term `foreign jurisdiction' means a jurisdiction of a foreign country or political subdivision thereof.

`(4) GAMBLING BUSINESS- The term `gambling business' means a business that is conducted at a gambling establishment, or that--

`(A) involves--

`(i) the placing, receiving, or otherwise making of bets or wagers; or

`(ii) the offering to engage in the placing, receiving, or otherwise making of bets or wagers;

`(B) involves 1 or more persons who conduct, finance, manage, supervise, direct, or own all or part of such business; and

`(C) has been or remains in substantially continuous operation for a period in excess of 10 days or has a gross revenue of $2,000 or more from such business during any 24-hour period.

`(5) INFORMATION ASSISTING IN THE PLACING OF A BET OR WAGER- The term `information assisting in the placing of a bet or wager'--

`(A) means information that is intended by the sender or recipient to be used by a person engaged in the business of betting or wagering to accept or place a bet or wager; and

`(B) does not include--

`(i) information concerning parimutuel pools that is exchanged exclusively between or among 1 or more racetracks or other parimutuel wagering facilities licensed by the State or approved by the foreign jurisdiction in which the facility is located, and 1 or more parimutuel wagering facilities licensed by the State or approved by the foreign jurisdiction in which the facility is located, if that information is used only to conduct common pool parimutuel pooling under applicable law;

`(ii) information exchanged exclusively between or among 1 or more racetracks or other parimutuel wagering facilities licensed by the State or approved by the foreign jurisdiction in which the facility is located, and a support service located in another State or foreign jurisdiction, if the information is used only for processing bets or wagers made with that facility under applicable law;

`(iii) information exchanged exclusively between or among 1 or more wagering facilities that are located within a single State and are licensed and regulated by that State, and any support service, wherever located, if the information is used only for the pooling or processing of bets or wagers made by or with the facility or facilities under applicable State law;

`(iv) any news reporting or analysis of wagering activity, including odds, racing or event results, race and event schedules, or categories of wagering; or

`(v) any posting or reporting of any educational information on how to make a bet or wager or the nature of betting or wagering.

`(6) INTERACTIVE COMPUTER SERVICE- The term `interactive computer service' means any information service, system, or access software provider that uses a public communication infrastructure or operates in interstate or foreign commerce to provide or enable computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet.

`(7) INTERACTIVE COMPUTER SERVICE PROVIDER - The term 'Internet computer service provider' means any person that provides an interactive computer service.

`(8) INTERNET- The term `Internet' means the international computer network of both Federal and non-Federal interoperable packet switched data networks.

`(9) PERSON- The term `person' means any individual, association, partnership, joint venture, corporation, State or political subdivision thereof, department, agency, or instrumentality of a State or political subdivision thereof, or any other government, organization, or entity (including any governmental entity (as defined in section 3701(2) of title 28)).

`(10) PRIVATE NETWORK- The term `private network' means a communications channel or channels, including voice or computer data transmission facilities, that use either--

`(A) private dedicated lines; or

`(B) the public communications infrastructure, if the infrastructure is secured by means of the appropriate private communications technology to prevent unauthorized access.

`(11) STATE- The term `State' means a State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or a commonwealth, territory, or possession of the United States.

`(12) SUBSCRIBER- The term `subscriber'--

`(A) means any person with a business relationship with the interactive computer service provider through which such person receives access to the system, service, or network of that provider, even if no formal subscription agreement exists; and

`(B) includes registrants, students who are granted access to a university system or network, and employees who are granted access to the system or network of their employer.

`(b) INTERNET GAMBLING-

`(1) PROHIBITION- Subject to subsection (d), it shall be unlawful for a person engaged in a gambling business to use the Internet or any other interactive computer service--

`(A) to place, receive, or otherwise make a bet or wager; or

`(B) to send, receive, or invite information assisting in the placing of a bet or wager.

`(2) PENALTIES- A person engaged in a gambling business who violates paragraph (1) shall be--

`(A) fined in an amount equal to not more than the greater of--

`(i) the amount that such person received in bets or wagers as a result of engaging in that business in violation of this subsection; or

`(ii) $20,000;

`(B) imprisoned not more than 4 years; or

`(C) both.

`(3) PERMANENT INJUNCTIONS- Upon conviction of a person under this section, the court may, as an additional penalty, enter a permanent injunction enjoining the transmission of bets or wagers or information assisting in the placing of a bet or wager.
`(c) CIVIL REMEDIES.-
(1) JURISDICTION- The district courts of the United States shall have original, exclusive, and continuing jurisdiction to prevent and restrain violations of section 1085 of title 18, United States Code, as added by section 2 of this Act, by issuing appropriate orders in accordance with this section, regardless of whether a prosecution has been initiated under that section.
(2) PROCEEDINGS-
(A) INSTITUTION BY FEDERAL GOVERNMENT-
(i) IN GENERAL- The United States may institute proceedings under this subsection to prevent or restrain a violation of this section.
(ii) RELIEF- Upon application of the United States under this subparagraph, the district court may enter a temporary restraining order or an injunction against any person to prevent a violation of this section, United States Code, if the court determines, after notice and an opportunity for a hearing, that there is a substantial probability that such violation has occurred or will occur.
(B) INSTITUTION BY STATE ATTORNEY GENERAL-
(i) IN GENERAL- The attorney general of a State (or other appropriate State official) in which a violation of this section allegedly has occurred, or may occur, after providing written notice to the United States, may institute proceedings under this subsection to prevent or restrain the violation, unless the United States has exclusive jurisdiction over the violation.
(ii) RELIEF- Upon application of the attorney general (or other appropriate State official) of an affected State under this subparagraph, the district court may enter a temporary restraining order or an injunction against any person to prevent a violation of this section if the court determines, after notice and an opportunity for a hearing, that there is a substantial probability that such violation has occurred or will occur.
(C) INDIAN LANDS.- Notwithstanding subparagraphs (A) and (B). for violation that is alleged to have occurred, or may occur, on Indian lands (as that term is defined in section 4 of the Indian Gaming Regulatory Act (25 U.S.C. 2703))-
(i) the United States shall have the enforcement authority provided under subparagraph (A); and
(ii) the enforcement authorities specified in an applicable Tribal-State compact negotiated under section 11 of the Indian Gaming Regulatory Act (25 U.S.C. 2710) shall be carried out in accordance with that compact.
(D) EXPIRATION- Any temporary restraining order or preliminary injunction entered pursuant to subparagraph (A) or (B) shall expire if, and as soon as, the United States, or the attorney general (or other appropriate State official) of the State, as applicable, notifies the court that issued the injunction that the United States or the State, as applicable, will not seek a permanent injunction.
(3) EXPEDITED PROCEEDINGS-
(A) IN GENERAL- In addition to any proceeding under paragraph (2), a district court may enter a temporary restraining order against a person alleged to be in violation of section 1085 of title 18, United States Code, upon application of the United States under paragraph (2)(A) of this subsection, or the attorney general (or other appropriate State official) of an affected State under paragraph (2)(B), without notice and the opportunity for a hearing as provided in rule 65(b) of the Federal Rules of Civil Procedure (except as provided in subsection (d)(3)), if the United States or the State, as applicable, demonstrates that there is probable cause to believe that the use of the Internet or other interactive computer service at issue violates this section.
(B) EXPIRATION- A temporary restraining order entered under this paragraph shall expire on the earlier of--
(i) the expiration of the 30-day period beginning on the date on which the order is entered; or
(ii) the date on which a preliminary injunction is granted or denied.
(C) HEARINGS- A hearing requested concerning an order entered under this paragraph shall be held at the earliest practicable time.

Continue to subsection (d).