S 692 -The Internet Gambling Prohibition Act (3/23/99, Sec. 1-2)

30 March 1999
S 692 IS

106th CONGRESS

1st Session

S. 692

To prohibit Internet gambling, and for other purposes.

IN THE SENATE OF THE UNITED STATES

March 23, 1999

Mr. KYL (for himself and Mr. BRYAN) introduced the following bill; which was read twice and referred to the Committee on the Judiciary


A BILL

To prohibit Internet gambling, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

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

      `(8) 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, United States Code)).

      `(9) 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.

      `(10) 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.

      `(11) 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) GAMBLING BUSINESSES-

      `(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.

    `(c) 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.

    `(d) APPLICABILITY-

      `(1) IN GENERAL- Subject to paragraph (2), the prohibition in this section does not apply to--

        `(A) any otherwise lawful bet or wager that is placed, received, or otherwise made wholly intrastate for a State lottery, or for a multi-State lottery operated jointly between 2 or more States in conjunction with State lotteries if--

          `(i) each such lottery is expressly authorized, and licensed or regulated, under applicable State law;

          `(ii) the bet or wager is placed on an interactive computer service that uses a private network;

          `(iii) each person placing or otherwise making that bet or wager is physically located when such bet or wager is placed at a facility that is open to the general public; and

          `(iv) each such lottery complies with sections 1301 through 1304 of title 18, United States Code, and other applicable provisions of Federal law;

        `(B) any otherwise lawful bet or wager that is placed, received, or otherwise made on an interstate or intrastate basis on a live horse race, or the sending, receiving, or inviting of information assisting in the placing of such a bet or wager, if such bet or wager, or the transmission of such information, as applicable, is--

          `(i) expressly authorized, and licensed or regulated by the State in which such bet or wager is received, under applicable Federal and such State's laws;

          `(ii) placed on a closed-loop subscriber-based service;

          `(iii) initiated from a State in which betting or wagering on that same type of live horse racing is lawful and received in a State in which such betting or wagering is lawful;

          `(iv) subject to the regulatory oversight of the State in which the bet or wager is received and subject by such State to minimum control standards for the accounting, regulatory inspection, and auditing of all such bets or wagers transmitted from 1 State to another; and

          `(v) made in accordance with the Interstate Horse Racing Act of 1978 (15 U.S.C. 3001 et seq.); or

        `(C) any otherwise lawful bet or wager that is placed, received, or otherwise made for a fantasy sports league game or contest.

      `(2) INAPPLICABILITY TO BETS OR WAGERS MADE BY AGENTS OR PROXIES-

        `(A) IN GENERAL- Paragraph (1)(A) does not apply in any case in which a bet or wager is placed, received, or otherwise made by the use of an agent or proxy using the Internet or an interactive computer service.

        `(B) RULE OF CONSTRUCTION- Nothing in this paragraph may be construed to prohibit the owner operator of a parimutuel wagering facility that is licensed by a State from employing an agent in the operation of the account wagering system owned or operated by the parimutuel facility.'.

    (b) TECHNICAL AMENDMENT- The analysis for chapter 50 of title 18, United States Code, is amended by adding at the end the following:

      `1085. Internet gambling.'.

(Sec. 3-6)