Testimony: James E. Doyle

Good afternoon.

I appreciate the opportunity to appear today before the Subcommittee on this important issue.

State Attorneys General have been working on the serious law enforcement issues posed by Internet gambling since 1995. We have always seen this issue as one that presents unique problems for state law enforcement officials.

Though we traditionally urge Congress to preserve state-level decision-making on most criminal justice issues, we have asked the federal government to expand its law enforcement role in the area of Internet gambling. Our concerns have led the National Association of Attorneys General to seek federal legislation to implement a uniform federal prohibition against the use of the Internet and related computer networks for gambling purposes.

Gambling has always been a state issue. It is mentioned, and generally prohibited, in nearly every state constitution. State gambling policies and laws differ more widely than in almost any other area of the law. From complete gambling prohibitions in Utah and Hawaii to the huge commercial casinos of Nevada, Atlantic City and the Mississippi Gulf Coast, each state has chosen to draw the line on gambling based on local and state interests. In my own state, the gambling policy is part of our state constitution. Expanding gambling in Wisconsin requires not only the approval of our state legislature, but the approval of the voters in a statewide referendum.

The Internet threatens to disrupt each state's carefully crafted choice on gambling policy. By using technology and the tools of electronic commerce, a person no longer needs to get on a plane to Las Vegas to gamble in a large casino. Instead, they can simply log on to the Internet from their home or office and bet on any event imaginable, or play exciting and colorful interactive casino games that offer real money as prizes. Technologically, it doesn't matter that the person's home state has chosen to prohibit this potentially harmful activity, because the Internet crosses jurisdictional boundaries and has the potential to make any online activity available to anybody, anywhere, at any time.

It is important to remember that the Internet has provided, and will continue to provide, wonderful benefits to our society. It has brought the tools of the information age into the lives of millions of people who would otherwise not have access to such resources. It empowers people by giving them the information they need to make educated choices in their lives via their home, office or a public library computer. The Internet gives us access to medical, educational and cultural resources from around the world.

But the Internet's ability to cross boundaries and make technological advances available to everybody has also presented some of the problems addressed by the proposed Internet Gambling Prohibition Act. Without attempting to reach out and tackle these issues, individual state laws will have an uneven and minimal effect on the growth of this industry as a whole.

There is really no question that states can legally and constitutionally exercise criminal or civil jurisdiction over out-of-state gambling operators who project those businesses into their states. My office has brought several successful lawsuits against Internet gambling operations that violated Wisconsin law. But practical problems, such as difficulties with international extradition and the wide disparity of available enforcement resources, prevent uniform application of state laws, and allow an illegal enterprise to operate essentially unchecked throughout this country. No individual state could effectively address the more than 700 Internet gambling sites on the World Wide Web today, or even a significant proportion of them. Gambling on the Internet is much like the Wild Wild West, and foreign jurisdictions have become the hideouts for the bandits.

Federal legislation, like that being considered by this Subcommittee, can help combat this activity. In spite of its continued illegality, the vast majority of the world's Internet gambling players are right here in the United States. The reach of the federal courts goes well beyond each state's borders. The tools for injunctive relief provide much-needed preventative measures. The clarification of the criminal measures provides real penalties for the businesses taking advantage of the vacuum in the current wire act -- a vacuum created by new technologies and their ability to allow new forms of gambling to occur over the wires.

Senator Jon Kyl has worked closely with my office and the National Association of Attorneys General for several years on this issue. His efforts resulted in the passage, by unanimous consent, of the Senate version of the Internet Gambling Prohibition Act. After working closely with all of the parties affected by this legislation, he has been able to craft a bill which generally prohibits at-home gambling, while allowing existing licensed and regulated gambling enterprises to utilize technology to continue operating their own businesses. The strength of Senator Kyl's bill is that it allows states to continue to make their own decisions on what is legal and acceptable within their own borders, honoring their state laws and regulatory structures, while providing a complete prohibition on at-home gambling via the Internet. This is something that no individual state's law could assure.

This Subcommittee is considering a bill that is similar in many important respects to the one already passed by the Senate. Hopefully, with continued effort by the proponents of this legislation, a final bill will be crafted which meets the needs of both bodies, and the bill can finally become law. I would like to point out the few distinctions between the House and Senate bills that raise concerns.

The most significant distinction from our perspective as state Attorneys General is the omission, perhaps merely by drafting oversight, of a clause assuring the applicability of other state and federal criminal laws to Internet gambling. The Senate bill provides in its "Rules of Construction" section that nothing in the prohibition section "may be construed to create immunity from criminal prosecution under any provision of Federal or State law." This language is very important in accomplishing the main goal of the bill, which is to bolster the ability of the individual states to fight this form of illegal gambling as it crosses their borders via the Internet. I would strongly urge the members to insert such language into the House version of this bill before its final passage.

Assuring the applicability of state criminal laws is especially important when I view another section which seems to allow for at-home sales of state lottery tickets via the Internet. This practice is currently illegal in most states, including my own, where such practice is prohibited by the state constitution. However, the language allowing state lotteries and their agents to sell tickets via "closed loop subscriber-based systems" protected only by a "user name and password" would seem to encourage this specific practice. At-home sales of gambling products should not be encouraged in any way by this legislation. The danger of such sales can be seen in the tendency of many to purchase tickets well beyond their means. It is especially timely to note this fact in light of the frenzy surrounding sales of lottery tickets just last week as the multi-state Powerball jackpot approached record levels.

I am also concerned with the blanket exception in the House bill for "any otherwise lawful bet or wager" made on the Internet, either intrastate or state-to-state. No such exception appears in the Senate bill. This section would exempt these "otherwise lawful" bets and wagers from this act, essentially throwing this issue back to a state-by-state analysis. While intended to allow each state some degree of autonomy, this provision instead opens the door to a new hodgepodge of Internet gambling laws in this country. "Otherwise lawful" is a term that can be interpreted many ways depending upon what a particular party is pushing, and its presence in federal law could dilute the clear policy statement this legislation could otherwise make.

Finally, I think it is important to address the issue of gambling on Indian lands more fully. The House bill's current reference to the Indian Gaming Regulatory Act and tribal-state compacts should be enough to prevent illegal Internet gambling, because those documents clearly limit Indian gaming activity to those activities and participants physically located on Indian lands. However, that view is not shared by all. Senator Campbell proposed extensive language to address the Indian gaming issue directly, and that language was inserted into the Senate bill by a floor amendment. It represents a strong attempt to clarify the needs of those involved in this complex and often contentious issue. I recommend that this body also adopt similar language to clarify for all involved the types of gaming that can be conducted utilizing the new technology of the Internet.

I want to thank the Subcommittee for inviting me to testify today. All of the amazing benefits of the Internet could come crashing down upon us if we do not make serious efforts, like those reflected in this bill, to prevent online gambling from running roughshod over state laws. The wire act is just not doing the job in preventing the wide variety of gambling activities available on the Internet. This is one of those unique situations where a federal prohibition will actually assure the continuation of states' abilities to control what occurs within their own borders.

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