The Telecommunications, Trade and Consumer Protection Subcommittee of the House Commerce Committee met at 11 a.m. yesterday to discuss H.R. 3125, the Internet Gambling Prohibition Act. Overall, the hearing seemed to raise far more questions that it answered. A lot of issues clearly need to be resolved before the bill goes to the House for a vote.
Most of the day's exchanges concerned the scope and necessity of the carve-outs. While many members seemed to be keeping an open mind about the horse carve out, Cliff Stearns (R-FL) mildly defended dog racing or jai alai.
The bill was attacked on two fronts: expansion of gambling and regulation of the Internet. Nearly every member of Congress in attendance asked questions about whether in-home horse and dog wagering, or jai alai were presently legal. They then followed up with questions about the exemptions. Chairman Billy Tauzin (R-LA) actually got Rep. Bob Goodlatte (R-VA) to admit that the bill expanded gambling in these three areas.
A large portion of the testimony focused on existing laws rather than the impending one. Kevin DiGregory of the Department of Justice and Anne Paulson of the Virginia Thoroughbred Association argued extensively over whether the Interstate Horseracing Act of 1978 makes it illegal to accept pari-mutuel wagers over an interstate phone call. Paulson pointed out that several states have been doing this for years, and DiGregory clarified that either they're doing it illegally or they're not actually taking wagers over state borders. "It allows an interstate off-track wager, but it's defined in the act as a legal wager placed or accepted in one state with respect to the outcome of a horse race taking place in the other state," DiGregory said. "So it allows an intrastate bet."
Tauzin inquired as to whether the law has been tested in court, and both DiGregory and Paulson agreed that it hasn't. Tauzin then asked DiGregory why the DOJ hasn't prosecuted anyone in the 22 years since the law was enacted. DiGregory was unable to provide a definitive answer.
Rep. Markey, D-Mass., weighed in by asking Paulson to provide the committee with a list of those tracks currently accepting interstate phone wagers. DiGregory commented that he would like to see that list as well and implied (jokingly) that prosecutions could be forthcoming. (In another comment, DiGregory did, in fact, state that Justice was looking at YouBet and other in-home wagering businesses.)
Getting back to 3125, The panel then turned to the dog racing and jai alai exemptions, but made little progress, as attendees offered very little testimony on the matters. Markey criticized the bill for promoting "a non-standard standard," referring to provisions in the bill creating exceptions for closed-loop horse and dog racing, fantasy sports and jai alai. "It seems we are making distinctions based on which are our favorite domesticated animals," he said. "We can set up a closed loop for them, but not for the lottery." He also indicated that he'd rather see exceptions made for state lotteries that directly benefit communities. The bill, in its current state, limits the sale of lottery tickets over the Internet to transactions in which the customer is located at a public facility.
Greg Ziemak, president of the North American Association of State and Provincial Lotteries, added, "State lotteries would be put at a competitive disadvantage to other participants in the industry."
After thoroughly discussing these and the rest of the exemptions (including a fair amount of criticism of the fantasy sports exception), the panel turned to the impact this legislation could have on the Net. California Reps. Chris Cox and Anna Eshoo both noted the burdens the bill would place on ISPs. Cox made the case that the notice and take down procedures in H.R. 3125 would apply equally to search engines, and that fact was troublesome. In defense, the NFL's Greg Waldron claims that the exemptions were the same as those in the 1998 Digital Millennium Copyright Act, which set the standard for notice and take down procedures. However, Chairman Tauzin's staff grabbed a copy of the DCMA and stated for the
record that the Goodlatte provisions were far broader than those of the 1998 legislation.
Eshoo, who represents the Silicon Valley area, also noted that the "loopholes" are "so big you could drive a truck through them."
Little was said about the Indian carve-out. Dick WIlliams, representing the Lac Vieux Dessert (Mich.) Indian Tribe, argued that Class II bingo online was appropriate under IGRA and as such, should be protected in H.R. 3125. Waldren disagreed. "The IGRA regulates gaming on Indian lands," Waldren said. "The suggestion is that one can gamble, whether it's bingo or some other type of gaming, off of Indian land. The IGRA does not permit that."
The argument that the law shouldn't be enacted because it expands instead of prohibits online gambling, as expected, was made as well. "I'm quite surprised we're going to legalize gambling over the
Internet," Rep. Gene Green, D-Tex., said. "I have a suggestion: We could just ban Internet gambling."
Rev. Louis Sheldon, chairman of the Traditional Values Coalition, agreed, adding, "This bill is a Trojan horse for the horse racing, dog racing, 'sports fantasy' and jai alai companies."
The sequential referral to the Commerce Committee expires on June 23rd. Between now and then, the committee will either have to hold a mark-up and modify the legislation with amendments or ask for an extension of time, possibly for long enough that the bill dies in Commerce. The committee also has the option of doing nothing and letting the bill go to the floor. There are no clear indications as to what the committee will do, but Rep. Goodlatte was quoted by the National Journal's Technology Daily as saying he expected the legislation to be considered on the floor of the full House "in short order after June 23."
Sen. Jon Kyl, who started the whole process with his bill in the Senate, told the Journal's reporter, Teri Rucker, "If we don't do it this year (pass the bill) I question whether we will have another opportunity to do it."
Traci Sanders of the National Association of Attorneys General was quoted by Rucker as saying that without the bill "our state laws will become completely meaningless" because of the states' inability to handle 700 Internet gambling sites currently outside of state jurisdiction. John Perry Barlow, a fellow at Harvard Law School's Berkman Center for Internet and Society, had his own view of the bill. He says it is "unconstitutional, impractical, unenforceable and even, I would submit, immoral. Not only does it infringe on the rights of individuals, both American and foreign, it grossly advances federal authority over the states."
Las Vegas Review Journal, meanwhile, reports that the Clinton administration has repeatedly objected to the bill.
Eleven members of Congress attended yesterdays hearing: Chairman Tauzin and Reps. Stearns (R-FL), Marcy (D-MA), Largent (R-OK), Eshoo (D-CA), Shimkus (R-IL), Green (D-TX), Cox (R-CA), Cubin (R-WY), Rush (D-IL), and Gilmore (R-OH). Of these ten, six attacked the bill, two supported it, and two were silent.
Prepared Witness Testimony and Member Statements:
Statement by The Honorable Tom Bliley
Panel 2, Witness 1: Mr. Kevin V. DiGregory, Department of Justice
Panel 2, Witness 2: Ms. Lisa Dean, Free Congress Foundation
Panel 2, Witness 3: Mr. Michael Bowman, Family Research Council
Panel 2, Witness 4: Ms. Anne Paulson, Virginia Thoroughbred Association (testimony not available)
Panel 2, Witness 5: Mr. Daniel Nestel, The National Collegiate Athletic Association
Panel 2, Witness 6: Reverand Louis Sheldon, Traditional Values Coalition
Panel 2, Witness 7: Mr. Gregory Ziemak, Kansas Lottery (testimony not available)
Panel 2, Witness 8: Mr. Gerard J. Waldron, Covington and Burling
Panel 2, Witness 9: Mr. Richard Williams, Lac Vieux Desert Band, Lake Superior Chippewa Indian Tribe