U.S. House of Representatives Passes Internet Gambling Prohibition and Enforcement Act

19 July 2006

On July 11, 2006, the U.S. House of Representatives voted 317-93 to pass the "Internet Gambling Prohibition and Enforcement Act." The Bill, co-sponsored by Reps. Bob Goodlatte, R-Va., and Jim Leach, R-Iowa, is similar to a Bill sponsored by Sen. Jon Kyl, D-Ariz., currently pending in the U.S. Senate. In an interview broadcast on C-Span prior to the House vote, Leach suggested that the House version would likely be integrated with Kyl's Bill for Senate consideration.

The Republicans have clearly decided to use the issue of Internet gambling as part of their "family values" agenda in order to gear up for this fall's elections. In debates over the timing of the Bill, several House Democrats argued that the Minimum Wage Bill should have been given priority if Congress is really seeking to address "family values." These themes will likely be repeated throughout the upcoming election season.

The Bill has widespread support from several groups including the Christian Coalition, Concerned Women for America, the Eagle Forum, the Family Research Council and the Southern Baptist Convention. The conservative group Focus on the Family is also making a major push to try to get the Bill enacted this year. Additionally, during the debate, the Bill's sponsor noted that 48 of the 50 State Attorney Generals supported the legislation.

Substantively, the House Bill amends the Federal Wire Act by redefining some key terms, and rewording several provisions in an effort to prohibit those engaged in a gambling business from knowingly utilizing communication facilities to transmit bets or wagers. Currently, the Wire Act provisions only apply to wire communication facilities and to bets or wagers on sporting events or contests. There is an argument that the Act does not apply to Internet wagering involving anything other than a sporting event or contest.

The proposed legislation seeks to change this to more clearly prohibit Internet gambling. The Bill also regulates the payment systems used for Internet wagering sites, granting broad authority to the Department of Treasury and the Federal Reserve to adopt policies to identify, block, prevent or prohibit such wagers.

The Bill would also grant civil enforcement authority to state and federal law enforcement allowing them to seek injunctions against persons who facilitate illegal Internet gambling. It would appropriate $10 million each fiscal year from 2007-2010 to the Department of Justice for investigations and prosecutions of violators.

The Bill contains a number of exemptions and a "Sense of Congress" section stating that the Bill is not intended to change which activities related to horse racing may or may not be allowed under federal law.

During the floor debate Rep. Shelley Berkley, D-Nev., offered an amendment to the Bill eliminating all exemptions, including the horse racing "Sense of Congress" and the exemption for intrastate wagers. During the debate, several opponents of the Bill noted that Jack Abramoff had lobbied successfully in the past to defeat the Bill because it did not have such an exemption for intrastate lotteries. Berkley argued that by including this exemption, the members of the House would be giving Abramoff's clients exactly what they were always after. She was joined in seeking the amendment by Rep. John Conyers, D-Mich.

Rep. James Sensenbrenner, R-Wis., urged for the amendment to be defeated, alleging it was a "poison pill" designed to prevent passage of the Bill. Goodlatte also gave an impassioned speech urging defeat of the amendment because he viewed it to be an attempt to derail the Bill by eliminating the exemption allowing states to regulate gambling on their own.

The amendment was defeated by a vote of 297-114. Thereafter, Conyers further delayed a vote by proposing a motion to have the Bill sent back to committee to consider an amendment prohibiting people underage from engaging in Internet wagering. Sensenbrenner and Goodlatte opposed the motion noting they believed the motion was designed to ensure that State Attorney Generals would no longer support the Bill without being permitted to review such a specific age provision in the context of potentially applicable state laws. They added that the Bill already requires consideration of age and location requirements in the development of follow-up rules and policies by Treasury and the Federal Reserve. They argued that such specific age requirements on gambling are a matter of state, rather than federal law.

After the motion was defeated by a voice vote, Conyers demanded a record vote, and it was defeated by a vote of 243-167.

The Bill will now move over to the Senate for consideration. However, with the legislation session growing short, supporters of the Bill may be time-pressed to get a floor vote by the end of the session. If the Senate votes favorably for the Bill, supporters believe that President Bush will sign it.

It is a fact that America has become increasingly accepting of wagering that is properly regulated, and a growing number of state governments have illustrated they can create and operate a successful regulatory structure to ensure the integrity of gaming. This acceptance has resulted in an explosive growth of economic development across America, and provided assistance to numerous governmental programs via the taxes paid by the industry.

In addition to the increased acceptance of regulated wagering, is the fact that Americans continue to be interconnected and dependent on their technological entertainment devices (Ipod, cell phones, computers, etc).

It seems illogical for the U.S. to outlaw an activity that has proven to be favored by a majority of Americans, and one that state governments have proven can be properly regulated. It seems much more logical and reasonable for the U.S. to seek to establish a method or structure of regulation and oversight, than to prohibit an activity that will prove difficult, if not impossible to prevent.

David Waddell

David Waddell is an attorney for Regulatory Management Counselors, P.C. (RMC), which assists businesses in navigating the legislative, regulatory and licensing systems governing Michigan’s commercial and tribal casino industries. He is the co-author of The State of Michigan Gaming Law Legal Resource Book and one of the founders of The Michigan Gaming Newsletter.

David Waddell Website