US Law Roundup - September 2004

22 September 2004

Staying on top of interactive gambling bills as they move through the United States' federal and state legislatures no longer entails hours of research, thanks to this monthly update on U.S. state and federal legislation. Since the legislative session has already ended in most states, little has happened in the last few months at the state level. On the federal scene, the industry is waiting for the Senate to address the Kyl Internet gambling bill in the Banking Committee, although most insiders doubt this will happen during an election year.

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State Legislation

Illinois	HB 1515
Bill Summary	Introduced by state Rep. Elizabeth Coulson, HB 1515 would make it illegal for banks and credit card companies to facilitate payments for Internet gambling. A bank found to have allowed wire transfers to be processed for online gambling transactions would be fined $1,000 per offense. The bill would also make all credit card debt resulting from online gambling null and void. Coulson told the Copley News Service that credit card companies would, under her bill, effectively put a stop to Internet gambling.
Bill Status	The bill has been introduced to the House of Representatives Gaming Committee and awaits a hearing there. It was referred to the Rules Committee on March 13, 2003, but has seen no action since then.
Outlook	Gaming Committee Chairman Rep. Lou Lang said he is not sure Coulson's bill is the best way to legislate Internet gambling. He told Interactive Gaming News: "At first blush, I'm not sure why we want to make financial institutions criminally responsible for people taking their money out of their bank account, which is basically what the bill does. Whether Internet gambling is or isn't legal, I'm not sure this is the appropriate place to put the enforcement mechanism." The Illinois legislature is currently out of session and will meet again on November 8th for a short veto session. It is unlikely that HB 1515 or any other bill not dealing with the state's budget with receive any more attention this year.
Indiana	HB 1172
Bill Summary	House Bill 1172 would make Internet gambling by the consumer a Class B misdemeanor. The act of operating or promoting an online gambling service would be made a Class D felony. Authored by Representative Jerry L. Denbo, the bill would require Internet sites to shut down if a law enforcement agency were to determine that a site promotes online gambling. Internet service providers would also be required to restrict access to sites that promote and offer online gambling.
Bill Status	The bill received its first reading on Jan. 13, 2004 and was then referred to the Committee on Public Policy and Ethics and Veterans Affairs.
Outlook	The bill is similar to a bill in the Indiana Senate and another bill that failed both last year and the year before. Internet service providers are likely to oppose the bill.
Indiana	SB 0186
Bill Summary	Very similar to House Bill 1172, SB 0186 makes it a Class D felony for an operator of an Internet site to use the Internet to engage in gambling activities. The wording of the law gives interactive computer services (Internet service providers) a right of action against any person that transmits information for the purpose of online gambling. Internet service providers may block access to gambling sites and will not be held liable for action voluntarily taken in good faith to block the receipt or transmission of information if it reasonably believes is related to illegal gambling.
Bill Status	The bill was introduced on Jan. 6, 2004 and had three readings before being passed and sent to the House on Jan. 27. The bill was read in the House on Feb. 4 and then sent to the Committee on Public Policy and Ethics and Veterans Affairs.
Outlook	Similar to House Bill 1172, this bill could incite the wrath of Internet service providers if it makes it far in the ratification process. It seems, however, that its progress has already reached its furthest point.
New Jersey	AJR-66
Bill Summary	This bill, proposed by Assemblymen Joseph Azzolina, would create a 21-member Internet gaming study commission that would be charged with recommending a course of action regarding online gaming in New Jersey.
Bill Status	The bill was introduced Jan. 13, 2004 and immediately referred to the Assembly Tourism and Gaming Committee.
Outlook	Assemblyman Anthony Impreveduto, who co-sponsored a similar bill last year, told IGN that the bill was created to provide the Tourism and Gaming Committee with more information about the Internet gambling industry before considering other bills on I-gaming. The current legislative session in New Jersey extends into 2005 so even though the bill received very little attention in 2004, it could still garner consideration next year.
New Jersey	A-429
Bill Summary	A-429 would authorize licensed land-based casinos in New Jersey to offer their games via the Internet.
Bill Status	A-429 is a version of a bill that was filed as A-568 last year. It was originally filed by Assemblyman Tony Impreveduto during the 2000-2001 legislative session. The bill was introduced on Jan. 13, 2004 and referred to the Assembly Tourism and Gaming Committee.
Outlook	Unlike the I-gaming bill passed in Nevada, A-429 has failed to garner great support among legislators and Atlantic City casino operators.
New Jersey	S-1013
Bill Summary	Senate Bill 1013, authored by Senator Richard Codey, is nearly identical to last year's Senate Bill 2376, which Codey also authored. The bill clarifies the definition of illegal gambling to include Internet gambling and voids credit card debt incurred through illegal gambling. The bill also includes a clause establishing that only the state may sue to recover gambling losses.
Bill Status	The bill was introduced and referred to Senate Wagering, Tourism & Historic Preservation Committee on Feb. 9, 2004. It hasn't since seen any action.
Outlook	Codey became president of the Senate this session so any bill with his name on it is going to be taken seriously. New Jersey sources indicate, however, that I-gaming is not a top priority in the state.
Washington	SB 6481
Bill Summary	Signed into law April 2, 2004, SB 6481 adds Washington to the growing number of states that offer advance deposit wagering via Internet and telephone. It permits residents of the state to legally wager on horses without being present at a track of off-course betting facility. The law was pushed through because lawmakers were concerned that the state's citizens were using the Internet and phones to gamble with services in other states.
Bill Status	This bill has been passed and signed into law.
Outlook	The bill passed the legislature and was signed into law by Governor Gary Locke.
Georgia	HB 1272
Bill Summary	On Jan. 30, 2004 members of the House introduced HB 1272, which would make Georgia the first state to allow its citizens to purchase lottery tickets online. Supporters are hoping to boost lotto sales to maintain a scholarship program to which lottery funds are allocated. Georgia residents would be permitted to spend a maximum of $5 per day on lottery tickets.
Bill Status	The bill passed through the House on March 4, 2004 and awaits a reading by the Senate.
Outlook	This bill has a long way to go because there is much uncertainty as to whether an online lottery is consistent with federal law. The lottery would certainly be illegal if the Kyl bill were to be enacted.

Federal Legislation

HR 21	Unlawful Internet Gambling Funding Prohibition Act
Bill Summary	This bill would prohibit Internet gambling businesses from accepting the following payment methods from customers: credit cards, electronic fund transfers, any instrument drawn by or on behalf of another and payable through any financial institution and the proceeds of any other form of financial transaction involving a financial institution as payer or financial intermediary for another.
Bill Status	HR 21 was introduced by Rep. James Leach, R-Iowa, on the first day of the 108th session of Congress, which was Jan. 8, 2003. The bill is virtually the same as HR 556, which Leach introduced last year. HR 556 was passed in the House by a voice vote, but it did not go to a vote in the Senate and thus died. HR 21 was reported favorably to the full House by the Judiciary Committee in May 2003. However, the committee voted to amend the bill in a way the stopped the bill in its tracks. The amendment, proposed by Rep. Chris Cannon, R-Utah, removed the bill's carve-outs for horse racing, dog racing, lotteries and casino games.
Outlook	The Justice Department has stated its disapproval of the bill; Rep. Spencer Bacchus' bill, HR-2143, was adopted instead.
S-627	Unlawful Internet Gambling Funding Prohibition Act
Bill Summary	Sponsored by Sen. Jon Kyl, R-Ariz., S. 627, is very similar to the House bill proposed by Rep. James Leach, R-Iowa. In a press release, Kyl said he is opposed to Internet gambling because he believes it exacerbates the problem of gaming addiction, funds criminal activities, targets children and has the potential for fraud. "Internet gambling is not a fun diversion, but feeds a dangerous and growing addiction," Kyl said. "It is linked to organized crime, rife with fraud, ruins credit ratings, and allows many young people to build up thousands of dollars in debt on their parents' credit cards."
Bill Status	The bill was unanimously voted out of the Senate Banking Committee last year and was placed on the Senate Legislative Calendar on Oct. 27, 2003. It hasn't yet received a reading in the full Senate.
Outlook	Many experts believe the bill has no chance of passing during an election year. Nevertheless, Kyl is determined to prove them wrong.
HR-1223	Internet Gambling Licensing and Regulation Commission Act
Bill Summary	Rep. John Conyers, D-Mich., introduced this bill on March 12, 2003. A reprisal of the legislation he introduced late in the 107th Congress, HR 1223 would form a commission to study the feasibility of licensing and regulating Internet gambling.
Bill Status	The bill has been referred to the House Financial Services Committee.
Outlook	Bills that would prohibit Internet gambling are gaining much momentum in the Congress, and Washington insiders say it is unlikely that this bill will be marked up by the House Financial Services Committee. However, the bill was discussed, but not voted on, during the Judiciary Committee's markup on the Leach Internet gambling bill.
HR-2143	Unlawful Internet Gambling Funding Prohibition Act
Bill Summary	Introduced on May 19, 2003 in the House Financial Services Committee, HR 2143 is basically the same bill as HR 21, except it lacks the civil and criminal penalties set forth in that bill. Rep. Spencer Bachus, R-Ala., introduced the bill to compete with the version of HR 21 that the Judiciary Committee passed on May 14.
Bill Status	The U.S. House of Representatives passed HR 2143 by a vote of 300-104 on June 10, 2003. A key amendment that would have effectively killed the bill was narrowly defeated. The amendment, introduced by Jim Sensenbrenner, R. Wis., would have removed carve-outs for racing, state lotteries and other interests. The bill was received in the Senate and referred to the Committee on Banking, Housing and Urban Affairs on June 11.
Outlook	The Senate is considering the Kyl Internet gambling bill, which would have similar consequences as the Bachus bill.