A contingency of U.S. legislators agree that online gambling should be banned on the federal level--and quickly--but just how to approach doing so remains undecided. Policymakers discussed the issue at length yesterday during a House subcommittee hearing.
Bills have been introduced to ban the use of banking devices such as credit cards, wire transfers and debit cards from being used in online gambling, while others may be introduced to seek an outright ban of the activity.
Once the subcommittee heard from its first panel consisting of congressmen, the issue was bantered about back and forth.
Rep. John LaFalce, D-N.Y., who is sponsoring a House bill banning credit cards and other bank devices for gambling online, said the move is being made to single out the online gaming industry. Other bills that have tried to ban certain forms of gaming are destined to fail and would create even more controversy if passed, he said.
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"With a few hundred dollars and a creative programmer, you can open up a site. It is really cheap to do, unlike traditional gambling and horse racing."
- Rep. Michael Oxley, R-Ohio
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"There has been a change of thinking among the Nevada gaming community," he said. "If the law doesn't address the issue, it can't be unlawful. If I am a credit card company, how am I going to know what the law is at every jurisdiction as they go along the way? We are creating the chances of driving a truck right through the legislation."
LaFalce, speaking before the House Financial Services subcommittee on Financial Institutions and Consumer Credit, admitted that his approach may be somewhat harsh out of the gate, but he feels it is the best course of action.
"If I had to choose between being too draconian and being loose, that is an easy one for me to choose," he said. "I will take the tough road all the time. You can always loosen the reigns once something is passed, but it is harder to tighten them up once you have allowed people to do a certain activity."
Rep. Spencer Bachus, R-Ala., the chairman of the Subcommittee on Financial Institutions and Consumer Credit, which conducted the hearing, echoed the sentiment of the other GOP members that the only viable solution in dealing with online gambling was an outright ban.
"I am not sure technology will allow us to regulate it," he said. "A much cleaner solution would be a ban."
Rep. Michael Oxley, R-Ohio, the chairman of the full committee, said he supports any ban on Internet gambling because he doesn't want to see other forms of gambling take over the Internet.
"I am worried about riverboat casinos, Indian gaming tribes and the proliferation of gambling in normally conservative bastions like Ohio and other states," he said.
Oxley also warned of the ease with which people can get into the business--at least, how he perceives it. "With a few hundred dollars and a creative programmer, you can open up a site," he said. "It is really cheap to do, unlike traditional gambling and horse racing."
The issue of states like Nevada and New Jersey expressing interest in regulating Internet gambling (with Nevada having already passed a bill) and how they would be affected by a federal ban was brought up as well.
Bachus feels that any ban on the federal level can be written in such a way that gaming states have the freedom to decide whether they want to include online gaming in their jurisdictions. He also pointed out the ban could go the other way as well.
"We may leave that up to the states to figure out or we may have an across the board ban," he said.
Leach feels that by cutting out the payment system, offshore casinos will be brought to their knees.
"The only effective way of monitoring the offshore operations is to preclude the payment mechanism," he said. "On the Internet, if you cannot pay, that will damage the offshore sector a great deal."
Kyl, Leach and others are targeting the banking and credit card sector after failing to use Internet service providers as the blocking mechanism for such offshore sites.
"You can do it through the blocking, which the ISPs don't want to do, or you ban the payment vehicles," Kyl said. "This is an effort to begin to enforce something that is beginning to get out of hand, law enforcement doesn't know what to do about it, and we hope that legislation can address the issue of what to do about it."
Goodlatte said using the ISP as the gatekeepers couldn't work when ISPs voiced too many objections to the bill. "We have worked with them in the past and we continue to work with them to try and address their concerns," he said.
Leach responded to questions about privacy issues that could be raised with such a bill by saying they were without warrant. Any concerns, he said, should be focused on how people get into huge debt and not what the government would have to do to stop it.
"I don't know that criticism," he said. "The concern should be on the company that places someone in debt. The credit card company only has to be knowingly accountable. There will be some things they don't know about."
Citizens may have their privacy infringed upon in order for the government to enforce the law, but Leach claims it won't be enough to merit worries.
"There might be a trivial privacy umbrage, but not enough for people to be concerned," he said.
When it comes time to enforce such a ban, Leach said it would be up to the states to prosecute the individual gamblers while the Justice Department will take care of the credit card companies and operators who continue to break the law. States can determine their own penalties, but the federal ones being proposed could be stiff penalties.
"We leave that to the state law, the gamblers are the jurisdiction of the state," he said. "However, for those engaged in offering the services will have four or five years, or something in that range."
Rep. Judy Biggert, R-Ill., was puzzled at how college students, who typically have small limits on their credit cards, can rack such enormous debts up on them.
Kyl responded to her questioning by deflecting the issue to other mainstream groups who are opposed to online gambling.
"I can't specify how they are able to get that much value on a credit card when they have limits," he said. "The biggest proponents of these bills are the NFL, the NBA, NCAA and major league baseball. There is a lot of money involved in these sports and they can't have them adulterated with the chance that the game is fixed. That shows you the degree of concern they have about it."
Leach admitted that there was no hard evidence to support claims that problem gambling is an epidemic in the U.S., but he said there are plenty of individual stories that have been told exemplifying the problem.
"All of the coaches in America have become exceptionally alarmed," he said. "There are no studies that show it, but there is a lot of anecdotal evidence."
Rep. Sue Kelly, R-N.Y., said she has seen the dark side of gambling first hand and will do everything she can to prevent others from experiencing her pain. But like Leach, Kelly gave only one example and no hard facts to back her argument up that problem gamblers are getting hooked because of the Internet and is a serious social dilemma.
"I lost a friend to gambling who started playing penny-ante bridge on the train on the way home from the stock market," she said. "He got deeper and deeper until he lost his family and became homeless."
Kyl said his whole goal for passing any legislation is to update the Wire Act and clear up any uncertainties that have been raised because of the Internet. He said he has opted for that approach rather than regulating the business.
"There will still be plenty of outlets for people to gamble," he said. "All we are saying is that we want to update the Wire Act to include all forms of Internet gambling, and it doesn't matter if it is done over satellite, microwaves. We know it is very difficult to regulate an online casino, so it is easier to ban this kind of activity."