The growing availability of emerging technologies has had a prolific effect on gambling. The Internet and other new technologies have made possible types of gambling that were not feasible a few years ago. For example, a U.S. citizen can now log on from his living room and participate in an interactive Internet poker game operated from a computer located in Antigua. Not only have the Internet and other new technologies brought gambling into the home, they have made it anonymous and readily available to virtually anyone at any time and at any place where there is an Internet hookup. As a result, the number of Internet gambling sites operating illegal betting and wagering businesses online has increased at an alarmingly rapid rate. The Department is deeply troubled by this proliferation of gambling on the Internet for three reasons.

First, since the Internet allows virtually instantaneous and anonymous communication that is difficult to trace to a particular individual or organization, the potential for operators of Internet gambling sites to successfully defraud their customers is significantly greater than with traditional casino-style gambling. Fraudulent activities can range from credit card fraud to the manipulation of gambling odds. Of course -- and as the Deputy Attorney General noted before the Subcommittee on Crime of the House Committee on the Judiciary on February 29, 2000 -- we recognize that there are legitimate reasons to allow anonymity in communications networks. A whistleblower or a member of a battered woman's support group, for example, may understandably wish to use the Internet and other new technologies to communicate with others without revealing his or her identity. Nonetheless, such admittedly legitimate uses for anonymity on the Internet involve legal activities and are inapplicable in connection with gambling on the Internet, which is illegal.

Second, because the Internet provides people with virtually unfettered access to the opportunity to gamble at any time and from any place, Internet gaming presents a greater danger for compulsive gamblers and can cause severe financial consequences for an unsuccessful player.

Last, because the Internet is both anonymous and widely available, it is much more difficult to prevent minors from gambling. Currently, Internet gambling businesses have no reliable way of confirming that gamblers are not minors who have gained access to a credit card and are gambling on their web sites.

Despite the proliferation of Internet gambling, the Department is optimistic about its ability to combat this form of illegal gambling. On February 28, 2000, a jury in federal district court in New York found Jay Cohen, the owner of an Internet gambling site in Antigua, guilty of violating 18 U.S.C. § 1084, a statute that makes it illegal for a betting or wagering business to use a wire communication facility to transmit bets or wagers in interstate or foreign commerce. Several of the counts for which Mr. Cohen was found guilty solely involved his Internet operations. That is not to say that section 1084, as written, will apply in every case. As I will explain later in my testimony, the Department believes that the statute may need to be amended to assist us in our efforts against gambling and organized crime.

Before I discuss that, however, let me say that the Department has reviewed H.R. 3125 in great detail and is very concerned about how it proposes to deal with Internet gambling. The Department is most concerned about the following three issues.

First, the Department is concerned that the bill does not really prohibit Internet gambling, but rather facilitates certain types of gambling from the home and, therefore, arguably expands gambling opportunities. Specifically, the Department recognizes that H.R. 3125 exempts parimutuel wagering from the prohibition against Internet gambling. The result is that people will be able to bet on horse racing, dog racing, and jai alai from their living rooms. While the bill provides that such gambling must be done on a "closed loop subscriber based service," the definition of that term is extremely broad. I could receive a free disk in the mail, load it on my computer, connect through my regular Internet service provider, and start betting on horse racing from my living room. Additionally, if my children have access to that same computer, they may also be able to get online and bet and wager on parimutuel activities.

Simply stated, the Department does not understand why the parimutuel wagering industry should be allowed to accept bets from people in their homes, when other forms of gambling have rightly been prohibited from doing so. The same concerns that we have expressed about children and compulsive gamblers having unfettered access to gambling via the Internet is true whether the betting is on horse races or on casino games.

Related to this point is the Department's second concern that the passing of H.R. 3125 will allow gambling online that currently is not allowed in the physical world. For example, currently a gambling business that accepts bets on horse races cannot accept interstate bets on the races over the telephone. Yet, H.R. 3125 would allow them to place the same such bets over the Internet. It is hard for the Department to understand why conduct previously deemed unacceptable in the physical world and over the telephone should now be legal when carried out in cyberspace.

Third, H.R. 3125 is not technology-neutral, but applies only to Internet gambling while leaving the existing prohibition on gambling over "wire communication facilities" in general unchanged. While the Department is generally concerned about legislation designed for particular technologies such as the Internet, it is specifically troubled here by the creation of two inconsistent gambling prohibitions - one expressly for the Internet and a different one for the use of wire communication facilities (which includes the Internet).

Indeed, any effort to distinguish Internet transmission from other methods of communication is likely to create artificial and unworkable distinctions. For example, we expect digital Internet telephony to grow in popularity over the next few years. How would we deal with gambling that occurred over this technology, which would use the Internet or other packet-switched networks for pure voice communications? Would it be under the proposed section 1085, which is designed specifically for the Internet, or under section 1084, which deals with wire communications in general (but also includes the Internet)? This is especially problematic, as section 1084 and the new section 1085 proposed by H.R. 3125 would have different standards and punishments.

The Department urges Congress to identify the conduct that it is trying to

prohibit and then to prohibit that conduct in technology-neutral terms. The fact that gambling has gone high-tech and can now be done through the Internet, is no reason to pass new laws that specifically target the Internet for regulation. Passing laws that are technology-specific can create overlapping and conflicting laws prohibiting the same activity, but with different legal standards and punishments. This will be the result if H.R. 3125 is enacted in its current form. We will have both section 1084, which we've used to prosecute Internet gambling, and a new section 1085 which would prohibit some, but not all, types of Internet gambling. This overlap in the statutes can only complicate law enforcement's efforts on the Internet gambling front.

The Department encourages Congress, especially as it encounters more traditional crimes online, to ensure that existing laws are sufficient and technology-neutral in their approach and do not single out the Internet for regulation. If existing laws are deemed insufficient, please consider legislation, whether prohibitive or permissive, which focuses on specific conduct and not on the specific medium employed to perpetrate that conduct.

Moreover, the Department believes that any Internet gambling legislation should not repeal or amend the rights or privileges secured tribes under IGRA. Of course, to the extent that Indian Tribes seek to offer gaming to citizens of various states, where such gaming does not take place solely on Indian lands and is not otherwise authorized by law, there is no compelling reason to exempt Indian Tribes from the otherwise generally applicable provisions of the legislation for such off-reservation gambling.

For all of the reasons I've discussed, the Department urges Congress to amend existing gambling laws, rather than create a new technology-specific statutory scheme.

As I noted earlier, section 1084 criminalizes those betting and wagering businesses that transmit bets or wagers on sporting events or contests over the Internet. The Department recognizes, however, that section 1084, which was enacted almost forty years ago, may need to be amended to bring it into the 21^st Century. The Department believes that this can be done through the following actions:

• Amending section 1084 so that it clearly applies to all betting or wagering and includes the transmission of bets or wagers over any communications facilities. Such an amendment would eliminate any doubt about whether section 1084 only applies to bets or wagers on sporting events and contests. It would also ensure that future technologies that are not wire-based communication facilities are covered by section 1084.
• Adding several definitions to 18 U.S.C. § 1081. For example, we would recommend adding the following definitions for "transmission," "bets or wagers," and "information assisting in the placing of bets or wagers."
• Amending section 1084 to specifically cover those individuals in the betting and wagering business who are located outside the territorial jurisdiction of the United States, when those individuals knowingly facilitate or aid in unlawful betting and wagering by transmitting a bet or wager to or from an individual located within the United States. While the current statute includes those transmissions involving interstate and foreign commerce, it is unclear whether the statute would cover someone on a boat in the middle of the Atlantic Ocean who is using a cellular phone to take bets or wagers from a U.S. citizen located in Miami.
• Requiring any person, not just a common carrier, that provides a facility to an individual in the business of betting and wagering to disconnect service when served with proper lawful process by law enforcement agencies. We would also extend the same protections against liability contained in the existing statute for common carriers to these persons.

(5) Clarifying that section 1084 does not repeal or amend the rights or privileges secured tribes under IGRA.

• Clarifying that section 1084 does not prohibit how states are currently legally using communication facilities in the operation of multi-state lotteries.

The Department of Justice believes that if section 1084 were to be amended in these ways, many of our concerns, as well as the concerns that led to the introduction of Internet gambling bills, would be addressed. We would be happy to work with Congress towards this goal. We have prepared a draft bill that incorporates our recommendations. A copy of our draft bill is attached for the Subcommittee's convenience.

I want to thank the Subcommittee again for asking me to present the Department's views on Internet gambling. I would now be pleased to answer any questions you may have.

Be it enacted by the House of Representatives and the Senate of the United States of America, in Congress assembled, that

SECTION 1. SHORT TITLE.

This Act may be cited as the "Internet Gambling Prohibition Act of 2000".

SEC. 2. PURPOSES AND FINDINGS.

(a) The Congress finds and declares that--

(1) the federal government has largely deferred to the states in matters relating to gambling, devoting its resources to gambling activities involving criminal matters (e.g., organized crime and fraud) or matters involving interstate or foreign commerce;

(2) historically, states have taken actions to prohibit or heavily regulate gambling activities due to perceived social impacts, concern about criminal activities, and moral positions;

(3) earlier this century, states discovered that illegal bookmaking operations were using telephones and other communications facilities to rapidly transmit gambling information between states and to and from foreign locations. These bookmaking operations were often run by organized crime groups;

(4) the use of technology enabling gambling businesses to transmit bets or wagers in interstate and foreign commerce raised serious concerns and left states unable to effectively enforce their gambling laws and to protect their citizens;

(5) in recognition of the growing use of technology by bookmaking operations in furtherance of their criminal activities, then-Attorney General Robert F. Kennedy transmitted in 1961 to Congress a proposed bill to assist states in the enforcement of their laws pertaining to gambling and to aid in the suppression of organized gambling activities;

(6) the 1961 bill was passed and codified at 18 U.S.C. § 1084. Section 1084 made it criminal for an individual engaged in the business of betting or wagering to use a wire communication facility to transmit in interstate or foreign commerce bets or wagers, or information assisting in the placing of bets or wagers, on any sporting event or contest;

(7) the prohibition on the transmission of bets or wagers in interstate and foreign commerce was necessary to protect the health, safety, and economic welfare of the Nation's citizens, as well as to uphold the gambling laws enacted by individual states;

(8) the Internet and other new technologies have hindered the ability of federal, state, tribal, and local governments to enforce their gambling laws and have created important new concerns with respect to the health, safety, and welfare of U.S. citizens;

(9) although section 1084 clearly prohibits Internet gambling related to any sporting event or contest, emerging technologies have allowed for new types of electronic gambling, including interactive games on the Internet such as poker and blackjack, which may not clearly be included within the types of gambling currently prohibited by section 1084. As a result, it has become necessary to amend section 1084 to eliminate any ambiguities in the law and to ensure that new types of gambling activities made possible by emerging technologies are prohibited;

(10) the Internet also allows virtually instantaneous and anonymous communication that is difficult to trace to a particular individual or organization, making the medium attractive to organized crime groups operating gambling businesses since it is difficult for law enforcement to detect and prevent crimes being committed by unknown and untraceable persons;

(11) this lack of accountability also raises the potential for numerous criminal activities. First, there is the possibility of abuse by gambling operators. The ability for operators to alter, move, or entirely remove sites from the Internet within minutes makes it possible for dishonest operators to take credit cards numbers and money from deposited accounts and close down. Second, operators may tamper with gambling software to manipulate games to their benefit. Unlike the highly-regulated resort-destination and Indian casinos in the physical world, assessing the integrity of Internet operations is quite difficult. Last, gambling on the Internet may provide an easy means for money laundering, as it provides criminal anonymity, remote access, and access to encrypted data;

(12) the anonymous nature of the Internet also creates the danger that access to Internet gambling will be abused by underage gamblers. Gambling businesses have no reliable way of confirming that gamblers are not minors who have gained access to a credit card and are gambling on their websites. The government has received numerous correspondence from concerned and affected citizens regarding this problem;

(13) in addition, since the Internet provides people with the opportunity to gamble at any time and from any place, Internet gambling presents a greater danger for compulsive gamblers and may cause severe financial consequences for the player and those dependent on the player's resources (e.g., dependent children);

(14) thus, these concerns have made it necessary to amend the provisions of 18 U.S.C. § 1084 to ensure that non-sports gambling over new and emerging technologies, including the Internet, is clearly prohibited by the section; and

(15) this amendment is in accordance with the United States government's policy of enacting legislation that is technology-neutral, especially as such legislation relates to the Internet and emerging technologies.

(b) It is the purpose of this bill to amend 18 U.S.C. § 1084 to confirm that it is criminal for an individual in the business of betting or wagering to use a communication facility to transmit in interstate or foreign commerce, within the special maritime and territorial jurisdiction of the United States, or to or from any place outside the jurisdiction of any nation with respect to any transmission to or from the United States, bets or wagers, or information assisting in the placing of bets or wagers.

SEC. 3. DEFINITIONS.

Section 1081 of title 18, United States Code, is amended --

(1) by designating the five undesignated paragraphs as subsections (a) - (e) respectively;

(2) in subsection (e), as so designated --

(A) by striking "wire communication" and inserting "communication";

(B) by inserting "satellite, microwave," after "cable,"; and

(C) by inserting "(whether fixed or mobile)" after "connection"; and

(3) by adding at the end the following:

"(f) The term 'information assisting in the placing of bets or wagers' means information knowingly transmitted by an individual in the business of betting or wagering for use in placing, receiving, making, or otherwise enabling or facilitating a bet or wager that violates applicable federal, state, tribal, or local law and does not include --

"(1) the transmission of information for use in news reporting of wagering activities, as long as such transmission does not solicit or provide information for the purpose of facilitating or enabling the placing or receipt of bets or wagers in a jurisdiction where such betting is illegal;

"(2) any posting or reporting of any educational information on how to make a legal bet or wager or the nature of betting or wagering, as long as such transmission does not solicit or provide information for the purpose of facilitating or enabling the placing or receipt of bets or wagers in a jurisdiction where such betting is illegal; or

"(3) advertising relating to betting or wagering in a jurisdiction where such betting or wagering is legal, as long as such advertising does not solicit or provide information for the purpose of facilitating or enabling the placing or receipt of bets or wagers in a jurisdiction where such betting is illegal.

"(g) The term 'transmission' or 'transmit' means to place, send, receive, transfer, post, disseminate, or otherwise convey from one person or place to another.

"(h) The term 'fantasy sports league or rotisserie league' means an activity that:

"(1) consists of persons who pay an entrance or administrative fee to participate in a league that allows each participant to create a fictitious team composed of athletes from a professional sport;

"(2) allows for the selection or subsequent replacement of players without charging any fees in excess of the initial entrance or administrative fee;

"(3) allows a participant to accrue points for the performance of that participant's team that can be compared to the points accrued by other participants and may award de minimis prizes daily, weekly, or monthly during the regular season or after each round of post season play based on total points accrued, or other prizes at the conclusion of the regular season and/or post season based on the cumulative points accrued during the regular season and/or post season;

"(4) designates the specific prizes (including amounts, if monetary prizes) to be won by participants in the league at the start of the regular season before the registration of, or acceptance of fees from, the participants and does not base the value of prizes on the number of participants or the total amount of entrance or administrative fees collected; and

"(5) provides to each participants the rules governing the conduct of the fantasy sports league."

"(i) The term 'bets or wagers' means the staking or risking by any person of something of value upon --

"(1) any contest or game based whole or in part on chance, including a lottery;

"(2) one or more sporting events or contests, or one or more performances of the participants in such events or contests, including any scheme of a type described in section 3702 of title 28, United States Code; or

"(3) a future contingent event not under the person's control or influence

with an agreement or understanding that the person or another person will or may receive something of value as a result of such stake or risk. However, the term does not include a bona fide business transaction in securities or commodities of the nature governed by the federal securities and trading laws of the United States, a contract of indemnity or guarantee, a contract for insurance, or an entrance or administrative fee collected by a fantasy sports or rotisserie league where the operation of or participation in such league does not violate applicable federal, state, tribal, or local laws and such league does not collect fees from or allow participation by individuals under the age of 18.".

SEC. 4. TRANSMISSION OF WAGERING INFORMATION.

Section 1084 of title 18, United States Code, is amended to read as follows --

"§ 1084. Use of a communication facility to transmit bets or wagers; penalties.

"(a) Whoever being engaged in the business of betting or wagering knowingly uses a communication facility --

"(1) for the transmission in interstate or foreign commerce, within the special maritime and territorial jurisdiction of the United States, or to or from any place outside the jurisdiction of any nation with respect to any transmission to or from the United States, of bets or wagers, or information assisting in the placing of bets or wagers, or

"(2) for the transmission of a communication in interstate or foreign commerce, within the special maritime and territorial jurisdiction of the United States, or to or from any place outside the jurisdiction of any nation with respect to any transmission to or from the United States, which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers,

shall be fined under this title or imprisoned not more than two years, or both.

"(b) Nothing contained in this section shall create immunity from criminal prosecution under any laws of any State or Tribe.

"(c) When any person or entity is notified in writing by a Federal, State, tribal or local law enforcement agency, acting within its jurisdiction, that any communication facility furnished by it is being used or will be used by its subscriber for the purpose of transmitting bets or wagers, or information assisting in the placing of bets or wagers, in interstate or foreign commerce, within the special maritime and territorial jurisdiction of the United States, or to or from any place outside the jurisdiction of any nation with respect to any transmission to or from the United States in violation of federal, state, tribal or local law, it shall discontinue or refuse, the leasing, furnishing, or maintaining of such facility, after reasonable notice to the subscriber, but no damages, penalty or forfeiture, civil or criminal, shall be found against any person or entity for any act done in compliance with any notice received from a law enforcement agency. Nothing in this section shall be deemed to prejudice the right of any person affected thereby to secure an appropriate determination, as otherwise provided by law, in a Federal court or in a State, tribal, or local tribunal or agency, that such facility should not be discontinued or removed, or should be restored.

"(d) Nothing in this section shall repeal or amend the rights or privileges secured tribes under the Indian Gaming Regulatory Act of 1988, 25 U.S.C. § 2701, et seq, or under Indian treaties.

"(e) As used in this section, the term 'State' means a State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or a commonwealth, territory or possession of the United States. The term 'tribe' or 'tribal' refers to an Indian tribe, as defined under section 4(5) of the Indian Gaming Regulatory Act of 1988, 25 U.S.C.

§ 2703(5).

"(f) This section shall not prohibit the use of a communication facility in the operation of a state-operated lottery (including a multi-state lottery jointly operated by several states), so long as such lottery --

"(1) only transmits bets or wagers to or from states that have explicitly authorized the operation of such a lottery within their borders;

"(2) if authorized by a state to operate within its borders, complies with all other laws of that state;

"(3) only receives bets or wagers from state-authorized locations that are open to the public generally, and does not enable betting or wagering to be transmitted to or from private residences or unauthorized locations; and

"(4) is otherwise in compliance with federal law.".

DESCRIPTION OF THE LEGISLATION

Section 1084 of Title 18 makes unlawful the use of a wire communication facility to transmit in interstate or foreign commerce bets or wagers, or information assisting in the placing of bets or wagers, on any sporting event or contest. Section 1084 assists the various States, the District of Columbia, commonwealths, territories, and possessions of the United States with the enforcement of their laws pertaining to gambling, bookmaking, and like offenses, and aids in the suppression of gambling activities by organized crime groups.

In recent years, however, technology has allowed for new types of electronic gambling, including interactive games on the Internet such as poker and blackjack, which may not clearly be included within the types of gambling currently made illegal by section 1084. As a result, it was necessary to amend section 1084 to eliminate any ambiguities in the law and to ensure that new types of gambling activities made possible by emerging technologies are prohibited.

The growing availability of emerging technologies has had a prolific effect on gambling businesses. The Internet and other new technologies have made possible types of gambling that were not feasible a few years ago (i.e. interactive Internet poker operated from a computer located in a foreign country). Not only have these technologies created new mechanisms by which to gamble, they have made gambling anonymous and readily available to virtually anyone at any time and at any place where there is an Internet hookup. As a result, the number of Internet gambling sites has increased at an alarmingly rapid rate. At a March 23, 1999, Congressional hearing, Ohio Attorney General Betty Montgomery estimated that nearly 300 gambling web sites currently were operating on the Internet. Internet Gambling, Hearings before the Subcommittee on Technology, Terrorism, and Government Information of the Senate Comm. on the Judiciary, 106^th Cong., 1^st Sess.(March 23, 1999) (statement of Ohio Attorney General Betty Montgomery). A recent study by the research group Christiansen/Cumming Associates estimated that between 1997 and 1998, Internet gambling more than doubled, from 6.9 million to 14.5 million gamblers, with revenues doubling from $300 million to $651 million. This growth has created several problems for federal, state, tribal, and local governments in the enforcement of their gambling laws.

First, since the Internet allows virtually instantaneous and anonymous communication that is difficult to trace to a particular individual or organization, the potential for operators of Internet gambling sites to successfully defraud their customers is significantly greater than with traditional casino-style gambling. Fraudulent activities could range from the manipulation of gambling odds to credit card theft. In addition, the anonymity allowed by the Internet also makes the medium attractive to organized crime since it is difficult for law enforcement to detect and prevent crimes being committed by unknown and untraceable persons.

Second, because the Internet provides people with the opportunity to gamble at any time and from any place, Internet gaming presents a greater danger for compulsive gamblers and may cause severe financial consequences for the player and those dependent on the player's resources (e.g., dependent children).

Last, because the Internet is both anonymous and widely available, it is much more difficult to prevent minors from gambling. Currently, gambling businesses have no reliable way of confirming that gamblers are not minors who have gained access to a credit card and are gambling on their websites.

These problems are exacerbated by the international scope of the Internet. While the United States has determined that there is a strong law enforcement priority to prohibit Internet gambling, other countries, including Australia, have chosen to allow unrestricted Internet gambling or, in the alternative, to regulate betting and wagering on the Internet. The amendments to section 1084 do not interfere with the operation of these legal gambling operations, so long as such operations do not transmit bets or wagers to or from the United States. In fact, the amendments do not alter the existing prohibition on the transmission of bets or wagers, or information assisting in the placing of bets or wagers, in "interstate or foreign commerce" by those in the betting and wagering business. Currently, law enforcement agencies prosecute individuals engaged in the business of betting or wagering in foreign countries who knowingly transmit illegal sports bets and wagers to or from U.S. residents. These agencies will continue to prosecute such cases, as well as prosecute matters involving the transmission of non-sports betting and wagering, under the amended section 1084. As for the enforcement of section 1084 against those betting and wagering businesses operating in foreign commerce, the United States shall attempt to procure the cooperation of foreign governments in enforcing the prohibition of Internet gambling within the United States, when foreign gambling operations transmit bets or wagers, or information assisting in the placing of bets or wagers, to the United States.

As noted above, section 1084 currently includes the transmission of bets or wagers, or information assisting in the placement of bets or wagers, in "interstate or foreign commerce." In recent years, however, virtual betting parlors accepting bets from individuals in the United States have attempted to avoid the application of United States law by locating themselves outside of the United States and beyond the reach of "interstate and foreign commerce." See e.g. United States v. Montford, 27 F.3d 137 (5th Cir. 1994) (overturning a conviction under section 1084 based on communications between the United States and a boat on a "cruise to nowhere" because the communication did not involve foreign commerce as the boat had no contact with foreign country or waters within jurisdiction of foreign country). Amending section 1084 to prohibit the transmission of bets or wagers "within the special maritime and territorial jurisdiction of the United States, or to or from any place outside the jurisdiction of any nation with respect to any transmission to or from the United States," assures that these businesses cannot avoid the prohibition of Internet gambling within the United States.

A comprehensive prohibition of illegal Internet gambling can be efficiently accomplished through federal legislative efforts. Indeed, the interstate nature of Internet gambling has resulted in states encouraging the federal government to take the lead in tackling Internet gambling. Protection of the integrity of states' policies regarding gambling requires a federal prosecutorial option when communication facilities are used to facilitate illegal gambling. The National Association of Attorneys General (NAAG) has in recent months confirmed to both Congress and the National Gambling Impact Study Commission that it supports revising federal law to clarify that Internet gambling is prohibited. See e.g, Internet Gambling, Hearings before the Subcommittee on Technology, Terrorism, and Government Information of the Senate Comm. on the Judiciary, 106^th Cong., 1^st Sess.(March 23, 1999)(statement of Wisconsin Attorney General James E. Doyle). Consequently, the federal government is in the best position to balance the various interests of the states with the broader policy interest in prohibiting Internet gambling and its associated societal ills.

The amendments to Chapter 50 of Title 18 accomplish the following:

(1) clarify that section 1084 applies to all betting or wagering (not merely betting or wagering on sports events) and includes the transmission of bets and wagers over any communication facilities;

(2) require any person, not just a common carrier, that provides a facility to an individual in the business of betting and wagering to cooperate with law enforcement agencies;

(3) apply section 1084 to those engaged in the business of betting or wagering who are located outside the territorial jurisdiction of the United States, when those individuals knowingly facilitate or aid in unlawful betting and wagering by transmitting a bet or wager, or information assisting in the placing of a bet or wager, to or from an individual located within the United States;

(4) amend the definition of various terms contained in section 1081;

(5) clarify that section 1084 does not prohibit the lawful use of communication facilities in the operation of state lotteries; and

(5) clarify that section 1084 does not amend or repeal the Indian Gaming Regulatory Act.

Several definitions were either added to or amended in section 1081 that directly affect section 1084. These changes were necessary to eliminate any doubt as to which individuals, and to what activities, the statute applies. A definition for "information assisting in the placing of bets or wagers" was added to ensure that those engaged in the business of betting or wagering who do not directly accept bets or wagers but nonetheless facilitate or enable betting or wagering, are liable for their actions. See e.g., United States v. Miller, 22 F.3d 1075 (8^th Cir. 1994)(conviction for aiding and abetting under section 1084 upheld for Georgia defendant who obtained daily point spreads from another Georgia bookmaker who, in turn, obtained the information via telephone from Las Vegas); United States v. McLeod, 493 F.2d 1186 (7^th Cir. 1974)(defendant prosecuted under section 1084 for copying Las Vegas line information for football games and relaying such information to co-defendant via telephone to Indianapolis for use on parlay cards). It also situations where individuals in the business of betting and wagering set up "shell" phone numbers or Internet sites which enable individuals to bet or wager. See United States v. Kelly, 395 F.2d 727 (2d Cir. 1968)(defendant engaged in giving "information assisting in the placing of bets or wagers when he furnished prospective bettors with telephone number and code name that informed him, when number was called, that caller was ready to place a bet).

Recognizing that limitations on the transmission of information could potentially raise First Amendment concerns if a definition of "information assisting in the placing of bets or wagers" infringed on protected speech, the definition contains several exceptions. The first is a news reporting exception that weighs the interest of legitimate news reporting against an interest in protecting the public from the distribution of gambling-enabling information by those in the business of betting or wagering. Under the exception, the transmission of "news reporting information" is only not protected is if it is transmitted by an individual in the business of betting or wagering in order to enable or facilitate illegal wagering. See Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 496 (1982)(the First Amendment does not protect an offer to engage in an unlawful transaction or activity).

The new definition of "information assisting in the placing of bets or wagers" also reflects the Supreme Court's recent opinion in Greater New Orleans Broadcasting Association, Inc., et al. v. United States et al., No 98-397 (June 14, 1999), which discusses the legality of prohibiting broadcasters from carrying advertising about legal privately operated commercial casino gambling operations. In Greater New Orleans, the Court determined that the prohibition of advertisements of lawful private casino gambling by broadcast stations located where gambling is legal is unconstitutional. For the most part, amended section 1084 does not include within the definition of "information assisting in the placing of bets or wagers" advertising for legal gambling operations. The only advertising included within the definition and, consequently, prohibited by section 1084 is that advertising that enables or facilitates the placing or receiving of bets or wagers in a state where such bets or wagers are illegal. This approach protects non-gambling states' interests in upholding their gambling policies within their borders.

To further clarify the scope of the statute, definitions of "transmission," "fantasy sports league or rotisserie league," and "bets or wagers" were added to section 1081. The definition of "transmission" makes clear that placing, sending, receiving, transferring, posting, disseminating, or otherwise conveying bets or wagers, or information assisting in the placing of bets or wagers, is included within the statute. This definition supports the interpretation of many courts that section 1084's "transmission" language applies to those individuals in the business of betting or wagering who "receive" bets or wagers, or information assisting in the placing of bets or wagers, from others. See e.g., United States v. Pezzino, 535 F.2d 483, 484 (9th Cir.) (per curiam), cert. denied, 429 U.S. 839 (1976) (finding that section 1084 forbids "the use of interstate facilities for sending or receiving wagering information"). In addition, the definition of "transmission" is intended to include the dissemination or posting of information on the Internet and other emerging technologies. The definition of "bets or wagers" makes clear what constitutes a bet or wager for purposes of section 1084. Since the term "fantasy sports league or rotisserie league" appears in the new definition of "bets or wagers" it was necessary to add a definition for the term to eliminate any confusion on what constitutes a fantasy sports league for purposes of section 1084.

The last revision to section 1081 is that the definition of "wire communication facility" was changed to "communication facility." This change removes any doubt about whether microwave, satellite, or other communication facilities that do not transmit through landline cables or wires are included in section 1084.

Since section 1084 involves more than the "transmission of wagering information," the title of the section was changed to "Use of a communication facility to transmit bets or wagers; penalties." This title more accurately reflects the scope of section 1084.

Paragraph 1084(a) was amended to make clear several points. The scope of section 1084 was expanded to include all bets or wagers over a communications facility, not merely bets or wagers on sporting events or contests. In addition, paragraph 1084(a) was divided into two subsections. The first subsection confirms that an individual in the business of betting and wagering is prohibited from transmitting bets or wagers, or information assisting in the placing of bets or wagers "in interstate or foreign commerce, within the special maritime and territorial jurisdiction of the United States, or to or from any place outside the jurisdiction of any nation with respect to any transmission to or from the United States." The subsection also gives the United States broader jurisdictional authority to enforce section 1084, thus addressing the problems found in United States v. Montford discussed above. The jurisdictional language found in subsection (a) was added to the second subsection, which pertains to the use of a communication facility to receive money or credit as a result of bets or wagers or information assisting in the placing of bets or wagers. This subsection is designed to prohibit the transmission of telegraphic money orders, credit card charges, and the like to and from those engaged in the business of betting or wagering.

Since section 1081 now contains a definition of "information assisting in the placing of bets or wagers," the exceptions to "information assisting in the placing of bets or wagers" found in paragraph 1084(b) became unnecessary, as the exceptions were incorporated into the definition. Consequently, 1084(b) was stricken and 1084(c) became 1084(b) and 1084(d) became 1084(c).

Paragraph 1084(b) was amended to make it applicable to any person, not only a common carrier subject to the jurisdiction of the Federal Communications Commission. Since new technologies may be provided by facilities owned or operated by non-common carriers, this amendment was necessary to provide law enforcement agencies with the tools necessary to enforce section 1084. Paragraphs 1084(b) and (c) now also contain references to "Tribe" or "tribal." This change recognizes the sovereignty of Indian tribes and enables tribes to enforce their customary or tribal laws within their respective jurisdictions. Also, the phrase "or receiving gambling information in interstate or foreign commerce" after the word "transmitting" in 1084(c) was eliminated. Since section 1081 now includes a definition of "transmission,"which explicitly includes the "receipt" of bets or wagers, or information assisting in the placing of bets or wagers, this clause became redundant and unnecessary.

A new paragraph 1084(d) was added to the section. This paragraph provides that section 1084 does not repeal or amend the Indian Gaming Regulatory Act (IGRA). This paragraph is intended to address concerns that amending section 1084 would make illegal those gambling activities occurring entirely on Indian lands that are currently legal under IGRA. In addition, a definition of "Tribe or tribal" was added to paragraph 1084(e), following the description of a "State." This definition reflects the definition of "Tribe" contained in IGRA.

A new paragraph 1084(f) was added to the section to protect legal state-operated lotteries. This paragraph insures that existing multi-state lotteries that allow individuals in multiple states to purchase chances in the same lottery are not made illegal by the amendments to section 1084, especially since these lotteries may use communication facilities to transmit bets or wagers, or information assisting in the placing of bets or wagers. The statute, however, only protects state-operated lotteries and does not allow for the transmission of bets or wagers to or from states where such lotteries are illegal, or for the transmission of bets or wagers to or from unauthorized locations or private residences.