Mr. Chairman, and members of the committee, I am Rev. Lou Sheldon, Chairman of the Traditional Values Coalition. I appreciate the opportunity to testify before you today on behalf of Traditional Values Coalition's 43,000 member churches.

This bill, the Internet Gambling Prohibition Act, has become the Internet Gambling Expansion Act. That which is illegal according to the wire act, is now made legal in the current version of H.R. 3125.

Like gun violations, the Justice Department has chosen not to prosecute Internet gambling until recently. However, they recently indicted 21 people for illegal Internet sports gambling. ItÕs a good (albeit late) start. More should follow.

Internet gambling is already illegal under federal law, as we have said. The Congressional Research Service has noted that Internet gambling operators are criminally liable under at least five existing federal laws:

1. The Wire Act, 18 USC sec. 1084 (use of wires for sports gambling is a federal crime)

2. The Travel Act, 18 USC sec. 1952 (use of any facility of Interstate commerce to break state gambling laws is a federal crime)

3. The Crime Control Act, 18 USC sec. 1955 (it is illegal under federal law to own any share of a gambling business that operates illegally under state law)

4. Racketeering Influenced and Corrupt Organizations (RICO) Act, 18 USC sec. 1964 (it is illegal to conduct a criminal enterprise that involves a collection of an unlawful debt OR a pattern of activity in which state gambling laws are broken)

5. Amateur and Professional Sports Protection Act, 28 USC sec. 3702 (making it illegal to promote or accept wagers on sporting events)

This bill, H.R. 3125, has been hijacked and pushed by horse racing, dog racing, jai alai, and sports betting companies. It would allow for in-home gambling via the Internet when it would otherwise be illegal.

According to the testimony of Deputy Assistant Attorney General Kevin DiGregory, March 9, 2000, before the House Crime Subcommittee, ÒH.R. 3125 exemptsÊparimutuel wagering from the prohibition against Internet gambling.Ê The result is that people will be able to bet on horse racing, dog racing, and jai alai from their living rooms.Ó

This bill does not merely preserve current law É it expands in-home gambling opportunities.

1. There is nothing in current law to allow for in-home gambling on jai alai or dog racing. Nevertheless, under H.R. 3125, in-home gambling on dog races and jai alai matches would be legal.

2. In a letter to Sen. Patrick Leahy on June 9, 1999, Acting Asst. Attorney General Jon Jennings stated, ÒThe Interstate Horse Racing Act does not [currently] allow for [interstate horse] gambling, and if a parimutuel wagering business currently transmits or receives interstate bets or wagers (as opposed to intrastate bets and wagers on the outcome of a race occurring in another state), it is violating federal gambling laws.Ó

3. H.R. 3125 also contains a broad carve-out for so-called Òfantasy sports.Ó While some of these fantasy sports leagues are legitimate recreation, we are concerned that gambling interests will structure their wagers so that they fall under the fantasy sports exemption.

For instance, the language in the legislation exempts Òany otherwise lawful bet or wager that is placed, received, or otherwise made for a fantasy sports league game or contest, and defines such a contest as one that Òis not dependent solely on the outcome of any single sporting event or non-participant's singular individual performance in any single sporting event; has an outcome that reflects the relative knowledge and skill of the participants; and offers a prize or award to a participant that is established in advance of the game or contest and is not determined by the number of participants or the amount of any fees paid by those participants.Ó

There is no harm in individuals competing against each other, trying to pick which athletes are going to perform best in their real-life leagues. However, the existing fantasy sports carve-out in the hands of gambling interests could be a dangerous loophole.

4. H.R. 3125 would require a Òclosed loop, subscriber based systemÓ for pari-mutuel gambling. We have already seen the success of such a system Ð America Online. AOL WOULD MEET EVERY TEST FOR THE ÒCLOSED LOOP, SUBSCRIBER BASED SYSTEMÓ under H.R. 3125.

The companies that would benefit from these exemptions have already broken the law. They should not be rewarded with legislation that gives them new opportunities for in-home gambling.

3. Youbet.com Ð the company that already conducts in-home gambling on horse races using the Internet Ð was prosecuted by the California Attorney General Bill Lockyer last year. Passing H.R. 3125 would lift a consent decree that currently bars Youbet.com from taking California wagers.

4. Youbet.com and others like it are waiting in the wings to aim their marketing toward compulsive gamblers.

a. YoubetÕs Internet page attracts gamblers by loudly claiming: ÒMake the bet, Feel the rush, All on Line.Ó

b. H.R. 3125 contradicts the National Gambling Impact Study Commission's statement that horse racing has the highest incidence of compulsive gambling. This bill allows for these compulsive gamblers to place bets from the convenience of their own home.

c. In that same report, the National Gambling Impact Study Commission called on Congress to pass a ÒcleanÓ Internet gambling ban Ð one that does so Òwithout allowing for new exceptions, or expanding current exemptions in federal law.Ó NGISC Recommendation 5-1. Again this bill ignores the commission's recommendation.

This bill is a Trojan horse for the horse racing, dog racing, jai alai, and sports betting companies. If federal prosecutors already have laws on the books to prosecute Internet casinos, why pass a bill that does nothing but allow new companies to push another form of gambling into our homes?

If we need to pass legislation to wake up America, we should pass a sense of the Congress bill that calls on Janet Reno to prosecute Internet gambling businesses with the tools she already has in her arsenal.

I have been told that the Justice Department is planning to recommend a veto of this bill because it expands gambling. Does Congress want to pass a bill that the American people will see as an expansion of gambling?

In conclusion, please remove all exemptions to H.R. 3125 so that the bill will be able to accomplish its original intent. With the demonstrated problems gambling inflicts upon communities and families, these exemptions will only exacerbate the problems. Until they are removed Traditional Values Coalition will oppose the bill. Thank you for your consideration of Traditional Values Coalition's concerns.