DRAFT
5/18/00

Although we are opposed to illegal gambling, whether done over the Internet or otherwise, we cannot support the legislation reported by the Judiciary Committee. H.R. 3125 not only expands gambling over the Internet, it arbitrarily favors certain forms of gambling over others. In addition, the bill inappropriately requires Internet Service Providers and others to police websites, threatens the privacy and civil liberty of all Americans, and creates a patchwork of inconsistent laws. By approving this legislation, the Majority reveals its insensitivity to the growth of the Internet and the interests of our citizens in the information age.

Concerns or outright opposition with regard to the legislation (or similar predecessor versions of it) have been expressed by the Justice Department and a wide variety of groups. These include Internet and telecommunications concerns such as Computer & Communications Industry Association (CCIA), Covad Communications, and AT&T; civil liberties groups such as the Center for Democracy and Technology (CDT); and groups harmed by the bill=s arbitrary preference for certain forms of gambling (A) horse racing, dog racing, and jai alai ¹ (B) and its equally arbitrary dismissal of other forms of gambling, including state lotteries, ² charitable gaming, ³ and gambling on Indian reservations. ⁴ These include Lottery.com, the Association of Lottery Retailers, and the Lac Vieux Band of Lake Superior Chippewa Indians.

H.R. 3125 would make it unlawful for a person engaged in a gambling business knowingly to use the Internet to place, receive or otherwise make a bet or wager or to send, receive or invite information assisting in the placing of a bet or wager. At the same time the bill vitiates the existing federal wire statute prohibition on certain bets from the home by making it legal to place a bet or wager at home over the Internet on a horse race, dog race or jai alai match; the bill also discriminates against regulated gambling by church and non-profit organizations, in-state lottery sales, and Native American tribes by severely restricting their legality over the Internet. The bill excludes fantasy sports leagues from its coverage by defining a (A) bet or wager? to exclude such activities.

The bill=s enforcement scheme is premised on several broad (A) notice and take down, ?blocking, and injunctive requirements, which principally rely on so-called (A) interactive computer service? (ICS) providers to act as surrogates for law enforcement (presumably, this would include Internet service providers, such as AOL or the Microsoft Network (MSN), but potentially a far broader range of companies such as search engines and portals). With regard to (A) notice-and-take down? the bill specifies that after notice from a law enforcement agency, an ICS is required to (A) take down? any web site, customer account, or other offending material which is seen as facilitating illegal Internet gambling or advertising thereof. This requirement would attach merely upon the request of a local or federal law enforcement order (e.g., no court order is required) and is written so broadly that even individual consumers engaging in a form of gambling which is not illegal for them can lose their accounts without any advance notice.

In terms of blocking, H.R. 3125 would require any ICS to mandatorily block an individual=s access to specified foreign websites. Again, this provision is not premised on the individual whose access is being blocked having violated any federal or state gambling law. (In nominal exchange for these new burdens, the bill immunizes qualifying ICS=s from liability under Federal or State gambling law for the use of its facilities to violate the Act.)

Subsection (d)(3)(B)(I) of H.R. 3125 would authorize law enforcement officials to go to court to obtain a restraining order prohibiting an ICS from providing access to an identified (A) subscriber,? which could apply to individual subscribers. This is because, first, H.R. 3125 would define (A) subscriber? in section 1085(a)(12)(A) to mean (emphasis supplied): any person with a business relationship with the interactive computer service provider through which such person receives access to the system, service, or network of that provider, even if no formal subscription agreement exists. Second, not only would the bill allow a restraining order to be issued against a subscriber who accesses the ICS to violate the bill=s prohibition, the bill also would authorize a restraining order against a subscriber who Aengage[s] with another person in a communication that violates? the bill=s prohibition. The bill would therefore give law enforcement officials two ways in which they could obtain a restraining order against individual consumers.

Subsection (d)(1) of H.R. 3125. The immunity would apply under the following conditions: (1) the violating material or activity was not initiated by or at the direction of the interactive computer service providers; (2) the material or activity was automatically processed without selection by the interactive computer service providers; and (3) the interactive computer service providers played no role in modifying the content of the site. The bill would further immunize qualifying interactive computer service providers from liability under Federal or State gambling law if another person advertised legal or illegal gambling activity.

Interactive computer service providers would only qualify for these immunities, however, if they: (1) maintain a written or electronic policy that requires them to terminate a subscriber=s account expeditiously following the receipt of a notice; (2) prevent their server from being used to engage in activity which violates the Act, with the specific intent that the server be used for that purpose; (3) do not knowingly permit their server to be used to advertise non-Internet gambling activity that violates the law; and (4) offer blocking software that would assist in blocking minors= access to Internet gambling sites.

Finally, the legislation includes a very broad court-ordered injunction provision. This relief can be obtained upon a mere showing of (A) probable cause.? The authorization for an injunction is not limited to an ICS and can be brought against any person to prevent or restrain a violation of the law.

Amazingly, a bill that purportedly originated as an anti-gambling initiative would significantly expand the availability of gambling over the Internet. Rather then calling the bill the (A) Internet Gambling Prohibition Act of 2000,? the bill is styled more appropriately as the (A) Internet Gambling Permission Act of 2000.? This result, though denied or ignored by the legislation=s proponents, is indisputable. In testimony before the Subcommittee on Crime, the Department of Justice described how the bill prohibits Internet gambling in name only:

[T]he 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 pari-mutual 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 (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 pari-mutual activities.

Simply stated, the Department does not understand why the pari-mutuel 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 [are] 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, people cannot currently legally call gambling businesses in other states from their homes and place bets on horse races. 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.

Federal law enforcement is not alone in expressing its concerns regarding a bill that expands Internet gambling. Socially conservative advocacy groups, which support the stated goal of the bill, pleaded with the bill=s sponsors to eliminate the special interest carve-outs (B) to no avail. The Christian Coalition declared that (A) it cannot support any legislation that purports to restrict gambling on the Internet and at the same time expands gambling opportunities on the Internet.? The Family Research Council found (A) the >exemptions= in the bill unnecessary.? And the Madison Project noted that (A) this bill contains loop-holes that actually expand [Internet gambling] .... Why would Congress want to pass a law that encourages the expansion of a problem that already affects 15.4 million Americans .... Please do not allow this bill to be used as a vehicle for expanding the scope of gambling in America.

Recognizing that the prohibition on Internet gambling in H.R. 3125 has become a proxy for the expansion of Internet gambling, the Legal Times of Washington described the bill=s posture: MR. WEINER: Now, if there were other types of gambling that were available, for example, we particularly take note in this legislation of horse racing and dog racing, and I guess jai alai is also included, if there were other types of gambling available, would you simply move? Do you have a desire to gamble or is it just a desire to play blackjack?

MR. DOE: It is mainly a desire to gamble. My game of choice -- well, it is my desire and win money, so it is my passion for gambling that was driven uncontrollably with the ease of the Internet.

MR. WEINER: So if you had a sure shot on a 25 to 1 horse that you thought for sure was going to win, you would have a desire to gamble on that horse race, just like you would have a desire to double down on 11?

MR. DOE: I would consider that.

This National Council on Problem Gambling recognized that H.R. 3125 offered no safeguards to prevent gambling addicts from betting away their family savings:

[T]he bill=s prohibition on other forms of gambling would give operators no incentives to put programs in place to screen out problem gamblers and keep children from their websites . . . . [T]here is little incentive for rogue operators to screen out problem gamblers, and without regulation there is no practical way to enforce provisions to protect those who are most vulnerable.

from gambling in (A) bricks and mortar= casinos, to become gambling addicts using the Internet. Although the supporters of H.R. 3125 assert that by requiring permitted Internet gambling to be carried out on a closed-loop subscriber-based system, website operators can effectively screen out minors„ a closed-loop system does not, by itself, adequately ensure that minors will be unable to access gambling sites. In fact, the nation=s largest Internet Service Provider, AOL, available in tens of millions American homes, would fit the definition of a closed-loop, subscriber-based system.

Just as disturbing, from a policy perspective, is the fact that the bill arbitrarily discriminates against certain forms of gambling as it elevates the legality of some types of gambling over others. The victims of this discrimination are state lotteries, charitable contests, and gambling on Indian reservations. Ironically, the very entities that one would expect Congress to protect in a bill to regulate Internet gambling (B) those that have the greatest overall benefit to society, state lotteries, charitable giving, and those that are essential to the livelihood of Native Americans (B) have been disregarded in H.R. 3125.

H.R. 3125 would prevent state lotteries from entering the Internet age. Lotteries are the only form of gaming that return profits directly to the public. In fiscal year 1999 alone, lotteries generated more than $12 billion nationwide for essential public education, seniors, and environmental programs, as well as for local governments, state general coffers, and a variety of other programs. Since 1964, thirty-seven states, the District of Columbia, and Puerto Rico have opted to offer their citizens lotteries, and use the proceeds to fund critical programs and projects.

In its current form, H.R. 3125 would place state lotteries at a further competitive disadvantage. H.R. 3125 would allow the online purchase of in-state lottery tickets only in facilities (A) open to the general public= In other words, states may not allow their own residents to purchase lottery tickets over the Internet from the convenience of their homes. As a result, whether online gaming activities supplant or supplement physical gaming activities, state lotteries stand to lose even more ground to other forms of gaming that provide no direct return to the public whatsoever. The Association of Lottery Retailers noted that the real beneficiaries of the bill=s restrictions on state lotteries would be the offshore operators of Internet lotteries, and pointed out the irony that the professed opponents of Internet gambling, including Representative Pease, who offered the amendment to restrict the operations of state lotteries, have only benefitted Aa handful of offshore, illegal operators of unregulated and unregulatable internet lotteries [who] could not be happier.?

If H.R. 3125's discriminatory treatment of state lotteries is allowed to stand, individuals will be able to bet using their credit cards at home (B) up to the maximum credit limit (B) to place bets on horse races, which may even take place in another state. At the same time, they will be barred from using debit cards or other cash-like means online at home to spend a dollar or two on their own state=s lottery tickets.

Although the sponsors of H.R. 3125 have argued that the bill upholds state=s rights, in fact, it undercuts them. The National Governors= Association (NGA) recognized this when it wrote that H.R. 3125 encroaches on their ability to structure state lotteries. The NGA urged that the bill=s exemption for state lotteries include (A) when lawful wagers are placed either at a facility that is open to the general public or when the person placing the wager uses an individualized name and password?:

States possess the authority to regulate gambling within their own borders and must continue to be allowed to do so. An incursion into this area with respect to online gambling would establish a dangerous precedent with respect to gambling in general as well as broader principles of state sovereignty.

In addition to the NGA, the North American Association of State & Provincial Lotteries wrote that permitting states to determine the format of their lotteries is fundamental to states= rights:

[G)aming is a states-rights issue .... Lottery profits support much needed programs and services, and each state must maintain the right to decide the best ways to raise revenue so that these programs and services do not suffer .... We strongly believe that the states determination to provide gaming is appropriately left at the state legislative and gubernatorial levels.

H.R. 3125 also would discriminate against charities (as compared to pari-mutuel gambling), completely preventing non-profits from raising funds through Internet lotteries and bingo. Although section 1955 of title 18 and most state laws permit charitable gaming, H.R. 3125 would block charities from raising funds through on-line games. Despite the fact that charitable gaming accounts for a mere 1.5% of all wagering in the United States and is not the game of choice for compulsive gamblers, H.R. 3125 deprives charitable organizations from conducting activities in cyberspace which are perfectly legal in the physical world. Such an exclusion will place charitable organizations at a competitive disadvantage as the Internet becomes an increasingly important tool of commerce and communication in our society. Individuals who wish to participate in games of chance that have social value will have no ability to do so on-line.

Finally, H.R. 3125 discriminates against Native-Americans by requiring that the player of a game be (A) physically located on Indian lands.? This would outlaw a form of gambling that allows a Tribe to conduct a Class II Bingo game in which the player need not be physically on the Reservation. This type of Bingo was developed at great expense to some times, in reliance on the letter and spirit of the Indian Gambling Regulatory Act (IGRA). Indeed, in testimony before a Senate Committee on Indian Affairs Oversight Hearing on Internet Gaming, the Tribe acknowledged its expenditure of (A) millions of dollars and countless hours developing a Bingo game that utilizes Internet technology to expand its participation levels.?

The Lac Vieux Desert Band of Lake Superior Chippewa Indians of Michigan wrote: [T]he Tribe opposes passage of this legislation . . . [because] such a broad-sweeping prohibition runs counter to the letter and spirit of the 1988 Indian Gambling Regulatory Act (IGRA) and deals a serious blow to tribal sovereign rights to enter into legal Class II gaming activities, via the Internet .... In essence, H.R. 3125 takes away existing legal rights of tribes authorized under the IGRA, while expanding more privileges to non-Indian gaming interests.

The Tribe also noted that H.R. 3125 has been universally condemned by tribes and national tribal organization throughout the country. These include the National Congress of American Indians, the United South and Eastern Tribes, the Midwest Alliance of Sovereign Tribes, and the National Indian Gaming Association.

The National Gambling Impact Study Commission issued a report to President Clinton and found that gambling is widespread problem, and criticized the carve-outs and exemptions contained in H.R. 3125:

The Commission recommends to the President, Congress, and the Department of Justice (DOJ) that the federal government should prohibit, without allowing new exemptions or the expansion of existing federal exemptions to other jurisdictions, Internet gambling not already authorized within the United States.

Rather than heed the advice of the Commission, the sponsors of H.R. 3125 have catered to special interests by ripping gaping loopholes in a bill originally drafted to prohibit Internet gambling. At the same time, perhaps in a transparent effort to innoculate the bill against charges that it opens up more loopholes than it closes, the bill=s sponsors have effectively barred state lotteries, charitable organizations, and Tribes from merging onto the information superhighway.

The notice and takedown provisions in H.R. 3125 operate to allow any local or federal law enforcement official to take down a supposedly offending sight with no prior notice or any semblance of due process and inappropriately deputizes (A) interactive computer service providers? to serve as law enforcement authorities. As the Computer and Communications Industry Association (a trade group) has written, (A) requiring ISPs to >take down= websites based solely on the request of a law enforcement official from the Federal government or any of the fifty States is a dangerously broad new grant of censorship power to Federal and State governments .... The provision sets forth a flawed precedent .... We believe it is more appropriate to adhere to well-established procedures of notice and opportunity to be heard, court review, and judicially imposed injunctions.? These concerns were echoed by the Center for Democracy and Technology (CDT), perhaps the nation=s leading authority on rights and liberties on the Internet, which observed that the bill=s takedown provisions place (A) too much discretion in the hands of government officials, who get to decide in the first instance, without any independent review, what is legal and what is illegal.? CDT noted further that it not those government officials, but the ISPs, which are required to deliver the notice or face injunctive relief:

This approach, were it to serve as a precedent for other similar burdens on ISPs to cooperate with mere requests that they take down other illegal or undesirable content, would fundamentally change the nature of the Internet. While ISPs can decide what to host and what not to host, they should not be required to police their systems, nor should the government, through immunity provisions, dictate their terms of service with their customers.

We also have an independent concern that H.R. 3125 will operate to allow individual Internet users who have not violated the statute to have their accounts taken down, also without any prior warning. Under the bill, if a government actor notifies an ISP that a (A) subscriber? is in violation of the Act=s provisions, the ISP must take action against the offending (A) subscriber.? As reported by the Committee, the definition of Asubscribers? includes both the operators of gambling websites, as well as the individual consumers who log on to the targeted websites. This is because the definition of (A) subscriber? would cover anyone with a business relationship with the ICS through which the person receives access to the system.

The notice and takedown provisions fail to include the process and legal safeguards specified in the Digital Millennium Copyright Act (DMCA), which the legislation purportedly uses as a model. The DMCA included language to protect people from becoming the subject of wrongful or erroneous takedowns. An ISP receives immunity under the DMCA for copyright infringement provided that the ISP gives notice to the website operator and gives the website the opportunity to file a counter-notification. The DMCA=s counter-notification process would ensure that the website operator has the opportunity to register its objections to the action by the ISP if the website believes that the allegation of copyright infringement is not supported by the law. By contrast, under H.R. 3125, without the ability to file a counter-notification, the website will have no protection from a takedown by an ISP that incorrectly believes that the site facilitates or promotes illegal gambling or that is acting in response to an overzealous prosecutor.

The legislation=s provisions mandating blocking of foreign websites are far broader than any existing law. The requirement not only represents a real and viable threat to our own privacy and our nation=s birthright as an exemplar of individual liberty, but it will have the likely effect of slowing down and interfering with the operation of the Internet.

In order to comply with the blocking requirements, H.R. 3125 would force ICSs to launch cyberpatrols to identify offending sites or face becoming the object of a court order. Not only is it inappropriate to place ICSs in the position of becoming Internet hall monitors, it would have the effect of chilling unfettered expression on the Internet. In a letter filed with the Senate during the debate on Senator Kyl=s version of the Internet gambling bill, the American Civil Liberties Union noted the threat to privacy that arises from ill-conceived measures to regulate the Internet:

[R]espect for issues of personal privacy and content freedom should be central to this and any other debate on Internet policy. We oppose any effort by states to regulate content on the internet, a national and global communications medium that the Supreme Court has found to be especially valuable because of the breadth and diversity of the speech found there. We also oppose all attempts to turn internet service providers into de facto government agents. The CCIA also has criticized this blocking obligation imposed under H.R. 3125 as inappropriate and discriminatory:

It is not appropriate for Congress to mandate that ISPs police the content of the millions of websites accessible through their facilities, but the risk of criminal sanctions would clearly force any responsible ISP to do so .... [L]ike many new content regulations, these requirements unfairly discriminate against the Internet as a medium of communication. Newspapers, magazines, telephone companies, and mail delivery services need not fear criminal prosecution for facilitating illegal gambling, although undoubtedly these media are much more central to illegal gambling activities.

Similar concerns were echoed by the Center for Democracy and Technology:

[T]his mandatory filtering approach is fundamentally incompatible with the user empowerment vision of the Internet: filtering is appropriate at the user level [when voluntary], but it is inappropriate at the ISP or server level, particularly when mandated by the government. The Internet=s power stems from its decentralized, user-controlled nature. Installing ISPs as chokepoints or gatekeepers turns the Internet into something different, akin to the broadcast media.

Intruding on individual privacy by denying individual Internet users access to websites of their own choosing establishes a very poor precedent for other nations that look to the United States as the leader in safeguarding individual liberty. It would be ironic indeed if Congress passed legislation that required private parties to act as censorship agents for government officials in a medium that virtually everyone agrees should be left alone. There is a national consensus that the Internet is the singlemost significant force driving this nation=s unprecedented economic expansion and corresponding explosion of information and communication. H.R. 3125 would represent a dramatic departure from Congress=s past legislation in this area, which has been designed to ensure that new laws do not burden the Internet in ways that would slow this engine of growth.

By requiring ISPs to block individual access to specified Internet locations, H.R. 3125 would send an unintended signal to China, Cuba, and other autocratic regimes, that they too may block their citizens access to the Internet. As Time Digital editor Joshua Quittner has observed, (A) I find it objectionable that the government would feel the need to act as a proxy in this way .... This is exactly the kind of thing a totalitarian regime would undertake (B) in fact, it=s exactly what the Chinese government has already done.?

As the ACLU noted in its analysis of similar blockage provisions in the Senate version of the Internet gambling bill, efforts to require ISPs to block overseas websites (A) version of the Internet gambling bill, the American Civil Liberties Union noted the threat to privacy that arises from ill-conceived measures to regulate the Internet would attempt to segment the Internet (B) in effect, placing an electronic wall around the United States (B) to >protect us from ourselves= much like China and Singapore have tried to do. The idea of making U.S. ISP=s responsible for policing the content of offshore Internet sites is clearly unworkable.? For example, in China, the Ministry of Education recently took steps to police content on the Internet by requiring distance learning websites to register. The Ministry is expected to have direct supervision of a website=s content. In addition, the State Council Information Office created the Internet Information Management Bureau, which is responsible for overseeing the Internet news industry and is requiring pre-approval of all news that is published on the Internet.

Turkey, a country whose leadership has repeatedly cracked down on dissenting political views, is considering requirements for patrolling Internet content that is strikingly similar to the framework proposed in H.R. 3125. The Turkish government is considering creating a watchdog body of government officials who could order (A) registered Internet corporations, public and private, to take any measures the watchdog body may request? against Internet communications by those with (A) evil intentions.?

Finally, the potential for blocking to become a tool for government censorship is demonstrated by Saudi Arabia, which requires all ISPs to be linked through a central node in Riyadh. This enables the Saudi government to block all pornographic websites as well as access to any site that the government believes could stir up religious hatred.

Another concern that we have stems from the harm that H.R. 3125's mandatory blockage provisions will cause to the Internet in general and to smaller ISPs in particular. The burdens on smaller ISPs could prove particularly devastating. It is one thing to ask a mufti-billion dollar company such as AOL to institute complex blocking requirements; it is quite another to ask a fledgling ISP provider, or a new technology firm to change his or her business to conform to the blocking requirements of this bill. Thus, for the thousands of small start-up ISP and other telecommunications firms in America, compliance with the blockage provisions would be expensive and invasive. Either the small ISP would have to dedicate personnel and resources to identify the websites that are claimed to be in violation of the blockage order (B) resources that could have been spent on innovation and growth (B) or the ISP would have to spend funds that otherwise could be used for capital investment on paying lawyers to defend against a temporary restraining order or an injunction.

Supporters of the bill would argue that much of its framework was drawn from the Digital Millennium Copyright Act (DMCA), which contains a similar blocking provision. However, there are important differences between the DMCA and H.R. 3125. Unlike H.R. 3125, the DMCA=s blocking provisions provide the target of the blockage with the opportunity to file a counter-notification to register its objections to the action by the ISP if the website believes that the allegation of copyright infringement is in error. And, as discussed below, the threshold for issuing an injunction under the DMCA arguably is substantially higher than under H.R. 3125.

We are also concerned, that despite all of the threats this bill poses to civil liberties and privacy, it will all be for naught, as the provisions are likely to carry little real enforcement value. As one representative of the ISP industry noted in testimony during consideration of a substantially similar bill that was considered in the 105th Congress:

If an ISP receives a court order specifying a list of sites to be blocked, it can attempt to block access to these sites. However, as soon as the targeted site moves to another IP (Internet Protocol) address, as it inevitably will do, the block is worthless. Sites can change addresses within hours. Efforts to keep the blocks updated would require hundreds of thousands of employee hours, while employees attempt, with dubious likelihood of timely success, to track down the new location of the targeted site.

It is also important to note that H.R. 3125 includes a general injunction provision which is not limited to ISPs or even to Interactive Computer Service Providers. Although this provision does require a court order, its scope is incredibly broad, and it could well burden all sorts of unsuspecting parties with little obvious relationship to illegal gambling. As talking points provided by AT&T explained, the injunctive relief provisions Awould give courts sweeping power to issue injunctions against >any person to prevent a violation= of the statute, regardless of whether that person had any involvement in criminal activity.?

These general injunction provisions could allow a state attorney general to launch a Afishing expedition? in which it enlists the help of an e-mail service to review all of its subscriber accounts for gambling references, seeking to prevent search engines from accessing any website with any gambling in it (no matter how benign, such as Gamblers Anonymous), and to limit advertising for these websites in newspapers, television, radio and other outlets, to cite but a few possible examples. Moreover, it is not a stretch to realize that this provision could authorize a state attorney general to search through millions of credit card receipts or to prohibit extending credit to certain specified websites, legitimate or otherwise. In this regard, the Department of Justice has previously noted that the Internet gambling prohibition Amay have serious economic and societal consequences for Internet usage generally? and Ais likely to promote a spate of litigation over what solutions are feasible.?

The standard for issuing injunctive relief under the bill may well encourage law enforcement officials to abuse this authority. Not only would H.R. 3125 authorize injunctive relief against any person, the bill would empower a court to issue such relief if there is Aprobable cause to believe that such subscriber is using that access to violate this section.- It is inappropriate to import the probable cause standard from fourth amendment search and seizure criminal law jurisprudence to the injunctive relief criteria under H.R. 3125. It is arguably lower (B) and certainly different (B) from the criteria for preliminary injunctive relief under Rule 65 of Federal Rules of Civil Procedure, which requires a court to find a reasonable likelihood of success on the merits, no adequate remedy at law, irreparable injury, and a balance of hardships weighing in the moving party=s favor; or the DMCA, which also requires a court to weigh the burdens and balance the hardships. H.R. 3125 would create a threshold for injunctive relief that is unprecedented. Not only is the standard itself arguably easier to satisfy than that which is in place under Rule 65 or the DMCA, H.R. 3125 would therefore authorize its issuance against a party without any requirement that law enforcement give the enjoined party notice and an opportunity to be heard.

H.R. 3125 sets up the wrong model for how to regulate the Internet because it creates a patchwork of inconsistent Internet laws that conflict with existing laws that govern the physical world. The Wire Communications Act, 18 U.S.C. 31084, already governs Internet gambling in that the Internet is a (A) wire communications facility- under the Act. Rather than amending this statute to clarify its applicability to new types of Internet communications, H.R. 3125 would create a new section of the code, 18 U.S.C. 3 1085, that would overlap with (B) and be inconsistent with (B) existing law.

The proposed section 1085 would conflict with existing laws on gambling. Whereas the Wire Communications Act outlaws all interstate bets or wagers that use a (A) wire communications facility- (including those that use the Internet), H.R. 3125 would create a special set of rules and exceptions that apply to Internet activity, only. Thus, activity would be legal under the proposed Section 1085, but illegal under the existing Section 1084. One sure way to spur litigation and quelch innovation is to create a patchwork of laws that conflict with each other. Yet that is exactly what H.R. 3125 does.

If we are going to regulate content on the Internet (B) as supporters of the bill are intent on doing (B) we should not create a hodge-podge of Internet-specific laws that layer on top of and conflict with existing law. Legislation should treat physical activity and cyber-activity the same way. As the Department of Justice has stated, (A) If activity is prohibited in the physical world but not on the Internet, then the Internet becomes a safe haven for that criminal activity.? It is hard to understand why conduct previously deemed unacceptable in the physical world and over the telephone should now be legal when carried out in cyberspace.

The distinction between (A) Internet= activity and other types of (A) wire communications- activity is a false one. Indeed, any effort to distinguish Internet transmissions from other methods of communication will likely create artificial and unworkable distinctions. For example, many 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 for 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?

Finally, we note the inconsistency that is created by H.R. 3125's treatment of individual Internet subscribers. Although individuals come within the definition of (A)subscribers? who may be the target of a notice and takedown, and are (A) person[s]? who may be enjoined, the criminal penalties of H.R. 3125 would apply only to a (A) person engaged in a gambling business.? This term is not defined in current law by 18 U.S.C. 31081, but it has been interpreted by courts to mean persons who facilitate or accept bets, and to exclude the individual bettors. Thus, conduct which is currently illegal under a statute that covers the Internet would not be prohibited under the new bill, undermining the claims by the bill=s sponsors that H.R. 3125 would toughen the penalties for Internet gambling.

H.R. 3125 will establish an unfortunate and dangerous precedent for selective regulation of content on the Internet. The exemptions in the bill eliminate the ability of the bill=s sponsors to claim that they are taking a principled or coherent approach to the regulation of Internet gambling. With respect to the purported policy goals of the bills sponsors and the concern for regulating the Internet, the bill represents the worst of both worlds. The bill would legalize the use of the Internet for the most addictive types of gambling, while excluding the use of the Internet for more benign activities, like state lotteries, charitable gaming, or Bingo. And to carry out its goals, the bill would conscript anyone who provides computer services into serving as a handmaiden for law enforcement officials who want to remove sites that law enforcement deems unlawful.

As more and more activity (B) both commercial and criminal (B) migrates to the Internet, we should resist the urge to create Internet-specific legislation that sets a different standard for cyber-activity as compared to activity in the physical world. A checkerboard of inconsistent and overlapping laws will only create legal uncertainty and will not benefit Internet providers or Internet users. It is hardly surprising that this scattershot and unprincipled approach to content-based regulation of the Internet would give rise to an enforcement scheme that disregards the due process and privacy rights of website operators and individual subscribers. Given the significant concerns that have been voiced concerning privacy rights and effective law enforcement on the Internet, we strongly oppose H.R. 3125.

FOOTNOTES:

^1. Subsection (f)(1)(B) of H.R. 3125 would exclude (A) any otherwise lawful bet or wager that is placed, received, or otherwise made on an interstate or intrastate basis on a live horse or live dog race or on jai alai.?

^2. Subsection (f)(1)(A) of H.R. 3125 would permit the purchase of lottery tickets on the Internet only by a person who (A) is physically located when such bet or water [sic] is physically located when such et or water [sic] is placed at a facility that is open to the general public.

^3. Charitable donations that are placed through bets are neither excluded from definition of (A)bet or wager,? nor from the prohibition on Internet gambling.

^4. Subsection (f)(1)(D) of H.R. 3125 would greatly restrict the placement and receipt of Indian gambling bets over the Internet to situations in which the person is (A) physically located on Indian lands.

^5. Subsection (a)(9) of H.R. 3125 would broadly define (A) person? to include individuals and entities with indirect or highly attenuated connections to the activity in question, such as shareholders of a corporation or officers of a holding company.

^6. Subsection (a)(4) of H.R. 3125 would define a person engaged gambling business to include those persons who place or receive bets and is in continuous operation for more than 10 days or has a gross revenue of at least $2,000. This definition could be construed to apply to an individual gambler.

^7. H.R 3125, subsection (b)(1). The bill would institute new civil and criminal penalties for violating its provisions. Civil penalties would include the greater of the amount of bets and wagers placed or received by the defendant or $20,000. Criminal penalties would include imprisonment up to four years. A defendant could be subject to both the civil and criminal penalties. H.R. 3125, subsection (b)(2).

^8. The Wire Communications Act, 18 U.S.C. 31084 prohibits persons who are (A)engaged in the business of betting or wagering knowingly [to] use[] a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers.? As defined by 18 U.S.C. 31081, a (A) wire communication facility? includes the Internet.

^9. H.R. 3125, subsection (f). Such bets would be permitted if allowed by State and placed on a closed-loop subscriber service, broadly defined, which would include the purchase of a diskette with a credit card which could be used to access the system.

^10. H.R. 3125 would prohibit non-profit charities from raising funds through Internet lotteries and bingo.

^11. Subsection (f)(1)(B) H.R. 3125 restricts in-state lotteries by limiting the sale of on-line lottery tickets in facilities that are (A) open to the general public.? See Letter to Judiciary Chairman Hyde from Timothy Fuller, Executive Director, the Gray Panthers (May 5, 2000).

^12. Subsection (f)(1)(D) of H.R. 3125 overturns established authorizations for certain types of gaming conducted by Native Americans. The 1988 Indian Gambling Regulatory Act currently permits Native Americans to use the Internet and telecommunications technologies to link Bingo that is played on different Reservations. This legislation expressly encouraged tribes to deploy the latest technology and communications for Bingo. Like its treatment of state lotteries, H.R. 3125 would eliminate the ability of tribes to conduct lawful intra-Reservation Bingo at the same time that it opens the floodgates for currently unlawful horse races, dog races, and jai alai.

^13. H.R. 3125, subsection (a)(1)(D)(v). The bill defines fantasy sports leagues as contests that do not depend on the outcome of any single sporting event or a singular individual performance, that have an outcome reflecting the skill and knowledge of contestants, and that offer a prize that is determined in advance of the event and does not depend on the number of participants or the fees paid by those participants.

^14. Subsection (a)(7) of H.R. 3125 would define an (A) interactive computer service provider? to be (A) any person that provides an interactive computer service, to the extent that such person offers or provides such service.? Since the essence of the Internet is to provide its users with interactive computer services, the definition would encompass not only Internet Service Providers like AOL, but also on any search engine, portal, website, or even a website infrastructure, all of which provide interactive services to users.

^15. Two subsections of H.R. 3125 establish the notice and takedown requirements. First, subsection (b)(2) of H.R. 3125 provides that an ICS, upon receipt of a notice that a website is violating the prohibitions on Internet gambling, must (A) expeditiously remove or disable? access to the material or notify law enforcement that it incorrectly received the notice. If the ICS fails to take either of these steps within the 24 hours of receiving the notice, law enforcement may seek a temporary restraining order or an injunction preventing the ICS from being used to violate this section. Parallel provisions apply to online advertising of Internet gambling websites. Subsection (3)(D) of H.R. 3125.

^16. Subsection (d)(3)(B)(II) of H.R. 3125 would authorize law enforcement to go into court to obtain an order requiring the ICS to block access to (A) specific, foreign online location[s].?

^17. Subsection (d)(3) of H.R. 3125. This provision, by its own terms, would authorize injunctive relief (A) to prevent the use of the interactive computer service by another person? (emphasis supplied). Since (A) person? is broadly defined in subsection (a)(9) to include (A)any individual,? the bill plainly would authorize a court to enjoin any person that is in violation of the bill without notice or an opportunity to be heard.

^18. Hearing on H.R. 3125 Before the House Comm. on the Judiciary, Subcomm. on Crime, 106th Cong., 2d Sess. (March 9, 2000) (testimony by Deputy Assistant Attorney General Kevin DiGregory).

^19. Letter to Judiciary Chairman Hyde from Jeffrey K. Taylor, Director of Government Relations, the Christian Coalition (March 22, 2000).

^20. Letter to Judiciary Chairman Hyde from Michael D. Bowman, Director of State & Local Affairs, the Family Research Council (March 22, 2000).

^21. Letter to Judiciary Chairman Hyde from Michael P. Farris, Chairman, the Madison Project (April 3, 2000).

^22. Ron Eckstein, (A) Rolling the Dice,? LEGAL TIMES, at 1 (March 13, 2000). See also, Thomas E. Weber, (A) Playing the Ponies In Your Underwear,? The Wall Street Journal Interactive Edition, http://interactive.wsj.com/archive/retrieve.cgi?id=SB957138139977057683.djm (May 1, 2000).

^23. Hearing on H.R. 3125 Before the House Comm. on the Judiciary, Subcomm. on Crime, 106th Cong., 2d Sess. (March 9, 2000) (testimony by John Doe).

^24. Press Release of National Council on Problem Gambling, Voices Concern About Internet Gambling Legislation in House and Senate (October 8, 1999).

^25. Letter to Judiciary Chairman Hyde from Mark F. Jones, Executive Director, the Association of Lottery Retailers (May 16, 2000).

^26. Letter to Judiciary Chairman Henry Hyde and Ranking Member John Conyers from Governors Michael O. Leavitt and Parris N. Glendening, National Governors= Association (April 4, 2000).

^27. Letter to Representative Robert Goodlatte from David B. Gale, Executive Director of the North American Association of State & Provincial Lotteries (March 29, 2000). These concerns were echoed by the Association of Lottery Retailers, which wrote that its constituency, small retailers, will oppose the bill=s (A) heavy-handed effort by some in Congress to take a federal slap at state lotteries.? Letter to Judiciary Chairman Hyde from Mark F. Jones, Executive Director, the Association of Lottery Retailers (May 16, 2000). See also Letter to Judiciary Chairman Hyde from Steven M. Saferin, President & Chief Executive Officer, MDI Entertainment, Inc. (May 12, 2000) (A) The consequences of this Bill may be extreme . . . To continue to provide valuable revenues to the good causes they serve, lotteries must be able to compete on a level playing field and the use of the Internet as a distribution method for existing and future games should clearly be a decision left to each individual State and the lottery it operates.?); Letter to Judiciary Ranking Member Conyers from Roger W. Ach, II, President & Chief Executive Officer, lottery.com (May 12, 2000) (A) By eliminating the ability of state lotteries to sell lottery tickets on-line, Congress will cause a detrimental impact on lottery revenues and on lottery.com business.?).

^28. 25 U.S.C. 2703(7)(A)(i). This provision of the IGRA applies to AClass II? Bingo.

^29. Oversight Hearing on Internet Gaming, Before the Senate Committee on Indian Affairs, on Crime, 106th Cong., 1st Sess. (June 9, 1999) (testimony by Richard Williams, Chairman, Lac Vieux Desert Band of Lake Superior Chippewa Indians).

^30. Letter to Judiciary Ranking Member Conyers from the Lac Vieux Desert Band of Lake Superior Chippewa Indians of Michigan (April 3, 2000). See also, Letter to Judiciary Ranking Member Conyers from Anthony C. Minthorn, Chairman of the Board of Trustees, Confederated Tribes of the Umatilla Reservation of Oregon (March 23, 2000) (A)Without a tribal gaming exemption, H.R. 3125 will bear the dubious distinction of not only treating tribal governments in an arbitrary (B) if not discriminatory (B) fashion, but of stifling one of the few successful economic engines available to our communities within memory.?)

^31. National Gambling Impact Study Commission, Final Report, Recommendation 5.1 (June 18, 1999).

^32. Letter to Judiciary Ranking Member Conyers from Ed Black, President and CEO, the Computer & Communications Industry Association (April 3, 2000).

^33. position Paper, Center for Democracy and Technology [date?].

^34. Id.

^35. Pub. L. 105-304 (105th Cong., 2d Sess.).

^36. The counter-notification provisions appear in section 512(g)(3) of the DMCA appears in section 202(a) of Pub. L.105-34,112 Stat. 2282 (105th Congress, 2d Sess.). An effective counter-notification must (A) substantially? include a physical or electronic signature of the subscriber; information that enables the identification and location of the material in question; a statement of the subscriber=s good-faith belief that the material was removed or disabled due to mistake or misidentification; and identifying information about the subscriber along with the subscriber=s consent to federal jurisdiction.

^37. Letter to Senate Judiciary Chairman Hatch from the American Civil Liberties Union, Americans for Tax Reform, the Association of Concerned Taxpayers, Citizens for a Sound Economy, the Competitive Enterprise Institute, the First Amendment Coalition for Expression, the Interactive Services Association, the Small Business Survival Committee, and the United States Internet Council (October 8,1997).

^38. Letter to Judiciary Ranking Member Conyers from Ed Black, President and CEO, CCIA (May 5, 2000).

^39. Position Paper, Center for Democracy and Technology.

^40. See, e.g. , the DMCA, Pub. L. 105-304 (105t" Cong., 2d Sess.); the Internet Tax Freedom Act, Pub. L. 105-277 (105th Cong., 2d Sess.).

^41. Time.com Digital Daily Edition, http://www.time.com/time/daily/0,2960,42462-101000405,00.html (April 9, 2000). ,p.^42. Letter to Senate Judiciary Chairman Orrin Hatch from the ACLU, Americans for Tax Reform, the Association of Concerned Taxpayers, Citizens for a Sound Economy, the Competitive Enterprise Institute, the First Amendment Coalition for Expression, the Interactive Services Association, the Small Business Survival Committee, and the United States Internet Council (October 8,1997).

^43. Elif Unal, (A) Turkey Debates Cyberspace Controls, Reuters.com, http://dailynews.yahoo.com/h/nm/20000416/wr/turkey internet_l.html (April 18, 2000).

^44. Frank Gardner, (A) Saudi censors say they=re winning the war against porn,? POLITECH, http://www.politech.bot.com (May 10, 2000).

^45. Section 512(c) of the DMCA, Pub. L. 105-304, 112 Stat. 2879-2881 (105th Cong. 2d Sess.).

^46. Testimony of David G. Jemmett, President, WinStar GoodNet, Hearing on H.R. 2380 before the House Comm. on the Judiciary, Subcomm. On Crime, 105th Cong., 2d Sess. (June 24,1998).

^47. Subsections (d)(3) and (d)(4)(D) of H.R. 3125.

^48. Position Paper, AT&T.

^49. Position Paper, AT&T, quoting Department of Justice.

^50. Department of Justice Letter, at 1.

^51. DiGregory Testimony at _.

^52. Subsections (b)(1) and (b)(2) of H.R. 3125.

^53. See, e.g., United States v. Reeder, 614 F.2d 1179 (8th Cir.1980); Cohen v. United States, 378 F.2d 751 (7th Cir. 1967); 5th Circuit Pattern Jury Instruction (Instructing jurors to find that a person is engaged in a gambling business when the (A) defendant was prepared on a regular basis to accept bets placed by others, that is, the defendant was a >bookie.=).

^54. See, e.g., United States v. Anderson, 542 F.2d 428, 436 (7th Cir. 1976); United States v. Baborian, 528 F. Supp. 324 (D.R.I. 1981).