The Unlawful Internet Gambling Funding Prohibition Act (HR 556)

The Unlawful Internet Gambling Funding Prohibition Act (HR 556) was unanimously passed in the U.S. House of Representatives on Tuesday October 2, 2002 by a voice vote. A voice vote means that the names of those who vote are not recorded. The bill was considered by way of what is literally called a political a "rush job." The rush job required a suspension of the rules, meaning that it was voted on after 40 minutes of discussion and required a two-thirds majority to pass. Proposed last fall by Rep. James Leach (Iowa), the bill outlaws usage of a credit card, electronic fund transfer or any other bank instrument to pay for Internet gambling. It also provides a vehicle requiring U.S. Internet service providers (ISPs) to block access to or pull advertising from offshore Web gambling sites. In either case, a federal or state court order would be required and ISPs would be under no legal obligation to police their networks for gambling advertisements. Authors of the bill utilized advice from the three-year old National Gambling Impact Study Commission, about which I reported in my September article of Online Poker News (http://www.cardplayer.com/op2.php?sec=art2). One of the study's conclusions was that because it is difficult to stop Internet gambling, it was advisable to cut off Internet gambling at its source by prohibiting access to primary payment vehicles. That is precisely what the bill accomplishes. Prior to its passage, the 40 minutes allotted was divided between Leach (Iowa) and LaFalce (New York) to use or share. The supporters made short but dramatic speeches, including Leach appealing to his colleagues' sympathy by stating that gambling addiction causes divorce and suicide. Leach also said that online gambling involves no entertainment or socialization element! One of the supporters tried mild intimidation when he said: "To vote against this bill would be unbelievable." Wolf (Virginia) also said: "If ANYONE votes against this bill, I won't understand it." (I'm using all caps on "anyone" because Wolf put heavy emphasis on the word in his remarks.) LaFalce was quick to add that he believed our nation's vulnerable youth to be at risk and according to the testimony from the Director of the FBI, Internet gambling serves as a haven and breeding ground for money laundering and therefore terrorist activity. Bachus (Alabama) cited Harvard's Dr. Howard Shaffer statement that Internet gambling is doing to our youth in the gambling spectrum what crack cocaine did to the narcotics experience, where millions became addicted within a year or two. You may remember that Representative Bob Goodlatte (Virginia), one of the bill's main supporters, along with House Financial Services Committee Chairman Mike Oxley (Ohio), tried to pass the Goodlatte Bill under a suspension of rules in July 2000, but the bill did not receive a two-thirds majority vote and was defeated. In order to gain approval of HR 556, Leach agreed to add provisions from Goodlatte's bill, including updating the U.S. Wire Act of 1961 by changing the language prohibiting wagering by way of a "wire communication" to simply any "communication," as well as increasing jail time for offenders from 2 years to 5 years. The Interactive Gaming Council is an international non-profit trade association of over 100 companies around the globe that are involved with the interactive gaming industry. Members are operators of Internet gaming sites, software suppliers, e-commerce providers, information-providers or other companies involved in the industry. The IGC is an advocate for regulation of the on-line gaming industry and comprises the portion of the industry that does not subscribe to a "Wild West" approach to on-line gaming, but instead adheres to an industry code of conduct, where players' rights are protected, sites operate in reasonably transparent fashion, and operators comply with the licensing and regulatory policies of the jurisdictions in which they operate. STATEMENT OF SUE SCHNEIDER, CHAIRMAN, INTERACTIVE GAMING COUNCIL (IGC) On House Passage of the Unlawful Internet Gambling Funding Act: Oct 2, 2002 "The membership of the Interactive Gaming Council is naturally disappointed that the House of Representatives has chosen to pass H.R. 556. As has been the case with previous legislation in this area, a substantial misunderstanding of Internet gaming and of the Internet itself drives the bill. "We take particular exception to the assertion that there is a link between Internet gaming and terrorism. Notwithstanding the reckless statements some have made, there has never even been a credible allegation that terrorists have used Internet gaming for money laundering. Internet gaming involves credit card transactions with a clear record of every wager. Money laundering is extremely difficult in a situation where every electronic transaction is recorded. Internet gaming is no different from any other form of e-commerce with respect to money laundering; perhaps the only difference is that our industry is subject to greater law enforcement scrutiny." The bill now goes to the U.S. Senate, where it faces a bleak future because only a few weeks are left in this legislative session and that is simply not enough time for all the political maneuvering that would be necessary to garner the necessary support. If the bill is successful on the Senate floor, the next step would be presenting the bill to Bush for approval. While the legislation represents a significant victory for the anti-gambling forces in Washington, a report by www.internetnews.com concludes that passage by the Senate is unlikely. They report in relevant part: "You have to remember this is the silly season," said a Senate staff member who asked not to be identified. "There's just a couple of weeks left before we break for the elections and this (the anti-gambling bill) will never come up in the Senate this year. All sorts of things get passed on a House voice vote just before elections so members can go home and say, 'Look what I got passed!'" If the bill fails to gain Senate passage before the end of the year, the legislation would die and have to be re-introduced in the House. For your edification and convenience, I have included links in order that you further educate yourselves regarding this bill. I invite your questions, comments or replies, and can be reached at attorney20yrs@cox.net. Allyn Jaffrey received her Bachelor of Arts from the University of California at Irvine in 1977, where she graduated cum laude and became a member of Phi Beta Kappa. She is a practicing criminal defense attorney, having received a Juris Doctorate with scholastic merit from Western State University, where she served as Research Editor and Executive Editor of Law Review in 1982-1983. She has lectured all over California, teaching other attorneys the fine points of criminal defense. She specializes in legal research and her areas of expertise include the filing of extraordinary Writs, Appeals and motions where a lower court judge commits legal error or where the police or prosecutors engage in misconduct. Ms. Jaffrey has been closely following the development of gaming law and the Internet ever since Jay Cohen was convicted in New York of operating a sports betting business from Antigua in violation of the Wire Act.