Editor's Notes: Rep. McCollum read a prepared statement. Tech Law Journal scanned a paper copy of this statement, and converted it to HTML. Copyright Tech Law Journal. All rights reserved.

Statement of Bill McCollum
Chairman, Subcommittee on Crime
Subcommittee Markup of H.R. 3125, the
"Internet Gambling Prohibition Act of 1999"

Good morning and welcome everyone to this morning's markup.

Today we will markup H.R. 3125, the "Internet Gambling Prohibition Act of 1999," introduced by Representatives Goodlatte and LoBiondo. In the 105' Congress the Subcommittee held TWO hearings on this issue and legislation and subsequently approved by voice vote similar legislation. Here we are a year later and the issues have not changed, unregulated Internet gambling sites abound on the Internet. The only thing that has changed is the size of this industry ... gambling on the Internet has become an extremely lucrative business. Earlier this year, an FBI study reported growth from $300 million in 1998 to $651 million in 1999. Other estimates on the explosive growth of this industry indicate that it could soon easily become a $10 billion a year enterprise.

On-line casino operators envision the day when the Internet will provide access to a "virtual strip" - where gamblers who are tired of one casino can simply "walk" down the virtual boardwalk into a different casino. There are currently over 100 sites on the Internet, offering everything from sports betting to blackjack. Most of these virtual casinos are organized and operated from tropical off-shore locations, where the operators feel free from both State and federal interference. Among the most popular locales are Antigua, St. Martin and Costa Rica. Earlier this year Australia and New Zealand announced that they intend to become choice locations for Internet gambling operations, with plans to regulate Internet casino operators.

To participate, many Internet sites require nothing more than a name, address and credit card number. Security on bets placed over the Internet is ineffective, and unlike traditional regulated casinos, Internet operators have no demonstrated ability or requirement to verify a participant's age or identification. Moreover, virtual casino winners are unable to guarantee that they will ever collect their winnings. If the "house" loses, its operators can simply shut down their sites and begin anew. Newspaper articles across the country have already reported stories of Internet operators who simply took the money and ran. Anti-gambling activists also fear that cybergambling will create a new generation of gambling addicts - computer savvy youths able to bankrupt themselves and their families from the comfort of their own homes.

State attorneys general have been frustrated in their attempts to prevent Internet gambling from permeating their borders. Some have attempted to charge Internet gambling providers with violations of state consumer fraud laws, but jurisdictional issues and other problems have thwarted these efforts. Attorneys general report that citizens often are unaware that gambling on the Internet is illegal, even if those same persons are aware that their home state does not allow gaming. The Office of the Minnesota Attorney General felt compelled to create a web page warning Minnesotans of the illegality of online gambling.

Having said that, I am pleased to note that in crafting this legislation Representatives Goodlatte and LoBiondo have been careful to avoid getting the federal government involved in regulating legal gaming industries that are already regulated in their respective states. Historically, since the founding of our country, the federal government has left gambling regulation to the states. The last two federal commissions Congress created to look into gambling have concluded that states are best equipped to regulate gambling within their own borders and recommended that Congress continue to defer to the states in this respect. This measure does just that.

The time for Congress to move legislation forward is now.