Summary of Bills Pertaining to
Internet Gambling
in the 106th Congress
This page contains a summary of the following bills:
| This page was last updated on July 24, 2000. |
Introduction: S 692 and HR 3125 would ban some, but not all, forms of gambling on the Internet. Sen. Kyl and Rep. Goodlatte also tried to pass a straight ban on Internet gambling in the 105th Congress (1997-1998). The Kyl bill, S 474 (105th), passed the Senate by a vote of 90 to 10, but the Goodlatte bill, HR 2380 (105th), never made it out of committee in the House.
The same sponsors are back with lengthy detailed bills which include new provisions designed to eliminate some of the opposition to their previous bills. The bills introduced in the 106th Congress prohibit only gambling businesses (not the gamblers), provide many exceptions to coverage, and provide certain immunities to interactive computer services (such as AOL) which act merely as hosts or conduits for gambling activity. The bills provide interactive computer services immunity for hosting gambling web sites, immunity for shutting them off, and no duty to monitor, provided they shut off illegal gambling businesses when told to do so by law enforcement.
There is very little public opposition to these bills. There is, however, a behind the scenes lobbying effort. The Internet casino companies, and their investors, oppose these bills.
There are also legalized land based and riverboat gambling interests, which now either support or don't oppose these bills. There are also state and local governments which receive substantial tax revenues off of legalized gambling and its associated hotel, restaurant, and entertainment activities. Also, most states derive revenues from state run lotteries. States support the bills. Finally, there are Indian gambling interests.
S 474 (105th) was a simple and short ban on Internet gambling. The first version of S 692 (106th), introduced in March of 1999, grew to 28 pages, largely due to its inclusion of exceptions and immunities. Each subsequent version grew in length. HR 3125, introduced on October 21, is up to 37 pages. The House Judiciary Committee marked up the bill on April 5-6, 2000. The Senate approved S 692 on November 19, 1999.
The bill now has so many exceptions, exemptions, immunities, loopholes, definitions, and clarifying clauses, that it is now a misnomer to call it the Internet Gambling Prohibition Act. It would be more appropriately called the Federal Internet Gambling Regulatory Code.
In fact, the even the term Internet is a misnomer. The bill would affect not just Internet activity, but also any system which networks two computers to a server.
Many forms of offline gambling which are legal today are exempted from the bill. The new business model, the Internet casino, would be most impacted by the bill.
When Sen. Kyl and Rep. Goodlatte began this effort, their bills looked like altruistic efforts to protect the Internet, and its users, from the insidious consequences of gambling. Now, their bills are taking on the appearance of efforts by established gambling interests to limit competition from new entrants, and by state governments to protect their gambling revenues.
HR 4419 is the most recent proposal. It was introduced on May 10, 2000 by Rep. James Leach (R-IA), Chairman of the House Banking Committee. As amended on June 28, it would ban the use of certain bank instruments for illegal Internet gambling.
S 692, Internet Gambling Prohibition Act of 1999.
Sponsor. Jon Kyl (R-AZ). Original Cosponsors. Richard Bryan (D-NV), Charles Grassley (R-IA), Dianne Feinstein (D-CA), Slade Gorton (R-WA), Michael Enzi (R-MN), Don Nickles (R-OK), Strom Thurmond (R-SC), Connie Mack (R-FL), Paul Coverdell (R-GA), Rick Santorum (R-PA), and Harry Reid (D-NV). Additional Cosponsors. Bob Smith (I-NH), Tim Hutchinson (R-AR), Wayne Allard (R-CO), Kit Bond (R-MO), Trent Lott (R-MS), Tim Johnson (D-SD), George Voinovich (R-OH), Mike DeWine R-OH), Sam Brownback (R-KS), Jim Bunning (R-KY), Robert Torricelli (D-NJ), and Jesse Helms (R-NC).
Summary. S 692 IS is a long and carefully drafted bill. Much of its 28 pages is devoted to creating exceptions to its coverage, and to defining the circumstances under which legitimate interactive computer services are immune from injunction or penalty for the activities of Internet gambling businesses which use their services or facilities.
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Excerpt from S 692 IS |
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The Internet Gambling Prohibition Act would create a new § 1085 in Title 18 of the United States Code. It begins with a lengthy definitions section.
The bill then states the basic prohibition: "it shall be unlawful for a person engaged in a gambling business to use the Internet or any other interactive computer service to place, receive, or otherwise make a bet or wager." The word "person" is defined to include corporations and other entities, of course. However, this language is significant in that it does not illegalize the act of gambling on the Internet. Only the gambling businesses are affected. S 474 went after both gambling businesses and individual gamblers.
The bill next sets out penalties for violators. These are fines in the amount of the total wagers received, or 20,000, whichever is greater, and jail time of up to four years.
The bill also provides that either federal or state authorities can obtain injunctions in federal district court against illegal Internet gambling businesses.
The bill also provides that several types of gambling are exempted. These include fantasy sports leagues, state lotteries, and certain activities under the Interstate Horse Racing Act of 1978.
The bill also has an extensive set of provisions dealing with interactive computer services, which would include businesses such as America Online and web hosting companies. The bill contemplates that most illegal gambling businesses will operate through web sites which reside on servers owned by interactive computer services.
Basically, the bill provides that interactive computer service providers shall have,
provided that they shut off the illegal gambling businesses when notified to do so by law enforcement authorities, and otherwise comply with the labyrinthine terms of the bill.
This bill contains a rather complicated extension of the principles underlying the immunity clauses of section 230 of the Telecommunications Act of 1996. Interactive computer service providers are merely conduits for, and should not be held responsible for, the communications of others.
First, to be eligible for these benefits, interactive computer service providers must "establish[] and reasonably implement[] a policy for the termination of the account of a subscriber of the service ... upon the receipt ..." of a notice from law enforcement authorities. The bill also provides in detail what must be in such a notice.
The immunity from liability for hosting gambling sites provision reads, in part:
"Nothing ... may be constructed to impose, or to provide any basis for, liability against an interactive computer service provider [who adopts a termination policy] whose facilities or services are used by [an a gambling business] arising out of any transmitting, routing, or providing connections .. if ... (i) the material or activity was initiated by or at the direction of a person other than the provider; (ii) [it was] an automatic process without selection of material or activity by the provider; (iii) the provider does not select the recipients of the material or activity ...; and (iv) [the provider does not modify the content]. (See, pages 16-18.)
The immunity from liability for shutting off gambling web sites provision reads, in part:
If an interactive computer service provider receives from a Federal or State law enforcement agency ... notice ... that a particular online site residing on a computer server owned, controlled, or operated by or for the provider is being used [by an illegal gambling business] the provider shall not be liable under any Federal or State law, if ... (i) the provider removes or disables ... or (ii) if the provider does not own, operate, or control the site ... the provider [tells law enforcement, and if subpoenaed, helps to identify who controls the site.]
The relief from duty to monitor or delete provision reads, in part:
"The Nothing ... may be construed to impose or authorize an obligation on an interactive computer service [who adopts a termination policy] to (A) monitor material or use of its service; or (B) except as required by an order of a court, to gain access to, to remove, or to disable access to material in any case in which such conduct is prohibited by law."
Status. S 692 was introduced on March 23, 1999, after a hearing by the Senate Subommittee on Technology, Terrorism, and Government Information. This subcommittee approved an amendment in the nature of a substitute on May 12. The full committee approved a much amended version of the bill on June 17. The full Senate approved the bill, with further amendment, on November 19, 1999.
Legislative History with Links to Related Materials.
HR 3125, Internet Gambling Prohibition Act of 1999.
Sponsor. Rep. Bob Goodlatte (R-VA). Original cosponsors. Frank LoBiondo (R-NJ), Frank Wolf (R-VA), Rick Boucher (D-VA), Jim Gibbons (R-NV), and Virgil Goode (D-VA).
Summary. HR 3125 IH is based on S 692 RS with some further revisions.
Status. This bill was introduced on October 21, 1999. The House voted on HR 3125 under suspension of the rules (which requires a 2/3 majority. The bill failed by a vote of 245 to 159. HR 3125 as voted on by the House.
Legislative History with Links to Related Materials.
HR 4419, Internet Gambling Funding Prohibition Act
Sponsor. Rep. James Leach (R-IA). Original Cosponsors. John LaFalce (D-NY), Marge Roukema (R-NJ), Richard Baker (R-LA).
Summary. HR 4419 IH would ban the use of certain bank instruments for Internet gambling.
The version approved by the Banking Committee on June 28 includes language that limits the prohibition of the bill applies only "where such bet or wager is unlawful under any applicable Federal or State law in the State in which the bet or wager is initiated, received, or otherwise made".
Status. This bill was introduced on May 10, 2000. The Banking Committee held a hearing on June 20, 2000. The Banking Committee approved HR 4419 with a significant amendment limiting its application.
Legislative History with Links to Related Materials.
Tech Law Journal stories.
Other Resources