S 692 IS (106th), "Internet Gambling Prohibition Act of 1999."
Re: criminalization of Internet gambling businesses.
Sponsor: Sen. Jon Kyl (R-AZ).
Date introduced: March 23, 1999.
Source: Library of Congress.

See also, Summary of Bills Pertaining to Internet Gambling in the 106th Congress.

To prohibit Internet gambling, and for other purposes.

IN THE SENATE OF THE UNITED STATES

March 23, 1999

Mr. KYL (for himself and Mr. BRYAN) introduced the following bill; which was read twice and referred to the Committee on the Judiciary

A BILL

To prohibit Internet gambling, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Internet Gambling Prohibition Act of 1999'.

SEC. 2. PROHIBITION ON INTERNET GAMBLING.

(a) IN GENERAL- Chapter 50 of title 18, United States Code, is amended by adding at the end the following:

`Sec. 1085. Internet gambling

`(a) DEFINITIONS- In this section:

`(1) BETS OR WAGERS- The term `bets or wagers'--

`(A) means the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game of chance, upon an agreement or understanding that the person or another person will receive something of value based on that outcome;

`(B) includes the purchase of a chance or opportunity to win a lottery or other prize (which opportunity to win is predominantly subject to chance);

`(C) includes any scheme of a type described in section 3702 of title 28, United States Code; and

`(D) does not include--

`(i) a bona fide business transaction governed by the securities laws (as that term is defined in section 3(a)(47) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(47))) for the purchase or sale at a future date of securities (as that term is defined in section 3(a)(10) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(10)));

`(ii) a transaction on or subject to the rules of a contract market designated pursuant to section 5 of the Commodity Exchange Act (7 U.S.C. 7);

`(iii) a contract of indemnity or guarantee; or

`(iv) a contract for life, health, or accident insurance.

`(2) CLOSED-LOOP SUBSCRIBER-BASED SERVICE- The term `closed-loop subscriber-based service' means any information service or system that uses--

`(A) a device or combination of devices--

`(i) expressly authorized and operated in accordance with the laws of a State, exclusively for placing, receiving, or otherwise making a bet or wager described in subsection (d)(1)(B); and

`(ii) by which a person located within any State must subscribe to be authorized to place, receive, or otherwise make a bet or wager, and must be physically located within that State in order to be authorized to do so;

`(B) an effective customer verification and age verification system, expressly authorized and operated in accordance with the laws of the State in which it is located, to ensure that all applicable Federal and State legal and regulatory requirements for lawful gambling are met; and

`(C) appropriate data security standards to prevent unauthorized access by any person who has not subscribed or who is a minor.

`(3) FOREIGN JURISDICTION- The term `foreign jurisdiction' means a jurisdiction of a foreign country or political subdivision thereof.

`(4) GAMBLING BUSINESS- The term `gambling business' means a business that is conducted at a gambling establishment, or that--

`(A) involves--

`(i) the placing, receiving, or otherwise making of bets or wagers; or

`(ii) the offering to engage in the placing, receiving, or otherwise making of bets or wagers;

`(B) involves 1 or more persons who conduct, finance, manage, supervise, direct, or own all or part of such business; and

`(C) has been or remains in substantially continuous operation for a period in excess of 10 days or has a gross revenue of $2,000 or more from such business during any 24-hour period.

`(5) INFORMATION ASSISTING IN THE PLACING OF A BET OR WAGER- The term `information assisting in the placing of a bet or wager'--

`(A) means information that is intended by the sender or recipient to be used by a person engaged in the business of betting or wagering to accept or place a bet or wager; and

`(B) does not include--

`(i) information concerning parimutuel pools that is exchanged exclusively between or among 1 or more racetracks or other parimutuel wagering facilities licensed by the State or approved by the foreign jurisdiction in which the facility is located, and 1 or more parimutuel wagering facilities licensed by the State or approved by the foreign jurisdiction in which the facility is located, if that information is used only to conduct common pool parimutuel pooling under applicable law;

`(ii) information exchanged exclusively between or among 1 or more racetracks or other parimutuel wagering facilities licensed by the State or approved by the foreign jurisdiction in which the facility is located, and a support service located in another State or foreign jurisdiction, if the information is used only for processing bets or wagers made with that facility under applicable law;

`(iii) information exchanged exclusively between or among 1 or more wagering facilities that are located within a single State and are licensed and regulated by that State, and any support service, wherever located, if the information is used only for the pooling or processing of bets or wagers made by or with the facility or facilities under applicable State law;

`(iv) any news reporting or analysis of wagering activity, including odds, racing or event results, race and event schedules, or categories of wagering; or

`(v) any posting or reporting of any educational information on how to make a bet or wager or the nature of betting or wagering.

`(6) INTERACTIVE COMPUTER SERVICE- The term `interactive computer service' means any information service, system, or access software provider that uses a public communication infrastructure or operates in interstate or foreign commerce to provide or enable computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet.

`(7) INTERNET- The term `Internet' means the international computer network of both Federal and non-Federal interoperable packet switched data networks.

`(8) PERSON- The term `person' means any individual, association, partnership, joint venture, corporation, State or political subdivision thereof, department, agency, or instrumentality of a State or political subdivision thereof, or any other government, organization, or entity (including any governmental entity (as defined in section 3701(2) of title 28, United States Code)).

`(9) PRIVATE NETWORK- The term `private network' means a communications channel or channels, including voice or computer data transmission facilities, that use either--

`(A) private dedicated lines; or

`(B) the public communications infrastructure, if the infrastructure is secured by means of the appropriate private communications technology to prevent unauthorized access.

`(10) STATE- The term `State' means a State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, or a commonwealth, territory, or possession of the United States.

`(11) SUBSCRIBER- The term `subscriber'--

`(A) means 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; and

`(B) includes registrants, students who are granted access to a university system or network, and employees who are granted access to the system or network of their employer.

`(b) GAMBLING BUSINESSES-

`(1) PROHIBITION- Subject to subsection (d), it shall be unlawful for a person engaged in a gambling business to use the Internet or any other interactive computer service--

`(A) to place, receive, or otherwise make a bet or wager; or

`(B) to send, receive, or invite information assisting in the placing of a bet or wager.

`(2) PENALTIES- A person engaged in a gambling business who violates paragraph (1) shall be--

`(A) fined in an amount equal to not more than the greater of--

`(i) the amount that such person received in bets or wagers as a result of engaging in that business in violation of this subsection; or

`(ii) $20,000;

`(B) imprisoned not more than 4 years; or

`(C) both.

`(c) PERMANENT INJUNCTIONS- Upon conviction of a person under this section, the court may, as an additional penalty, enter a permanent injunction enjoining the transmission of bets or wagers or information assisting in the placing of a bet or wager.

`(d) APPLICABILITY-

`(1) IN GENERAL- Subject to paragraph (2), the prohibition in this section does not apply to--

`(A) any otherwise lawful bet or wager that is placed, received, or otherwise made wholly intrastate for a State lottery, or for a multi-State lottery operated jointly between 2 or more States in conjunction with State lotteries if--

`(i) each such lottery is expressly authorized, and licensed or regulated, under applicable State law;

`(ii) the bet or wager is placed on an interactive computer service that uses a private network;

`(iii) each person placing or otherwise making that bet or wager is physically located when such bet or wager is placed at a facility that is open to the general public; and

`(iv) each such lottery complies with sections 1301 through 1304 of title 18, United States Code, and other applicable provisions of Federal law;

`(B) any otherwise lawful bet or wager that is placed, received, or otherwise made on an interstate or intrastate basis on a live horse race, or the sending, receiving, or inviting of information assisting in the placing of such a bet or wager, if such bet or wager, or the transmission of such information, as applicable, is--

`(i) expressly authorized, and licensed or regulated by the State in which such bet or wager is received, under applicable Federal and such State's laws;

`(ii) placed on a closed-loop subscriber-based service;

`(iii) initiated from a State in which betting or wagering on that same type of live horse racing is lawful and received in a State in which such betting or wagering is lawful;

`(iv) subject to the regulatory oversight of the State in which the bet or wager is received and subject by such State to minimum control standards for the accounting, regulatory inspection, and auditing of all such bets or wagers transmitted from 1 State to another; and

`(v) made in accordance with the Interstate Horse Racing Act of 1978 (15 U.S.C. 3001 et seq.); or

`(C) any otherwise lawful bet or wager that is placed, received, or otherwise made for a fantasy sports league game or contest.

`(2) INAPPLICABILITY TO BETS OR WAGERS MADE BY AGENTS OR PROXIES-

`(A) IN GENERAL- Paragraph (1)(A) does not apply in any case in which a bet or wager is placed, received, or otherwise made by the use of an agent or proxy using the Internet or an interactive computer service.

`(B) RULE OF CONSTRUCTION- Nothing in this paragraph may be construed to prohibit the owner operator of a parimutuel wagering facility that is licensed by a State from employing an agent in the operation of the account wagering system owned or operated by the parimutuel facility.'.

(b) TECHNICAL AMENDMENT- The analysis for chapter 50 of title 18, United States Code, is amended by adding at the end the following:

`1085. Internet gambling.'.

SEC. 3. CIVIL REMEDIES.

(a) IN GENERAL-

(1) JURISDICTION- The district courts of the United States shall have original, exclusive, and continuing jurisdiction to prevent and restrain violations of section 1085 of title 18, United States Code, as added by section 2 of this Act, by issuing appropriate orders in accordance with this section, regardless of whether a prosecution has been initiated under that section.

(2) PROCEEDINGS-

(A) INSTITUTION BY FEDERAL GOVERNMENT-

(i) IN GENERAL- The United States may institute proceedings under this subsection to prevent or restrain a violation of section 1085 of title 18, United States Code.

(ii) RELIEF- Upon application of the United States under this subparagraph, the district court may enter a temporary restraining order or an injunction against any person to prevent a violation of section 1085 of title 18, United States Code, if the court determines, after notice and an opportunity for a hearing, that there is a substantial probability that such violation has occurred or will occur.

(B) INSTITUTION BY STATE ATTORNEY GENERAL-

(i) IN GENERAL- The attorney general of a State (or other appropriate State official) in which a violation of section 1085 of title 18, United States Code, is alleged to have occurred, or may occur, after providing written notice to the United States, may institute proceedings under this subsection to prevent or restrain the violation, unless the United States has exclusive jurisdiction over the violation under Federal law.

(ii) RELIEF- Upon application of the attorney general (or other appropriate State official) of an affected State under this subparagraph, the district court may enter a temporary restraining order or an injunction against any person to prevent a violation of section 1085 of title 18, United States Code, if the court determines, after notice and an opportunity for a hearing, that there is a substantial probability that such violation has occurred or will occur.

(C) EXPIRATION- Any temporary restraining order or preliminary injunction entered pursuant to subparagraph (A) or (B) shall expire if, and as soon as, the United States, or the attorney general (or other appropriate State official) of the State, as applicable, notifies the court that issued the injunction that the United States or the State, as applicable, will not seek a permanent injunction.

(3) EXPEDITED PROCEEDINGS-

(A) IN GENERAL- In addition to any proceeding under paragraph (2), a district court may enter a temporary restraining order against a person alleged to be in violation of section 1085 of title 18, United States Code, upon application of the United States under paragraph (2)(A) of this subsection, or the attorney general (or other appropriate State official) of an affected State under paragraph (2)(B) of this subsection, without notice and the opportunity for a hearing, if the United States or the State, as applicable, demonstrates that there is probable cause to believe that the use of the Internet or other interactive computer service at issue violates section 1085 of title 18, United States Code.

(B) EXPIRATION- A temporary restraining order entered under this paragraph shall expire on the earlier of--

(i) the expiration of the 30-day period beginning on the date on which the order is entered; or

(ii) the date on which a preliminary injunction is granted or denied.

(C) HEARINGS- A hearing requested concerning an order entered under this paragraph shall be held at the earliest practicable time.

(b) INTERACTIVE COMPUTER SERVICE PROVIDERS-

(1) ELIGIBILITY- For purposes of this subsection, an interactive computer service provider is described in this paragraph only if the provider has established and reasonably implements a policy that provides for the termination of the account of a subscriber of the service system or network of the provider upon the receipt by the provider of a notice described in paragraph (4)(B).

(2) USE OF FACILITIES OR SERVICES- Nothing in section 1085 of title 18, United States Code, may be constructed to impose, or to provide any basis for, liability against an interactive computer service provider described in paragraph (1) whose facilities or services are used by another person to engage in an activity prohibited by that section--

(A) arising out of any transmitting, routing, or providing of connections for the material or activity (including intermediate and temporary storage in the course of such transmitting, routing, or providing connections) by the provider, if--

(i) the material or activity was initiated by or at the direction of a person other than the provider;

(ii) the transmitting, routing, or providing of connections is carried out through an automatic process without selection of the material or activity by the provider;

(iii) the provider does not select the recipients of the material or activity, except as an automatic response to the request of another person; and

(iv) the material or activity is transmitted through the system or network of the provider without modification of its content; or

(B) with respect to material or activity at an online site residing on a computer server owned, controlled, or operated by or for the provider, unless the provider fails to comply within a reasonable time with a notification under paragraph (4) with respect to the particular material or activity at issue.

(3) PROTECTION OF PRIVACY- Nothing in this section or in section 1085 of title 18, United States Code, may be construed to impose or authorize an obligation on an interactive computer service described in paragraph (1) 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.

(4) NOTICE TO INTERACTIVE COMPUTER SERVICE PROVIDERS-

(A) IN GENERAL- If an interactive computer service provider receives from a Federal or State law enforcement agency, acting within its jurisdiction, a written or electronic notice described in subparagraph (B), that a particular online site residing on a computer server owned, controlled, or operated by or for the provider is being used to violate section 1085 of title 18, United States Code, the provider shall not be liable under any Federal or State law if, in a reasonably expeditious manner--

(i) the provider removes or disables access to the material or activity residing at that online site that allegedly violates that section; or

(ii) if the provider does not own, operate, or control the site at which the subject material or activity resides, the provider notifies the Federal or State law enforcement agency that--

(I) the provider is not the proper recipient of such notice; and

(II) upon receipt of a subpoena, the provider will cooperate with the Federal or State law enforcement agency in identifying the person or persons who control the site.

(B) NOTICE- A notice is described in this subparagraph if it--

(i) identifies the material or activity that allegedly violates section 1085 of title 18, United States Code;

(ii) provides information reasonably sufficient to permit the provider to locate the material or activity;

(iii) is supplied to any agent of a provider designated under section 512 of title 17, United States Code, if information regarding such designation is readily available to the public; and

(iv) provides information that is reasonably sufficient to permit the provider to contact the law enforcement agency that issued the notice, including--

(I) the name of the law enforcement agency; and

(II) the name and telephone number of an individual to contact at the law enforcement agency, and, if available, the electronic mail address of that individual.

(5) INJUNCTIVE RELIEF-

(A) IN GENERAL- Except as provided in subparagraph (B), a Federal or State law enforcement agency acting within its jurisdiction, may, following the issuance of a notice to an interactive computer service provider under paragraph (4), in a civil action, obtain an injunction or other appropriate relief to prevent the use of the interactive computer service in violation of Federal or State law.

(B) OTHER LIMITATIONS- In the case of any application for an injunction against an interactive computer service provider to prevent a violation of section 1085 of title 18, United States Code--

(i) arising out of the transmitting, routing, or providing of connections by the provider for material or activity that is prohibited by section 1085 of title 18, United States Code, or performing the intermediate and temporary storage of such material or activity in the course of such transmitting, routing, or providing of connections, the injunctive relief is limited to--

(I) an order restraining the provider from providing access to an identified subscriber of the system or network of the interactive computer service provider, who is using that access to violate section 1085 of title 18, United States Code (or whose use of that access involves a violation of section 1085 of title 18, United States Code, by another person), by terminating the specified account of that subscriber; and

(II) an order restraining the provider from providing access, by taking reasonable steps specified in the order to block access, to a specific, identified, foreign online location;

(ii) with respect to conduct other than that which qualifies for the limitation on remedies set forth in clause (i), the injunctive relief is limited to--

(I) an order restraining the provider from providing access to a material or activity that violates section 1085 of title 18, United States Code, at a particular online site residing on a computer server, owned, operated, or controlled by the provider;

(II) an order restraining the provider from providing access to a subscriber of the system or network of the interactive computer service, who is identified in the order and who is using such service in violation of section 1085 of title 18, United States Code, by terminating the specified account of that subscriber; or

(III) such other injunctive remedies as the court considers necessary to prevent or restrain access to specified material or activity that is prohibited by section 1085 of title 18, United States Code, at a particular online location residing on a computer server owned, operated, or controlled by the provider, that are the least burdensome to the provider among the forms of relief that are comparably effective for that purpose.

(C) CONSIDERATIONS- The court, in determining appropriate injunctive relief under this paragraph, shall consider--

(i) whether such an injunction, either alone or in combination with other such injunctions issued against the same provider (under section 1085 of title 18, United States Code, or under this section) would significantly burden either the provider or the operation of the system or network of the provider;

(ii) whether implementation of such an injunction would be technically feasible and effective, and would not unreasonably interfere with access to lawful material at other online locations;

(iii) whether other less burdensome and comparably effective means of preventing or restraining access to the illegal material or activity are available; and

(iv) the magnitude of the harm likely to be suffered by the community if the injunction is not granted.

(D) NOTICE AND EX PARTE ORDERS- Injunctive relief under this paragraph shall not be available without notice to the service provider and an opportunity for such provider to appear before the court, except for orders ensuring the preservation of evidence or other orders having no material adverse effect on the operation of the communications network of the service provider.

(6) EFFECT ON OTHER LAW-

(A) PREEMPTION OF STATE LAW- An interactive computer service provider described in paragraph (1) shall not be liable under any State law prohibiting or regulating gambling, or subject to any injunctive relief under any such State law, in connection with the use of the interactive computer service of that provider by any person in interstate or affecting commerce.

(B) IMMUNITY FROM LIABILITY- In the absence of fraud or bad faith, an interactive computer service provider described in paragraph (1) shall not be liable for any damages, penalty, or forfeiture, civil or criminal, under Federal or State law for--

(i) taking any action described in paragraph (1) or paragraph 4(A) to comply with a notice described in paragraph (4)(B); or

(ii) complying with any court order issued under paragraph (5).

(c) RELATIONSHIP TO OTHER REMEDIES-

(1) IN GENERAL- Except as provided in subsection (b)(6), nothing in this section may be construed to affect any remedy under section 1085 of title 18, United States Code, or under any other provision of Federal or State law.

(2) AVAILABILITY OF RELIEF- The availability of relief under this section shall not depend on, or be affected by, the initiation or resolution of any action under section 1085 of title 18, United States Code, or under any other provision of Federal or State law.

SEC. 4. RULE OF CONSTRUCTION.

Except as provided in section 3(b)(6) of this Act, nothing in this Act or in section 1085 of title 18, United States Code, as added by section 2 of this Act, may be construed otherwise to affect any prohibition or remedy relating to gambling that is imposed under any other provision of Federal or State law.

SEC. 5. REPORT ON ENFORCEMENT.

Not later than 3 years after the date of enactment of this Act, the Attorney General shall submit to Congress a report, which shall include--

(1) an analysis of the problems, if any, associated with enforcing section 1085 of title 18, United States Code, as added by section 2 of this Act;

(2) recommendations for the best use of the resources of the Department of Justice to enforce that section; and

(3) an estimate of the amount of activity and money being used to gamble on the Internet.

SEC. 6. SEVERABILITY.

If any provision of this Act, an amendment made by this Act, or the application of such provision or amendment to any person or circumstance is held to be unconstitutional, the remainder of this Act, the amendments made by this Act, and the application of the provisions of such to any person or circumstance shall not be affected thereby.