S 692 RS (106th), "Internet Gambling Prohibition Act of 1999."
Re: criminalization of Internet gambling businesses.
Sponsor: Sen. Jon Kyl (R-AZ).
Date Reported by Judiciary Committee: June 17, 1999.
Source: Library of Congress.

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

June 17, 1999

Reported with an amendment

S 692 RS

Calendar No. 158

106th CONGRESS

1st Session

S. 692

To prohibit Internet gambling, and for other purposes.

IN THE SENATE OF THE UNITED STATES

March 23, 1999

Mr. KYL (for himself, Mr. BRYAN, Mr. GRASSLEY, Mrs. FEINSTEIN, Mr. GORTON, Mr. ENZI, Mr. NICKLES, Mr. THURMOND, Mr. MACK, Mr. COVERDELL, Mr. SANTORUM, Mr. REID, Mr. SMITH of New Hampshire, Mr. HUTCHINSON, Mr. ALLARD, Mr. BOND, Mr. LOTT, Mr. JOHNSON, Mr. VOINOVICH, Mr. DEWINE, Mr. BROWNBACK, Mr. BUNNING, and Mr. TORRICELLI) introduced the following bill; which was read twice and referred to the Committee on the Judiciary

June 17, 1999

Reported by Mr. HATCH, with an amendment

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; 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 (f)(1)(B); and

`(ii) by which a person located within any State must subscribe and be registered with the provider of the wagering service by name, address, and appropriate billing information 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) a business that is conducted at a gambling establishment, or that--

`(i) 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;

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

`(iii) 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; and

`(B) any soliciting agent of a business described in subparagraph (A).

`(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 place, receive, or otherwise make 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 operates in, or uses a channel or instrumentality of, interstate or foreign commerce to provide or enable access by multiple users to a computer server, including specifically a service or system that provides access to the Internet.

`(7) INTERACTIVE COMPUTER SERVICE PROVIDER- The term `interactive computer service provider' means any person that provides an interactive computer service, to the extent that such person offers or provides such service.

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

`(9) PERSON- The term `person' means any individual, association, partnership, joint venture, corporation (or any affiliate of a 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)).

`(10) 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.

`(11) 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.

`(12) 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 or contractors who are granted access to the system or network of their employer.

`(b) INTERNET GAMBLING-

`(1) PROHIBITION- Subject to subsection (f), it shall be unlawful for a person engaged in a gambling business knowingly 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 this section shall be--

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

`(i) the total amount that such person bet or wagered, or placed, received, or accepted in bets or wagers, as a result of engaging in that business in violation of this section; or

`(ii) $20,000;

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

`(C) both.

`(3) PERMANENT INJUNCTIONS- Upon conviction of a person under this section, the court may enter a permanent injunction enjoining such person from placing, receiving, or otherwise making bets or wagers or sending, receiving, or inviting information assisting in the placing of bets or wagers.

`(c) CIVIL REMEDIES-

`(1) JURISDICTION- The district courts of the United States shall have original and exclusive jurisdiction to prevent and restrain violations of this section by issuing appropriate orders in accordance with this section, regardless of whether a prosecution has been initiated under this 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 this section.

`(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 or restrain a violation of this section 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 this section allegedly has occurred or will occur, after providing written notice to the United States, may institute proceedings under this subsection to prevent or restrain the violation.

`(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 or restrain a violation of this section 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) INDIAN LANDS- Notwithstanding subparagraphs (A) and (B), for a violation that is alleged to have occurred, or may occur, on Indian lands (as that term is defined in section 4 of the Indian Gaming Regulatory Act (25 U.S.C. 2703))--

`(i) the United States shall have the enforcement authority provided under subparagraph (A); and

`(ii) the enforcement authorities specified in an applicable Tribal-State compact negotiated under section 11 of the Indian Gaming Regulatory Act (25 U.S.C. 2710) shall be carried out in accordance with that compact.

`(D) 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 order or 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, in exigent circumstances, enter a temporary restraining order against a person alleged to be in violation of this section upon application of the United States under paragraph (2)(A), or the attorney general (or other appropriate State official) of an affected State under paragraph (2)(B), without notice and the opportunity for a hearing as provided in rule 65(b) of the Federal Rules of Civil Procedure (except as provided in subsection (d)(3)), 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 this section.

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

`(d) INTERACTIVE COMPUTER SERVICE PROVIDERS-

`(1) IMMUNITY FROM LIABILITY FOR USE BY ANOTHER-

`(A) IN GENERAL- An interactive computer service provider described in subparagraph (B) shall not be liable, under this section or any other provision of Federal or State law prohibiting or regulating gambling or gambling-related activities, for the use of its facilities or services by another person to engage in Internet gambling activity that violates such law--

`(i) arising out of any transmitting, routing, or providing of connections for gambling-related 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

`(ii) arising out of any gambling-related material or activity at an online site residing on a computer server owned, controlled, or operated by or for the provider, or arising out of referring or linking users to an online location containing such material or activity, if the material or activity was initiated by or at the direction of a person other than the provider, unless the provider fails to take expeditiously, with respect to the particular material or activity at issue, the actions described in paragraph (2)(A) following the receipt by the provider of a notice described in paragraph (2)(B).

`(B) ELIGIBILITY- An interactive computer service provider is described in this subparagraph only if the provider--

`(i) maintains and implements a written or electronic policy that requires the provider to terminate the account of a subscriber of its system or network expeditiously following the receipt by the provider of a notice described in paragraph (2)(B) alleging that such subscriber has violated or is violating this section; and

`(ii) with respect to the particular material or activity at issue, has not knowingly permitted its computer server to be used to engage in activity that the provider knows is prohibited by this section, with the specific intent that such server be used for such purpose.

`(2) 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 authority and 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 by another person to violate this section, the provider shall expeditiously--

`(i) remove or disable access to the material or activity residing at that online site that allegedly violates this section; or

`(ii) in any case in which the provider does not control the site at which the subject material or activity resides, the provider, through any agent of the provider designated in accordance with section 512(c)(2) of title 17, or other responsible identified employee or contractor--

`(I) notify the Federal or State law enforcement agency that the provider is not the proper recipient of such notice; and

`(II) upon receipt of a subpoena, 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 only if it--

`(i) identifies the material or activity that allegedly violates this section, and alleges that such material or activity violates this section;

`(ii) provides information reasonably sufficient to permit the provider to locate (and, as appropriate, in a notice issued pursuant to paragraph (3)(A) to block access to) the material or activity;

`(iii) is supplied to any agent of a provider designated in accordance with section 512(c)(2) of title 17, if information regarding such designation is readily available to the public;

`(iv) provides information that is reasonably sufficient to permit the provider to contact the law enforcement agency that issued the notice, including the name of the law enforcement agency, and 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); and

`(v) declares under penalties of perjury that the person submitting the notice is an official of the law enforcement agency described in clause (iv).

`(3) INJUNCTIVE RELIEF-

`(A) IN GENERAL- The United States, or a State law enforcement agency acting within its authority and jurisdiction, may, not less than 24 hours following the issuance to an interactive computer service provider of a notice described in paragraph (2)(B), in a civil action, obtain a temporary restraining order, or an injunction to prevent the use of the interactive computer service by another person in violation of this section.

`(B) LIMITATIONS- Notwithstanding any other provision of this section, in the case of any application for a temporary restraining order or an injunction against an interactive computer service provider described in paragraph (1)(B) to prevent a violation of this section--

`(i) arising out of activity described in paragraph (1)(A)(i), 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, if the court determines that there is probable cause to believe that such subscriber is using that access to violate this section (or to engage with another person in a communication that violates this section), 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) arising out of activity described in paragraph (1)(A)(ii), the injunctive relief is limited to--

`(I) the orders described in clause (i)(I);

`(II) an order restraining the provider from providing access to the material or activity that violates this section at a particular online site residing on a computer server operated or controlled by the provider; and

`(III) such other injunctive remedies as the court considers necessary to prevent or restrain access to specified material or activity that is prohibited by this section at a particular online location residing on a computer server 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, and currently operative, against the same provider would significantly (and, in the case of relief under subparagraph (B)(ii), taking into account, among other factors, the conduct of the provider, unreasonably) 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 materially 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.

`(4) EFFECT ON OTHER LAW-

`(A) IMMUNITY FROM LIABILITY FOR COMPLIANCE- An interactive computer service provider shall not be liable for any damages, penalty, or forfeiture, civil or criminal, under Federal or State law for taking in good faith any action described in paragraph (2)(A) to comply with a notice described in paragraph (2)(B), or complying with any court order issued under paragraph (3).

`(B) DISCLAIMER OF OBLIGATIONS- Nothing in this section may be construed to impose or authorize an obligation on an interactive computer service provider described in paragraph (1)(B)--

`(i) to monitor material or use of its service; or

`(ii) except as required by a notice or an order of a court under this subsection, to gain access to, to remove, or to disable access to material.

`(C) RIGHTS OF SUBSCRIBERS- Nothing in this section may be construed to prejudice the right of a subscriber to secure an appropriate determination, as otherwise provided by law, in a Federal court or in a State or local tribunal or agency, that the account of such subscriber should not be terminated pursuant to this subsection, or should be restored.

`(e) AVAILABILITY OF RELIEF- The availability of relief under subsections (c) and (d) shall not depend on, or be affected by, the initiation or resolution of any action under subsection (b), or under any other provision of Federal or State law.

`(f) 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, 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 or a live dog 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 or live dog 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) in the case of--

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

`(II) live dog racing, subject to consent agreements that are comparable to those required by the Interstate Horse Racing Act of 1978, approved by the appropriate State regulatory agencies, in the State receiving the signal, and in the State in which the bet or wager originates; or

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

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

`(A) IN GENERAL- Paragraph (1) 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) QUALIFICATION- 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.

`(3) ADVERTISING AND PROMOTION- The prohibition of subsection (b)(1)(B) does not apply to advertising or promotion of any activity that is not prohibited by subsection (b)(1)(A).

`(g) RULE OF CONSTRUCTION- Nothing in this section may be construed to affect any prohibition or remedy applicable to a person engaged in a gambling business under any other provision of Federal or State law.'.

(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. 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. 4. 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 this Act and the provisions of such amendments to any other person or circumstance shall not be affected thereby.