Sen. Kyl Releases Revised Internet Gambling Prohibition Bill

(March 30, 1999) Sen. Jon Kyl released his "Internet Gambling Prohibition Act" on Monday, March 29. The 28 page bill bans most forms of gambling on the Internet. The exceptions listed in the bill include state lotteries and fantasy sports leagues. The bill also provides 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.

Sen. Jon Kyl (R-AZ), the Chairman of the Senate Subcommittee on Technology, Terrorism, and Government Information, introduced a bill in the 105th Congress to ban Internet gambling. S 474 was approved by the Senate by a vote of 90 to 10 in July of 1998. The companion bill in the House, HR 2380, sponsored by Rep. Bob Goodlatte (R-VA), was not passed. The only formal action taken on the House bill was a hearing by the Judiciary Committee's Subcommittee on Crime on February 4, 1998.

Very soon after the Senate passed S 474, the House Judiciary Committee became fully occupied with the Clinton impeachment matter. However, there was also opposition to the bill.

Sen. Jon Kyl

Sen. Kyl's new bill is longer but narrower than its predecessor. Unlike the previous bill, there is no prohibition on individuals placing bets over the Internet. Only "gambling businesses" are prohibited. Also, several categories of businesses are expressly exempted. By including these exceptions, Sen. Kyl eliminated some key sources of opposition to the bill.

For example, fantasy sports leagues are exempted from the scope of the bill. This lead the attorney for the major league baseball players to announce at a hearing on March 23 that the players were withdrawing their opposition.

Also exempted are state lotteries and certain activities permitted under the Interstate Horse Racing Act of 1978.

The bill also has a new extensive set of provisions dealing with interactive computer service providers, which would include businesses such as America Online and web hosting companies. The bill contemplates that many illegal gambling businesses will operate through web sites which reside on servers owned by interactive computer services.

The interactive computer services which host the gambling businesses are extensively protected by the bill. Basically, the bill provides that interactive computer service providers shall have,

• no liability for hosting illegal gambling businesses,
• no liability for shutting off illegal gambling businesses which they host when told to do so by law enforcement, and
• no duty to monitor or shut off the activities of illegal gambling web sites which they host,

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.

It is only the non-exempt gambling businesses which operate on the Internet that would bear the brunt of this bill. And for them, the bill provides hefty fines (the total wagers which they received) and up to four years in jail. The bill also provides that both state and federal authorities may obtain preliminary and permanent injunctions in federal court.