House Crime Subcommittee Approves Internet Gambling Bill

May 6, 2003. The House Judiciary Committee's Subcommittee on Crime, Terrorism, and Homeland Security approved HR 21, the "Unlawful Internet Gambling Funding Prohibition Act", without amendment, by a voice vote.

This bill, which is sponsored by Rep. James Leach (R-IA), would attempt to functionally bar internet gambling by prohibiting the use of financial instruments, such as credit cards, in any transaction involving illegal internet gambling.

Rep. Bob Goodlatte (R-VA), a longtime proponent of passing federal legislation that would ban illegal internet gambling, presided at the hearing in the place of Rep. Howard Coble (R-NC). Rep. Goodlatte first discussed the problems of gambling by children, problem gambling, and money laundering for organized crime.

He said that "Federal law is currently unclear as to whether or not all types of Internet gambling is illegal. H.R. 21 is intended to make it crystal clear that operating a gambling business on the Internet is illegal."

Rep. Goodlatte (at right) continued that "This bill creates a new crime of accepting financial instruments, such as credit cards or electronic fund transfers, for debts incurred in illegal Internet gambling. Also, because the perpetrators of this crime are off-shore and beyond the reach of U.S. law enforcement tactics, the bill enables state and federal Attorneys General to request that injunctions be issued to any party, such as financial institutions and Internet Service Providers, to assist in the prevention or restraint of this crime."

Finally, he stated that "this bill allows federal bank regulators to create rules requiring financial institutions to use designated methods to block or filter illegal Internet gambling transactions."

Rep. Sheila Lee (D-TX) (at left) stated that while should would not "cry on her pillow" over the problems of big banks, she is concerned about the burden imposed by legislation on small community banks. She offered an amendment that would have deleted Section 3 of the bill.

Rep. Goodlatte stated that "the amendment offered strikes the operative section of the bill", and would leave only the findings and the title of the bill. He added that it "would have the effect of gutting the bill". The amendment was defeated on a voice vote.

Rep. Scott argued that the bill "will be ineffective", because internet gambling would continue, with miscoded credit card transactions, the use of e-cash, and other less transparent processes. He argued that internet gambling should instead be permitted, but "tightly regulated". He said that this would allow for consumer protection, and taxation of gambling operations.

Rep. Bobby Scott (D-VA) offered an amendment that he stated would prohibit conduct by individuals as well as gambling operations. However, during debate it was suggested that the proposed wording might not accomplish the intended purpose. Rep. Scott withdrew the amendment, but stated that he would introduce a similar amendment at the full committee markup.

Rep. Scott also stated that he would offer at the full committee markup an amendment that substitutes the language of HR 1223, the "Internet Gambling Licensing and Regulation Commission Act", sponsored by Rep. John Conyers (D-MI) and Rep. Chris Cannon (R-UT). That bill would establish a commission to study the feasibility of regulating internet gambling.