Lawmakers seek ‘net
gaming ban (again)

Mar 21, 2006 3:40 AM

As if by clockwork, the U.S. Congress has once again undertaken a drive to stamp out Internet gambling.

Last week, a House committee approved a bill that would stop online gambling businesses from accepting payments from U.S. citizens in states where betting is illegal.

Specifically, the bill would prohibit gambling businesses from accepting credit cards, checks, wire transfers and electronic fund transfers to pay for illegal online gambling.

Unlawful gambling, under the legislation, would include online poker wagers and sports bets made or received in a place where such a bet is illegal under federal or state law.

The proposed legislation carved out exceptions for wagering on horse races and fantasy sports bets.

The bill now moves to the full House for consideration.

About a year ago, Senator John Kyl of Arizona introduced legislation that would have outlawed online gambling.

But members of the House could not agree on the terms of a companion bill, thus the measure died through inaction. One of the sticking points was a provision in the Senate version that would have prohibited states from legalizing Internet gambling within their own borders.

The current proposal has garnered the support of the National Football League (NFL) and Major League Baseball as well as other organizations.

But Massachusetts Rep. Barney Frank, the top Democrat on the House committee, opposed the bill and implored Congress to not try to control how adults spend their money just because some lawmakers oppose gambling.

"Adults are entitled to do with their money what they want to do," Frank said.

Several groups have already lined up to oppose the legislation.

"No matter what bill Congress passes, nothing will stop online gaming," said former New Jersey gaming regulator Frank Catania. "There are 70 jurisdictions around the world operating legally and nothing is going to stop them from taking bets."

Catania, former assistant attorney general and director of the New Jersey Division of Gaming, said the answer is to regulate online gaming in much the same way that non-Internet gambling has been regulated.

One online gambling company executive, David Carruthers, echoed many opponents of the proposed legislation.

"Trying to shut down a multi-billion dollar industry with consumer demand that includes an estimated eight million Americans annually is an empty legislative effort," Carruthers, CEO of BetOnSports, wrote in an L.A. Times editorial. "This law shouldn’t be applied to Internet betting. No case law or statue clearly defines where Internet bets are taking place. BetOnSports, for example, is based in Costa Rica. Our customers can place bets from anywhere that has an Internet connection. In part because of this ambiguity, no one has been prosecuted for online betting under the law."

Catania said the online gaming industry could be regulated relatively easily to protect U.S. citizens. He said he worked with the Kahnawake Mohawk Indian tribe in Canada to establish rules to protect online gamblers.

He suggested that gaming sites could be required to be certified by regulatory bodies to conduct gambling with U.S. players. For instance, players could be required to initially limit their bets to $250 and an age limit of 18 could be established.

Furthermore, operators would undergo "background checks to make sure they are fair and honest," he said, "and to make sure people are paid when they win."

Catania said some states have already expressed an interest in regulating online gaming and he added that the U.S. Virgin Islands is prepared to begin some online gaming activity.

In the Senate. Sen. Kyl has tried to attach a similar version of the bill to other legislation, but so far without success.