Mr. Speaker, I thank the gentleman for yielding. Mr. Speaker, I rise to note that folded into the SAFE Port Act is the Unlawful Internet Gambling Enforcement Act which is one of the most important…
Mr. Speaker, I thank the gentleman for yielding.
Mr. Speaker, I rise to note that folded into the SAFE Port Act is the Unlawful Internet Gambling Enforcement Act which is one of the most important pieces of family legislation this Congress has ever considered.
Internet gambling restraints have been under review for four Congresses. This evening we are finally poised to act decisively on this subject, and I want to extend my personal appreciation to the Speaker; to the majority leader, Mr. Boehner; and to the Senate majority leader, Mr. Frist, for their steadfast support.
Companion legislation to the House product was forthrightly led in the Senate by John Kyl of Arizona. Many Members have played an important part over the years in this legislation, particularly Mike Oxley and Spencer Bachus from the Financial Services Committee and Bob Goodlatte and Chris Cannon from Judiciary.
But I want to stress this is bipartisan legislation. The majority of Democrats voted for it just a few weeks ago. Indeed, all of us can be proud of this legislation. It should be considered a significant accomplishment of this Congress. After all, with each passing day we learn of friends and neighbors touched by devastating losses from Internet gambling. Never has it been so easy to lose so much so quickly at such a young age.
As a professor of business at the University of Illinois has noted, Internet gambling is crack cocaine for gamblers. There are no needle marks; you just click the mouse and lose your house.
The reason the NCAA, the NFL and the NBA, the NHL, and Major League Baseball support this legislation is their concern for the integrity of the games. The reason the religious community from Baptists and Methodists to Muslims has rallied to this cause is because it is concerned for the unity of the American family.
The reason we should adopt this approach is that we must be mindful of our obligations to the American family.
Mr. Speaker, I urge support for this legislation, and I will submit for the Record at this point its legislative history.
Legislative History for the Unlawful Internet Gambling Enforcement Act
Section 801. Short title
This Act may be cited as the `Unlawful Internet Gambling
Enforcement Act of 2006.'
Section 802. Prohibition on acceptance of any payment instrument for
unlawful Internet gambling
Subsection (a) adds a new `Subchapter IV--Prohibition on
Funding of Unlawful Internet Gambling' to Chapter 53 of Title
31 (Monetary Transactions). The new subchapter will come
immediately after subchapter III, covering Money Laundering
and Related Financial Crimes.
Section 5361. Congressional findings and purpose
(a) Findings. The Congressional findings note that: (1)
Internet gambling is primarily funded through the personal
use of payment system instruments, credit cards, and wire
transfers; (2) the National Gambling Impact Study Commission
in 1999 recommended the passage of legislation to prohibit
wire transfers to Internet gambling sites or the banks which
represent such sites; (3) Internet gambling is a growing
cause of debt collection problems for insured depository
institutions and the consumer credit industry; and (4) new
mechanisms for enforcing gambling laws on the Internet are
necessary because traditional law enforcement mechanisms are
often inadequate for enforcing gambling prohibitions on the
Internet, especially where such gambling crosses State or
national borders.
(b) Rule of Construction. No provision is to be construed
as altering, limiting, or extending any Federal or State law
or Tribal-State compact prohibiting, permitting or regulating
gambling within the United States. This is intended to
alleviate fears that this bill could have the effect of
changing the legality of any gambling-related activity in the
United States.
Section 5362. Definitions
This defines the term `bet or wager' as 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 subject
to chance with the agreement that the winner will receive
something of value in the event of a certain outcome. This
subsection clarifies that `bet or wager' does not include
bona fide business transactions such as securities trading or
buying or selling insurance contracts, or participation in a
simulation sports game or educational game. ``Something of
value'' does not include personal efforts of the participants
in playing the game or contest, or points or credits that the
sponsor of the game or contest provides to participants free
of charge and that can be used or redeemed only for
participation in games or contests offered by the sponsor.
Defines the term `unlawful Internet gambling' as placing,
receiving, or transmitting a bet or wager by any means which
involves the use of the Internet, where such bet or wager is
unlawful under any applicable Federal or State law in the
State or Tribal lands in which the bet or wager is
initiated, received, or otherwise made. Clarifies that
purely intrastate transactions conducted in accordance
with state laws with appropriate security controls will
not be considered unlawful internet gambling. Likewise,
transactions solely within Tribal lands complying with
similar security requirements and the Indian Gaming
Regulatory Act will not be considered unlawful. Section
5362(10)(D) addresses transactions complying with
Interstate Horseracing Act (IHA) which will not be
considered unlawful, because the IHA only regulates legal
transactions that are lawful in each of the states
involved. Also clarifies that intermediate routing of data
packets does not determine the location in which bets or
wagers are made.
The Internet gambling provisions do not change the legality
of any gambling-related activity in the United States. For
instance, if use of the Internet in connection with dog
racing is approved by state regulatory agencies and does not
violate any Federal law, then it is allowed under the new
section 5362(10)(A) of title 31.
The Internet gambling provisions do not interfere with
intrastate laws. New section 5362(10)(B) creates a safe
harbor from the term ``unlawful Internet gambling'' for
authorized intrastate transactions, if the state law has
adequate security measures to prevent participation by minors
and persons located out of the state. The safe harbor would
leave intact the current interstate gambling prohibitions
such as the Wire Act, federal prohibitions on lotteries, and
the Gambling Ship Act so that casino and lottery games could
not be placed on websites and individuals could not access
these games from their homes or businesses. The safe harbor
is intended to recognize current law which allows states
jurisdiction over wholly intrastate activity, where bets or
wagers, or information assisting in bets or wagers, do not
cross state lines. This would, for example, allow retail
lottery terminals to interact with a processing center within
a state, and linking of terminals between separate casinos
within a state if authorized by the state.
Tribal gaming laws are similarly preserved. Transactions
solely within tribal lands complying with similar security
requirements and the Indian Gaming Regulatory Act will not be
considered unlawful, under section 5362(10)(C). Moreover, the
principle of the Indian Gaming Regulatory Act is that state
governments cannot apply discriminatory laws against gaming
authorized by tribal governments within the state. If a state
authorizes use of the Internet for gambling pursuant to this
section and the tribal government also authorizes this,
gambling businesses located on tribal lands within that state
would be permitted to ``export'' gambling services to persons
in the rest of the state, off of tribal lands, if the
``exported'' game complies with state law, pursuant to
section 5362(10)(B). This does not give the state
jurisdiction over the operation of the tribal gambling
business, including licensing requirements, and does not
allow the state to dictate tribal gaming laws. Only the game
itself--including the method for playing the game--must
comply with state law if a person physically located off of
tribal lands places a bet that is received by a tribal
gambling business. This principle also applies in reverse: if
a person on tribal lands plays a gambling game with a state-
based gambling
business, the game must not violate tribal law.
Section 5362 also defines the terms `business of betting or
wagering,' `designated payment system,' `Internet,' and
`restricted transaction.' Several additional terms are
defined by reference to other sections of the U.S. Code.
Section 5363. Prohibition on acceptance of any financial instrument for
unlawful Internet gambling
Prohibits persons engaged in the business of betting or
wagering from knowingly accepting credit, funds, bank
instruments, or proceeds of any other form of financial
transaction in connection with the participation of another
person in unlawful Internet gambling. This is called a
'restricted transaction' according to the definitions
section.
Section 5364. Policies and procedures to identify and prevent
restricted transactions
(a) Regulations and (b) Requirements for Policies and
Procedures. Requires the Secretary of the Treasury and the
Federal Reserve Board, in conjunction with the U.S. Attorney
General, to prescribe regulations within nine months
requiring any payment system to establish policies and
procedures reasonably designed to identify and block
restricted transactions, or otherwise prevent restricted
transactions from entering its system.
(c) Compliance and (d) Liability. Provides persons
operating financial systems with immunity from civil
liability for blocking transactions that they reasonably
believe are restricted transactions, or in reliance on the
regulations promulgated by the Treasury Department and
Federal Reserve. Though a financial institution may block
additional transactions based on reasonable belief, it has no
duty to do so, and may rely solely on the regulations to
fully discharge its obligations.
(e) Enforcement. The Federal functional regulators and the
Federal Trade Commission are given the exclusive authority to
enforce this section.
Section 5365. Civil remedies
Authorizes the U.S. Attorney General and State Attorneys
General to pursue civil remedies, including a preliminary
injunction or injunction against any person to prevent or
restrain a violation of this legislation. It clarifies that
the bill does not alter, supersede or otherwise affect the
Indian Gaming Regulatory Act; generally limits responsibility
of an interactive computer service to the removal or
disabling of access to an online site violating this section,
upon proper notice; restricts the ability to bring injunctive
cases against financial transaction provider activities.
Internet gambling operators primarily use the resources of
two types of businesses to conduct their unlawful
enterprises: payment systems and interactive computer
services. The unlawful use of payment systems is addressed by
section 5364, not by injunctions. The legislation addresses
the unlawful use of interactive computer services through
injunctions, but with appropriate limits to avoid imposing
any duty to censor or monitor on these computer services.
Section 5365(c)(2) also extends to interactive computer
services the same immunity from liability that common
carriers are afforded when complying with a notice from law
enforcement pursuant to section 1084(d) of title 18 to
discontinue service to a gambling business.
Section 5366. Criminal penalties
Authorizes criminal penalties for violating section 5363,
including fines or imprisonment for not more than five years
or both. Also authorizes permanently enjoining a person
convicted under this section from engaging in gambling
activities.
Section 5367. Circumventions prohibited
Provides that, notwithstanding the safe harbor provided in
section 5362(2), a financial intermediary or interactive
computer service or telecommunications service that has
actual knowledge and control of bets and wagers, and operates
or is controlled by an entity that operates, an unlawful
Internet gambling site can be held criminally liable under
this subchapter.
Section 803. Internet gambling in or through foreign jurisdictions
Subsection (a) provides that, in deliberations between the
U.S. Government and any other country on money laundering,
corruption, and crime issues, the U.S. Government should
encourage cooperation by foreign governments in identifying
whether Internet gambling operations are being used for money
laundering, corruption, or other crimes, advance policies
that promote the cooperation by foreign governments in the
enforcement of this Act, and encourage the Financial Action
Task Force on Money Laundering to study the extent to which
Internet gambling operations are being used for money
laundering. It also requires the Secretary of the Treasury to
submit an annual report to Congress on the deliberations
between the United States and other countries on issues
relating to Internet gambling.
Subsection (b) requires the Secretary of the Treasury to
submit an annual report to Congress on any deliberations
between the United States and other countries on tissues
relating to Internet Gambling.