This page contains a summary of the following bills:
S 692, Internet Gambling Prohibition Act of 1999 (Kyl).
HR 3125, Internet Gambling Prohibition Act of 1999 (Goodlatte).
HR 4419, Internet Gambling Funding Prohibition Act (Leach).
Introduction: S 692 and HR 3125 would ban some, but not all, forms of gambling on the
Internet. Sen. Kyl and Rep. Goodlatte also tried to pass a straight ban on Internet
gambling in the 105th Congress (1997-1998). The Kyl bill, S 474 (105th), passed the Senate
by a vote of 90 to 10, but the Goodlatte bill, HR 2380 (105th), never made it out of
committee in the House.
The same sponsors are back with lengthy detailed bills which include new provisions
designed to eliminate some of the opposition to their previous bills. The bills introduced
in the 106th Congress prohibit only gambling businesses (not the gamblers), provide many
exceptions to coverage, and provide certain immunities to interactive computer services
(such as AOL) which act merely as hosts or conduits for gambling activity. The bills
provide 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.
There is very little public opposition to these bills. There is, however, a behind the
scenes lobbying effort. The Internet casino companies, and their investors, oppose these
bills.
There are also legalized land based and riverboat gambling interests, which now either
support or don't oppose these bills. There are also state and local governments which
receive substantial tax revenues off of legalized gambling and its associated hotel,
restaurant, and entertainment activities. Also, most states derive revenues from state run
lotteries. States support the bills. Finally, there are Indian gambling interests.
S 474 (105th) was a simple and short ban on Internet gambling. The first version of S 692
(106th), introduced in March of 1999, grew to 28 pages, largely due to its inclusion of
exceptions and immunities. Each subsequent version grew in length. HR 3125, introduced on
October 21, is up to 37 pages. The House Judiciary Committee marked up the bill on April
5-6, 2000. The Senate approved S 692 on November 19, 1999.
The bill now has so many exceptions, exemptions, immunities, loopholes, definitions, and
clarifying clauses, that it is now a misnomer to call it the Internet Gambling Prohibition
Act. It would be more appropriately called the Federal Internet Gambling Regulatory Code.
In fact, the even the term Internet is a misnomer. The bill would affect not just Internet
activity, but also any system which networks two computers to a server.
Many forms of offline gambling which are legal today are exempted from the bill. The new
business model, the Internet casino, would be most impacted by the bill.
When Sen. Kyl and Rep. Goodlatte began this effort, their bills looked like altruistic
efforts to protect the Internet, and its users, from the insidious consequences of
gambling. Now, their bills are taking on the appearance of efforts by established gambling
interests to limit competition from new entrants, and by state governments to protect
their gambling revenues.
HR 4419 is the most recent proposal. It was introduced on May 10, 2000 by Rep. James Leach
(R-IA), Chairman of the House Banking Committee. As amended on June 28, it would ban the
use of certain bank instruments for illegal Internet gambling.
S 692, Internet Gambling Prohibition Act of 1999.
Sponsor. Jon Kyl (R-AZ). Original Cosponsors. Richard Bryan (D-NV), Charles Grassley
(R-IA), Dianne Feinstein (D-CA), Slade Gorton (R-WA), Michael Enzi (R-MN), Don Nickles
(R-OK), Strom Thurmond (R-SC), Connie Mack (R-FL), Paul Coverdell (R-GA), Rick Santorum
(R-PA), and Harry Reid (D-NV). Additional Cosponsors. Bob Smith (I-NH), Tim Hutchinson
(R-AR), Wayne Allard (R-CO), Kit Bond (R-MO), Trent Lott (R-MS), Tim Johnson (D-SD),
George Voinovich (R-OH), Mike DeWine R-OH), Sam Brownback (R-KS), Jim Bunning (R-KY),
Robert Torricelli (D-NJ), and Jesse Helms (R-NC).
Summary. S 692 IS is a long and carefully drafted bill. Much of its 28 pages is devoted to
creating exceptions to its coverage, and to defining the circumstances under which
legitimate interactive computer services are immune from injunction or penalty for the
activities of Internet gambling businesses which use their services or facilities.
The Internet Gambling Prohibition Act would create a new § 1085 in Title 18 of the United
States Code. It begins with a lengthy definitions section.
The bill then states the basic prohibition: "it shall be unlawful for a person
engaged in a gambling business to use the Internet or any other interactive computer
service to place, receive, or otherwise make a bet or wager." The word
"person" is defined to include corporations and other entities, of course.
However, this language is significant in that it does not illegalize the act of gambling
on the Internet. Only the gambling businesses are affected. S 474 went after both gambling
businesses and individual gamblers.
The bill next sets out penalties for violators. These are fines in the amount of the total
wagers received, or 20,000, whichever is greater, and jail time of up to four
years.
The bill also provides that either federal or state authorities can obtain injunctions in
federal district court against illegal Internet gambling businesses.
The bill also provides that several types of gambling are exempted. These include fantasy
sports leagues, state lotteries, and certain activities under the Interstate Horse Racing
Act of 1978.
The bill also has an extensive set of provisions dealing with interactive computer
services, which would include businesses such as America Online and web hosting companies.
The bill contemplates that most illegal gambling businesses will operate through web sites
which reside on servers owned by interactive computer services.
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.
This bill contains a rather complicated extension of the principles underlying the
immunity clauses of section 230 of the Telecommunications Act of 1996. Interactive
computer service providers are merely conduits for, and should not be held responsible
for, the communications of others.
First, to be eligible for these benefits, interactive computer service providers must
"establish[] and reasonably implement[] a policy for the termination of the account
of a subscriber of the service ... upon the receipt ..." of a notice from law
enforcement authorities. The bill also provides in detail what must be in such a notice.
The immunity from liability for hosting gambling sites provision reads, in part:
"Nothing ... may be constructed to impose, or to provide any basis for, liability
against an interactive computer service provider [who adopts a termination policy] whose
facilities or services are used by [an a gambling business] arising out of any
transmitting, routing, or providing connections .. if ... (i) the material or activity was
initiated by or at the direction of a person other than the provider; (ii) [it was] an
automatic process without selection of material or activity by the provider; (iii) the
provider does not select the recipients of the material or activity ...; and (iv) [the
provider does not modify the content]. (See, pages 16-18.)
The immunity from liability for shutting off gambling web sites provision reads, in part:
If an interactive computer service provider receives from a Federal or State law
enforcement agency ... notice ...
that a particular online site residing on a computer server owned, controlled, or operated
by or for the provider
is being used [by an illegal gambling business] the provider shall not be liable under any
Federal or State law, if
... (i) the provider removes or disables ... or (ii) if the provider does not own,
operate, or control the site ... the
provider [tells law enforcement, and if subpoenaed, helps to identify who controls the
site.]
The relief from duty to monitor or delete provision reads, in part:
"The Nothing ... may be construed to impose or authorize an obligation on an
interactive computer service [who
adopts a termination policy] to (A) monitor material or use of its service; or (B) except
as required by an order
of a court, to gain access to, to remove, or to disable access to material in any case in
which such conduct is
prohibited by law."
Status. S 692 was introduced on March 23, 1999, after a hearing by the Senate Subommittee
on Technology, Terrorism, and Government Information. This subcommittee approved an
amendment in the nature of a substitute on May 12. The full committee approved a much
amended version of the bill on June 17. The full Senate approved the bill, with further
amendment, on November 19, 1999.
Legislative History with Links to Related Materials.
7/24/98. Senate approved S 474 in the 105th Congress. See, Tech Law Journal story.
3/23/99. The Senate Subcommittee on Technology, Terrorism, and Government Information held
a hearing on Internet
gambling. See also:
• Statement by Sen. Jon Kyl.
• Statement by Wisconsin Atty. Gen. James Doyle.
• Tech Law Journal story.
3/23/99. S 692 IS introduced in Senate. See, Tech Law Journal story.
3/23/99. S 692 referred to Senate Judiciary Committee.
5/12/99. The Senate Judiciary Committee's Subcommittee on Technology approved an amendment
in the nature of a
substitute.
6/17/99. The Senate Judiciary Committee approved S 692 RS by a vote of 16 to 1 (Sen.
Feingold voted no.)
7/2/99. Report filed by the Senate Judiciary Committee. See, S. Rept. 106-121.
11/19/99. S 692 passed the Senate, with amendment.
HR 3125, Internet Gambling Prohibition Act of 1999.
Sponsor. Rep. Bob Goodlatte (R-VA). Original cosponsors. Frank LoBiondo (R-NJ), Frank Wolf
(R-VA), Rick Boucher (D-VA), Jim Gibbons (R-NV), and Virgil Goode (D-VA).
Summary. HR 3125 IH is based on S 692 RS with some further revisions.
Status. This bill was introduced on October 21, 1999. The House voted on HR 3125 under
suspension of the rules (which requires a 2/3 majority. The bill failed by a vote of 245
to 159. HR 3125 as voted on by the House.
Legislative History with Links to Related Materials.
10/21/99. HR 3125 IH introduced in the House. See also:
• Statement by Rep. Goodlatte.
• Tech Law Journal story.
10/21/99. HR 3125 referred to House Judiciary Committee.
10/27/99. HR 3125 referred to the Crime Subcommittee.
11/3/99. HR 3125 approved by the Crime Subcommittee without amendment. See:
• Statement by Rep. Bill McCollum.
• Tech Law Journal story.
2/29/00. Rep. Don Young (R-AK) wrote a letter to Speaker Denny Hastert (R-IL) requesting
Resources Committee
jurisdiction for HR 3125.
3/10/00. The House Crime Subcommittee held a second hearing on HR 3125.
4/5-6/00. The House Judiciary Committee approved HR 3125, with amendments, by a vote of 21
to 8. See:
• Goodlatte amendment regarding Indian gaming (approved).
• Pease amendment regarding state lotteries (approved).
• Lee amendment regarding financial institutions (not approved).
6/15/00. The House Telecom Subcommittee held a hearing on HR 3125. See:
• Statement by Rep. Eshoo (D-CA).
• Tech Law Journal story.
7/11/00. Rep. Tauzin (R-LA) and Rep. Goodlatte announced compromise language for HR 3125.
See, Tech Law
Journal story.
7/17/00. The House voted on HR 3125 under suspension of the rules (which requires a 2/3
majority. The bill
failed by a vote of 245 to 159.
• HR 3125 as voted on by the House.
• Tech Law Journal story.
HR 4419, Internet Gambling Funding Prohibition Act
Sponsor. Rep. James Leach (R-IA). Original Cosponsors. John LaFalce (D-NY), Marge Roukema
(R-NJ), Richard Baker (R-LA).
Summary. HR 4419 IH would ban the use of certain bank instruments for Internet gambling.
The version approved by the Banking Committee on June 28 includes language that limits the
prohibition of the bill applies only "where such bet or wager is unlawful under any
applicable Federal or State law in the State in which the bet or wager is initiated,
received, or otherwise made".
Status. This bill was introduced on May 10, 2000. The Banking Committee held a hearing on
June 20, 2000. The Banking Committee approved HR 4419 with a significant amendment
limiting its application.
Legislative History with Links to Related Materials.
5/10/00. HR 4419 IH introduced in the House.
5/10/00. HR 4419 referred to the Banking Committee and the Judiciary Committee.
5/30/00. HR 4419 referred to the Judiciary Committee's Crime Subcommittee.
6/20/00. Hearing before the House Banking Committee. See, statements of:
• Rep. Jim Leach (R-IA).
• Gregory Baer (Treasury Dept.).
• Kevin Di Gregory (Justice Dept.).
• Alan Kesner (NAAG).
• Richard Leone (former Commissioner on the NGISC).
• Daniel Nestel (NCAA).
• Alec Ingle (NY Racing Assoc.).
6/28/00. HR 4419 amended and approved by the House Banking Committee. See, Tech Law
Journal story and
analysis of the vote.
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