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House Wants to Inhibit Offshore Internet Gambling

U.S. can't regulate the sites, but legislation would prevent funding of gaming transactions.

June 11, 2003|Justin Gest | Times Staff Writer

WASHINGTON -- The House on Tuesday approved legislation that targets unregulated offshore Internet gambling sites by prohibiting financial institutions and creditors from completing credit-card payments or wire transfers for funds owed by online losers.

Because the government cannot regulate online casinos that are located beyond U.S. jurisdiction, the Unlawful Internet Gambling Funding Prohibition Act, which passed 319 to 104, would wage a war of attrition by closing the U.S. money pipeline. Rep. Spencer Bachus (R-Ala.), who sponsored the legislation, said that the bill was an attempt to curb betting, particularly by underage or chronic gamblers.

Internet gambling sites allow players to use the Web to place bets on a wide variety of online games. Because the U.S. government does not license such operations, sites are typically based abroad, particularly in the Caribbean.

The bill's sponsors say that in 1997, only 24 offshore sites were conducting business. By 2001, there were at least 1,500 -- collecting about $6 billion in bets annually.

"Do we want to continue to let this industry grow -- a mob-run industry?" Bachus asked his colleagues. "There will be other lives ruined and families broken up."

He estimated that about 5 million American youths gamble -- an activity that is illegal in casinos for individuals under 18 or 21, depending on state law.

A similar bill proposed by Rep. James A. Leach (R-Iowa) was passed by voice vote in the House in October, but it was not introduced in the Senate before the legislative term expired.

This time, Sen. Jon Kyl (R-Ariz.) is sponsoring a companion bill that is similar to the House version but features stiffer consequences, including criminal penalties of up to five years in prison for online casino operators. The bill, which Kyl introduced in March, is before the Senate Banking, Housing and Urban Affairs Committee.

"We are moving closer than ever to banning Internet gambling, an activity that preys on children and addicts and facilitates money-laundering by organized crime," Kyl said. "I am optimistic that both houses of Congress will pass a ban sometime this year."

In floor debate Tuesday, Rep. Barney Frank (D-Mass.) described the bill as "the Inconsistency Act of 2003," in reference to Republicans' usual insistence on less governmental regulation. "I don't gamble, but if other people want to, mind your own business.... There are a lot of people who do things in excess that we do in moderation. Leave people alone!"

Frank added that while he believes in his opponents' concern for children, he also believes that they are restricting the personal choice of adults.

The Interactive Gaming Council, a Vancouver, Canada-based organization that serves the interests of international online casinos, did not return phone calls Tuesday. However, upon passage of the House bill last year, the group's chair, Sue Schneider, said: "A substantial misunderstanding of Internet gaming and of the Internet itself drives the bill."

Frank J. Fahrenkopf, president and CEO of the American Gaming Assn., a Washington-based trade association for the casino industry, said Tuesday that his group would remain neutral on the issue as long as the regulatory rights of each state are maintained.

"We were not opposed to the legislation, but we made it very clear that if there was any derogation of states' rights, then that would put us in opposition," said Fahrenkopf.

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