Capitol Hill Mulls Ban on Net Gambling

Controversy continued to mount Thursday over the issue of Internet gambling, which appeared headed for a U.S. government ban earlier this week. A vote on a pending House of Representatives bill could come as early as next week.

The Internet Gambling Prohibition Act was the subject of heated negotiations in the House on Tuesday, and by Thursday the fate of the bill was still unclear. The Senate has already approved a similar bill.

At the center of the controversy is language in the House bill that seems to allow consumers to place inter-state wagers over the Internet, wagers that are illegal under all other circumstances.

Playing the Horses

The proposed law, sponsored by U.S. Rep. Bob Goodlatte, (R-Virginia) and U.S. Rep. Billy Tauzin, (R-Louisiana) has raised the ire of online gambling opponents because it includes exemptions for horse racing and other sports that allow pari-mutuel wagering. Although dog racing and jai alai would also fall under this category, the critics are focusing on horse racing.

On Thursday, Goodlatte and Tauzin, struggling to gain passage of the bill, agreed to amend some of its language so it would no longer appear to endorse activities that are now illegal. Goodlatte and Tauzin still strongly defend their effort, saying the bill is designed to stop the growth of Web sites that allow people to wager money on casino games through their home computer, regardless of whether casinos are legal in their state.

The U.S. Department of Justice (DOJ) contends the bill is inadequate because it would enable home-based computer users to routinely place illegal bets. With the weight of the Justice Department behind the mounting opposition, the bill has stalled in the House Commerce Committee.

Gambling Laws Behind the Curve

Gambling is currently illegal in the United States, unless allowed and regulated by state law. Every U.S. state has gambling statutes to determine the type and amount of legal gambling permitted. With the development of the Internet, however, prohibitions and regulations governing gambling have become outdated, according to many industry observers.

Some legal analysts say that current federal law does not clearly provide that using the Internet to operate a gambling business is illegal. The view is that the closest useful statute is the Wire Act, which prohibits gambling over telephone wires; however, because the Internet does not always travel over telephone wires, the Wire Act — placed on the books long before the World Wide Web arrived — has become outmoded.

Other analysts say that it is not clear whether the Wire Act applies to the Internet at all. Furthermore, according to their view, even if it does apply to online gambling, it only applies to sports betting and not to virtual casino games like blackjack and roulette.

High Stakes Legislation

The proposed law would make it a federal crime — punishable by up to four years in prison and fines of $20,000 (US$) or more — to operate a Web site that accepts wagers from Americans. Additionally, law enforcement agencies would be required to maintain a current list of gambling Web sites.

The River City Group, a consulting group for the online gambling industry, reports that nearly 700 Web sites currently offer gambling. The group says that online gambling, which last year realized revenues of $1.1 billion, is set to grow to $3 billion by 2002.

Strange Bedfellows

The proposed ban on Internet gambling has attracted the attention of radically different groups, some of whom find themselves unlikely allies.

Conservative groups, such as the National Council of Churches, Focus on the Family and the Family Research Council, are vocal supporters of the bill, as are online sports bookies and liquor store owners. Horse track operators are also in favor of it because of the pari-mutuel betting exemption.

Public advocacy groups, like the American Civil Liberties Union (ACLU), oppose the bill because they say it is unwanted government intrusion into what is essentially a private affair.

Other critics, including conservative religious groups and the National Collegiate Athletic Association (NCAA), oppose the bill, saying it would encourage more people to gamble.