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Sunday, July 16, 2006

House passes bill to limit online gambling

Updated: 2:32 p.m. CT July 11, 2006
WASHINGTON - The House passed legislation Tuesday that would prevent gamblers from using credit cards to bet online and could block access to gambling Web sites.

The legislation would clarify and update current law to spell out that most gambling is illegal online. But there would be exceptions — for state-run lotteries and horse racing — and passage isn’t a safe bet in the Senate, where Republican leaders have not considered the measure a high priority.

The House voted 317-93 for the bill, which would allow authorities to work with Internet providers to block access to gambling Web sites.

To enforce that ban, the bill would prohibit credit cards and other payment forms, such as electronic transfers, from being used to settle online wagers. It also would give law enforcement officials the authority to work with Internet providers to block access to gambling Web sites.

Reps. Bob Goodlatte, R-Va., and Jim Leach, R-Iowa sponsored the bill. They successfully beat back an amendment to strip out exemptions in the legislation for the horse racing industry and state lotteries.

Goodlatte called that “a poison pill amendment,” aimed at defeating the larger bill.


Critics argued that regulating the $12 billion industry would be better than outlawing it. The Internet gambling industry is headquartered almost entirely outside the United States, though about half its customers live in the U.S.

Other critics complain that the bill doesn’t cover all forms of gambling. They point to exemptions they say would allow online lotteries and Internet betting on horse racing to flourish while cracking down on other kinds of sports betting, casino games and card games like poker.

“If you’re going to support legislation that is supposed to ’prohibit gambling,’ you should not have carve-outs,” said Andrea Lafferty, executive director of the conservative Traditional Values Coalition.

Other conservative and antigambling groups are supporting the legislation, sponsored by Reps. Bob Goodlatte, R-Va., and Jim Leach, R-Iowa.


John Kindt, a business professor at the University of Illinois at Urbana-Champaign who has studied the issue, calls the Internet “the crack cocaine” of gambling.

“There are no needle marks. There’s no alcohol on the breath. You just click the mouse and lose your house,” he said.

Congress has considered similar bills several times before. In 2000, disgraced lobbyist Jack Ambramoff led a fierce campaign against it on behalf of an online lottery company.

Online lotteries are allowed in the bill passed today, largely at the behest of states that increasingly rely on lotteries to augment tax revenues.

Pro-sports leagues also like the bill, arguing that Web wagering could hurt the integrity of their sports.

The horse racing industry also supported the bill because of the exemption it would get. Betting operators would not be prohibited from any activity allowed under the Interstate Horseracing Act. That law written in the 1970s set up rules for interstate betting on racing. It was updated a few years ago to clarify that betting on horse racing over the Internet is allowed.

Greg Avioli, chief executive officer of the National Thoroughbred Racing Association, said the mention of horse racing in the bill is “a recognition of existing federal law,” not a new carve-out.

He said the racing industry has a strong future in the digital age and acknowledged the bill would send Internet gamblers to racing sites. “They’d return to the one place they can bet legally,” Avioli said.

That’s what some critics say is unfair.

“Somehow we find ourselves in a situation where Congress has gotten in the business of cherry-picking types of gambling,” complained Rep. Robert Wexler, D-Fla. Wexler had tried unsuccessfully to include exemptions for dog racing and jai alai, both popular in Florida.

The Justice Department has taken a different view on the legality of Internet betting on horse races. In a World Trade Organization case involving Antigua, the department said online betting on horse racing remains illegal under the 1961 Wire Act despite the existence of the more recently passed Interstate Horseracing Act.

The department hasn’t actively enforced its stance, but observers say it is possible the agency and the racing industry could face off in court in the future.

Sen. Jon Kyl, R-Ariz., is leading support for the ban in the Senate. The issue has so far not been debated in that chamber this year.