House Committee To Take Up Internet Gambling Prohibition Bill

by Leroy Baker, Tax-News.com, New York

10 May 2006

A bill that seeks to outlaw all gambling over the internet by updating the Wire Act will shortly be taken up the House Judiciary Committee.

The bill, sponsored by Rep. Bob Goodlatte (R-Va.), chairman of the House Judiciary subcommittee on crime, amends the Wire Act to make it clear that its prohibitions include Internet gambling by updating the current legislation to take into account new technology.

The bill expands the existing prohibition to include all bets or wagers, not merely bets or wagers on sporting events or contests, but explicitly excludes securities and commodities transactions, indemnity and insurance contracts, and fantasy sports leagues.

Gambling business will be prohibited from accepting certain forms of non-cash payment, including credit cards and electronic transfers, for the transmission of bets and wagers under Goodlatte’s amendments.

The provision also provides an “enforcement mechanism” to address the situation where the gambling business is located offshore but the gambling business used bank accounts in the United States - in defiance of a recent World Trade Organisation ruling. This ruling upheld a complaint by the tiny Caribbean jurisdiction of Antigua & Barbuda, where many gambling websites are based, that US laws unfairly discriminate against remote online gaming companies, contradicting its service sector commitments that it made when the WTO was formed in 1995.

However, Goodlatte argued that: “Virtual betting parlors have attempted to avoid the application of United States law by locating themselves offshore and out of our jurisdictional reach."

“These offshore, fly-by-night Internet gambling operators are unlicensed, untaxed and unregulated and are sucking billions of dollars out of the United States,” he added.

Goodlatte’s bill also provides an additional tool to fight illegal gambling by allowing Federal, State, local and tribal law enforcement to seek injunctions against any party to prevent and restrain violations of the Act. For example, law enforcement could use such injunctions to get assistance from ISPs to remove or disable access to hypertext links to online gambling sites that violate the Act.

The bill increases the maximum prison term for a violation of the law from 2 years to 5 years.

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