House Judiciary Committee Passes Anti-Gambling Bills

by Glen Shapiro, LawAndTax-News.com, New York

12 June 2006

The US House of Representatives Judiciary Committee recently voted 25 to 11 in favour of the bill from Rep. Bob Goodlatte (Rep-Va) that would update the 1961 Wire Act by adding an “enforcement mechanism” to address the situation where a gambling business is located offshore but the gambling business uses bank accounts in the United States.

"Offshore online gambling Web sites are cash cows and the greed that propels these companies leads them to solicit bettors in the United States despite the fact that the Department of Justice already believes this activity is illegal," Goodlatte said in a statement after the vote.

Submissions to the Committee included one from the US Chamber of Commerce which highlighted its concerns over the substantial burdens the Bill would place on the banking industry, and one from the Government of Antigua and Barbuda, which is locked in an unequal struggle with the US over the jurisdiction's gambling industry. The US and Antigua and Barbuda last week asked the World Trade Organization's Dispute Settlement Body to establish a compliance panel to determine whether the US remains out of compliance with a WTO ruling last year which appeared to favour the tiny offshore nation.

The Committee also passed by voice vote a bill from Rep. Jim Leach (Rep-Iowa) that would prohibit the use of credit cards and checks to make Internet gambling payments. Although the two bills are not likely to make it onto the statute book in this Congress, given that they have to pass the House, go to the Senate and then be reconciled before mid-term elections this fall, the Committee's vote makes the eventual strengthening of the Wire Act more likely.

“The approval by the Judiciary Committee of the so-called Goodlatte and Leach Internet Gaming Bills represents a troubling about-turn by an important arm of the US Government in response to the crystal-clear recommendations and rulings of the Dispute Settlement Body (DSB) of the World Trade Organisation (WTO),” said Antigua and Barbuda’s Minister of Finance and the Economy, Dr Errol Cort.

Dr Cort said recently that if the WTO finds that the United States is failing to comply with last year's ruling (and it has pointedly refused to do anything to change its laws or practices in response) then his government reserves the right to request authorization to suspend concessions or other obligations under the relevant WTO provisions. This could, for instance, include the suspension of intellectual property conventions, allowing Antigua and Barbuda to manufacture and distribute pirate goods and services with impunity.

The US has successfully used the Wire Act, which prohibits the use of telecommunications to make wagers across state lines or internationally, to attack the US operators of offshore casinos.

Last month, the US District Court for the District of Columbia unsealed an indictment under the Wire Act against the operators of two internet gambling firms based in Antigua and Barbuda for offenses related to an estimated $250 million worth of internet gambling wagers.

The indictment alleges that wagers were placed by toll-free telephone numbers and through the website, www.BetWWTS.com, and other sites controlled by the defendants in violation of the Wire and Travel Acts.

The indictment also alleges that by causing funds to be sent from places within the United States to places abroad with the intent to promote Wire and Travel Act violations, the operators engaged in a money laundering conspiracy.

US punters are estimated to be behind up to half of the $12 billion a year wagered in cyber casinos. Antigua-based operators are thought to account for 25% of this turnover.

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