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US Congress Passes Anti-On-Line Gambling Bill

by Mike Godfrey, Tax-News.com

03 October 2002


The US House of Representatives yesterday passed HR 556, the Unlawful Internet Gambling Funding Prohibition Act of 2002, on a voice vote. The Bill is described as an attempt: 'To prevent the use of certain bank instruments for unlawful Internet gambling, and for other purposes,' and would make it illegal to use credit cards or any form of electronic payment for the illegal offshore activity.

“We shut off the money, we shut off the sites,” said Rep. Spencer Bachus, R-Ala. But the Bill now goes to the Senate, where it is unlikely to make progress in the short time left in this Congress.

“It may be impossible to keep illegal gambling sites off the World Wide Web, but it is entirely possible to prevent American credit card companies from completing these transactions that these crooks need to make their money, and that’s what this bill does,” said Rep. Joseph Pitts, R-Pa. That description may raise some eyebrows in the board-rooms of the corporations which service the multi-million dollar gaming sector, many of which are listed on US stock exchanges.

The bill, championed by Rep. James Leach, R-Iowa, would make it a crime for a gambling business to accept credit cards, checks or fund transfers in connection with unlawful Internet gambling. The problem comes with the word 'unlawful'. Most types of gambling are legal in Nevada, for instance, and in what sense is a gambling transaction unlawful if it is conducted under the laws of an offshore jurisdiction which permit it?

Even the notorious US Wire Act, which prohibits gambling transactions across state lines, makes an exception if the transaction is legal in the jurisdiction where it is carried out.

“Internet gambling serves no legitimate purpose in our society — it is a danger to the family, it is a danger to society at large,” Leach said. The moral majority which is attacking on-line gambling accuses it of corrupting minors and encouraging money-laundering and hence terrorism. It may be so, although these charges are strenuously denied by the gambling operators themselves, and making gambling illegal will probably be about as effective as prohibition was in stopping people from drinking.

Let's try not to notice that there's a Congressional election due in a few weeks' time.

A comprehensive report on the online gambling situation in a number of offshore jurisdictions is available in the Tax-News Reports shop at http://www.tax-news.com/reportshop/

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