Joseph Kelly is a business law professor at Buffalo State College, State University of New York. This is part one of a paper he presented at the International Symposium on Internet Gambling Law and Management, held this week in Antigua. Footnotes have been omitted. Part two will be posted here Friday.
1. Federal Legislation: All bills must be re-introduced during the next Congress
Senate: The Kyl Bill (S 692)(106th Congress): In the 107th Congress, Senator Kyl is uncertain as to whether he will introduce new legislation. Senator-elect John Ensign (R. Nev.) stated he "supported a ban on Internet gaming when I was in the House (of Representatives), but I don't know if a ban will be successful. If you can't win the issue, you have to do what's smart. We may have to move in the direction of legalizing and regulating Internet gaming." (emphasis added)
House of Representatives: Three relevant bills were introduced in the 106th Congress. The Goodlatte Bill (H.R. 3125) failed (245-159) on July 17, 2000, to obtain the necessary 2/3 vote because of a procedural requirement.
Cong. Goodlatte had predicted the legislation would pass with "overwhelmingly strong bipartisan support." He and many others had warned of the danger to children, the support from sports associations and Christian groups, that Internet gaming is growing so fast that unless stopped it would be too late; and that the Goodlatte Bill did not expand gambling on the Internet.
Opponents of the Bill stressed the opposition of the Justice Department, the President, and most of the nation's governors because of the failure to include an exemption for online lottery purchases and other groups. Two of the best debaters in Congress opposed the Bill. Cong. Barney Frank stressed how the Bill would destroy Internet freedom and state rights. Cong. Chris Cox emphasized the Bill would (1) treat "online and offline gambling under different rules, (2) legalize betting which would be illegal if made by phone and
"Third, the bill would unfairly make Internet service providers and search engines and other interactive service providers, ISPs, who have nothing to do with gambling, people who have nothing to do with gambling, it would make them responsible for policing the behavior of their subscribers…
"Fourth, this bill would have the Federal government dictate, indeed amend, the terms and conditions on which ISPs today offer service. It would require that every ISP terminate the account of any subscriber who is suspected of using the service to gamble.
"Fifth, the bill contains price controls. It requires every ISP to offer gambling filtering software at, quote 'reasonable cost,' putting the Federal government in an unspecified way in charge of determining what is a reasonable price for filtering software."
In an analysis of the vote 159 members (44 Republicans, 114 Democrats and 1 Independent) voted against the measure; 25 short of the 270 votes (two-thirds) required. Goodlatte, in opting for suspension "badly misjudged the mood of the House. Or to be charitable, maybe he was just taking measure of the opposition, on the assumption that the GOP leadership will allow him another vote."
Supporters and opponents of the Goodlatte bill included very liberal and very conservative members. Supporters included very liberal democrats such as Cong. Hastings (Fla), Jackson-Lee (TX), Nadler (NY), Wexler (Fla) and conservatives such as Armey (TX), Burton (Ind), Hyde (Ill). Liberal opponents ranged from very liberal democrats (Conyers (Mich), Frank (Mass), Kennedy (RI) , Rangel (NY)) to ultra-conservative Republicans Archer (TX), Cannon (UT), Kasich (OH) Rohrabacher (Cal).
Instead of ideology, a regional analysis might be more useful. The South (the Confederacy, except for Texas) voted 73-18 for the Bill, perhaps because of the relative unimportance of the lottery in many of those states. California, a high-tech state, voted 30-18 against the Bill. Massachusetts, a liberal state with a well-respected lottery voted 9-0 against the Bill. The casino-dominated states of New Jersey and Nevada voted 13-2 in favor of the Bill.
Perhaps the development most devastating to the success of the re-introduction of the Goodlatte Bill would be the introduction by Conyers of H.R. 5020 which basically mirrored the proposals of the U.S. Justice Department, whereby the Wire Act would be amended to prohibit Internet gambling without exemptions, and the ISPs would be immune from liability. The authors had no intent to proceed with bill unless Congressman Goodlatte succeeded in again scheduling H.R. 3125 for a vote. Should the Goodlatte Bill be re-introduced in the 107th Congress, it will have to face to a re-introduced Cannon-Conyers Bill.
The bill most serious to the success of Internet gambling, even more so than the Goodlatte Bill would be the Internet Gambling Funding Prohibition Act, was introduced on May 10, 2000 by Congressmen James Leach and John LaFalce and was immediately referred to the Banking Committee and the Committee on the Judiciary (on May 30, 2000, it was referred to the Judiciary Committee Crime subcommittee). The bill would prohibit bank instruments such as credit cards or electronic funds transfers from being used for Internet gambling or betting activities. The Bill also "contains sanctions designed to dissuade other nations from hosting such casinos."
At the June 20, 2000 hearing, the speakers opined along predictable lines; for the bill were the Attorney General of Wisconsin, a former member of the NGISC; opposed were the U.S. Treasury Department and the U.S. Justice Department. The most important remarks, however, were those of Alex Ingle, Executive Vice-President of the New York Racing Association who warned the Racing Industry's "future appears to be threatened with the sweeping nature of H.R. 4419 which would appear, again, to make it inadvertently illegal to transact simulcast wagering and account wagering over 'a packet-switched data network, words contained in the bill,' using checks, wire transfers and credit cards for settlement. Criminalizing this highly regulated, licensed, taxpaying, $12 billion piece of commerce would end pari-mutuel wagering as we understand it today."
On June 28, 2000 the House banking Committee voted on the Leach-LaFalce Bill. It had earlier rejected a compromise amendment by Cong. Leach that "would have exempted any 'lawful bet or wager that is placed, received, or otherwise made on a live horse or a live dog race.'" Cong. Jack Sweeney then offered an amendment "which substantially (limited) the applicability of the bill. The Sweeney amendment, which passed overwhelmingly on a voice vote, and a show of hands, provides that the prohibition contained in the bill applies only 'where such bet or wager is unlawful under any applicable Federal or State law in the State in which the bet or wager is initiated, received, or otherwise made.'"
There was some confusion concerning the bill. Cong. Mell Watt (D. NC) opined that "I don't think anyone understands what we are doing at this point." Cong. LaFalce was so upset at the Sweeney amendment that "he no longer supports the legislation that bears his name."