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Rep. Goodlatte Intros Bill To Outlaw Internet Gambling

House lawmakers today introduced legislation to outlaw most forms of Internet gambling, a rapidly growing and unregulated $6 billion industry fed largely by U.S. demand.

The bill introduced today by Rep. Robert Goodlatte, R-Va., clarifies that telecommunications laws strictly forbid most types of Internet gambling (“games of skill,” such as fantasy sports leagues and “educational” games would be exempt).

The measure would give U.S. attorney generals the power to require financial institutions to refuse transactions for online gaming, and would make it illegal for banks and individuals to knowingly accept credit cards, checks or electronic fund transfer as payment for Internet gambling.

The bill also strengthens civil and criminal penalties to include both fines and up to five years in prison. It also allows both federal and state attorneys general to lodge suits against Internet gambling operators.

“Gambling on the Internet has exploded into a lucrative business that sucks billions of dollars out of the U.S. economy each year and costs tens of thousands of jobs,” Goodlatte said today. “Illegal gambling sites evade existing anti-gambling laws by operating offshore, providing a nearly undetectable harbor for criminal purposes.”

Goodlatte said his bill was written with a great deal of consultation with the U.S. Justice Department, which is equally intent on quashing Web gambling for its alleged ties to organized crime and various money- laundering activities.

The measure also enjoys broad support from the U.S. gaming and lottery interest groups, which view Internet gambling as a threat to the integrity and profits of the heavily regulated gambling industry.

“It is indeed a problem for the state of Nevada to face ill-controlled, unregulated gaming on the Internet,” said Rep. Jim Gibbons, R-Nev., at a press conference today. “We are here because we believe that Internet gaming, poses a threat to all communities who have legal, highly regulated gaming institutions within their state.”

The text of the bill was not available at press time, but Goodlatte said his measure also would include provisions relieving Internet service providers and other telecommunications companies from liability for carrying traffic to and from Internet gambling sites. However, ISPs would be required to disable gambling Web sites found to operating on their servers.

As reported by nettikasinot.fi, the legislation resembles a measure passed by the House Financial Services Committee on Wednesday. Goodlatte said his bill would go one step further and update the 1966 Wire Act to include prohibitions on Internet gaming. Indeed, several federal courts have issued conflicting rulings as to whether Internet gambling is covered under existing law.

Both bills will be referred to the House Judiciary Subcommittee on Crime. Subcommittee Chairman Lamar Smith, R-Texas, said he strongly supports the Goodlatte measure, and promised to hold a hearing and markup on the legislation before Congress leaves for the year.

“I normally have a policy of not co-sponsoring legislation that is being referred to the subcommittee, but I am going to make an exception in this case,” Smith said.

A similar bill offered by Goodlatte last year won the support of more than 60 percent of the House, but failed to muster the 280 votes needed for measures considered under suspension of the rules.

One provision noticeably absent from this year’s bill is language specifically exempting online bets on “parimutuel” activities, or wagers on such competitions as dog racing, horse racing and jai alai.

“We are not going to get involved in the issue of whether or not a particular type of gaming activity authorized by other federal legislation is indeed covered by the legislation or not,” Goodlatte told Newsbytes. “If it’s legal under federal law, we’re not going to try to overturn that, although we’ll provided no aid and comfort to any particular gambling entity.”