Amended Goodlatte Gambling Bill Passes Judiciary Over Strong Democratic Objections

HR-4777 would let states continue to offer gambling provided they bar its spread beyond state lines. The bill would amend the phone-specific Wire Act to cover all forms of interstate gambling and take account of new technologies, prevent gaming operators from accepting the most common forms of payment for unlawful transactions, give law enforcement new injunctive authority to go after violations, and increase penalties (WID Feb 17 p1). The measure was in a “hiatus” a few years because “some lobbyists were acting in a manner that is inconsistent with the truth” over what the legislation did, Goodlatte said. Former lobbyist Jack Abramoff twice opposed the bill.

Democrats faulted the bill as futile for attacking supply: “As long as there’s a demand, there’s only limited success” in going after gambling outfits without also targeting gamblers, Rep. Scott (D-Va.) said. It would be better for states to require online gamblers to provide a mailing address to receive winnings so they can be tracked, he said. Legislation shouldn’t burden “any single business sector [with] the bulk of enforcement,” Scott added, referring to banks: Identifying online gambling transactions would be “very difficult if not impossible.” The bill proposes “a complex regulatory system [that’s] virtually impossible to comply with. It won’t work,” Ranking Member Conyers (D-Mich.) said, citing vocal opposition from “countless local bankers” in earlier hearings. HR-4777 also doesn’t include safeguards to prevent minor gambling, he said. Scott said lawmakers shouldn’t count on support abroad in cracking down on offshore Internet operations: The bill would “simply be increasing profit opportunities for uncooperative countries.”

A manager’s amendment from Goodlatte incorporates requests from DoJ to ensure that future advances in technology, such as fiber, would be covered. DoJ alone would get the $10 million in the bill for enforcement and prosecution under the amendment, also sponsored by Reps. Cannon (R-Utah) and Boucher. The amendment clarifies that the bill doesn’t change “which activities related to horse racing may or may not be allowed under federal law.”

The horse racing provision sparked a heated argument between Rep. Wexler (D-Fla.) and Goodlatte. Conyers opened the rift by alleging that HR-4777 and HR-4411 don’t actually stop online bets for horse racing, and cited a Baltimore Sun article in which horse racing officials said they would use an exemption to attract youth to bet. HR-4777 says it doesn’t prohibit legal activities under Public Law 95-515, the Interstate Horseracing Act, which first legalized interstate off-track betting. That law’s meaning has been in constant dispute between DoJ and the horse racing industry, especially in relation to other federal laws touching on gambling.

Wexler said he doesn’t favor or oppose Internet gambling, but “do it evenly… Don’t pick and choose between lawful businesses,” specifically favoring the horse racing industry. He introduced an amendment to remove the alleged favorable treatment of horse racing in the bill by specifically approving dog racing and jai-alai if already legal in those states. As Chmn. Sensenbrenner (R-Wis.) approved Goodlatte to respond, Wexler interjected that his amendment had been supported in previous Congresses by Sensenbrenner and Reps. Coble (R-N.C.) and Hyde (R-Ill.) on the committee: “This isn’t partisan.”

There’s no corresponding federal law for dog or any other racing, Goodlatte responded, explaining why HR-4777 refers to horse racing: “We have very carefully stayed out of that debate” between the feds and industry on 95-515’s meaning. Goodlatte’s original bill included a “carve-out” for dog racing and jai alai, but Wexler’s amendment is for a “very different bill” given DoJ’s feedback on 95-515, Goodlatte said. “I wish it were so,” Wexler responded: “If it’s so clear, why do we need to make it clearer in a rules construction?” -- a reference to Sec. 5 in Goodlatte’s amended bill. Rep. Lee (D-Tex.) said she agreed with Wexler: “The very fact that we're debating the confusion… says to me that there is additional work to be done” before HR-4777 moves to the House floor. The bill could also put the U.S. in violation of World Trade Organization rules, an argument wager-friendly Antigua has often made (WID March 20 p7).

The disagreement provoked a steady stream of puns from amused members. “I don’t have a horse in this race, and I don’t have a dog in this race either,” Rep. Schiff (D-Cal.) said. “Let us throw the bone to the Justice Department,” Cannon said. “All those in favor of the amendment shall please say ‘woof,'” Sensenbrenner said. Wexler’s amendment failed 15-21. An amendment from Cannon, clarifying that nothing in the bill will interfere with state gambling laws - - Hawaii and Utah are the only states with no legalized betting -- passed by voice vote.

Wexler unsuccessfully offered another amendment he compared to one Cannon offered in a previous Congress. It would basically block states from offering legalized Internet gambling and remove Sec. 5 and 6 from Goodlatte’s amended bill. Those sections say the bill doesn’t prohibit activities legal under 95-515 and gives a “sense of Congress” that the bill doesn’t change the relationship between 95-515 and other statutes in effect when it was enacted -- another reference to the DoJ-horse racing dispute. Wexler’s amendment would fulfill Goodlatte’s goal to “send the Senate a clean bill that does all the proper law enforcement objectives,” Wexler said. The amendment would harm states’ rights, Goodlatte protested, calling it a “poison pill” promoted years ago by Abramoff that had stopped his legislation “dead in its tracks.” Sec. 5 and 6 “do nothing other than relate to the horse racing industry,” Wexler responded in a notably calmer tone from his earlier shouting: “All this amendment does is strike them.” He tossed away his microphone theatrically: “That’s it, I'm done.” The amendment failed on a voice vote.

More Democratic amendments failed following states’ rights rebuttals from Goodlatte: Conyers’ amendment to block minors from gambling (14-17-2) and Scott’s amendment to fine or jail people unlawfully wagering online (6-30). Gambling businesses may be legal in one state but not another, Goodlatte said, and states should be left to regulate individual behavior. Rep. Watt (D-N.C.) said he didn’t support the Scott amendment but agreed with its underlying point: Either regulate Internet gambling or leave it alone.

Gambling Groups Unite Behind ‘Study’ Bill

The 2 bills approved Thurs. may be complicated by another introduced Wed. Rep. Porter’s (R-Nev.) legislation would examine online gambling’s effects and put out a study that would be the first of its kind. It would set up a 9-member Internet Gambling Study Commission to analyze the existing legal framework that governs activities in the Web gambling arena. Within 18 months, the group would publish a report containing findings and recommendations to Congress and the President for any legislative or administrative action, Porter said. His bill, originally cosponsored by Reps. Gibbons (R-Nev.) and Berkley (D-Nev.), has 42 cosponsors.

“With technology constantly evolving, we need a much better understanding of online gambling before Congress makes any rash decisions about its future,” Porter said. Establishing the bipartisan, independent commission would “make sure we have all of the facts laid out on the table before considering any possible next steps.” Gibbons also called for a “thoughtful examination of the availability of online gaming.” “The fact remains that, despite already being illegal, millions of Americans currently gamble online,” he said. Restricting the Web gaming industry without fully reviewing the risks would be a knee-jerk reaction, he said.

Gambling groups rose up to push for Porter’s bill as they assailed the Judiciary-approved bills. A study will “reveal the vast benefits to U.S. regulation and taxation of the industry,” said Poker Players Alliance Pres. Michael Bolcerek: “This is a thoughtful and reasoned approach that has the potential to mollify concerns over online gambling, not just sweep it under the rug.” The Alliance agreed with Judiciary Democrats protesting that HR-4777 would discriminate between different forms of online gambling by favoring horse racing, Internet lotteries and “certain fantasy sports.” “Simply putting the word ‘Internet’ in front of poker should not criminalize this American tradition and the people who play it,” Bolcerek said.

More than 70 countries regulate Internet gambling, adding to tax revenue and job creation, said Frank Catania, a former dir. of the N.J. Div. of Gaming Enforcement. Those policies “protect consumers, prevent underage gambling and direct compulsive gamblers to seek help,” none of which Congress has addressed, he said: Trying to “put up a wall in cyberspace” is foolish and “unenforceable.” Catania supports the Porter bill.

Congress is “well intentioned” but is only holding back U.S. companies from participating in “what has been a real growth industry,” Interactive Gaming Council Deputy Dir. Keith Furlong told us. Goodlatte had cited estimates of online gambling as a $12 billion industry, with $6 billion coming from U.S. bettors. Furlong cited the dispute at the WTO as another reason to use caution in banning online gambling. Referring to the dispute over the Interstate Horseracing Act’s application to the Internet, he said: “We really don’t delineate between various industries, but if you have gambling, you shouldn’t discriminate against the medium.” The Porter bill is a solid alternative, Furlong said, but better measures may come along.