NEW ANTI-NET GAMBLING LEGISLATION SET FOR CONSIDERATION IN
CONGRESS
written Thurday, October 4th by The Shrink
The U.S. House Financial Services Committee late yesterday announced an "Anti-Terrorist Financing" bill that includes language aimed at making it more difficult to gamble on the internet.
I have seen a summary of the bill, not the actual language, so I cannot tell you precisely what it does. But an entire section of this bill is devoted to the issue. I believe the goal will be to prohibit, or at least make it very difficult, for financial insitituions to handle ANY transaction that may go to or come from an "illegal internet gambling site."
The committee is expected to take up this bill next week; other committees may become involved as well.
The committee site, www.house.gov/financialservices has a press release and bill summary.
Does this bill have a good chance to become law?
Yes, in my opinion, the bill probably will become law, BUT...
It still has to go through committee(s) where there is an opportunity for changes. It will also have to be reconciled with the Senate's version, and I do not know what the Senate plans to do on the Internet gambling issue.
The real problem here, as you can imagine, is that the Carribean books and the rest of the industry have ZERO representation in Washington, either amongst elected officials or lobbyists. Again, I have not seen the actual bill language, which is key.
If it asks too much of the financial services industry on this issue, they might use their clout to get it changed. But it is certainly not good news that this language, whatever it is, is in the originial bill and has the support of the Chairman, Mike Oxley (R-OH).
Will look at language in regard to Carribean licenses, but my guess is foreign licensing will mean little; "illegal internet gambling" refers to what is legal in THIS country and is meant to grandfather state lotteries, OTB, even fantasy leagues...which of course just shows you what a hypocritical, one sided effort this is (see my comment above about "representation in Washington").
I think the language of the bill was written by an anti-gambling zealot named John LaFalce (D-NY). I also hope interested news media, (there aren't many) such as the Las Vegas Review Journal, will do some reporting on this.
This is an excerpt from the bill introduced by Rep. James Leach R-Iowa which includes a section targeting Internet gambling payment transactions in an anti-terrorism bill:
Section 303. Prohibition on Acceptance of Any Bank Instrument for Unlawful Internet Gambling
Internet gambling serves as a haven for money laundering activities. FBI representatives have told Committee staff that a huge potential exists for offshore gambling sites to be used to launder money. The FBI currently has two pending cases involving Internet gambling as a conduit for money laundering, as well as a number of pending cases linking Internet gambling to organized crime.
This section prohibits a gambling business from accepting bank instruments in connection with unlawful Internet gambling. Covered instruments include credit cards, electronic fund transfers, and checks.
Subsection (b) defines the term "bets or wagers" as the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game predominantly subject to chance with the agreement that the winner will receive something of greater value than the amount staked or risked. This subsection clarifies that "bets or wagers" does not include a bona fide business transaction governed by the securities laws; a transaction subject to the Commodity Exchange Act; an over-the-counter derivative instrument; a contract of indemnity or guarantee; a contract for life, health, or accident insurance; a deposit with a depository institution; or certain participation in a simulation sports game or education game. The subsection also clarifies that "business of betting or wagering" does not generally include any financial intermediary (creditor, credit card issuer, insured depository institution, transmitter of an electric fund transfer, money transmitting business, or network used to effect a credit transaction, electronic fund transfer, stored value product transaction, or money transmitting service, or any participant in such network). Subsection (b) also defines the terms "Internet" and "unlawful Internet gambling."
Subsection (c) authorizes civil remedies, including a preliminary injunction or injunction, against any person to prevent or restrain a violation of this section, including expedited proceedings in exigent circumstances. The subsection authorizes such proceedings to be brought by the U.S. Attorney General, or the attorney general of a State or other appropriate State official. The subsection clarifies that this section should not be construed as altering, superseding, or otherwise affecting the application of the Indian Gaming Regulatory Act. The subsection requires that, before any proceeding under this subsection is initiated against an insured depository institution, notification must be made to the appropriate Federal banking agency and such agency must be allowed a reasonable time to issue the appropriate regulatory order.
Subsection (d) authorizes criminal penalties, including fines or imprisonment for not more than five years, or both. The subsection also authorizes a permanent injunction against a person convicted under this subsection, enjoining such person from placing, receiving, or otherwise making bets or wagers or sending, receiving, or inviting information assisting in the placing of bets or wagers.
Subsection (e) provides that the safe harbor provided to a financial intermediary (creditor, credit card issuer, financial institution, operator of a terminal at which an electronic fund transfer may be initiated, money transmitting business, or national, regional, or local network) under subsection (b)(2) does not apply to a financial intermediary that operates, manages, supervises, or directs an Internet website at which unlawful bets or wagers are or may be placed, received, or otherwise made; or is owned or controlled by any person who operates, manages, supervises, or directs such an Internet website.
Subsection (f) allows the appropriate Federal banking agency to prohibit an insured depository institution from extending credit, or facilitating an extension of credit, electronic fund transfer, or money transmitting service, or from paying, transferring, or collecting on any check, draft, or other instrument drawn on any depository institution, where the institution has actual knowledge that a person is violating this section in connection with such activities. This subsection, in conjunction with subsections (b)(2) and (e), is intended to ensure that a financial intermediary is not held liable for a violation of this section solely based on the unknowing and unintentional involvement of the intermediary through the use of the facilities of such intermediary in an unlawful Internet gambling transaction, unless the intermediary acted as an agent of a gambling business and had: (1) actual knowledge that the specific transaction is an unlawful Internet gambling transaction; and (2) the intent to engage in the business of submitting into the payment system Internet gambling transactions prohibited by this section.
Section 304. Internet Gambling in or through Foreign Jurisdictions
This section provides that, in deliberations between the U.S. Government and any other country on money laundering, corruption, and crime issues, the U.S. Government should encourage cooperation by foreign governments in identifying whether Internet gambling operations are being used for money laundering, corruption, or other crimes, advance policies that promote the cooperation by foreign governments in the enforcement of this Act, and encourage the Financial Action Task Force on Money Laundering to study the extent to which Internet gambling operations are being used for money laundering.
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