House Panel Votes to Crack Down on Internet Gambling

A House panel voted Thursday to crack down on the $12 billion Internet gambling industry by applying federal prohibitions to games like online poker, blackjack and roulette.

The legislation would amend the 1961 Federal Wire Wager Act to explicitly prohibit online gambling. It also would outlaw electronic transmission of funds to pay for gambling bets, give law enforcement agencies authority to block such money transfers, and increase penalties for violation of the law.

Although the Justice Department has taken the position that the Wire Act already prohibits online gambling in the U.S., there is disagreement about that. Most of as many as 2,300 online gambling sites in existence are overseas.

The bill approved by the Judiciary Committee would "prevent offshore fly-by-night gambling businesses from violating the laws of all states," said sponsor Bob Goodlatte, R-Va. He said spending on the sites had skyrocketed.

But at least half of the billions of dollars spent on online gambling each year is thought to come from U.S. bettors, and some companies in this country want to get in on the action. The American Gaming Association, the industry's largest lobby, has opposed online gambling in the past but last month backed a study of the feasibility of regulating it.

"It has to be able to be properly regulated and controlled. If it is we'd be interested," said Frank Fahrenkopf Jr., the gaming association's president, of online gambling.

Nevada's House members introduced a bill this week calling for such a study.

The United Kingdom last year passed a law significantly liberalizing Internet gambling.

Several Internet gambling bills have advanced in the House and Senate in recent years but have failed to become law.

One previous attempt by Goodlatte fell to a surprise defeat in the House in 2000 after aggressive opposition by disgraced lobbyist Jack Abramoff, then working for an online lottery company. Goodlatte alluded to that during heated debate in the Judiciary Committee on Thursday.

"This was the poison pill that was supported by Jack Abramoff five years ago — don't support it today," he shouted as Rep. Robert Wexler, D-Fla., sought to attach an amendment related to horse racing.

Wexler objects to Goodlatte's bill because it specifically exempts horse racing; groups including the Poker Players Alliance also are opposed for that reason. Goodlatte says horse racing already is covered by the Interstate Horseracing Act.

Wexler didn't comment on the Abramoff reference and his amendment failed.

"Unfortunately the gentleman just mentioned by the gentleman from Virginia had some involvement in this issue before," remarked Rep. Chris Cannon, R-Utah. Abramoff has pleaded guilty in a Justice Department corruption probe.

Goodlatte's bill passed 25-11. The committee also approved, on voice vote, a similar bill by Rep. Jim Leach, R-Iowa, that creates new restrictions on financial transactions.

The two measures could be combined. Majority Leader John Boehner, R-Ohio, has said he hopes to bring Internet gambling legislation to the House floor this year.

In the Senate, Republican Jon Kyl of Arizona has pursued online gambling prohibitions for several years and his office said he would wait to see what the House does.