Congress passes Unlawful Internet Gambling Enforcement Act

Congress dealt a massive blow to U.S. Internet gamblers over the weekend when it passed legislation forcing U.S. banks and credit card companies to block electronic transactions to Internet gambling businesses late Friday night.

Online gaming giants PartyPoker and 888 will suspend business with U.S.-based customers when President Bush signs the bill. And more sites are expected to follow suit. PartyPoker, which earned $859.1 million in 2005, says they will change their focus to the non-U.S. market.

"In the first half of 2006 our non-US business generated revenues of $150 million, a 151% increase over the comparable period in the previous year," said PartyPoker CEO Mitch Garber.

Senate Majority Leader Bill Frist (R-Tenn.) attached the measure to the Safe Port Act Conference Report. The bill also prohibits the use of checks to fund Internet gambling accounts. Frist had been trying for over a week to attach the measure to a Department of Defense budget appropriations bill.

The bill passed 409-2 in the House of Representatives and on a voice vote in the Senate.

"Gambling is a serious addiction that undermines the family, dashes dreams, and frays the fabric of society," said Frist in a statement after the bill passed in the Senate. "Congress has grappled with this issue for 10 years, and during that time we've watched this shadow industry explode. For me as majority leader, the bottom line is simple: Internet gambling is illegal. Although we can't monitor every online gambler or regulate offshore gambling, we can police the financial institutions that disregard our laws."

Bush has until Tuesday, Oct. 10 to sign the bill into law, and is widely expected to do so. Federal regulators and the banking industry will then have up to 270 days to formulate the necessary policies to identify and block transactions to Internet gambling sites.

Also included in the bill is language that indicates that Internet service providers could be required to block access and remove links to Internet gambling Web sites.

"It's just too easy to access Internet gambling sites," said Michele Combs, Director of Communications for the Christian Coalition, which lobbied for the measure's passage. "We think this is the first step toward a larger bill that will come soon (completely banning Internet gambling)."

The gaming industry says the measure will force a thriving industry underground and hurt problem gamblers.

"We don't think poker is a 'shadowy enterprise,' whether it's played at your home or the Internet," said Michael Bolcerek, president of the Poker Players Alliance.

Bolcerek believes that the elimination of corporate gaming entities from the U.S. market such as PartyPoker actually makes the situation more dangerous.

"The largest sites, such as Party and 888 and others, offer support for problem gamblers and are diligent about keeping children off (Internet gambling sites)," Bolcerek said.