Eleventh-Hour Opposition in the House

In the days leading up to the May 14 markup of the Leach Internet gambling bill, the House Judiciary Committee leadership heard from a handful of diverse groups with an interest in blocking the bill.

HR 21, the bill sponsored by Rep. James Leach, a Republican from Iowa, is a controversial piece of legislation that seeks to ban payment options for illegal online gambling operations. The bill would make financial institutions responsible for making sure their credit cards, electronic wire transfer services and all other payment instruments aren't used to transact online gambling business from Americans. On Wednesday, the bill was reported favorably to the House of Representatives by the Judiciary Committee.

"Our concern is the prospect of people being able to bet from their homes; not the prospect of people betting on black jack as opposed to horses, or lotteries as opposed to football games."

- Rev. Louis Sheldon
Traditional Values Coalition

Interactive Gaming News has received copies of two letters sent to Chairman James Sensenbrenner, the leader of the Judiciary Committee.

One of the letters is from the Traditional Values Coalition, a lobbying group that describes itself on its Web site as the "largest non-denominational, grassroots church lobby in America." Rev. Louis Sheldon, the chairman of the Traditional Values Coalition, stated in the letter that his group, which has 43,000 member churches, has concerns with the Leach bill because it provided exemptions for various groups, such as the racing industry, that would have allowed them to continue taking online wagers.

"We have always emphasized that any legislation in this area should not pick and choose among various gambling interests, but rather, ban all gambling from the Internet," Sheldon wrote. "Our concern is the prospect of people being able to bet from their homes; not the prospect of people betting on black jack as opposed to horses, or lotteries as opposed to football games."

Sheldon also describes the bill's allowance for state-licensed Internet bets as a "loophole big enough to drive a truck through."

"We are aware that some people claim that this provision has no real effect, and that it will not allow Internet gambling," he stated. "However, our concern remains simple: If the relevant provision has no effect, then no one should mind if it is removed from the bill. However, if (as we suspect), it does have the real effect of allowing Internet gambling, then it undercuts the ostensible purpose of the bill."

The Traditional Values Coalition then asks Sensenbrenner, a Republican from Wisconsin, to delete that provision of the bill.

The U.S. Chamber of Commerce is another group that let Sensenbrenner know its concerns about the "Unlawful Internet Gambling Funding Prohibition Act." The lobbying group represents three million American businesses and has 3,000 local and state chambers of commerce as members.

R. Bruce Josten, the organization's executive vice president of government affairs, told Sensenbrenner that if HR 21 became law it would require American businesses to enforce a law without telling them exactly what is illegal.

"... Imposing potential criminal penalties on a company for undertaking an action that is neither clearly legal nor illegal, is highly problematic."

- R. Bruce Josten
US Chamber of Commerce

"The bill makes it a crime to process payment for 'unlawful Internet gambling' wagers, without saying what an illegal Internet gambling wager is, or what the law should apply," Josten writes. "As you know, the definition of an illegal Internet gambling wager is an open question that is being litigated in both federal and state court, and therefore imposing potential criminal penalties on a company for undertaking an action that is neither clearly legal nor illegal, is highly problematic."

The group also has a problem with how financial institutions are supposed to identify transactions as being related to online gambling when there are so many ways to pay for such activities online that don't require the merchant to code the payment as Internet gambling.

"The current industry-wide mechanisms used for a variety of financial instruments including electronic check or electronic debit transactions -- do not employ a coding system comparable to that for credit cards, which currently code for 'gambling,' Josten states. "However, the bill applies to all financial instruments, which may require other types of money transfers, including checks, to potentially develop a coding system -- a potentially costly and unenforceable requirement."

The U.S. Chamber concludes its letter by asking legislators to take caution when trying to limit the Internet's use for commerce.