House Committee Amends, Passes Leach Bil

The Judiciary Committee this morning passed a wounded version of the Leach I-gaming bill that is emptied of its carve-outs for dog racing, horse racing, lotteries and casino games.

The move means that House of Republicans leadership will now have to choose between the Judiciary Committee version of the bill and the version passed by the Financial Services Committee, which kept the exemptions.

Leach's bill, HR 21, would ban online gambling merchants from accepting payment in the form of credit card transactions or other bank instruments from Americans for any illegal online gambling transactions. The amendment in question was put forth by Rep. Chris Cannon, R-Utah, who stated that while he is against gambling, the exceptions in the Leach bill "could swallow the rule."

Cannon said he offered the amendment because he was worried the bill might allow some types of gambling in Utah, where all forms of gambling are illegal. He also said the bill would create burdens on financial businesses, which along with Internet service providers, could, under the bill, have been served with injunctions with the aim of halting or preventing Internet gambling activity.

Congress should do whatever it can to limit gambling, he said, but where the activity can't be limited, it should be regulated. His amendment passed the committee by a vote of 16-15.

An online gambling industry expert, who did not want to be named, said many in the industry hope the Cannon amendment has the effect of killing the Leach bill much in the same way Cannon did last year by stripping a similar bill of Leach's of its gambling industry exemptions.

"I don't want to oversell it... (but) it was a good day," the source said.

Since the version of HR 21 that passed the Judiciary Committee is now different from the version that passed the Financial Services Committee, the chairmen of both committees could form an agreement about which bill will advance to the full House. Another option is that House leadership could draft its own version.

The Cannon amendment makes the Leach bill more controversial, industry sources agree. Some experts even question whether the matter will be dropped for good from the legislative agenda. The Interactive Gaming Council stated today that it hopes the bill from Rep. John Conyers, D-Mich., which would create a commission to study the feasibility of regulating online gambling, is explored.

"Our main point is that we're actually disappointed to see the movement of legislation to prohibit Internet gambling," said Keith Furlong, the IGC's spokesman. "We feel the more sensible solution is through an effective regulatory system. We're hopeful that legislation such as that introduced by Conyers to set up a study commission... would go through the same process as the legislation to prohibit Internet gambling."

A possible effect of the Cannon amendment is that groups that had formerly supported the legislation--such as horse racing groups--may now be more apt to oppose it. Frank Fahrenkopf, president of the American Gaming Association, said the addition of Cannon's amendment might mean that the AGA will oppose the Leach bill.

"The hallmark of our industry's gaming philosophy is that states' rights are critically important, and were the Cannon amendment to be in the final bill it would really violate states' rights, and my guess is that we would oppose it; my guess is that probably the lotteries would oppose it. But I haven't had a chance this morning to talk to everyone about it," Fahrenkopf said.

A handful of other amendments were also offered up during the markup, including attempts to strip the bill of its directives for financial institutions and a motion to make individual gamblers liable for their online gambling activities.