House Committee Passes Goodlatte and Leach I-Gaming Legislation

The U.S. House Judiciary Committee today approved Rep. Bob Goodlatte's, R-Va., HR 4777, "the Internet Gambling Prohibition Act" as well as Rep. James Leach's, R-Iowa, HR 4411, "the Unlawful Internet Gambling Enforcement Act of 2006." Both bills will proceed to the full House of Representatives for further consideration.

The committee began the morning with the markup of Goodlatte's bill. Very early on Rep. Chris Cannon, R-Utah, proposed an amendment to strike language referring to horse race wagering. During HR4777's hearing before the House Judiciary subcommittee on Crime, Terrorism and Homeland Security in early April the status of Internet horse race wagering had been the subject of much confusion. Many representatives at the hearing, including Cannon (who is not actually a member of the subcommittee but is very interested in the issue), indicated that they could not support Goodlatte's bill because of its lack of clarity with regards to horse race wagering. While Goodlatte claimed that his bill made no judgment about the legality of Internet horse race wagering, a representative from the Justice Department stated to the contrary that his agency could not support the bill because of its exception of horse race wagering.

The amendment introduced at today's markup clarifies that HR4777 makes no judgment about the legality of remote horse race wagering and instead leaves it to the Department of Justice to interpret whether it believes the Interstate Horseracing Act permits such wagering. Cannon, who hails from one from of only two states that prohibit all forms of gambling, he stated at the subcommittee hearing that he feared Goodlatte's bill would expand gambling. He revealed today, however, that he and Goodlatte had worked together to create the recent amendment to make Goodlatte's bill clearly neutral on horse racing. Cannon and Goodlatte also stated that the Department of Justice approves of the Goodlatte bill in its new amended form.

Rep. Robert Wexler, D-Fl., attempted to attach an amendment that would extend a carve-out exemption to all remote pari-mutuel wagering, including dog track and jai alai wagering. Wexler stated concern that Goodlatte's bill gave horse racing preferential treatment, but Goodlatte reiterated once again that his bill does not make a judgment on the legality of horse race wagering and that the relevant piece of legislation governing horse race wagering is the Interstate Horseracing Act. Goodlatte stated that horse racing is unique because Congress has passed the Interstate Horseracing Act, and if Congress felt dog racing should gain authorization to operate across state borders then they should pass an interstate dog racing act. The amendment failed.

A follow-up amendment attempt put forth by Wexler would have banned all forms online gambling, but Goodlatte urged against the bill on the grounds that it would restrict states' rights. Goodlatte called the amendment a "poison pill," stating that it threatened to kill the bill by removing protections that ensure legal gambling stays within the states. Wexler's second amendment was also defeated.

Rep. Robert Scott, D-Va., told the committee that he disagreed with several of the burdens and implications that Goodlatte's bill would have upon the U.S. banking industry. He pointed out that several of the problem areas were highlighted in a letter that was sent yesterday to the committee by the U.S. Chamber of Commerce. Scott stated that he had prepared amendments to address these concerns, but that had heard that Goodlatte is working with the banking industry to address some of the problems so he therefore did not introduce any amendments. Goodlatte responded that he is working with the banking industry and will continue to do so.

Scott introduced an amendment that would impose a criminal fine on anyone who places an illegal wager over the Internet, but it was defeated. It is apparent that Scott did not really hope for this amendment to pass but instead wanted to demonstrate the fundamental hypocrisy of the bill--that it does not actually target Internet gambling but the operation of an online gambling company.

After one hour and 25 minutes of debate, Goodlatte's bill came to a vote before the committee in its amended form and passed 25-11. Before the committee moved on to the next order of business, Scott submitted to the record a letter from the government of Antigua that stressed concerns that Goodlatte's bill violated international trade laws established by the World Trade Organization.

In a press release distributed almost immediately after the bill's passage, Goodlatte stated, "The Internet Gambling Prohibition Act allows states to continue to regulate gambling within their borders with tight controls to be sure that it does not extend beyond their borders or to minors. It also prohibits a gambling business from accepting certain forms of payment, including credit cards, checks, wire and Internet transfers, in illegal gambling transactions. The legislation also allows federal, state, local and tribal law enforcement officials to seek injunctions to prevent and restrain violations of this Act and obtain cooperation in the fight against illegal gambling."

Later in the afternoon the committee addressed Rep. James Leach's Unlawful Internet Gambling Enforcement Act of 2006. The bill passed by a voice vote in less than five minutes, with the only relevant action of note being a proposed amendment from Cannon that attempted to make the bill more consistent with the Wire Act by clarifying that wagers that violate the Wire Act should be blocked. Rep. John Conyers, D-Mich., stated that he opposed HR 4411, and Rep. Scott stated that it, like HR 4777, does not appear to prohibit online gambling, only the offering of such services.

It is anticipated that the Judiciary and Banking Committees may work to integrate the two bills.

Documents

Chamber of Commerce Letter

HR 4777 (prior to the addition of the Cannon amendment)

HR 4411