Gearing up for Prohibition 2006

By reintroducing his I-gaming prohibition bill, U.S. Rep. James Leach, R-Iowa, appears to be positioning himself to make another run in 2006 at banning "unlawful" gambling over the Internet. He's also reaching out to the prohibition movement's biggest supporter in the Senate, Sen. Jon Kyl, R-Ariz.

"The purpose of [the Leach bill] is not to shut down businesses that already exist legally in the United States."

- Michael Borden
Leach Staffer

Leach says Internet gambling is a national security problem because it opens up channels for money laundering and cross-border crime. He and Kyl are working together to draft a flawless anti-gambling bill to cut off the money flow between gamblers and Internet gambling operators by making it unlawful to use credit cards, wire transfers and other electronic forms of payment.

Leach dropped his bill, H.R. 4411 (The Unlawful Internet Gambling Enforcement Act), on Nov. 17--just four days after sending a letter to each member of Congress seeking support for his and Kyl's campaign. The legislation is the culmination of all the past efforts by legislators to prohibit what Leach calls a scourge on America. The language in H.R. 4411 is almost identical to Kyl's bill, which died this year before it ever reached committee.

"We worked closely with Senator Kyl's office to eliminate the bicameral hurdle the previous bill couldn't make it over," Michael Borden, a legislative assistant to Leach, explained. "The Senate will pass something and then the House will pass something different. The House will act; the Senate won't and vice versa. So to eliminate one of the obstacles we faced before, we decided to work with Senator Kyl's office."

The essence of Leach's legislation, which Borden said is being backed by the NFL, NBA, NHL, NCAA and Major League Baseball, aims to break the link between gambler and operator by making it illegal to use credit cards to gamble online, ultimately eliminating Internet gambling.

Like other bills before it, H.R. 4411 includes a carve-out for off-track horse betting services that use Internet technology to accept wagers, but Borden was quick to point out that this does not constitute an expansion of gambling.

"I wouldn't even call it an exemption," he said. "I would call it a clarification. We aren't exempting horseracing so that someone who's sitting in their home can just keep betting on horses and not, for example, the NFL. The purpose of this is not to shut down businesses that already exist legally in the United States."

With the exception of one week in December allotted for conference reports, the House is finished for the year, so it is doubtful that the bill will see any action during this session.

Greenberg Traurig's Dan Walsh, a lobbyist in Washington for the Interactive Gaming Council, said Leach most likely introduced the bill to retain ownership of the issue.

The last I-gaming bill to see action in the House was brought by Rep. Spencer Bachus, R-Ala., one of the new Leach bill's 18 original sponsors. Bachus's legislation, H.R. 2143, was passed by the full House in 2003, but made no progress in the Senate. Shortly before the introduction of H.R. 2143, the last bill introduced by Leach, H.R. 21, died following the removal of a racing carve-out.

Borden said there are few differences between H.R. 21 (prior to the racing exemption's removal) and the new Leach bill. "Everything you saw in H.R. 21 is in this bill," he said. "There might be a couple of small changes, but essentially it's the same bill."

Whereas the Bachus bill and the original Leach bill define activity covered by the racing exemption simply as "any lawful transaction with a business licensed or authorized by a State," the new Leach bill offers a detailed definition of what constitutes such a transaction; it also specifies that exempted activity must not violate provisions of the Interstate Horseracing Act, the Professional and Amateur Sports Protection Act, the Gambling Devices Transportation Act or the Indian Gaming Regulatory Act. Further, only businesses offering "intrastate" services are exempt.