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Emily D. Swoboda

US Law Roundup - January 2003

28 January 2003

Staying on top of interactive gambling bills as they move through the United States' federal and state legislatures no longer entails hours of research, thanks to this monthly update on U.S. state and federal legislation. One the state level, a bill that would hold Internet service providers liable for allowing online gambling to take place under their service was passed in the Indiana Senate on Jan. 27. On the federal scene, a new session of Congress started Jan. 8. All of the bills from last session that had not been passed have put out of the running, and so far the only bill on the table is HR 21, a bill from Rep. James Leach to ban online gambling.

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State Legislation

Indiana SB 71

Bill Summary SB 71 would hold Internet services providers liable if they host online casinos or allow online casinos to target their customers. The bill passed the Senate last year, but died in the House. This year, the author of the bill, Sen. David Ford, said he's garnered more support. If passed, the bill would allow county prosecutors to send a written notice to Internet service providers--such as America Online--saying that Web-based gambling is illegal in Indiana. The notice would list specific Web sites that are providing gambling opportunities and require the Internet providers to restrict their Indiana customers' access to those sites within 30 days. If the companies fail to comply, they could be charged with a Class D felony, punishable by up to three years in prison and a $10,000 fine. (Currently, illegal gambling in Indiana is a misdemeanor.) The casino operators also would face the same penalty. The bill additionally calls for the state attorney general to maintain a list of gambling Web sites that Internet providers should block. Eventually, Ford said, Internet companies would routinely acquire new lists from the attorney general and make the appropriate changes in their software to block the sites, without an overt threat of prosecution.

Bill Status The bill was passed Monday, Jan. 27, 2003 by the state Senate. It will now be put to a vote in the House.

Outlook The bill's sponsor in the House is optimistic about its passage, but ISP's who could be opposed to the bill have yet to come forward.

Nevada AB 466

Bill Summary AB 466 permits gambling sites to operate from Nevada. The original bill, AB 296, was eventually incorporated into a companion bill, AB 578. At first the bill steamrolled its way through both houses of the Nevada legislature, yet failed at the final step--by all accounts, suffering from a political tiff between the two houses--while awaiting a vote on the Senate floor. The legislation, however, was brought back to life by being piggybacked with AB 466, a bill that creates a uniform, statewide system for issuing work cards to gambling employees. Gov. Kenny Guinn signed the legislation on June 14, and the bill went into effect on July 1. The next step is for the Nevada Gaming Commission and the Gaming Control Board to do a survey of applicable legislation on the state and federal levels

Bill Status AB 466 went into effect July 1. Now the state is looking at the legality of Internet gambling under federal law, as well as a host of other issues. A hearing on this subject was held July 31 and Aug. 1, 2001. (See related article, Nevada Gaming Commission Meeting Agenda.)

Outlook Internet gambling probably remains a few years from becoming a reality in Nevada. There has been no determination whether the federal government could prevent a state or territorial government from offering interactive gambling services. Recent discussion of anti-Internet gambling bills in the U.S. House of Representatives Financial Services Committee couldn't solve the problem of overlap between state and federal laws. In late August, the U.S. Justice Department responded to an inquiry put forth by the Nevada Gaming Commission and Gaming Control Board regarding whether AB 446 is legal according to the Wire Act. The Justice Department responded that its interpretation of federal law indicates that gambling via the Internet, including casino-style gambling, is illegal. The next session of the Nevada legislature will convene on Feb. 3, 2003.

New Jersey AJR-51

Bill Summary This bill, which is an assembly joint resolution, was proposed by Assemblymen Gary L. Guear Sr. and Anthony Impreveduto on Dec. 9. It would create a 21-member Internet Gambling Study Commission that would be charged with recommending a course of action regarding online gaming in New Jersey.

Bill Status The bill was referred to the Assembly Tourism and Gaming Committee.
Outlook Impreveduto told IGN that the bill was created because Guear, who is chairman of the Tourism and Gaming Committee, wanted more information about the Internet gambling industry before considering other bills on I-gaming.

New Jersey A-568

Bill Summary This controversial bill would authorize licensed land-based casinos in New Jersey to offer their games via the Internet.

Bill Status A-568 is this year's prefiled version of A-3150, a bill Assemblyman Tony Impreveduto filed during the 2000-2001 legislative session. A-3150 had been sent to the Commerce, Tourism, Gaming and Military and Veterans Affairs Committee on Jan. 23, 2001, where it remained for the rest of the session.
Outlook Unlike the pro I-gaming bill in Nevada that passed last year, New Jersey's A-3150 had failed to garner great support among legislators and Atlantic City casino operators.

New Jersey A-1532

Bill Summary This bill was prefiled for the 2002-2003 legislative session by Assemblymen Joseph Azzolina and Nicholas Asselta. It replaces A-3932, which they introduced on Nov. 9, 2001. Both the old bill and the new one propose to allow Atlantic City casinos to offer real-time card games via the Internet.
Bill Status A-3932 was heard by the Commerce, Tourism, Gaming and Military and Veterans Affairs Committee on Nov. 20. The purpose of the hearing was to educate the committee members about the technology that could be implemented if the bill is passed. The committee received more than an hour of demonstrations, at which point it decided to table the bill until another hearing could be scheduled. The legislative session ended before A-3932 could be revisited.

Outlook Azzolina and Asselta have pre-filed A-1532 for the current session. It faces competition from Assemblyman Tony Impreveduto's A-568.

Federal Legislation

HR 21 Unlawful Internet Gambling Funding Prohibition Act

Bill Summary This bill would prohibit Internet gambling businesses from accepting the following payment methods from customers: credit cards, electronic fund transfers, any instrument drawn by or on behalf of another and payable through any financial institution and the proceeds of any other form of financial transaction involving a financial institution as payer or financial intermediary for another.
Bill Status HR 21 was introduced by Rep. James Leach, R-Iowa, on the first day of the 108th session of Congress, which was Jan. 8, 2003. The bill is virtually the same as HR 556, which Leach introduced last year. HR 556 was passed in the House by a voice vote, but it did not go to a vote in the Senate and thus died. House Financial Services Committee Chairman Michael Oxley, R-Ohio, says that HR 21 is a priority for his committee this year.

HR 556 was the second attempt by Leach to prohibit Internet gambling by making it nearly impossible for Americans to pay for it. The bill was introduced in February, 2001, by Leach but was revisited in the Financial Anti-Terrorism Act of 2001, which was proposed by Oxley and Rep. John LaFalce, D-N.Y. A response to the Sept. 11 terrorist attacks, that bill aimed to squash money-laundering opportunities for terrorists. Leach's bill against online gambling was included in the anti-terrorism legislation. After being discussed by the House Financial Services Committee, the anti-terrorism bill was fast-tracked without the Internet gambling provisions and approved by the full House on Oct. 17, 2001. On Oct. 31, 2001, the Internet gambling section was reconsidered and approved by the committee by a vote of 34 to 18. HR 556 was discussed on Nov. 29, 2001, along with HR 3215 at a legislative session of the House Judiciary Committee's Subcommittee on Crime.

On Dec. 13, 2001, the House Committee on Judiciary granted an extension for further consideration of the HR 556 no later than Dec. 21, 2001; on Dec. 20, 2001, the same committee granted another extension for consideration of the bill ending on March 29, 2002. On Jan. 29, 2002, LaFalce and Oxley testified before the Senate Banking, Housing and Urban Affairs Committee. They told the committee that online gambling and credit card fraud are terrorists' key money laundering methods. On Feb. 5, 2002, Leach, Oxley and LaFalce sent a letter to members of the House asking them to support and consider co-sponsoring HR 556. In the letter, the authors ask House members to support their bill over other proposals that have been introduced to ban Internet gambling, most notably, Rep. Bob Goodlatte's bill. In early September of 2002, elements of Goodlatte's bill were implanted into Leach's bill, essentially putting the two legislators on the same team regarding Internet gambling.

Outlook According to the press officer for the House Financial Services Committee, HR 21 is a top priority this year. In addition, Rep. John Conyers, D-Mich., is expected to introduce a bill soon that would establish a committee to study the feasibility of making online gambling legal and safe in the United States.

US Law Roundup - January 2003 is republished from
Emily D. Swoboda
Emily D. Swoboda