Industry Dodges Latest Oxley Prohibition Attempt

Just as it appeared the noose was tightening around the neck of the online gaming industry a reprieve was granted in Washington as Congress appears to be backing off the idea of adding a prohibition bill to larger 9/11 anti-terrorism legislation.

Earlier this week Rep. Michael Oxley, R-Ohio, tried to add on H.R. 2143, the Unlawful Internet Gambling Funding Prohibition Act, to the larger 9/11 bill. The 9/11 bill is aimed at focusing on money laundering and financial transactions originating in offshore jurisdictions and also includes some amendments to the USA PATRIOT Act which was passed in the wake of the Sept. 11 terrorist attacks on the U.S.

Oxley, who chairs the House Financial Services Committee, had hoped to tack on H.R. 2143, which aims to block the use of credit cards, wire transfers and other "instruments of banking," for use in online gambling transactions.

A committee hearing was held on the 9/11 bill on Wednesday and Oxley was going to try and add H.R. 2143 to the bill. The subject of online gambling was brought up in the committee hearing but no action was taken on H.R. 2143.

Some felt last week that the only way a prohibition bill would pass was as an add-on to a larger bill, like an anti-terrorist one. But the threat of that happening seems to have subsided now as Oxley was met with less than favorable results from his latest effort.

Washington insiders stressed that Senate, House and White House leadership don't want the 9/11 bill to become a political hotbed with extra add-ons. Oxley could still try to add the anti-online gambling bill to the 9/11 bill during next week's mark up of the bill, scheduled for Wednesday, but anything beyond that seems a long shot.

A draft version of the 9/11 bill was sent to the White House by House Republican leadership late this week and insiders have said the draft version doesn't contain H.R. 2143 or any other Internet gaming provisions. Even if Oxley was able to get the add-on out of the committee, Congressional leaders said they would have trouble supporting the bill.

Congress would like to pass the full 9/11 bill before it adjourns on Oct. 8 for members to head back to their constituents in preparation of the Nov. 2 election. Therefore leadership would like the 9/11 bill to be as bipartisan as possible to prevent it from being bogged down in the legislative process.

The news is a small victory for the interactive gaming industry but the battle has not yet been won, according to one Washington insider. He said Oxley is committed to the anti-gambling bill and could still be willing to fight for it, either as an add-on or its own separate piece of legislation.

Although Senate leadership has indicated they don't want add-ons to the 9/11 bill either, there is a small chance that Sen. Jon Kyle, a longtime foe of the industry, could follow Oxley's lead and add similar anti-online gambling language to the Senate's 9/11 bill.

Kyl though is part of the Senate Republican leadership so trying to add on his own legislation to the 9/11 bill is unlikely to happen.

Although the Department of Justice has been openly against online gambling (an ongoing Grand Jury Investigation in the Eastern District of Missouri is looking into the advertising practices of the industry), the White House and other branches of the government have been hesitant to support an outright ban on online gambling.

During the House Financial Services Committee meeting on Wednesday a witness from the U.S. Treasury's office was put on the hot seat by Barney Frank, the committee's ranking Democrat.

In jest Frank asked if the treasury thought that Al Qaeda were big gamblers because he was reading a lot in the bill about Internet gambling but didn't see the connection between it and terrorist groups.

The treasury witness's response was that the administration opposes illegal Internet gambling but doesn't necessarily endorse this bill in this context. At that point Democrat Mel Watt took the questioning a step further and asked the treasury representative if his department was endorsing the bill.

The witness was non-committal at first but eventually said that the Treasury "did not object to the bill."

Many observing the hearing felt that the comment was made to appease Oxley without having the administration on the record in support of H.R. 2143.

No action is expected on the 9/11 bill until after the House markup on Wednesday.