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Kevin Smith

Prohibition 2005 - A Sneak Peek at the Kyl Bil

29 April 2005

Sen. John Kyl, R-Ariz., is preparing to introduce the 2005 version of his Internet gambling prohibition legislation, and Interactive Gaming News has obtained a draft version of the bill.

Like other recent versions of the Kyl bill, the Unlawful Internet Gambling Enforcement Act of 2005 would make it illegal to use credit cards, wire transfers or other "instruments of banking" to fund online gambling transactions. But unlike previous versions, the 2005 bill doesn't define legal and illegal online gambling activity, nor does it contain a carve-out for online horse betting, an activity that has generated hundreds of millions of dollars for states in which it is currently legal.

The carve-out issue has been at the heart of debates throughout the lifetime of the U.S. Internet gambling prohibition movement.

The racing, lottery and land-based casino industries have been vocal over the years; all are in favor of an exemption allowing individual states to decide whether they want to license and regulate various forms of interactive gaming. The Indian gaming lobby has sought exemptions as well.

Racing is the only gambling industry whose products are legal and regulated over the Internet in U.S. states and, thus, has the most to lose if the current, exemption-free bill is passed.

But getting such a bill through both chambers won't be an easy task. The last exemption-free funding prohibition bill, authored by Rep. Jim Leach, R-Iowa, and introduced to the House in 2000, was ultimately killed by special interest groups seeking exemptions.

What remains to be seen is whether things will be different this time in light of the World Trade Organization's recent ruling in the Antigua/United States trade dispute regarding Internet gambling. The WTO ruled that it is within the United States' rights under the organization's General Agreement on Trade Services (GATS) to block foreign Internet gambling services as long as the services are illegal domestically as well. Because race betting is the only form of gambling that's conducted legally over the Internet in the United States, it is speculated that legislators will want to close that loophole so that the United States can effectively block all foreign online gambling operations while remaining in compliance with GATS.

Nevertheless, some Washington insiders say that with each passing year without a prohibition bill enacted, Internet gambling gains more acceptance among the American public. The rise in popularity of Internet poker rooms has fueled industry growth over the last two years, and many believe that it will be nearly impossible to tell citizens now that the activity is illegal.

Add hot-button issues like the future of the Social Security system and the ongoing war in Iraq into the mix, and the bill could be seen as a low priority for most Senate leaders.

Further, Republicans in the Senate are threatening to move forward with a "nuclear option" policy to prevent Senate filibusters of judicial nominations, and Democrats have threatened to respond to such an unprecedented move by making it nearly impossible to get normal business done in the Senate. Under such conditions, it isn't very likely that an anti-online gambling bill would see the light of day.

Kyl has introduced several bills aimed at prohibiting Internet gambling over the years, but none have cleared both chambers of Congress. Washington sources say the 2005 version could come to light within the next few weeks. Kyl will have until November 2006, when the 109th Congress closes, to push the bill through both chambers.

If the judicial nomination issue is cleared up, and the Senate returns to normal business, the 2005 bill could see action before the Senate's late summer recess in August.

The bill would likely be referred to the Senate Finance Committee (of which Kyl is a member), where members would decide when (if at all) to schedule a hearing on it.

Attempts by IGN to reach Kyl's office for comment on the 2005 bill were unsuccessful.

Click here to view the draft version of the Unlawful Internet Gambling Enforcement Act of 2005.

Prohibition 2005 - A Sneak Peek at the Kyl Bil is republished from
Kevin Smith
Kevin Smith