U.S. Law Roundup - Oct 30, 2001

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 biweekly update on U.S. state and federal legislation. While things remain quiet at the state level, efforts to prohibit Internet gambling by the federal government heat up as HR 556 heads for markup before the full House Committee on Financial Services on Wednesday.

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State Legislation

MICHIGAN	HB 4653
Bill Summary	The bill, HB 4653, would ban a person engaged in a gambling business from using the Internet or any interactive computer service (which would include an Internet service provider or system providing access to the Internet) from using the Internet to bet or wager, or to offer a bet or a wager. For further information, a legislative analysis is available.
Bill Status	House Bill 4653 awaits a hearing before the House Committee on Gaming and Casino Oversight.
Latest Action	This piece of legislation was introduced by Rep. James Koetje, who serves as the chairman of the House Committee on Gaming and Casino Oversight, on April 24. Following its introduction, the bill was referred to the committee, where it needs to be heard before any further action can be taken.
Outlook	The outlook for Michigan's latest effort to prohibit Internet gambling activity remains unclear. Although the state early last year enacted legislation that supposedly prohibits Internet gambling, its ability to do so has been questioned. Act 235, which amended the state's criminal code by making it illegal to offer Internet gambling to Michigan's residents, has long been derided as being ineffective. Michigan may very well be trying to clarify its anti-Internet gambling status through this bill. The state legislature has until December 2002 to either pass or kill HB 4653.
MICHIGAN	SB 565, 566, 567, 568 and 569
Bill Summary	Together these bills will, among other things, permit pari-mutuel wagering via the Internet and other electronic means.
Bill Status	This group of bills has been referred to the Senate Committee on Farming, Agribusiness and Food Systems.
Latest Action	These bills were introduced on June 26 and then passed to the Senate Committee on Farming, Agribusiness and Food Systems.
Outlook	According to a representative for one of the sponsors, Sen. George McManus Jr., Michigan's legislature must overcome many differences in priorities and beliefs before racing and gambling bills would be able to pass. "Peace in the Middle East is easier to achieve," the representative said.
CALIFORNIA	AB 471
Bill Summary	Among other things, this bill would authorize any racing association or fair to accept advance deposit wagers, or allow these wagers through a betting system or multi-jurisdictional wagering hub, including via electronic means.
Bill Status	Most recently California Governor Gray Davis gave AB 471 the thumbs up. The bill becomes law on Jan. 1, 2002.
Latest Action	AB 471 was passed by the state senate on July 18, and amendments proposed by the senate were accepted by the assembly on July 20. Somewhat unexpectedly, the governor passed the bill on August 13. The California Horse Racing Board on Sept. 22 announced that it had approved 15 proposed regulations that would set the stage for account wagering to begin in January. The proposed regulations, having been made available for public opinion, will be addressed during a Nov. 30 hearing for a vote by the full board.
Outlook	Despite the governor having nixed similar efforts last year, this year's move to allow account wagering has proven successful. With the bill's passage and approval from the governor, it becomes law in January. Already a number of racing companies, like Youbet.com and TVG, are preparing to offer their services to Californians. It's estimated that California's coffers will benefit from the redirection of the nearly $30 million residents bet last year on illegal offshore sites.
NEVADA	AB 466
Bill Summary	AB 466 permits interactive gambling sites to operate from Nevada.
Bill Status	AB 466 went in effect July 1, 2001. 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. (See related article, Nevada Gaming Commission Meeting Agenda.)
Latest Action	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 with a little-known legislative move, whereupon it was piggybacked unto 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 an in-house survey of applicable legislation on the state and federal levels.
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. Further, it remains unclear whether the Interstate Wire Act prohibits games of chance in addition to sports wagering activities.
OREGON	SB 755
Bill Summary	SB 755 prohibits Internet gambling.
Bill Status	This bill was signed by Gov. John A. Kitzhaber on June 21.
Latest Action	To enhance its chances of passage, SB 755 was amended to permit racetrack hubs to offer interactive betting services via the Internet as part of a closed-loop system. It has passed both houses and was sent to Gov. Kitzhaber for his signature. The bill was renamed 755B and will be enacted this year.
Outlook	With the bill's passage, Oregon now joins a very select group of states that have banned Internet gambling. Other states to prohibit Net betting include Illinois, Louisiana, Michigan and South Dakota.
U.S. VIRGIN ISLANDS	Bill No. 24-0046
Bill Summary	This legislation creates a regulatory structure to permit interactive gambling from the Virgin Islands.
Bill Status	On July 18 the V.I. senate overwhelmingly passed the bill with a vote of 11-3. The governor signed it into law on Aug. 3.
Latest Action	This bill was discussed at a Senate Committee for Economic Development, Agriculture and Consumer Protection hearing on June 29, at which time two amendments were adopted. Having been heartily endorsed by the V.I. Senate on July 18, the bill was signed Aug. 3 by Charles Turnbull, the territorial governor.
Outlook	As with the Nevada bill, whether the federal government could prevent a state or territorial government from offering interactive gambling services hasn't yet been determined. Further, no definitive decision has been made regarding whether the wire wager act prohibits games of chance in addition to sports wagering. It's been suggested, however, that the V.I. government hoped to pass Bill No. 24-0046 before the federal government passes any prohibitive legislation, thus enabling the territory to grandfather in legislation for Internet gambling much like Nevada did back when casinos and sportsbooks were outlawed in the United States. The V.I. Casino Control Commission has now been handed the task of developing procedures and standards for online casinos, something that should take much less time than Nevada's two-year time period. The Virgin Island legislation, however, already includes the regulation for e-casinos.
New Jersey	A-3150
Bill Summary	This controversial bill would authorize licensed land-based casinos in New Jersey to offer their games via the Internet.
Bill Status	A-3150 remains in committee.
Latest Action	The bill currently resides in the Commerce, Tourism, Gaming and Military and Veterans Affairs Committee, where it was sent on Jan.18.
Outlook	Unlike the Nevada bill that passed earlier this year, New Jersey's A-3150 has failed to garner great support among legislators and Atlantic City casino operators. The bill's author, Assemblyman Tony Impreveduto, has vowed to introduce a new bill next session if the original one isn't passed.

Federal Legislation

HR 2579	Internet Gambling Payments Prohibition Act
Bill Summary	The purpose of the bill, which was introduced by Rep. John LaFalce, D-NY, is to prevent the use of certain bank instruments for Internet gambling and other purposes.
Bill Status	HR 2579 is pending before two House committees.
Latest Action	This piece of legislation was introduced before the House of Representatives on July 20 before being referred to both the House Financial Services and House Judiciary committees.
Outlook	Last year, LaFalce co-authored a similar bill with Rep. James Leach, R-Iowa. Upon that bill's failure to pass before Congress recessed, the two legislators have split their approach, with each introducing his own bill to ban the use of credit cards and other payment systems for Internet gaming. LaFalce's bill, however, could be condemned to meet the same fate as last year's bill. As it is, Leach's bill, which was introduced earlier this year, remains in committee awaiting attention.
HR 2421	Jurisdictional Certainty Over Digital Commerce Act
Bill Summary	To exercise authority under Article I, section 8, clause 3 of the constitution of the United States to clearly establish jurisdictional boundaries over the commercial transactions of digital goods and services conducted through the Internet, and to foster stability and certainty over the treatment of such transactions.
Bill Status	The Jurisdictional Certainty bill remains in committee.
Latest Action	This bill, while not directly related to Internet gambling, would give the federal government control over all e-commerce transactions, effectively erasing any state or territorial control over Net betting issues, including both regulation and prohibition of such activity. Introduced on June 28 by Rep. Cliff Stearns, R-Fla., it was referred to the House Energy and Commerce Committee, as well as the House Judiciary Committee. On July 6, the Commerce Committee sent the bill for consideration by the Subcommittee on Commerce, Trade and Consumer Protection. The Judiciary Committee on July 16 forwarded HR 2421 to the Subcommittee on Commercial and Administrative Law.
Outlook	The fate of this bill remains unclear, although determining whether the federal government should have control of the Internet--at least in the United States--remains a political hot potato.
HR 556	Unlawful Internet Gambling Funding Prohibition Act
Bill Summary	Unlawful Internet Gambling Funding Prohibition Act, as explained on the Congressional Web site: Prohibits any person engaged in a gambling business from knowingly accepting in connection with the participation of another person in Internet gambling: (1) credit; (2) electronic fund transfers or funds transmitted by or through a money transmitting business; (3) any instrument drawn by or on behalf of another and payable through any financial institution; or (4) the proceeds of any other form of financial transaction involving a financial institution as payer or financial intermediary for another. Prescribes judicial guidelines by which the Federal district courts exercise exclusive jurisdiction to prevent or restrain violations of this Act. Provides for civil and criminal penalties, including a permanent injunction against wagering. Shields certain financial intermediaries from liability for unknowing involvement or unknowing use of their facilities in: (1) any credit transaction, electronic fund transfer, or money transmitting service; or (2) drawing, paying, transferring, or collecting a check or draft instrument. Cites exceptions. Declares that the Federal Government, in deliberations with a foreign government on money laundering, corruption, and crime issues, should: (1) encourage cooperation by foreign governments and relevant international fora in identifying whether Internet gambling operations are being used for money laundering or other crimes; (2) advance policies that promote international cooperation in the enforcement of this Act; and (3) encourage the Financial Action Task Force on Money Laundering to study the extent to which Internet gambling operations are being used for money laundering. Amends the Federal Deposit Insurance Act to provide that if an appropriate federal banking agency determines that an insured depository institution is engaged in activities proscribed under this Act, such agency may issue an injunction.
Bill Status	The bill goes before the full House Committee on Finance for markup on Oct. 31.
Latest Action	HR 556 is the second attempt by Rep. James Leach, R-Iowa, to prohibit Internet gambling by making it nearly impossible for Americans to pay for their online gambling activities. The bill was introduced in February 2001 and sent to the House Judiciary and Financial Services Committee, where it still remains. A markup scheduled Oct. 31 before the entire Finance Committee is considered by Washington insiders to be a rubber stamp before HR 556 is placed on the House of Representatives schedule for consideration.
Outlook	As this bill heads for markup before the House Finance Committee, the possibility exists that HR 556 could get fast consideration by legislators who have begun lumping online gambling in with money laundering and terrorist activities. This is thanks to an effort to have language taken from HR 556 and added to money laundering and anti-terrorism legislation voted on following the Sept. 11 terrorist attacks in the United States. That effort was stalled, however, when legislators agreed that the I-gaming provisions were too hot for fast-track action. Those who worked to have this language removed from the anti-money laundering bill said Internet betting activities have not been linked to terrorist activities and should not have been included in that bill in the first place.
S 718	Amateur Sports Integrity Act
Bill Summary	A bill to direct the National Institute of Standards and Technology to establish a program to support research and training in methods of detecting the use of performance-enhancing drugs by athletes, and for other purposes. This would also outlaw all betting on amateur sporting events in Nevada, including college and Olympic events.
Bill Status	The Amateur Sports Integrity Act remains on the Senate legislative calendar.
Latest Action	On April 5, Sen. John McCain, R-Ariz., introduced S 718. S 718 has been the focus of several hard-fought battles between senators, and featured swipes that Muhammad Ali would have envied in his prime. Despite these battles in the Senate Commerce Committee, S 718 managed to survive, earning a 10-10-tie vote on May 3. The bill has since been placed on the Senate legislative calendar. No date for the vote has been set. A spokesperson for McCain explained that the senator would introduce his bill as an amendment to another bill.
Outlook	Whether this bill will pass is unclear. Although McCain has managed to gain significant support from a number of interest groups, the American Gaming Association continues to lobby hard against S 718.

Failed Legislation

Illinois H 3089

One of two Internet gambling bills that were introduced before the Illinois legislature this year, H 3089, was tabled by its author, Rep. Timothy Schmitz, on March 28. H 3089 was intended to prohibit a person from making a wire transfer of money for the purpose of an Internet gambling transaction. It would have also prohibited a financial institution from knowingly making a wire transfer of money that is to be used in an Internet gambling transaction

Illinois H 545

This bill, introduced on Feb. 1, was referred to several committees before finally stalling in the House Committee on Rules until the legislature ended its session. H 545 proposed amending the state criminal code to make it illegal for Illinois residents to gamble on the Internet.

California AB 1229

California's most recent effort to prohibit Internet gambling failed when AB 1229, a bill introduced by Assemblyman Dario Frommer (D-Glendale), was unable to get moved out of the state Senate Governmental Organization Committee before adjournment.

Oregon: HB 2823

This Net betting prohibition bill was introduced around the same time SB 755 was brought before the state senate. Since then, HB 2823 has languished in the House Judiciary Committee. With the adjournment of the legislature on July 7, the bill is now considered dead.

Indiana: HB 1042

This bill prohibiting Internet gambling failed to gain support among Indiana legislators. It has languished in the Public Policy and Ethics and Veterans Affairs committee since January. With the legislative session now closed, this bill is considered dead.

Iowa: HF 13

Iowa's bill, first introduced in January before being sent to the House Standing Committee on State Government, would prohibit a person from using the Internet to conduct or participate in a lottery or in a game for any sum of money or property, to make a bet, to engage in bookmaking, or to deliver a wager for a fee. The bill has seen no action since that time and remains unlikely to be passed out of committee.