Federal Efforts and Actions to Control The Internet Gambling

Ongoing efforts aim to strengthen Federal regulation and prohibition of Internet gambling. Members in both chambers of Congress have introduced legislation to address Internet gambling. The Internet Gambling Prohibition Act, first introduced by Senator Kyl during the 105th Congress, provides for the prohibition of Internet gambling through amending the Wire Communications Act. As reintroduced during the 106th Congress, the bill would expand and/ or clarify definitions within the statute to include the technology of the Internet and all forms of gambling. 54 The enforcement mechanisms in the legislation include fines and/ or imprisonment for people conducting business or participating in illegal gambling as well as measures against ISPs that provide communications service to Internet gambling Web sites.

Other measures affecting Internet gambling focus on the financial transactions used to make wagers. In at least two cases, individuals have named credit card companies and their banks in lawsuits for permitting them to use their credit cards for illegal Internet gambling. The first, in a California state court, stemmed from a bank’s attempt to collect a $70,000 debt, incurred through gambling, on 12 credit cards. 55 The resulting countersuit sought to prevent credit card companies from “permitting their credit cards from being used or accepted on Web sites that accept illegal bets from residents of the State of California.” 56 A similar federal court case in Wisconsin contends that credit card companies and banks have “aided and abetted” illegal gambling and therefore should not be able to collect what are illegal gambling debts. 57

Although amending or creating new federal statutes to prohibit or regulate gambling on the Internet would provide law enforcement with greater authority to prosecute owners and operators, there are many ways of frustrating the efforts of regulators. The international nature of business is perhaps the most important facilitator of owners’ and operators’ ability to circumvent regulations.

Currently, governments in 25 countries license or have passed legislation to permit Internet gambling operations. 58 To effectively prohibit Internet gambling, the U. S. government would have to ensure that these licensed operators do not offer their services within U. S. borders, a proposition that poses a range of unanswered questions regarding feasibility. Efforts to prevent customers in the United States from accessing and using these sites may be easily circumvented. For example, the on-line registration process makes possible an initial screening of customers when they disclose the locations of bank accounts or credit card companies. Yet potential customers can take a number of steps to conceal their location within the United States. For example, patrons can establish offshore bank accounts and wire the money from those accounts to the Internet gambling site. In addition, patrons can mask their origins by first dialing an offshore ISP before logging onto a particular site, thereby creating the appearance of operating in a legal Internet gambling jurisdiction.

53 Benjamin Weiser, “14 Facing Charges in First U. S. Action on Internet Betting,” New York Times, March 5, 1998, p. A1. 54 Internet Gambling Prohibition Act of 1997, S. 474, 105 th Cong. (1997). 55 Joseph M. Kelly, “Internet Gambling Law,” 26 William Mitchell L. Rev. (forthcoming Fall 1999) (manuscript at 4, on file with author). 56 Ibid at 38. 57 The statutes specified in the lawsuit include: 18 U. S. Code § 2, 18 U. S. Code § 1081, 18 U. S. Code § 1084, 18 U. S. Code § 1952, 18 U. S. Code § 1955, 18 U. S. Code § 1957, 18 U. S. Code § 1960, 18 U. S. Code § 1961, 18 U. S. Code § 1962, 18 U. S. Code § 1964, 28 U. S. Code § 2201. 58 (Last visited 5/ 7/ 99.) Interactive Gaming News http:// www. igaming news. com/ articles. licenses/ countries. cfm.