Anti-Internet Gaming Law Sails Through House Committee

...on these off-shore sites with its “Unlawful Internet Gambling Enforcement Act of 2006.”

The bill, which on May 26 made it through the House Judiciary Committee by a 25 – 11 vote and is being put up for debate in the full House of Representatives, would make it illegal to “place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise made,” according to bill H.R. 4777.

Currently there are no U.S. casino operators participating in the online wagering business. However, Harrah’s and MGM Mirage are looking to get a piece of the action, an industry niche garnering about $12 billion a year and growing. Half of the industry’s revenues – about $6 billion – are estimated to be coming from the United States.
In a statement after Friday’s vote, bill sponsor Rep. Bob Goodlatte, R-Va said that there are more than 2,300 gaming sites on the Internet. He said the 1961 Wire Act is widely interpreted as making this activity illegal already.
“I am encouraged by the passage of this legislation through the Judiciary Committee. Gambling on the Internet has become an extremely lucrative business.  Numerous studies have charted the explosive growth of this industry, both by the increases in gambling websites available, and via industry revenues,” said Goodlatte. Virtual betting parlors have attempted to avoid the application of United States law by locating themselves offshore and out of our jurisdictional reach.  These offshore, fly-by-night Internet gambling operators are unlicensed, untaxed and unregulated and are sucking billions of dollars out of the United States.”
Companies such as MGM and Harrah’s have given candidates for office more than $900,000 looking to be elected this fall in Congressional races across the country according to the Federal Election Commission.  These companies would like to see the formation of a committee to study the issue more fully before laws are passed banning online wagering outright.

The just released “An Analysis of Internet Gambling and its Policy Implications,” is sponsored by the American Gaming Association and argues for the legalization of online gaming. It was written by David O. Stewart, an attorney at Ropes and Gray, LLP who explained the online gambling industry currently is thriving, due in large part to participation from U.S. bettors.  He added the rate of Internet gambling among U.S. residents is growing at a rate of more than 20 percent a year.   Additionally, a number of foreign nations, including Great Britain, are in the process of legalizing, licensing, regulating and taxing Internet gambling operators.
“By driving all Internet gambling business to foreign entities,” he writes, “the current regime also ensures that no jobs are created for American workers, no returns are earned by American companies, and no tax revenues are paid to American governments.”    
The House bill could get voted on as early as June. Speculators are saying it could pass the House but have a more difficult time getting through the Senate.

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