Gamblers who prefer their laptops to blackjack tables won't like what Congress is doing. On Tuesday, the House plans to vote on a bill that would ban credit cards for paying online bets and could padlock gambling Web sites.
The legislation would clarify existing law to spell out that it is illegal to gamble online.
To enforce that ban, the bill would prohibit credit cards and other payment forms, such as electronic transfers, from being used to settle online wagers. It also would give law enforcement officials the authority to work with Internet providers to block access to gambling Web sites.
Some opponents of the legislation say policing the Internet is impossible, that it would be better to regulate the $12 billion industry and collect taxes from it. The online gambling industry is based almost entirely outside the United States, though about half its customers live in the U.S.
Other critics complain that the bill doesn't cover all forms of gambling. They point to exemptions they say would allow online lotteries and Internet betting on horse racing to flourish while cracking down on other kinds of sports betting, casino games and card games like poker.
"If you're going to support legislation that is supposed to 'prohibit gambling,' you should not have carve-outs," said Andrea Lafferty, executive director of the conservative Traditional Values Coalition.
Other conservative and antigambling groups are supporting the legislation, sponsored by Reps. Bob Goodlatte, R-Va., and Jim Leach, R-Iowa.
John Kindt, a business professor at the University of Illinois at Urbana-Champaign who has studied the issue, calls the Internet "the crack cocaine" of gambling.
"There are no needle marks. There's no alcohol on the breath. You just click the mouse and lose your house," he said.
Congress has considered similar bills several times before. In 2000, disgraced lobbyist Jack Ambramoff led a fierce campaign against it on behalf of an online lottery company.
Online lotteries are allowed in the latest bill, largely at the behest of states that increasingly rely on lotteries to augment tax revenues.
Pro-sports leagues also like the bill, arguing that Web wagering could hurt the integrity of their sports.
The horse racing industry also supports the bill because of the exemption it would get. Betting operators would not be prohibited from any activity allowed under the Interstate Horseracing Act. That law written in the 1970s set up rules for interstate betting on racing. It was updated a few years ago to clarify that betting on horse racing over the Internet is allowed.
Greg Avioli, chief executive officer of the National Thoroughbred Racing Association, said the mention of horse racing in the bill is "a recognition of existing federal law," not a new carve-out.
He said the racing industry has a strong future in the digital age and acknowledged the bill would send Internet gamblers to racing sites. "They'd return to the one place they can bet legally," Avioli said.
That's what some critics say is unfair.
"Somehow we find ourselves in a situation where Congress has gotten in the business of cherry-picking types of gambling," complained Rep. Robert Wexler (news, bio, voting record), D-Fla. Wexler had tried unsuccessfully to include exemptions for dog racing and jai alai, both popular in Florida.
The Justice Department has taken a different view on the legality of Internet betting on horse races. In a World Trade Organization case involving Antigua, the department said online betting on horse racing remains illegal under the 1961 Wire Act despite the existence of the more recently passed Interstate Horseracing Act.
The department hasn't actively enforced its stance, but observers say it is possible the agency and the racing industry could face off in court in the future.
Regarding the House bill, Antiguan Finance Minister Errol Cort said Monday, "I'm very surprised and quite disappointed that the U.S. Congress would be pushing full force ahead."
Sen. Jon Kyl (news, bio, voting record), R-Ariz., is leading support for the ban in the Senate. The issue has so far not been debated in that chamber this year.
The bill is H.R.4411.
Ron Paul, a Republican from Texas, made it clear that banning online gambling is a terrible decision. His dissenting views were included at the end of the original bill dated April 6, 2006.
We include his complete text here.
H.R. 4411 limits the ability of individual citizens to use bank instruments, including credit cards or checks, to finance Internet gambling. This legislation should be rejected by Congress since the federal government has no constitutional authority to ban or even discourage any form of gambling.
In addition to being unconstitutional, H.R. 4411 is likely to prove ineffective at ending Internet gambling. Instead, this bill will ensure that gambling is controlled by organized crime. History, from the failed experiment of prohibition to today's futile ‘‘war on drugs,'' shows that the government cannot eliminate demand for something like Internet gambling simply by passing a law. Instead, H.R. 4411 will force those who wish to gamble over the Internet to patronize suppliers willing to flaunt the ban. In many cases, providers of services banned by the government will be members of criminal organizations.
Even if organized crime does not operate Internet gambling enterprises, their competitors are likely to be controlled by organized crime. After all, since the owners and patrons of Internet gambling cannot rely on the police and courts to enforce contracts and resolve other disputes, they will be forced to rely on members of organized crime to perform those functions. Thus, the profits of Internet gambling will flow into organized crime. Furthermore, outlawing an activity will raise the price vendors are able to charge consumers, thus increasing the profits flowing to organized crime from Internet gambling. It is bitterly ironic that a bill masquerading as an attack on crime will actually increase organized crime's ability to control and profit from Internet gambling.
In conclusion, H.R. 4411 violates the constitutional limits on federal power. Furthermore, laws such as H.R. 4411 are ineffective in eliminating the demand for vices such as Internet gambling; instead, they ensure that these enterprises will be controlled by organized crime. Therefore I urge my colleagues to reject H.R. 4411, the Unlawful Internet Gambling Funding Prohibition Act.