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Industry Standard

Second time a charm for Net gambling bill?


March 24, 1999
Web posted at: 7:48 a.m. EST (1248 GMT)

by Elizabeth Wasserman

WASHINGTON (IDG) -- A U.S. senator is rolling the dice, hoping his lucky number for the passage of a bill outlawing Internet gambling is 1999.

Sen. Jon Kyl (R-Ariz.), Congress' foremost opponent of online betting, said during a Senate hearing Tuesday that he is reintroducing a revised measure to amend the federal 1961 Wire Act's prohibitions on interstate sports gambling conducted by telephone or wire to cover newer technological transmissions, including the Internet. The bill would extend the law to prohibit some newer forms of gambling, including those offered by an estimated 300 sports betting and "cybercasinos" that now exist in cyberspace.

Is the second time a charm for this bill?

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The new Internet Gambling Prohibition Act has been revised in an attempt to appease some of the most vocal opponents of the 1998 version. The new version is silent on the subject of "fantasy" sports betting programs, which are offered by some of the major online sports sites, but it does allow for the continuation of all types of gambling that are currently legal. In addition, the new bill also limits the liability of Internet access providers, by providing them two legal loopholes to avoid responsibility for stopping illegal online gambling sites once they are identified by law enforcement authorities: providers need not do anything that is "technologically infeasible" or "unduly burdensome."

During Tuesday's hearing before the Senate Judiciary's Subcommittee on Technology, Terrorism and Government Information, senators heard from a range of supporters of legislation prohibiting online gambling: law-enforcement officials, professional and college sports representatives, and regulators of legalized gambling.

"We strongly support this bill because it would strengthen and extend existing prohibitions on Internet gambling, including gambling on sports events, and provide enhanced enforcement tools tailored to the unique issues presented by Internet gambling," says Jeffrey Pash, executive VP of the National Football League. "The NFL's policy on these issues has been consistent for decades. Simply put, gambling and sports do not mix."

A representative of the Major League Baseball Players Association says that group, like the unions representing professional football and hockey players, will withdraw its previous opposition to the bill based on the loophole that now exists for fantasy sports games. Those games, which involve payments by participants to cover the administrative costs of games in which participants choose their own teams, are currently legal in most states. "We make sure that these are reputable sites before allowing them license to use player names and likenesses," says Marianne McGettigan, a lawyer representing the Baseball Players Association.

"For the record, it is certainly the case that there needs to be prize consideration for gambling," Kyl assured McGettigan during the hearing. "Clearly, if it is legal in the state and there is no prize offered, I can't see why anyone would consider it gambling. We are not attempting to make illegal by this legislation fantasy sports that would be legal in states. I'm pleased that the previous opposition has been removed."

However, only supporters of the legislation testified at the hearing. In a press release, the Interactive Gaming Council, which is located in Vancouver, Canada, complained that the hearing was a "sham" that was not designed to gather facts and hear divergent views in order to develop the best policy for Americans. IGC Chairman Sue Schneider said in the release that the council believed that Internet gambling should be regulated rather than prohibited. The regulation could include requiring online gaming companies to submit to U.S. jurisdiction, licensing and enforcement efforts at the state level.

But witness James Hurley, chairman of the New Jersey Casino Control Commission, says regulation similar to what exists in his state over casino and other gambling would be impossible on the Internet. He says New Jersey now conducts a series of background checks of employees, physical checks on machines that award large prizes and other inspections that are impossible online.

The Senate approved similar legislation last year by a 90-10 vote, but the 105th Congress adjourned before the House could complete action on a companion bill. It was supported by a coalition of anti-gambling interests, law enforcement, family groups and amateur and professional athletic groups.

"More than a billion dollars will be gambled over the Internet this year," says Kyl, who chairs the subcommittee. "Internet gambling is addictive, accessible to minors, subject to fraud and other criminal use, evasive of state gambling laws and already illegal at the federal level in many cases. We need to update the law to help it keep up with technology and close the loopholes that have allowed this activity to flourish."

Law-enforcement officials are among the biggest supporters of the legislation. "For generations, most communities in the United States have not allowed gambling," says Betty Montgomery, Ohio attorney general. "The Internet is a threat to the traditional independence of state law enforcement."

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