109TH CONGRESS H. R. 4411 2D SESSION AN ACT To prevent the use of certain payment instruments, credit cards, and fund transfers for unlawful Internet gambling, and for other purposes. 109TH CONGRESS H. R. 4411 2D SESSION AN ACT To prevent the use of certain payment instruments, credit cards, and fund transfers for unlawful Internet gambling, and for other purposes. 1 Be it enacted by the Senate and House of Representa- 2 tives of the United States of America in Congress assembled, 2 1 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 2 (a) SHORT TITLE.--This Act may be cited as the 3 ``Internet Gambling Prohibition and Enforcement Act''. 4 (b) TABLE CONTENTS.--The table of contents is OF 5 as follows: Sec. 1. Short title and table of contents. TITLE I--MODERNIZATION OF THE WIRE ACT OF 1961 Sec. 101. Definitions. Sec. 102. Modification of existing prohibition. Sec. 103. Authorization of civil enforcement. Sec. 104. Authorization of appropriations. Sec. 105. Rules of construction. Sec. 106. Sense of Congress. TITLE II--POLICIES AND PROCEDURES REQUIRED TO PREVENT PAYMENTS FOR UNLAWFUL GAMBLING Sec. 201. Policies and procedures required to prevent payments for unlawful gambling. Sec. 202. Technical and conforming amendment. TITLE III--INTERNET GAMBLING IN OR THROUGH FOREIGN JURISDICTIONS Sec. 301. Internet gambling in or through foreign jurisdictions. 6 TITLE I--MODERNIZATION OF 7 THE WIRE ACT OF 1961 8 SEC. 101. DEFINITIONS. 9 Section 1081 of title 18, United States Code, is 10 amended-- 11 (1) by designating the five undesignated para- 12 graphs that begin with ``The term'' as paragraphs 13 (1) through (5), respectively; 14 (2) by amending paragraph (5), as so des- 15 ignated, to read as follows: HR 4411 EH 3 1 ``(5) The term `communication facility' means 2 any and all instrumentalities, personnel, and services 3 (among other things, the receipt, forwarding, or de- 4 livery of communications) used or useful in the 5 transmission of writings, signs, pictures, and sounds 6 of all kinds by aid of wire, cable, radio, or an elec- 7 tromagnetic, photoelectronic or photooptical system, 8 or other like connection (whether fixed or mobile) 9 between the points of origin and reception of such 10 transmission.''; and 11 (3) by adding at the end the following: 12 ``(6) The term `bets or wagers'-- 13 ``(A) means the staking or risking by any 14 person of something of value upon the outcome 15 of a contest of others, a sporting event, or a 16 game predominantly subject to chance, upon an 17 agreement or understanding that the person or 18 another person will receive something of value 19 in the event of a certain outcome; 20 ``(B) includes the purchase of a chance or 21 opportunity to win a lottery or other prize 22 (which opportunity to win is predominantly sub- 23 ject to chance); 24 ``(C) includes any scheme of a type de- 25 scribed in section 3702 of title 28; and HR 4411 EH 4 1 ``(D) does not include-- 2 ``(i) any activity governed by the secu- 3 rities laws (as that term is defined in sec- 4 tion 3(a)(47) of the Securities Exchange 5 Act of 1934) for the purchase or sale of se- 6 curities (as that term is defined in section 7 3(a)(10) of that Act); 8 ``(ii) any transaction conducted on or 9 subject to the rules of a registered entity 10 or exempt board of trade under the Com- 11 modity Exchange Act; 12 ``(iii) any over-the-counter derivative 13 instrument; 14 ``(iv) any other transaction that-- 15 ``(I) is excluded or exempt from 16 regulation under the Commodity Ex- 17 change Act; or 18 ``(II) is exempt from State gam- 19 ing or bucket shop laws under section 20 12(e) of the Commodity Exchange Act 21 or section 28(a) of the Securities Ex- 22 change Act of 1934; 23 ``(v) any contract of indemnity or 24 guarantee; 25 ``(vi) any contract for insurance; HR 4411 EH 5 1 ``(vii) any deposit or other transaction 2 with an insured depository institution; 3 ``(viii) participation in any game or 4 contest in which participants do not stake 5 or risk anything of value other than-- 6 ``(I) personal efforts of the par- 7 ticipants in playing the game or con- 8 test or obtaining access to the Inter- 9 net; or 10 ``(II) points or credits that the 11 sponsor of the game or contest pro- 12 vides to participants free of charge 13 and that can be used or redeemed 14 only for participation in games or con- 15 tests offered by the sponsor; or 16 ``(ix) participation in any fantasy or 17 simulation sports game or educational 18 game or contest in which (if the game or 19 contest involves a team or teams) no fan- 20 tasy or simulation sports team is based on 21 the current membership of an actual team 22 that is a member of an amateur or profes- 23 sional sports organization (as those terms 24 are defined in section 3701 of title 28) and 25 that meets the following conditions: HR 4411 EH 6 1 ``(I) All prizes and awards of- 2 fered to winning participants are es- 3 tablished and made known to the par- 4 ticipants in advance of the game or 5 contest and their value is not deter- 6 mined by the number of participants 7 or the amount of any fees paid by 8 those participants. 9 ``(II) All winning outcomes re- 10 flect the relative knowledge and skill 11 of the participants and are determined 12 predominantly by accumulated statis- 13 tical results of the performance of in- 14 dividuals (athletes in the case of 15 sports events) in multiple real-world 16 sporting or other events. 17 ``(III) No winning outcome is 18 based-- 19 ``(aa) on the score, point- 20 spread, or any performance or 21 performances of any single real- 22 world team or any combination of 23 such teams; or 24 ``(bb) solely on any single 25 performance of an individual ath- HR 4411 EH 7 1 lete in any single real-world 2 sporting or other event. 3 ``(7) The terms `credit', `creditor', `credit card', 4 and `card issuer' have the same meanings as in sec- 5 tion 103 of the Truth in Lending Act. 6 ``(8) The term `electronic fund transfer'-- 7 ``(A) has the same meaning as in section 8 903 of the Electronic Fund Transfer Act, ex- 9 cept that such term includes transfers that 10 would otherwise be excluded under section 11 903(6)(E) of that Act; and 12 ``(B) includes any fund transfer covered by 13 Article 4A of the Uniform Commercial Code, as 14 in effect in any State. 15 ``(9) The term `financial institution' has the 16 same meaning as in section 903 of the Electronic 17 Fund Transfer Act, except that such term does not 18 include a casino, sports book, or other business at or 19 through which bets or wagers may be placed or re- 20 ceived. 21 ``(10) The term `financial transaction provider' 22 has the same meaning as in section 5361 of title 31 23 (as added by title II of this Act). HR 4411 EH 8 1 ``(11) The term `foreign jurisdiction' means a 2 jurisdiction of a foreign country or political subdivi- 3 sion thereof. 4 ``(12) The term `gambling business' means a 5 business of betting or wagering. 6 ``(13) The term `information assisting in the 7 placing of bets or wagers' means information know- 8 ingly transmitted by an individual in a gambling 9 business that enables or facilitates a bet or wager 10 and does not include-- 11 ``(A) any posting or reporting of any edu- 12 cational information on how to make a legal bet 13 or wager or the nature of betting or wagering, 14 as long as such posting or reporting does not 15 solicit or provide information for the purpose of 16 facilitating or enabling the placing or receipt of 17 bets or wagers in a jurisdiction where such bet- 18 ting is illegal; or 19 ``(B) advertising relating to betting or wa- 20 gering in a jurisdiction where such betting or 21 wagering is legal, as long as such advertising 22 does not solicit or provide information for the 23 purpose of facilitating or enabling the placing 24 or receipt of bets or wagers in a jurisdiction 25 where such betting is illegal. HR 4411 EH 9 1 ``(14) The term `insured depository institu- 2 tion'-- 3 ``(A) has the same meaning as in section 4 3 of the Federal Deposit Insurance Act; and 5 ``(B) includes an insured credit union (as 6 defined in section 101 of the Federal Credit 7 Union Act). 8 ``(15) The term `interactive computer service' 9 has the same meaning as in section 230(f) of the 10 Communications Act of 1934. 11 ``(16) The terms `money transmitting business' 12 and `money transmitting service' have the same 13 meanings as in section 5330(d) (determined without 14 regard to any regulations prescribed by the Sec- 15 retary thereunder). 16 ``(17) The terms `own or control' and to be 17 `owned or controlled' include circumstances within 18 the meaning of section 2(a)(2) of the Bank Holding 19 Company Act of 1956. 20 ``(18) The term `person' includes a government 21 (including any governmental entity (as defined in 22 section 3701(2) of title 28)). 23 ``(19) The term `State' means a State of the 24 United States, the District of Columbia, or a com- HR 4411 EH 10 1 monwealth, territory, or possession of the United 2 States. 3 ``(20) The term `tribe' or `tribal' means an In- 4 dian tribe, as defined under section 4(5) of the In- 5 dian Gaming Regulatory Act of 1988). 6 ``(21) For purposes of Section 1085(b), the 7 term `account' means-- 8 ``(A) the unpaid balance of money or its 9 equivalent received or held by an insured depos- 10 itory institution in the usual course of business 11 and for which it has given or is obligated to 12 give credit, either conditionally or uncondition- 13 ally, to an account, including interest credited, 14 or which is evidenced by an instrument on 15 which the depository institution is primarily lia- 16 ble; and 17 ``(B) money received or held by an insured 18 depository institution, or the credit given for 19 money or its equivalent received or held by the 20 insured depository institution in the usual 21 course of business for a special or specific pur- 22 pose, regardless of the legal relationships estab- 23 lished thereby, including escrow funds, funds 24 held as security for securities loaned by the de- 25 pository institution, funds deposited as advance HR 4411 EH 11 1 payment on subscriptions to United States Gov- 2 ernment securities, and funds held to meet its 3 acceptances.''. 4 SEC. 102. MODIFICATION OF EXISTING PROHIBITION. 5 Section 1084 of title 18, United States Code, is 6 amended to read as follows: 7 `` 1084. Use of a communication facility to transmit 8 bets or wagers; criminal penalties 9 ``(a) Except as otherwise provided in this section, 10 whoever, being engaged in a gambling business, know- 11 ingly-- 12 ``(1) uses a communication facility for the 13 transmission in interstate or foreign commerce, 14 within the special maritime and territorial jurisdic- 15 tion of the United States, or to or from any place 16 outside the jurisdiction of any nation with respect to 17 any transmission to or from the United States, of-- 18 ``(A) bets or wagers; 19 ``(B) information assisting in the placing 20 of bets or wagers; or 21 ``(C) a communication, which entitles the 22 recipient to receive money or credit as a result 23 of bets or wagers, or for information assisting 24 in the placing of bets or wagers; or HR 4411 EH 12 1 ``(2) accepts, in connection with the trans- 2 mission of a communication in interstate or foreign 3 commerce, within the special maritime and terri- 4 torial jurisdiction of the United States, or to or from 5 any place outside the jurisdiction of any nation with 6 respect to any transmission to or from the United 7 States of bets or wagers or information assisting in 8 the placing of bets or wagers-- 9 ``(A) credit, or the proceeds of credit, ex- 10 tended to or on behalf of another (including 11 credit extended through the use of a credit 12 card); 13 ``(B) an electronic fund transfer or funds 14 transmitted by or through a money transmit- 15 ting business, or the proceeds of an electronic 16 fund transfer or money transmitting service, 17 from or on behalf of the other person; 18 ``(C) any check, draft, or similar instru- 19 ment which is drawn by or on behalf of the 20 other person and is drawn on or payable 21 through any financial institution; or 22 ``(D) the proceeds of any other form of fi- 23 nancial transaction as the Secretary of the 24 Treasury and the Board of Governors of the 25 Federal Reserve System may prescribe by regu- HR 4411 EH 13 1 lation which involves a financial institution as a 2 payor or financial intermediary on behalf of or 3 for the benefit of the other person, 4 shall be fined under this title or imprisoned not more than 5 five years, or both. 6 ``(b) Nothing in this section prohibits-- 7 ``(1) the transmission of information assisting 8 in the placing of bets or wagers for use in news re- 9 porting if such transmission does not solicit or pro- 10 vide information for the purpose of facilitating or 11 enabling the placing or receipt of bets or wagers in 12 a jurisdiction where such betting is illegal; 13 ``(2) the transmission of information assisting 14 in the placing of bets or wagers from a State or for- 15 eign country where such betting or wagering is per- 16 mitted under Federal, State, tribal, or local law into 17 a State or foreign country in which such betting on 18 the same event is permitted under Federal, State, 19 tribal, or local law; or 20 ``(3) the interstate transmission of information 21 relating to a State-specific lottery between a State or 22 foreign country where such betting or wagering is 23 permitted under Federal, State, tribal, or local law 24 and an out-of-State data center for the purposes of HR 4411 EH 14 1 assisting in the operation of such State-specific lot- 2 tery. 3 ``(c) Nothing in this section prohibits the use of a 4 communication facility for the transmission of bets or wa- 5 gers or information assisting in the placing of bets or wa- 6 gers, if-- 7 ``(1) at the time the transmission occurs, the 8 individual or entity placing the bets or wagers or in- 9 formation assisting in the placing of bets or wagers, 10 the gambling business, and, subject to section 11 1084(b)(3), any individual or entity acting in con- 12 cert with a gambling business to process the bets or 13 wagers are physically located in the same State, and 14 for class II or class III gaming under the Indian 15 Gaming Regulatory Act, are physically located on 16 Indian lands within that State; 17 ``(2) the State or tribe has explicitly authorized 18 such bets and wagers, the State or tribal law re- 19 quires a secure and effective location and age 20 verification system to assure compliance with age 21 and location requirements, and the gambling busi- 22 ness and any individual or entity acting in concert 23 with a gambling business to process the bets or wa- 24 gers complies with such law; HR 4411 EH 15 1 ``(3) the State has explicitly authorized and li- 2 censed the operation of the gambling business and 3 any individual or entity acting in concert with a 4 gambling business to process the bets and wagers 5 within its borders or the tribe has explicitly author- 6 ized and licensed the operation of the gambling busi- 7 ness and any individual or entity acting in concert 8 with a gambling business to process the bets and 9 wagers, on Indian lands within its jurisdiction; 10 ``(4) with respect to class II or class III gam- 11 ing, the game and gambling business complies with 12 the requirements of the Indian Gaming Regulatory 13 Act; and 14 ``(5) with respect to class III gaming under the 15 Indian Gaming Regulatory Act, the game is author- 16 ized under, and is conducted in accordance with, the 17 respective Tribal-State compact of the Tribe having 18 jurisdiction over the Indian lands where the indi- 19 vidual or entity placing the bets or wagers or infor- 20 mation assisting in the placing of bets or wagers, the 21 gambling business, and any individual or entity act- 22 ing in concert with a gambling business to process 23 those bets or wagers are physically located, and such 24 Tribal-State compact expressly provides that the 25 game may be conducted using a communication fa- HR 4411 EH 16 1 cility to transmit bets or wagers or information as- 2 sisting in the placing of bets or wagers. 3 For purposes of this subsection, the intermediate routing 4 of electronic data constituting or containing all or part of 5 a bet or wager, or all or part of information assisting in 6 the placing of bets or wagers, shall not determine the loca- 7 tion or locations in which a bet or wager is transmitted, 8 initiated, received or otherwise made; or from or to which 9 a bet or wager, or information assisting in the placing of 10 bets or wagers, is transmitted. 11 ``(d) Nothing in this section creates immunity from 12 criminal prosecution under any laws of any State or tribe. 13 ``(e) Nothing in this section authorizes activity that 14 is prohibited under chapter 178 of title 28, United States 15 Code. 16 ``(f) When any common carrier, subject to the juris- 17 diction of the Federal Communications Commission, is no- 18 tified in writing by a Federal, State, tribal, or local law 19 enforcement agency, acting within its jurisdiction, that 20 any communication facility furnished by it is being used 21 or will be used by its subscriber for the purpose of trans- 22 mitting or receiving gambling information in interstate or 23 foreign commerce, within the special maritime and terri- 24 torial jurisdiction of the United States, or to or from any 25 place outside the jurisdiction of any nation with respect HR 4411 EH 17 1 to any transmission to or from the United States in viola- 2 tion of Federal, State, tribal, or local law, it shall dis- 3 continue or refuse, the leasing, furnishing, or maintaining 4 of such facility, after reasonable notice to the subscriber, 5 but no damages, penalty or forfeiture, civil or criminal, 6 shall be found against any common carrier for any act 7 done in compliance with any notice received from a law 8 enforcement agency. Nothing in this section shall be 9 deemed to prejudice the right of any person affected there- 10 by to secure an appropriate determination, as otherwise 11 provided by law, in a Federal court or in a State, tribal, 12 or local tribunal or agency, that such facility should not 13 be discontinued or removed, or should be restored.''. 14 SEC. 103. AUTHORIZATION OF CIVIL ENFORCEMENT. 15 Chapter 50 of title 18, United States Code, is amend- 16 ed by adding at the end the following new section: 17 `` 1085. Civil remedies 18 ``(a) JURISDICTION.--The district courts of the 19 United States (in addition to any other remedies under 20 current law) shall have original and exclusive jurisdiction 21 to prevent and restrain violations of section 1084 by 22 issuing appropriate orders in accordance with this section, 23 regardless of whether a prosecution has been initiated 24 under section 1084. 25 ``(b) PROCEEDINGS.-- HR 4411 EH 18 1 ``(1) The United States may institute pro- 2 ceedings under this section-- 3 ``(A) to obtain injunctive or declarative re- 4 lief, including but not limited to a temporary 5 restraining order and a preliminary injunction, 6 against any person (other than a financial 7 transaction provider) to prevent or restrain a 8 violation or a threatened violation of section 9 1084; 10 ``(B) in the case of an insured depository 11 institution that is a financial transaction pro- 12 vider, to-- 13 ``(i) restrain an account maintained at 14 such insured depository institution if such 15 account is-- 16 ``(I) owned or controlled by a 17 gambling business; and 18 ``(II) includes proceeds of, or is 19 used to facilitate a violation of, sec- 20 tion 1084; or 21 ``(ii) seize funds in an account de- 22 scribed in subparagraph (i) if such funds-- 23 ``(I) are owned or controlled by a 24 gambling business; and HR 4411 EH 19 1 ``(II) constitute the proceeds of, 2 were derived from, or facilitated, a 3 violation of section 1084. 4 ``(C) The limitation in subparagraph (A) 5 shall not apply if the financial transaction pro- 6 vider is a gambling business within the meaning 7 of section 1081(12), in which case such finan- 8 cial transaction provider shall be subject to the 9 enforcement provisions under subparagraph 10 (A). 11 ``(2) The attorney general (or other appropriate 12 State official) of a State in which a communication 13 in violation of section 1084 allegedly has been or will 14 be initiated or received may institute proceedings 15 under this section to obtain injunctive or declarative 16 relief to prevent or restrain the violation or threat- 17 ened violation. Upon application of the attorney gen- 18 eral (or other appropriate State official) of an af- 19 fected State under this paragraph, the district court 20 may enter a temporary restraining order, a prelimi- 21 nary injunction, an injunction, or declaratory relief 22 against any person (other than a financial trans- 23 action provider) to prevent or restrain a violation or 24 threatened violation of section 1084, in accordance 25 with rule 65 of the Federal Rules of Civil Procedure. HR 4411 EH 20 1 ``(3) Notwithstanding paragraphs (1) and (2), 2 for a communication in violation of section 1084 3 that allegedly has been or will be initiated or re- 4 ceived on Indian lands (as that term is defined in 5 section 4 of the Indian Gaming Regulatory Act)-- 6 ``(A) the United States shall have the en- 7 forcement authority provided under paragraph 8 (1); 9 ``(B) the enforcement authorities specified 10 in an applicable Tribal-State compact nego- 11 tiated under section 11 of the Indian Gaming 12 Regulatory Act (25 U.S.C. 2710) shall be car- 13 ried out in accordance with that compact; and 14 ``(C) if there is no applicable Tribal-State 15 compact, an appropriate tribal official may in- 16 stitute proceedings in the same manner as an 17 attorney general of a State. 18 No provision of this section shall be construed as al- 19 tering, superseding, or otherwise affecting the appli- 20 cation of the Indian Gaming Regulatory Act. 21 ``(4) Notwithstanding paragraph (3), no relief 22 shall be granted under this section against a finan- 23 cial transaction provider except as provided in para- 24 graph (1). HR 4411 EH 21 1 ``(c) No damages, penalty, or forfeiture, civil or crimi- 2 nal, shall be found against any person or entity for any 3 act done in compliance with any notice received from a 4 law enforcement agency. 5 ``(d) Relief granted under this section against an 6 interactive computer service (as defined in section 230(f) 7 of the Communications Act of 1934) shall-- 8 ``(1) be limited to the removal of, or disabling 9 of access to, an online site violating section 1084, or 10 a hypertext link to an online site violating such sec- 11 tion, that resides on a computer server that such 12 service controls or operates; except this limitation 13 shall not apply if the service is violating section 14 1084 or is in active concert with a person who is vio- 15 lating section 1084 and receives actual notice of the 16 relief; 17 ``(2) be available only after notice to the inter- 18 active computer service and an opportunity for the 19 service to appear are provided; 20 ``(3) not impose any obligation on an interactive 21 computer service to monitor its service or to affirma- 22 tively seek facts indicating activity violating section 23 1084; 24 ``(4) specify the interactive computer service to 25 which it applies; and HR 4411 EH 22 1 ``(5) specifically identify the location of the on- 2 line site or hypertext link to be removed or access 3 to which is to be disabled.''. 4 SEC. 104. AUTHORIZATION OF APPROPRIATIONS. 5 In addition to any other sums authorized to be appro- 6 priated for this purpose, there are authorized to be appro- 7 priated to the Department of Justice for each of fiscal 8 years 2007 through 2010 $10,000,000 for investigations 9 and prosecutions of violations of section 1084 of title 18, 10 United States Code. 11 SEC. 105. RULES OF CONSTRUCTION. 12 (a) Nothing in this Act may be construed to prohibit 13 any activity that is allowed under Public Law 95515 as 14 amended (15 U.S.C. 3001 et seq.). 15 (b) Nothing in this Act may be construed to preempt 16 State law prohibiting gambling. 17 SEC. 106. SENSE OF CONGRESS. 18 It is the sense of Congress that this Act does not 19 change which activities related to horse racing may or may 20 not be allowed under Federal law. Section 105 is intended 21 to address concerns that this Act could have the effect 22 of changing the existing relationship between the Inter- 23 state Horseracing Act (15 U.S.C. 3001 et seq.), and other 24 Federal statutes that were in effect at the time of this 25 Act's consideration; this Act is not intended to change that HR 4411 EH 23 1 relationship; and this Act is not intended to resolve any 2 existing disagreements over how to interpret the relation- 3 ship between the Interstate Horseracing Act and other 4 Federal statutes. 5 TITLE II--POLICIES AND PROCE- 6 DURES REQUIRED TO PRE- 7 VENT PAYMENTS FOR UNLAW- 8 FUL GAMBLING 9 SEC. 201. POLICIES AND PROCEDURES REQUIRED TO PRE- 10 VENT PAYMENTS FOR UNLAWFUL GAMBLING. 11 Chapter 53 of title 31, United States Code, is amend- 12 ed by adding at the end the following new subchapter: 13 ``SUBCHAPTER IV--POLICIES AND PROCEDURES 14 REQUIRED TO PREVENT PAYMENTS FOR 15 UNLAWFUL GAMBLING 16 `` 5361. Definitions 17 ``For purposes of this subchapter, the following defi- 18 nitions shall apply: 19 ``(1) CREDIT; CREDITOR; CREDIT CARD; AND 20 CARD ISSUER.--The terms `credit', `creditor', `credit 21 card', and `card issuer' have the same meanings as 22 in section 103 of the Truth in Lending Act. 23 ``(2) DESIGNATED PAYMENT SYSTEM.--The 24 term `designated payment system' means any system 25 utilized by a financial transaction provider that the HR 4411 EH 24 1 Secretary and the Board of Governors of the Fed- 2 eral Reserve System, in consultation with the Attor- 3 ney General, jointly determine, by regulation or 4 order, could be utilized in connection with, or to fa- 5 cilitate, any restricted transaction. 6 ``(3) ELECTRONIC FUND TRANSFER.--The term 7 `electronic fund transfer'-- 8 ``(A) has the same meaning as in section 9 903 of the Electronic Fund Transfer Act, ex- 10 cept that such term includes transfers that 11 would otherwise be excluded under section 12 903(6)(E) of that Act; and 13 ``(B) includes any fund transfer covered by 14 Article 4A of the Uniform Commercial Code, as 15 in effect in any State. 16 ``(4) FINANCIAL INSTITUTION.--The term `fi- 17 nancial institution' has the same meaning as in sec- 18 tion 903 of the Electronic Fund Transfer Act, ex- 19 cept that such term does not include a casino, sports 20 book, or other business at or through which bets or 21 wagers may be placed or received. 22 ``(5) FINANCIAL TRANSACTION PROVIDER.-- 23 The term `financial transaction provider' means a 24 creditor, credit card issuer, financial institution, op- 25 erator of a terminal at which an electronic fund HR 4411 EH 25 1 transfer may be initiated, money transmitting busi- 2 ness, or international, national, regional, or local 3 payment network utilized to effect a credit trans- 4 action, electronic fund transfer, stored value product 5 transaction, or money transmitting service, or a par- 6 ticipant in such network, or other participant in a 7 designated payment system. 8 ``(6) INSURED DEPOSITORY INSTITUTION.--The 9 term `insured depository institution'-- 10 ``(A) has the same meaning as in section 11 3 of the Federal Deposit Insurance Act; and 12 ``(B) includes an insured credit union (as 13 defined in section 101 of the Federal Credit 14 Union Act). 15 ``(7) MONEY TRANSMITTING BUSINESS AND 16 MONEY TRANSMITTING SERVICE.--The terms `money 17 transmitting business' and `money transmitting serv- 18 ice' have the same meanings as in section 5330(d) 19 (determined without regard to any regulations pre- 20 scribed by the Secretary thereunder). 21 ``(8) RESTRICTED TRANSACTION.--The term 22 `restricted transaction' means any transaction or 23 transmittal involving any credit, funds, instrument, 24 or proceeds described in any paragraph of section HR 4411 EH 26 1 5362 which the recipient is prohibited from accept- 2 ing under such section. 3 ``(9) SECRETARY.--The term `Secretary' means 4 the Secretary of the Treasury. 5 ``(10) UNLAWFUL GAMBLING.-- 6 ``(A) IN GENERAL.--The term `unlawful 7 gambling' means to place, receive, or otherwise 8 knowingly transmit a bet or wager by any 9 means which involves the use of a communica- 10 tion facility where such bet or wager is unlawful 11 under any applicable Federal or State law in 12 the State or tribal lands in which the bet or 13 wager is initiated, received, or otherwise made. 14 ``(B) EXCLUSION OF CERTAIN AUTHOR- 15 IZED TRANSACTIONS.--The term `unlawful 16 gambling' does not include any intrastate or 17 intratribal transactions authorized under sec- 18 tion 1084(c) of title 18, United States Code. 19 ``(C) INTERMEDIATE ROUTING.--With re- 20 spect to section 5362, the intermediate routing 21 of electronic data shall not determine the loca- 22 tion or locations in which a bet or wager is ini- 23 tiated, received, or otherwise made. 24 ``(11) OTHER TERMS.--The terms `bet or 25 wager', `communication facility', `gambling business', HR 4411 EH 27 1 `own and control', `person', `State', and `tribal' have 2 the same meanings as in section 1081 of title 18. 3 `` 5362. Prohibition on acceptance of any financial 4 instrument for unlawful gambling 5 ``No person engaged in a gambling business may 6 knowingly accept, in connection with the participation of 7 another person in unlawful gambling-- 8 ``(1) credit, or the proceeds of credit, extended 9 to or on behalf of such other person (including credit 10 extended through the use of a credit card); 11 ``(2) an electronic fund transfer, or funds trans- 12 mitted by or through a money transmitting business, 13 or the proceeds of an electronic fund transfer or 14 money transmitting service, from or on behalf of 15 such other person; 16 ``(3) any check, draft, or similar instrument 17 which is drawn by or on behalf of such other person 18 and is drawn on or payable at or through any finan- 19 cial institution; or 20 ``(4) the proceeds of any other form of financial 21 transaction, as the Secretary and the Board of Gov- 22 ernors of the Federal Reserve System may jointly 23 prescribe by regulation, which involves a financial in- 24 stitution as a payor or financial intermediary on be- 25 half of or for the benefit of such other person. HR 4411 EH 28 1 `` 5363. Policies and procedures to identify and pre- 2 vent restricted transactions 3 ``(a) REGULATIONS.--Before the end of the 270-day 4 period beginning on the date of the enactment of this sub- 5 chapter, the Secretary and the Board of Governors of the 6 Federal Reserve System, in consultation with the Attorney 7 General, shall prescribe regulations (which the Secretary 8 and the Board jointly determine to be appropriate) requir- 9 ing each designated payment system, and all participants 10 therein, to identify and block or otherwise prevent or pro- 11 hibit restricted transactions through the establishment of 12 policies and procedures reasonably designed to identify 13 and block or otherwise prevent or prohibit the acceptance 14 of restricted transactions in any of the following ways: 15 ``(1) The establishment of policies and proce- 16 dures that-- 17 ``(A) allow the payment system and any 18 person involved in the payment system to iden- 19 tify restricted transactions by means of codes in 20 authorization messages or by other means; and 21 ``(B) block restricted transactions identi- 22 fied as a result of the policies and procedures 23 developed pursuant to subparagraph (A). 24 ``(2) The establishment of policies and proce- 25 dures that prevent or prohibit the acceptance of the HR 4411 EH 29 1 products or services of the payment system in con- 2 nection with a restricted transaction. 3 ``(b) REQUIREMENTS FOR POLICIES AND PROCE- 4 prescribing regulations under subsection (a), DURES.--In 5 the Secretary and the Board of Governors of the Federal 6 Reserve System shall-- 7 ``(1) identify types of policies and procedures, 8 including nonexclusive examples, which would be 9 deemed, as applicable, to be reasonably designed to 10 identify and block or otherwise prevent or prohibit 11 the acceptance of the products or services with re- 12 spect to each type of restricted transaction; 13 ``(2) to the extent practical, permit any partici- 14 pant in a payment system to choose among alter- 15 native means of identifying and blocking, or other- 16 wise preventing or prohibiting the acceptance of the 17 products or services of the payment system or par- 18 ticipant in connection with, restricted transactions; 19 and 20 ``(3) consider exempting certain restricted 21 transactions or designated payment systems from 22 any requirement imposed under such regulations, if 23 the Secretary and the Board jointly find that it is 24 not reasonably practical to identify and block, or HR 4411 EH 30 1 otherwise prevent or prohibit the acceptance of, such 2 transactions. 3 ``(c) COMPLIANCE WITH PAYMENT SYSTEM POLI- 4 PROCEDURES.--A financial transaction provider CIES AND 5 shall be considered to be in compliance with the regula- 6 tions prescribed under subsection (a), if-- 7 ``(1) such person relies on and complies with 8 the policies and procedures of a designated payment 9 system of which it is a member or participant to-- 10 ``(A) identify and block restricted trans- 11 actions; or 12 ``(B) otherwise prevent or prohibit the ac- 13 ceptance of the products or services of the pay- 14 ment system, member, or participant in connec- 15 tion with restricted transactions; and 16 ``(2) such policies and procedures of the des- 17 ignated payment system comply with the require- 18 ments of regulations prescribed under subsection 19 (a). 20 ``(d) NO LIABILITY FOR BLOCKING OR REFUSING TO 21 HONOR RESTRICTED TRANSACTIONS.--A person that 22 identifies and blocks a transaction, prevents or prohibits 23 the acceptance of its products or services in connection 24 with a transaction, or otherwise refuses to honor a trans- 25 action-- HR 4411 EH 31 1 ``(1) that is a restricted transaction; 2 ``(2) that such person reasonably believes to be 3 a restricted transaction; or 4 ``(3) as a designated payment system or a mem- 5 ber of a designated payment system in reliance on 6 the policies and procedures of the payment system, 7 in an effort to comply with regulations prescribed 8 under subsection (a), 9 shall not be liable to any party for such action. 10 ``(e) REGULATORY ENFORCEMENT.--The require- 11 ments of this subchapter shall be enforced exclusively by-- 12 ``(1) the Federal functional regulators, with re- 13 spect to the designated payment systems and finan- 14 cial transaction providers subject to the respective 15 jurisdiction of such regulators under section 505(a) 16 of the Gramm-Leach-Bliley Act and section 5g of 17 the Commodities Exchange Act; and 18 ``(2) the Federal Trade Commission, with re- 19 spect to designated payment systems and financial 20 transaction providers not otherwise subject to the ju- 21 risdiction of any Federal functional regulators (in- 22 cluding the Commission) as described in paragraph 23 (1).''. HR 4411 EH 32 1 SEC. 202. TECHNICAL AND CONFORMING AMENDMENT. 2 The table of sections for chapter 53 of title 31, 3 United States Code, is amended by adding at the end the 4 following: ``SUBCHAPTER IV--POLICIES AND PROCEDURES REQUIRED TO PREVENT PAYMENTS FOR UNLAWFUL GAMBLING ``5361. Definitions. ``5362. Prohibition on acceptance of any financial instrument for unlawful gam- bling. ``5363. Policies and procedures to identify and prevent restricted transactions.''. 5 TITLE III--INTERNET GAMBLING 6 IN OR THROUGH FOREIGN JU- 7 RISDICTIONS 8 SEC. 301. INTERNET GAMBLING IN OR THROUGH FOREIGN 9 JURISDICTIONS. 10 (a) IN GENERAL.--In deliberations between the 11 United States Government and any other country on 12 money laundering, corruption, and crime issues, the 13 United States Government should-- 14 (1) encourage cooperation by foreign govern- 15 ments and relevant international fora in identifying 16 whether Internet gambling operations are being used 17 for money laundering, corruption, or other crimes; 18 (2) advance policies that promote the coopera- 19 tion of foreign governments, through information 20 sharing or other measures, in the enforcement of 21 this Act; and HR 4411 EH 33 1 (3) encourage the Financial Action Task Force 2 on Money Laundering, in its annual report on 3 money laundering typologies, to study the extent to 4 which Internet gambling operations are being used 5 for money laundering purposes. 6 (b) REPORT REQUIRED.--The Secretary of the 7 Treasury shall submit an annual report to the Congress 8 on any deliberations between the United States and other 9 countries on issues relating to Internet gambling. Passed the House of Representatives July 11, 2006. Attest: Clerk. HR 4411 EH
Conservatives in Congress continue to attempt to go after Internet gambling (well, at least some Internet gambling), this time around overwhelmingly passing the Unlawful Internet Gambling Enforcement Act of 2006. The bill would essentially make most online gambling illegal, and enforce that by going after financial institutions that process payments to gambling websites and Internet Service Providers that host such sites.
This mimics the approach used by New York Attorney General, who went after PayPal and Citibank and reached settlements with both that ended up denying their customers around the country (not just New York, where all gambling except the state lottery and some horse betting is illegal).
The House bill is a clear example of hypocrisy about gambling in general, in that it does contain an exemption for betting on horse racing over the Internet, just as most states that outlaw sports betting or other forms of gambling are perfectly happy to create state lotteries and encourage people to gamble on the outcome of random number draws (which has to be the most pathetic form of gambling imaginable).
The only upside to the House bill is that there is almost no chance the Senate will take it up before the elections which means it is essentially DOA.
The full text of the anti-gambling bill can be read here.
House votes yes on Net-gambling crackdown. Declan McCullagh, CNET News.Com, July 11, 2006.