The Leach / Kyl bills’ clumsy attempt to prohibit Internet gambling could backfire, while the Conyers bill offers a sorely needed study of this new form of gambling.
VANCOUVER, British Columbia, March 18, 2003 -- As the U.S. Congress again takes up the issue of Internet gambling, Congressional representatives are faced with bills that take diametrically opposite approaches. Rep. Jim Leach’s bill, H.R. 21, attacks Internet gambling by cutting off its financial underpinnings, placing enforcement burdens on financial institutions, while Rep. John Conyers’ bill sets up a commission to study how to best respond to and potentially regulate the industry.
Today, the U.S. Senate Banking Committee held a hearing on a proposal by Sen. Jon Kyl, S. 627, which contains similar language to Rep. Leach’s bill.
The Interactive Gaming Council, a longtime advocate of regulation and licensing of online gaming, believes the Leach / Kyl bills would exacerbate the problems they seek to address. According to Rick Smith, executive director of the IGC, “The Conyers bill offers the best opportunity to protect U.S. citizens and deal with the issues that accompany this type of gambling.”
“While many in Congress view study commissions as a strategy to delay legislation, in recent history there has not been an issue more deserving of further study than Internet gaming policy. The complexities of Internet gaming demonstrate the complexities of traditional, regulated businesses evolving to the new truly global marketplace created by the Internet,” Frank Catania told the Senate Banking Committee during the hearing on Internet gambling. Catania is the former Director of the New Jersey Division of Gaming Enforcement, the world’s largest gaming regulatory enforcement agency. He was one of several experts to testify today at the committee’s hearing.
The House Financial Services Committee passed the Leach bill on Thursday. Rep. Leach and Sen. Kyl believe that online gambling facilitates money laundering, and their bills would prohibit the use of credit cards or any other U.S. bank instrument for online gambling.
“Money laundering is extremely difficult in a situation where cash is not an option, and every electronic transaction is recorded,” Catania said at today’s hearing. He warned that anonymous transactions would make money laundering easier, stating, “a ban on credit cards and other financial instruments for Internet gaming will likely result in the development of settlement solutions that banks cannot recognize and block – anonymous e-cash.”
Catania also suggested that regulation could include taxation. Currently, he testified, “. . . monies from U.S. citizens leave the United States with no subsequent benefit, directly or indirectly, to our government or our citizens; one consequence of this is the fact that no funds are dedicated for protecting children and problem gamblers through education or other programs.” Analysts estimate that 50 percent to 60 percent of online gambling is done by Americans.
The Conyers bill, H.R. 1223, was introduced last week with co-sponsors from both political parties. In a release about his bill, Rep. Conyers said: “Prohibition will simply drive the gaming industry underground, thereby attracting the least desirable operators who will be out of the reach of law enforcement. A far better approach is to allow the States to strictly license and regulate the Internet gambling industry, to foster honest merchants who are subject to U.S. consumer protection and criminal laws.”
Although many gambling Web sites are loosely regulated by third-world countries, the IGC’s Smith pointed out that Britain plans to license and fully regulate online gambling, just as it has rigorously regulated traditional casinos.
“Regulators in Great Britain have spent considerable time studying this issue, and that country is set on a careful, deliberate course of regulating and licensing online gambling,” Smith said. “I hope the U.S. Congress gives this new form of gambling equal scrutiny, and of course I believe it would reach the same conclusion as British officials.”
Another reason that the IGC supports the Conyers bill and opposes the Leach bill is that the latter would deputize financial institutions to serve as an Internet police force. “The IGC believes that most Americans would not appreciate their financial institutions dictating how they can spend their money. Further, that prospect has to worry anyone involved in e-commerce generally,” said Keith Furlong, the IGC’s deputy director.
About the Interactive Gaming Council With more than 70 members, the IGC is the leading trade association for the international interactive gambling industry. Its members operate or supply services to most of the reputable interactive gambling sites on the World Wide Web. To help parents protect their children, IGC members are encouraged to participate in the self-labeling system of the Internet Content Rating Association. The IGC has developed a Code of Conduct for its members, and a program called Helping Hand to assist problem gamblers.
CONTACTS: Rick Smith, Executive Director,
Keith Furlong, Deputy Director,
| Phone: 732-687-0880
