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Archive for Tuesday, July 11, 2006

Congress considers imposing ban on some Web site wagers

July 11, 2006

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— Gamblers who prefer their laptops to blackjack tables won't like what Congress is doing.

Today, 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.

"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.

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. Horse racing states would not be prohibited from any activity allowed under the Internet Horseracing Act.

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, D-Fla.

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.

Sen. Jon Kyl, R-Ariz., is leading support for the ban in the Senate.

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