Gambling Ban, States’ Rights Debated at House Judiciary

“Gambling is a social evil, but the enforcement of it is sort of selectively picked and chosen,” Conyers said in his opening remarks. The recent law exempts online wagering on horse racing, which has a powerful lobby, and the Justice Department hasn’t used existing law to prosecute any online poker player, though DoJ maintains that the law bans all online gambling, he said.

Ages aren’t verified consistently across Web sites to keep minors from betting, and nothing stands between gambling addicts and self-destruction, said Ranking Member Lamar Smith, R-Tex. The new law cut weekly gambling by college-age players from 6 percent in 2006 to 1.5 percent in 2007, Smith said, citing data from the Annenberg Public Policy Center at the University of Pennsylvania. The law was signed by President Bush in Oct. 2006 but proposed regulations are open for public comment through mid-December.

The ban worsened an “intentional lack of clarity” in the law by exempting horse-racing, Rep. Shelley Berkley, D-Nev., a former casino lawyer, told the committee. She’s sponsoring a bill that would mandate a year-long study of Internet gambling’s social impact. Berkley quoted a horse-racing executive who called the ban the “biggest boon to the [horse racing] industry ever.” Las Vegas has an “organized regulatory structure that the Internet is not suited for,” said Rep. Bob Goodlatte, R-Va., primary sponsor of last year’s signed bill, citing last year’s expressions of support by 48 state attorneys general. He said several times that the Frank legislation would create a “federal gaming commission” that usurps state authority, as opposed to his bill, a “new tool for enforcement” of state laws. Goodlatte told Berkley her proposed social-impact study may be appropriate after Congress sees how the Treasury Department regulations work out.

“This is not a good example in which we should conduct our trade policies,” New York University Law Professor Joseph Weiler said. The U.S. still prosecutes gambling sites and company officials despite three losses on the issue at the WTO, laying the admittedly absurd groundwork for India to prosecute U.S. doctors and hospital administrators who work abroad, after adopting medical services commitments, he said.

“Screening online is far more effective than checking a driver’s license at the 7-Eleven,” said Michael Colopy, senior vice president of communications and marketing for age- and location-verification provider Aristotle. Even state lotteries, exempt from the ban, use Aristotle to keep minors and non-residents from gambling, he said. Catherine Hanaway, U.S. Attorney for the Eastern District of Missouri, said she is skeptical. “Boy, would it be helpful to law enforcement if there were real online verification of age,” in reverse, so social networking sites could keep adults from masquerading as children. A person would have to log in with his own identity for Aristotle to catch them, she told Colopy. Professional poker player Annie Duke pointed to Iovation, a company able to identify a device uniquely, separate from an IP address on a network, and permanently ban it from accessing a prohibited site.

Rep. Robert Wexler, D-Fla., made much of a 5th U.S. Circuit Court of Appeals ruling that U.S. law doesn’t prohibit non-sports betting. He’s sponsoring a bill to legalize online gambling for poker and other “games of skill.” The 5th Circuit ruling involved private parties, not the government, and that court didn’t analyze two other statutes that Justice believes prohibit all Internet gambling, including horse racing, a view backed by the local district court, Hanaway said. Horse race wagering actually was offered by BetonSports, now being prosecuted by her office, but Justice hasn’t gone after pure horse-race wagering operations, she told Wexler. Hanaway admitted to Rep. Bobby Scott, D-Va., that it would be “much more difficult” to prosecute a gambling site taking U.S. bets but not located in a country friendly to the U.S., unlike U.K.-based BetonSports.

Internet gambling barely existed in 1995, at the end of the WTO Uruguay round, at which the U.S. committed to allowing “other recreational services,” later interpreted as remote gambling, committee member Goodlatte said later from the dais. Antigua, which sued the U.S. over the ban, offers no online betting on horse racing, he added. “It’s very important for the Congress not to interfere” as the U.S. tries to settle with countries seeking penalties at the WTO. In that case, Justice should stop prosecuting company executives, Weiler said. Unlike blocking cocaine shipments from Colombia -- technically a trade violation -- blocking Internet gambling abroad involves “no vital national interest,” he told Goodlatte.

Tom McCluskey, Family Research Council vice president of governmental affairs, said a U.K. study found that Internet gambling, legal there, raised gambling addictions proportionally to the rise in gambling activity. Duke said that study was done in 1999, before consumer protection laws were implemented. Rep. Steve Cohen, D-Tenn., said his state approved an online lottery heavily opposed by religious groups that later “were the first people at the trough” in asking for private-school funding from lottery proceeds.