Internet Gambling Bill Advances

WASHINGTON, D.C. (July 31, 2003) -- The Internet gambling legislation took another step Thursday when the Unlawful Internet Gambling Funding Prohibition Act (S. 627) was reported favorably out of the Senate Banking Committee.

The bill is different than the legislation originally introduced by Senators Jon Kyl (R-AZ) and Dianne Feinstein (D-CA). The bill still prohibits the use of credit in connection with unlawful Internet wagering and credit is broadly defined, but the provision in the original bill that excluded from the definition of "bet or wager" "any lawful transaction with a business licensed or authorized by a state," (which was supported by racing and other gaming interests) was removed prior to the mark-up. Some members of the Committee and staff felt that the bill could not be passed by the Committee with this language.

Alternatively, new language more specifically dealing with horseracing was added. The new horseracing language exempts from the bill's prohibitions interstate wagers on pari-mutuel horseracing provided they are authorized and regulated by the state receiving the bet, placed on a closed-loop system, between states with horseracing and made in accordance with the Interstate Horse Racing Act.

Senator Jim Bunning (R-KY), a member of the Committee, was very influential in having this favorable language included in the bill. Chairman Richard Shelby (R-AL) and Ranking Democrat Paul Sarbanes of Maryland were also very supportive. That distinction for horseracing, now affirmed by the full Committee, is important.

In its current form, however, further action on this legislation could prove difficult. The bill is likely to be opposed by other gaming interests, such as the casino industry and state lotteries, which considered the "state-licensed" language important. In addition, Native Americans will likely seek a broader exclusion.

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