Restrictions on online wagering criticized

The year-old legislation prohibits American banks from processing transactions tied to online gambling, but leaves a loophole for bets on horse racing, opponents told the House Judiciary Committee.

Rep. Shelley Berkley, D-Nev., has introduced a bill to commission a one-year study on the issue. Others on Wednesday said Congress should lift the ban in favor of federally regulated Internet gambling.

“We do not prohibit betting on horses on the Internet, we do not prohibit betting on lotteries or fantasy sports,” said Rep. Robert Wexler, D-Fla. “Either we prohibit it all because we are morally so offended, or we let it all be up to our personal freedoms to decide.”

Wexler is sponsor of a bill to specifically exclude poker from the gaming ban. Another bill, by Rep. Barney Frank, D-Mass., would overturn the ban entirely.

Berkley said a study should have been completed ahead of any federal legislation, and that the existing law creates a “confusing environment” for Americans who seek to wager online.

“The law actually made things worse by targeting the financial sector,” she said, because banks now may be so reluctant to process transactions that the institutions would block even legal transfers.

Reps. Jon Porter and Dean Heller, both R-Nev., are cosponsors of the study bill.

But Rep. Bob Goodlatte, R-Va., the chief proponent of the 2006 Unlawful Internet Gambling Enforcement Act, said authorizing a study even now would be premature. The Treasury Department has not yet published the enforcement regulations of the act, he said.

“The most important thing right now is to let the new law take effect, then if questions arrive later, let’s then have a study,” Goodlatte said.

Though he called gambling a “social evil,” Judiciary Committee Chairman John Conyers, D-Mich., raised concerns about the viability of a gambling ban on a system that connects users globally.

The World Trade Organization has already ruled that the U.S. restrictions violate international trade rules, and the government could be forced to pay up to $100 billion to the European Union and other trading partners.

A former WTO panelist and law professor at New York University, Joseph Weiler, said the government’s action could lead to other countries blatantly violating trade agreements.

“The United States is the world leader in trade matters and it leads by example,” he said. “This is not a good example by which we should conduct our trade policy.”

Goodlatte said the federal government never intended to consider Internet gambling in the definition of “recreational services” during WTO talks.

The Department of Justice has prosecuted one offshore payment company, as well as an online sports betting organization based in the United States, said U.S. Attorney Catherine Hanaway of St. Louis.

When asked by Conyers about Internet horse racing bets, Hanaway said she knew of no prosecutions for that type of gambling.

“The proposed regulations make it clear that many forms of online gambling will continue to proceed unfettered, despite the new set of regulations,” Conyers said.

Online gambling, like traditional gambling, can lead to addiction, crime and moral decay, Goodlatte said. He highlighted a study by the Annenberg Public Policy Center that showed a decrease in Internet gambling among college-age Americans since the restrictions became law.

The percentage of 18- to 22-year-olds using the Internet weekly to gamble fell from 5.8 percent last year to 1.5 percent this year, according to the report.

Opponents of the ban maintained that Internet gambling, if regulated, is no more dangerous than addictive shopping or eating.

“There are far more people addicted to shopping online than gambling online,” Berkley said.

In fact, they said federally regulated Internet gaming which requires age-verification checks would prevent minors from gambling online and allow companies to keep compulsive gamblers from accessing their Web sites.

Location identification would be essential for any legal online gambling, since laws vary by state. Goodlatte said the sole purpose of last year’s ban is to stop interstate gambling.

Professional poker player Annie Duke said gamblers should have the right to play regulated games online or else Congress should rein in other addictive behaviors.

“I don’t understand why it would be more immoral to gamble on the Internet but not to go into the Bellagio and gamble there,” Duke said.

Contact Stephens Washington Bureau reporter Aaron Sadler at asadler@stephensmedia.com or (202) 783-1760.