12 July 2006


    By NANCY ZUCKERBROD, Associated Press Writer
    Tue Jul 11, 6:25 PM ET

    WASHINGTON – The House voted Tuesday to forbid the use of credit cards to settle online bets, an effort to halt mushrooming interest in Internet gambling.

    Opponents said it wouldn’t work and decried exceptions for state-run lotteries and a horse racing industry that has powerful patrons in Congress

    The vote was 317-93.

    “The House has acted very strongly on this measure,” said Rep. Bob Goodlatte (news, bio, voting record), R-Va, one of the bill’s lead sponsors. “I think that should send a strong signal that we need for the Senate to act.”

    Senate leaders have not identified the bill as a top priority, but the bill’s main champion in that chamber, Arizona Republican Jon Kyl, said Tuesday he would pursue it aggressively.

    The legislation would clarify and update current law to spell out that most gambling is illegal online and would prohibit most payment forms from being used to settle online wagers.

    The measure also would empower law enforcement authorities to work with Internet providers to block access to gambling Web sites.

    Supporters say Internet betting can create problem gamblers.

    “The Internet is addictive for many people anyway, and online gambling can be doubly addictive,” said Rep. John Duncan (news, bio, voting record) Jr., R-Tenn.

    Critics argued that regulating the $12 billion industry and collecting taxes on it would be more effective than outlawing it. They say policing the Internet is impossible.

    “Prohibition as a general principal is a bad principal, because it doesn’t work,” said Rep. Ron Paul (news, bio, voting record), R-Texas.

    The American Gaming Association, the industry’s largest lobby, opposed online gambling in the past but recently softened its stance and backed a study of the feasibility of regulating it.

    The Internet gambling industry is headquartered almost entirely outside the United States, although about half of its customers live in the U.S.

    The bill’s sponsors successfully beat back an amendment to strip out the exemptions for the horse racing industry and state lotteries.

    Rep. Shelley Berkley (news, bio, voting record), D-Nev., sponsored the failed amendment. She said it was unfair to allow online lotteries and Internet betting on horse racing to flourish while cracking down on other kinds of sports betting, casino games and card games like poker.

    Goodlatte called that “a poison pill” aimed at defeating the overall legislation.

    If the horse provision were stricken from the bill, there’s a good chance the measure would run into objections in the Senate from Majority Whip Mitch McConnell, R-Ky., and others from racing states.

    Under the provision concerning horse racing, betting operators would not be prohibited from any activity allowed under the Interstate Horseracing Act. That law was written in the 1970s to set up rules for interstate betting on racing. The industry successfully lobbied for legislation several years ago to clarify that Internet betting on horse racing is allowed.

    Greg Avioli, chief executive officer of the National Thoroughbred Racing Association, acknowledged the bill would likely move Internet gamblers away from banned sites toward horseracing sites.

    However, he said the racing industry did not get a new carve out, but Congress recognized existing federal law.

    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, and updated, Interstate Horseracing Act.

    The department hasn’t actively enforced its stance, though it recently indicated in a congressional hearing that it was considering taking action on the issue.

    Congress has considered banning online gambling in the past.

    In 2000, disgraced lobbyist Jack Abramoff led a fierce campaign against a similar bill on behalf of an online lottery company. Supporters of the bill brought up that history Tuesday and suggested that a vote for the bill was a way to make a statement against Abramoff’s influence.

    Opponents of the latest bill argued that the current lottery exemption wasn’t in the bill in 2000, and, if it had been, Abramoff’s client might have supported the bill.

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