NEWS ALERT: US LEGISTLATIVE UPDATE
World Online Gambling Law Report
NEWS ALERT: US LEGISTLATIVE UPDATE
THE UNLAWFUL INTERNET GAMBLING PROHIBITION AND ENFORCEMENT ACT OF 2006
The Unlawful Internet Gambling Prohibition and Enforcement Act of 2006 (the
Bill) was passed by the US House of Representatives on July 11 2006. It
will now move onto the Senate for further consideration. Hillary
Stewart-Jones, Partner at Berwin Leighton Paisner, briefly summarises the
provisions of the bill below and considers the remaining legislative hurdles
it faces.
BACKGROUND
The US House Judiciary Committee previously approved the original
incarnations of the Reps. Bob Goodlatte, R-VAs HR 4777 (the Internet
Gambling Prohibition Act) and James Leach, R-Iowas HR 4411 (the Unlawful
Internet Gambling Enforcement Act) on 25 May 2006.
THE COMBINATION OF THE GOODLATTE AND LEACH BILLS
Leach and Goodlatte combined their two anti online gambling bills in July
2006 to create a new single bill that includes the principal features of
both pieces of legislation.
The merged legislation took the number and title of Leach's original bill
and is now known as H.R. 4411, the Unlawful Internet Gambling Enforcement
Act of 2006.
The original Leach bill sought to combat remote gambling with unauthorised
offshore providers by restricting the use of credit cards, cheques, wire
transfers and electronic fund transfers to fund gambling accounts, subject
to exemptions for horseracing in certain areas of the US.
Goodlatte's original bill focused on updating the Federal Wire Act 1961 to
explicitly prohibit unauthorised remote gambling activities.
The Bill somewhat clumsily amalgamates these two approaches by modernising
the wording of the Federal Wire Act to explicitly cover internet gambling
while also restricting various payment methods to online gambling
businesses.
As the Bill currently stands, individual states retain the right to regulate
Internet gambling if they so choose. However, it is thought that such
regulations would only be for intrastate gambling and, given that supporters
of the bill do not believe technology exists to verify a Web users
location, they effectively consider the Bill to be an all-out prohibition.
Conversely, opponents of the Bill have noted that its only real effect is to
target the operating of online gambling businesses, which are already based
outside the US and ostensibly out of the reach of US authorities.
The Act was approved in the US House of Representatives on 11 July by a vote
of 317-93. It will now be referred to the Senate for further consideration.
PASSAGE OF THE ACT IN THE HOUSE OF REPRESENTATIVES
During the House debate, the Acts promoters repeated the long-standing
arguments against on-line gambling, notably that it siphons billions of
dollars away from the American economy, is highly addictive, causes family
problems and serves as a vehicle for money laundering.
A large part of the Republicans' argument for placing such high priority on
Internet gambling prohibition has been the fact that the disgraced lobbyist
Jack Abramoff helped prevent a previous prohibition bill in 2000 on behalf
of a client looking to legalise online lotteries.
An amendment to the bill was introduced towards the end of the hearing, the
aim of which was to "eliminate the exceptions to the bill's general
prohibition against online gambling, thereby establishing a complete ban on
all Internet gambling-related activities". Those behind the amendment
claimed that the bill was inconsistent as it did not ban all forms of online
gambling. They alleged that the bill only exempted horse racing because that
industry would oppose the bill were it not exempted. The proposed amendment
therefore added remote horse race wagering to the Bills prohibited
activities.
The horse-racing amendment was introduced by Rep. Shelley Berkley, D-Nev.
Nevada has by far the most liberalised gambling laws of any US state, and it
was alleged that it is for this reason Berkley introduced what amounted to a
poisoned pill amendment. The Bills supporters claimed Berkleys amendment
was disingenuous and she was in fact aiming to take advantage of the
vociferous opposition that the amended Bill would face from the horse-racing
industry. The amendment was ultimately voted against.
THE NEXT STEPS
The Bill will now pass to the US Senate, where it will have to follow a
process identical to that of the House of Representatives. Once the Bill
has been introduced to the Senate floor, it is passed to various
committees/sub-committees, where it is discussed and amended as necessary.
The Bill, with any amendments, is then sent to the Senate floor where it is
debated and voted upon. The two versions of the Bill, (one from the House
of Representatives and one from the Senate), are then sent to the conference
committee, resulting in a compromise bill which is sent back to each chamber
for final approval. Once approved, the President signs the final version
into law.
Midterm elections take place on 7 November 2006. According to the published
schedule for the 109th Congress (Congress being the House and the Senate),
summer recess will take place from August 7 to September 4 for the Senate
(31 July to 4 September for the House). The Senate and House reconvene on 5
September 2006, at which point both chambers will need to act quickly if
they intend to agree on what will be in the final version (that is, if the
Senate has already voted on the bill but made its own changes from the
version passed in the House on July 11).
Congress target adjournment date is 6 October 2006, approximately one month
before the midterm elections. If members of Congress intend to put real
pressure on the President to make an affirmative action to either sign or
veto the bill, they will, therefore, need to pass a final version in both
houses by Friday 22 September 2006 (10 business days before 6 October) or
Tuesday 26 September 2006 (10 actual days before 6 October). Otherwise,
President Bush may allow the bill to die after Congress adjourns on the
sixth without taking any action. Alternatively, the adjournment date may be
changed by House and Senate leaders. Ultimately, any veto handed down by
President Bush while Congress is in session must be overridden by a
two-thirds majority in both chambers.