Congressional interests interesting in new gambling law


I was reading an article this morning from CNET, when it dawned on me that the rationale and complaints in most of the article could have been for a half dozen other issues, and didn't need to be discussing the legislature's newly passed bill against Internet gabling.

The "Unlawful Internet Gambling Funding Prohibition Act" is a questionable new action by the government to attempt to curb internet gabling at the source. It may be a fine piece of legislation in theory, but the quotes in the CNET article, and some of the specifics of the bill are interesting to me in terms of how our legislators twist themselves toward particluar interests.

However, before I get to that, I need to make note that in the section on definition of the phrase "Bets and wagers," there is an explict exemption from the statute for "any activity governed by the securities laws (as that term is defined in section 3(a)(47) of the Securities Exchange Act of 1934) for the purchase or sale of securities (as that term is defined in section 3(a)(10) of such Act)", similar exemptions for commodities trading, and exemptions for insurance and derivatives. Good to see that they exempted most of the forms of legal gambling in the US. So, how much more money do you think people lost in the stock market over the last 10 years than in gambling parlors? What is the distinguishing factor?

But, on to the other comments:

  • Representative Oxley (R,OH) thinks that we need to have this law so Al Queda can't use internet gambling to launder money to fund it's illegal operations.
  • Representative Conyers (D, MI) thinks it is appaling thta the bill doesn't apply to all forms of gambling, including horse races in the states in which they are legal.
  • Representative Bachus (R, AL) thinks that we need to ban gambling because it targets "pre-teen age children" and will lead them to "a life of crime." I'm thinking these must be those dangerous children with credit cards they are going after, since the mechanism of the law is to block financial transactions.
  • Representative Rogers (R, KY) disagreed with Mr. Bachus, that the bill shouldn't exempt horse racing, so he fought for the changes to make operations sanctioned by states legal.
  • Representative Tom Delay (R, TX) thinks that "Illegal Internet gambling is no better than an offshore mail order drug business."

Just to make sure the law is nearly impossible to comply with, the prohits 'unlawful internet gambling', which is "to place, receive, or otherwise transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law in the State in which the bet or wager is initiated, received, or otherwise made." Now, as I read this, every organization that tries to comply needs to make sure that they comply with every state that you can make the bet from or receive the bet in. Consider for the moment the example of commodities exchanges that are not directly regulated by the government: how about virtual items sold from virtual worlds. This isn't as far fetched as it seems, since there is already a lucrative market for items from games such as Everquest. It is possible that the nature of the luck involved in obtaining items in that game may make the sale of such items illegal. Of course, that sounds like a very far out possibility, but if it is not explicitly legal in some state or federal sense, the people who do the action may well end up in court, along with anyone who allows the action (including eBay and Paypal, an eBay subsidiary that deals with payments).

Fortunately for all concerned, in order to avoid a trip through the Judiciary committee, the representatives didn't put any penalties in the law.