|House Crime Subcommittee
Approves Internet Gambling Bill
|3/11. The House
Judiciary Committee's Subcommittee on Crime amended and
approved HR 3215,
the "Combating Illegal Gambling Reform and Modernization
Act", by unanimous voice votes.
The bill was introduced on November 1, 2001. See, bill as
introduced [PDF]. It is sponsored by Rep. Bob Goodlatte
(R-VA), and 156 other Members of Congress, including Rep. Lamar Smith
(R-TX), the Chairman of the Crime Subcommittee.
Expansion of the Wire Act. The bill would amend 18
U.S.C. §§ 1081 and 1084, which contain the definitions and
prohibition, respectively, of the Wire Act. The Wire Act
currently criminalizes the use of "wire communications
facilities" in interstate commerce for gambling. The Wire
Act does not ban gambling. This is a matter of state law. HR 3215
expands the prohibition to cover all communications between
states or with other foreign countries. It maintains the
principle that gambling is otherwise a matter of state law.
Hence, under HR 3215, use of the Internet for gambling
purposes would become illegal (if interstate or foreign).
The criminal prohibition of the Wire Act, 18
U.S.C. §§ 1084, currently provides that "Whoever
being engaged in the business of betting or wagering knowingly
uses a wire communication facility for the transmission in
interstate or foreign commerce of bets or wagers ... shall be
fined under this title or imprisoned not more than two years,
or both." Since the current statute affects only wire
communication facilities, and some Internet communications do
not involve wires, it leaves open the possibility that some
Internet gambling may not be illegal under the Wire Act.
HR 3215 provides that "whoever, being engaged in a
gambling business, knowingly (1) for the transmission in
interstate or foreign commerce ..." or between the U.S.
and abroad "... of bets or wagers ... shall be fined
under this title or imprisoned not more than five years, or
both." Hence, it pertains to all communications, not just
wire communications. Moreover, the maximum penalty for
violation is increased from 2 to 5 years.
Also, HR 3215 would amend 18
U.S.C. § 1081, which currently defines ''wire
communication facility'' as "any and all
instrumentalities, personnel, and services (among other
things, the receipt, forwarding, or delivery of
communications) used or useful in the transmission of
writings, signs, pictures, and sounds of all kinds by aid of
wire, cable, or other like connection between the points of
origin and reception of such transmission." As amended,
it would provide that "communications facility"
means "any and all instrumentalities, personnel, and
services (among other things, the receipt, forwarding, or
delivery of communications) used or useful in the transmission
of writings, signs, pictures, and sounds of all kinds by aid
of wire, cable, satellite, microwave, or other like connection
(whether fixed or mobile) between the points of origin and
reception of such transmission."
Skill Versus Chance. On March 12, the Crime
Subcommittee adopted an amendment in the nature of a
substitute offered by Rep. Goodlatte. The substitute includes
several significant changes to the bill as introduced. One of
these changes involves the definitions in 18 U.S.C. § 1081.
The substitute defines of "bets or wagers" as
"the staking or risking by any person of something of
value upon the outcome of a contest of others, a sporting
event, or a game predominantly subject to chance, not
skill, upon an agreement or understanding that the person
or another person will receive something of greater value than
the amount staked or risked in the event of a certain
outcome". (Emphasis added.) The words "not
skill" have been added to the language of the bill as
introduced. (See, page 2, lines 16-23, of bill as introduced.)
Rep. Goodlatte stated at the mark up meeting that games based
on skill, such as fantasy sports leagues, would thus not be
covered by the Wire Act. Rep.
Robert Scott (D-VA), the ranking Democrat on the
Subcommittee, asked Rep. Goodlatte if poker would be covered
by the Act. Rep. Goodlatte stated that while some poker
players might think it a game of skill, it remains a game of
chance, and would be covered by the Act.
Illegal Gambling Funding. HR 3215 also
criminalizes "the transmission of a communication in
interstate or foreign commerce ... which entitles the
recipient to receive money or credit as a result of bets or
wagers, or for information assisting in the placing of bets or
wagers". Also, like HR 556,
the Unlawful Internet Gambling Funding Prohibition Act,
sponsored by Rep. James
Leach (R-IA), HR 3215 would prohibit the use of
credit, electronic funds transfers, and checks in connection
with illegal gambling.
Rep. Goodlatte stated to reporters after the March 12 meeting
that HR 556 puts the burden on financial services
companies to monitor transactions, while HR 3215 puts the
burden on law enforcement entities to prove that illegal
gambling is taking place, and requires law enforcement
entities to obtain a court order. Rep. Goodlatte added that he
would not characterize the financial services industry as
supporting his bill; however, he stated that it would prefer
HR 3215 to HR 556.
Enforcement. In addition to criminal penalties, HR 3215
would allow federal, state, local, and tribal law enforcement
agencies to obtain injunctions against violation of the act.
It also provides that "any common carrier, subject to the
jurisdiction of the Federal
Communications Commission" may enjoined from
providing service to entities in violation of the act, and
gives such carriers immunity from suit for discontinuing such
Rep. Goodlatte stated the federal prosecutors would likely
enforce the Wire Act against illegal Internet gambling
operations because states which run lotteries, and anti
gambling groups, will push them to enforce the law. He stated
that HR 3215 is supported by an "unusual
coalition"; state lotteries do not want competition from
Internet gambling operations, while anti gambling groups are
opposed to all gambling.
Internet Service Providers. The amendment in the nature
of a substitute adopted on March 12 changes the bill as
introduced on the matter of ISPs. The new language is as
follows: "Relief granted under paragraph (1) against an
interactive computer service (as defined in section 230(f) of
the Communications Act of 1934) shall be limited to the
removal of, or disabling of access to, an online site
violating this section, or a hypertext link to an online site
violating this section, that resides on a computer server that
such service controls or operates; except this limitation
shall not apply if the service is violating this section or is
in active concert with a person who is violating this section
and receives actual notice of the relief." Rep. Goodlatte
stated at the mark up meeting that this is a "notice and
take down" provision, which enables law enforcement
authorities to obtain a court order compelling an ISP to take
down a gambling web site.
State Lotteries. The amendment in the nature of a
substitute adopted on March 12 also changes the bill as
introduced on the subject of state lotteries. It includes a
technical amendment which allows states to operate intrastate
Internet lotteries with servers out of state. The new language
is as follows: "Nothing in this section prohibits ... the
interstate transmission of information relating to a
State-specific lottery between a State or foreign country
where such betting or wagering is permitted under Federal,
State, tribal, or local law and an out-of-state data center
for the purposes of assisting in the operation of such
Nine members of the Crime Subcommittee -- eight Republicans
and one Democrat -- were present at the March 12 mark up. Rep.
Goodlatte stated that no date has been set for a full
committee mark up. However, he predicted that the committee
would approve the bill. In the 106th Congress, the Judiciary
Committee approved another Internet gambling bill sponsored by
Rep. Goodlatte. The full House then considered it under a
suspension of the rules, meaning that it could not be amended,
and required a 2/3 majority for passage. It fell just short of
a 2/3 majority. Rep. Goodlatte stated that he will seek a rule
this time around.
|House to Consider Class
Action Reform Bill
|3/12. The House is scheduled to debate and vote on HR
2341, the Class Action Fairness Act of 2001, on Wednesday,
March 13. The House
Judiciary Committee approved the bill on March 7 by a vote
of 16 to 10. See, House
Report No. 107-370. The bill is sponsored by Rep. Bob Goodlatte
(R-VA), Rep. Rick
Boucher (D-VA), and others.
On March 13, the House
Rules Committee adopted a rule for
consideration of HR
2341, the Class Action Fairness Act of 2001. It allows
nine amendments to be offered. See, texts of allowable
amendments [in PDF], by offeror: Issa, Nadler/
Delahunt/ Johnson, Waters, Keller, Lofgren/
Schiff, Conyers/ Lee/
Berman/ Meehan, and Hart.
The bill, as reported by the Judiciary Committee, would add
new sections to Title 28 of the U.S. Code pertaining to
procedure governing interstate class actions brought pursuant
to Rule 23 of the Federal Rules of Civil Procedure to ensure
that the class members are treated fairly in settlements. For
example, if a settlement provides that the class members would
receive non cash benefits, the court must make "a written
finding that, the settlement is fair, reasonable, and adequate
for class members". This provision is designed to limit
the ability of class action lawyers to negotiate settlements
that provide the lawyers with attorneys fees in cash, while
leaving the class members with no cash recovery.
The bill would also amend 28
U.S.C. § 1332, regarding diversity of citizenship. It
would provide federal jurisdiction in certain class actions
where "any member of a class of plaintiffs is a citizen
of a State different from any defendant" and the
aggregated claims exceed $2 Million. However, it would also
provide an exception when "the substantial majority of
the members of the proposed plaintiff class and the primary
defendants are citizens of the State in which the action was
originally filed". This provision is designed to limit
the ability of class action lawyers to bring suits in distant
forums that are particularly friendly to the class action bar.
|NCTA's Sachs Addresses
|3/12. Robert Sachs, P/CEO of the National Cable &
Telecommunications Association (NCTA) gave a speech
titled "The Broadband Decade" to the Cable
Telecommunications Public Affairs Association Forum in
Washington DC. He addressed the FCC's classification of
broadband cable services, open access, digital rights
management, privacy, and demand for broadband services.
Regulatory Classification of Broadband Cable. Sachs
stated that "Later this week, the FCC is expected to
determine the appropriate regulatory classification for cable
modem service. This sounds like an arcane issue but it's one
that has been the subject of lengthy debate and litigation,
and it has enormous implications for American consumers who
benefit by our deployment of broadband services."
On March 8, the Federal
Communications Commission (FCC) announced that the agenda
for its Thursday, March 14, meeting includes consideration of
a Declaratory Ruling and Notice of Proposed Rulemaking (NPRM)
addressing the legal classification and the appropriate
regulatory framework for broadband access to the Internet over
cable system facilities. This is GN Docket No. 00-185.
Sachs continued that "We hope the Commission adopts a
course that allows our industry to continue to roll out
rapidly high speed Internet services in the most cost
effective manner. And should the FCC determine that cable
modem service is an ``information service´´, then we hope
that the Commission will make clear what this means and also
make clear that such services are inter-state in nature and
not subject to a myriad of conflicting state and local
regulations. The Internet is global in reach and a clear
national policy statement concerning the regulatory status of
cable modem service will provide much needed guidance to the
courts, local governments, and the capital markets."
Open Access. Sachs stated that "The government’s
``hand's off´´ policy has been a vital spur to the
remarkable pace of cable's broadband development. And industry
leaders like AOL Time Warner and Comcast have begun to offer
consumers a choice of ISP's, establishing models for other
MSO's. As a result of a deregulatory environment, cable's
broadband infrastructure and services have evolved rapidly.
Had government imposed common carrier type regulation as some
of the Bell companies advocated, cable modem service would
still be in the starting blocks."
He added that "The ``hands off´´ the Internet policy
stands in contrast to the close regulatory scrutiny to which
cable’s services were subjected not so long ago. Compare the
capital investment by this industry from 1992 to 1996 -- in
the wake of regulation imposed by the Cable Act of 1992 -- to
the capital investment made since 1996 -- following the
de-regulation fostered by the Telecommunications Act that same
year -- and, consider the related consumer benefits."
|3/12. The Department of
Justice (DOJ) announced that it "approved the National Consumer
Telecommunications Data Exchange's (NCTDE) proposal to
expand its credit data exchange service to include other
utility industries. The approval allows NCTDE, currently
providing credit histories to telecommunications carriers, to
open its membership to the electric power, gas and water
industries." See, DOJ
3/12. President Bush gave a speech
at a fund raiser in Washington DC in which he advocated
passage of trade promotion authority legislation. He
stated that "we passed a good trade bill out of the House
of Representatives. It's a bill that has got confidence in the
productivity of American farmers and American workers. It says
that if you're confident, you open up markets. If you're
confident, you encourage trade as opposed to protectionism.
And thanks to the Speaker's leadership, we got trade promotion
authority out of the House of Representatives."
3/5. Sen. Charles Schumer
(D-NY) and Sen. John
Edwards (D-NC) introduced S 1989,
the National Cyber Security Defense Team Authorization Act.
3/12. PayPal announced
that it has received an advisory opinion from the Federal Deposit Insurance
Corporation (FDIC). See, PayPal
3/12. The Federal Trade
Commission (FTC) announced that it will hold its two day
public workshop on issues relating to the security of
consumers' computers and the personal information stored
in them or in company databases on May 20 and 21. See, notice to
be published in the Federal Register. The FTC had previously
announced that this event would be held on May 16 and 17. See,
in Federal Register, March 6, 2002, Vol. 67, No. 44, at Pages
10213 - 10215.
|Wednesday, March 13
|The House will meet at 10:00 AM for legislative business.
The House may take up HR
2341, the Class Action Fairness Act of 2001.
7:30 AM. FTC Commissioner Orson
Swindle will speak at the Baltimore Academies Business
Professionals Breakfast on "consumer protection and
competition issues". Location: Pikesville Hilton, 1726
Reistertown Road, Pikesville, MD.
10:00 AM. The House Financial
Services Committee will hold a hearing on HR
3763, the "Corporate and Auditing Accountability,
Responsibility, and Transparency Act of 2002". Location:
Room 2128, Rayburn Building.
10:30 AM. The Senate
Appropriations Subcommittee's Subcommittee on the
Legislative Branch will hold hearings on the proposed budget
estimates for FY 2003 for the Library
of Congress (LOC) and the Congressional Research Service.
The Copyright Office
is a part of the LOC. Location: Room 124, Dirksen Building.
10:30 AM. The Senate
Appropriations Subcommittee's Subcommittee on Commerce,
Justice, State, and the Judiciary will hold a hearing on the
administration's proposed budget estimates for FY 2003 for the
Department of Commerce.
Location: Room 116, Dirksen Building.
|Thursday, March 14
|The House will meet at 10:00 AM for legislative business.
9:00 AM. The House
Judiciary Committee's Subcommittee on Courts, the
Internet, and Intellectual Property will hold a hearing titled
"Patent Law and Non Profit Research Collaboration."
Location: Room 2141, Rayburn Building.
9:30 AM. The FCC will hold a
meeting. See, agenda.
Location: FCC, 445 12th Street, SW, Room TW-C05.
10:00 AM. The Senate
Judiciary Committee will hold a hearing titled
"Competition, Innovation, and Public Policy in the
Digital Age: Is the Marketplace Working to Protect Digital
Creative Works?" The witnesses will be Richard Parsons
(AOL TW), Craig Barrett (Intel), Jonathan Taplin (Intertainer),
Joe Kraus, and Justin Hughes (UCLA Law School). Location: Room
226, Dirksen Building.
10:00 AM - 12:00 NOON. The House Science Committee's
Subcommittee on Environment, Technology, and Standards will
hold a hearing titled "Technology Administration: Review
and Reauthorization". Location: Room 2318, Rayburn
11:00 AM. FTC Chairman Timothy
Muris will speak at the 6th Annual Georgetown University
Law Center (GULC) Corporate Counsel Institute. Location: GULC,
600 New Jersey Avenue, NW.
12:00 PM. The FCBA will
host a luncheon. The speaker will be Craig McCaw,
Ch/CEO of Teledesic. A
reception will begin at 12:00 NOON, followed by lunch at 12:30
PM. RSVP to Wendy Parish at firstname.lastname@example.org
by 12:00 NOON on Tuesday, March 12. Location: Capital Hilton
Hotel, 16th and K Streets, NW.
2:00 PM. The Senate
Judiciary Committee will hold a business meeting.
Location: Room 106, Dirksen Building.
|Friday, March 15
|The House will not be in session.
9:00 AM. The AFL-CIO's
Department for Professional Employees will host a panel of
speakers who will advocate retention of the FCC's newspaper
and broadcast cross ownership rules. FCC Commission Michael
Copps will speak. See, AFL-CIO
notice. For more information, contact Leandra Kennedy at lkennedy @aflcio.org or
202 638-0320. Location: National
Press Club, Holeman Lounge, 529 14th St. NW, 13th Floor.
9:30 - 11:00 AM. The Progressive
Policy Institute (PPI) will host a panel discussion on the
impact of new homeland security efforts on privacy issues. The
panelists will be Robert Atkinson (PPI), Shane Ham (PPI), and
Jim Dempsey (Center for Democracy and Technology). RSVP to 202
547-0001. Location: PPI, 600 Pennsylvania Avenue, SE, Suite
11:00 AM. FTC Chairman Timothy
Muris will give the keynote address at the Consumer Federation of
America's Assembly. Location: Washington Plaza Hotel, 10
Thomas Circle, NW.
Deadline to submit comments to the FCC on the World
Radiocommunication Conference Advisory Committee's (WRC-03
Advisory Committee) recommendations of February 6, 2002,
regarding the 2003 World Radiocommunication Conference
(WRC-03). See, notice
|Monday, March 18
|9:30 AM. The U.S. Court of Appeals (DCCir)
will hear oral argument in Costa de Oro TV v. FCC, No.
01-1153. Judges Ginsburg, Henderson and Tatel will preside.
Location: 333 Constitution Ave. NW.
12:00 NOON. Deadline to submit requests to USTR to
testify orally at its April 1 hearing negotiation of a U.S.
Singapore Free Trade Agreement. See, notice
in the Federal Register.
Deadline to submit comments to the FCC in response
to its notice of proposed rulemaking (NPRM) regarding its
unbundling analysis under § 251
of the Communications Act and the identification of specific
unbundling requirements for incumbent local exchange carriers
(ILECs). The FCC adopted this NPRM at its December 12 meeting.
This is CC Docket No. 01-338. See, notice
in the Federal Register. Note: SBC submitted a request
for extension of deadline [PDF] on March 11.
|Tuesday, March 19
|9:30 AM - 4:30 PM. The Federal
Trade Commission (FTC) and the Department of Justice Antitrust Division will
continue their joint hearings titled "Competition and
Intellectual Property Law and Policy in the Knowledge Based
Economy." From 9:30 AM until 12:00 NOON, there will be
presentations on "Business Perspectives on Patents".
From 1:30 until 4:30 PM, there will be presentations on
"Business Perspectives on Patents: Biotech and
Pharmaceuticals. See, agenda.
Location: Room 432, FTC, 600 Pennsylvania Ave., NW.
10:00 AM. The Senate
Appropriations Committee's Subcommittee on Commerce,
Justice, State, and the Judiciary will hold a hearing on the
proposed budget estimates for FY 2003 for the FTC,
and other agencies. Location: Room 138, Dirksen Building.
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