House Telecom Subcommittee Holds Hearing on Net Gambling Bill

(June 15, 2000) The House Telecom Subcommittee held a hearing on Rep. Bob Goodlatte's Internet gambling bill. HR 3125, which passed the Judiciary Committee in April, encountered considerable criticism from at the June 15 telecom hearing.

See, Tech Law Journal Summary of Internet Gambling Bills in the 106th Congress.

Rep. Bob Goodlatte (R-VA), the sponsor of HR 3125, the Internet Gambling Prohibition Act of 1999, testified in favor of the bill, and responded to criticisms from subcommittee members.

Many subcommittees members were particularly concerned with the provisions of the bill regarding closed loop systems.

When Rep. Goodlatte and Sen. Jon Kyl (R-AZ) first introduced bills in the 105th Congress (1997-1998), they were straight bans on Internet gambling. However, many entrenched interests weighed in, including brick and mortar casinos, riverboats, associated hotels, horse racing, jai alai, dog racing, fantasy sports leagues, and states which derive revenue from lotteries and taxes on gambling operations.

Rep. Bob


Rep. Goodlatte and Sen. Kyl have pragmatically sponsored bills in the current Congress which carve out a number of exceptions for certain existing gambling operations. This has opened them up to criticism that their bills do not go far enough, or that there is no consistent rationale for which interests get exemptions, and which do not. Rep. Goodlatte heard these criticisms at length at the June 15 hearing of the House Commerce Committee's Subcommittee on Telecommunications.

"We are not expanding gambling on the Internet with this bill," said Rep. Goodlatte. "The effort here is to stop gambling." He pointed out that the exemptions contained in his bill account for only about 5% of gambling. He argued also that the major goal of the bill is to shut down Internet casinos.

Rep. Billy Tauzin (R-LA), the Chairman of the Subcommittee, presided at the hearing. He stated that "some will resist the idea that a bill that is intended to prohibit Internet gambling, actually creates exemptions, which could have the effect, indeed, of promoting some forms of gambling on the Internet."

Rep. Ed Markey (D-MA) mocked the bill. He called it "legislation that proposes certain new regulations on the Internet."

Gambling Schizophrenia?

"Our society has a schizophrenic attitude towards this issue," said Rep. Markey, pointing out that churches that sermonize against gambling also offer bingo. He also compared investments in biotech stocks to gambling. "But we don't call that gambling. We call that 'capital formation'," said Rep. Markey. He also referred to a stock exchange as a "Bookie on the Big Board", and New Orleans, where gambling is legal, as "Babylon on the Bayou."

"The bill contains promises that might have made the late great Claude Raines blush: a number of exceptions to the general prohibitions on Internet gambling that permit, under certain circumstances, fantasy sports leagues, gambling on horse races, gambling on jai alai, and gambling on greyhound racing. The legislation also permits intrastate purchase of lottery tickets, but only if such purchases are made in a public facility, which presumably means that you cannot buy a lottery ticket from home over the net."

He stated that "we need a uniform set of guidelines." He condemned the bill for creating exceptions for commercial gambling operations, but not the same exception for state lotteries. The problem with this, said Rep. Markey, is that lotteries fund schools and police departments.

He concluded that, "I don't think that it is going to be acceptable."

Several members of the subcommittee argued that the bill does not go far enough in banning Internet gambling.

"There is no dispute that there has been an explosive growth of Internet gambling over the past few years," said Rep. Steve Largent (R-OK). "There is dispute, however, if this legislation is sufficient to address the problem of Internet gaming."

Rep. Gene Green (D-TX) was more adamant. "So I am quite surprised that when I read 3125 that we are going to legalize gambling over the Internet. Gambling is just as addictive as drugs and alcohol, and yet the passage of this bill would allow the residents of Texas to bet on horse and dog races in other states."

"We should rename maybe this legislation, 'The Breakup of the Family,' because I know what would happen if my wife came in at 10:30 at night, and I said, 'By the way, we just lost our savings, and our children's saving.' "

"I have a suggestion: we could just ban Internet gambling. Gambling of any form over the Internet should be illegal," said Rep. Green.

In contrast, Rep. Tim Stearns (R-FL) praised the bill as it is written.

  Rep. Anna
Eshoo (D-CA)
  See also, opening
of Rep. Eshoo.

Rep. Anna Eshoo (D-CA), who represents Silicon Valley, roundly criticized the bill for regulating the Internet, and imposing a burden on Internet Service Providers. She stated that the bill is "deeply flawed."

She elaborated that "the bill seeks to put regulatory boundaries on the Internet. And I think that we need to take a look at whether these views are shortsighted, and also take into consideration civil liberties. The notice and the take down provisions, in my view, are overly broad. They are too burdensome for ISPs. And, I think that they give the government too much power. The blocking provisions in the legislation intrude on individual privacy. They attempt to put artificial boundaries on the Internet, when the Internet is designed specifically to transcend boundaries."

The subcommittee also heard from a large panel of witnesses. Kevin DiGregory, representing the Department of Justice, criticized the bill. The DOJ has its own proposed bill.

What They Said
Prepared Statements of Witnesses
(Links to HTML copies in the Commerce Committee web site.)
Kevin DiGregory, Justice Dept.
Lisa Dean, Free Congress Foundation
Michael Bowman, Family Research Council
Anne Paulson, Virg. Thoroughbred Assoc.
Daniel Nestel, NCAA
Louis Sheldon, Traditional Values Coal.
Gregory Ziemak, Kansas Lottery
Gerard Waldron, Covington and Burling
Richard Williams, Chippewa Indian Tribe

He argued that HR 3125 "does indeed expand Internet gambling," and that "it is not technologically neutral." He would prefer that the Congress amend 18 U.S.C. 1084 (Wire Act), rather than create a new section for Internet gambling.

Lisa Dean, of the conservative Free Congress Foundation, opposed the bill for expanding the powers of the federal government. "How does the federal government propose to enforce this nearly unenforceable legislation? Will it begin to monitor everyone's email? Will it create a list of federal-government-banned sites that Internet Service Providers must block? Will it stage dead-of night raids to seize the hard drives of unsuspecting individuals?"

In contrast, Michael Bowman of the conservative Family Research Council, testified in support of the bill. He stated that "this bill takes the heart out of an industry that is about to flourish."

The members of the subcommittee who participated in the hearing included Billy Tauzin, Ed Markey (D-MA), Barbara Cubin (R-WY), Bob Ehrlich (R-MD), Anna Eshoo (D-CA), Fosella (R-NY), Paul Gillmor (R-OH), Bart Gordon (D-TN), Gene Green (D-TX), Steve Largent (R-OK), Bob Luther (D-MN), Karen McCarthy (D-MO), Bobby Rush (D-IL), John Shimkus (R-IL), and Tim Stearns (R-FL).

Justin Lilley, the Telecommunications Counsel, sat at Rep. Tauzin's right hand throughout the hearing.

In addition, the Rep. Tom Bliley (R-VA) and Rep. John Dingell (D-MI), the Chairman and Ranking Member of the full Committee, respectively, both submitted prepared statements.