Push for ban on Internet casinos renewed

Laurence Arnold

Wednesday, July 25, 2001 | 10:32 a.m.

WASHINGTON -- Members of Congress for the fourth time are preparing an assault on Internet gambling, a $1.6 billion industry, even as Nevada considers becoming the first state to approve it.

This time, lawmakers plan to combine two approaches: banning Internet gambling outright and blocking the use of credit cards for online wagering.

Internet gambling "is sucking billions of dollars out of the country," said Rep. Bob Goodlatte, R-Va. "It's unregulated, untaxed, illegal and offshore, and we need legislation to address that problem."

Goodlatte and Sen. Jon Kyl, R-Ariz., two of the witnesses Tuesday before the House Financial Services subcommittee on financial institutions, have proposed a law explicitly banning online gambling.

Kyl has proposed a ban in each of the last three terms of Congress and is preparing to introduce legislation again. The bill passed the Senate in 1998 and 1999 but was not approved by the House.

Rep. Jim Leach, R-Iowa, and John LaFalce, D-N.Y., have proposed a different approach: choking off the ability of online casinos to collect bets through credit cards, checks or electronic fund transfers. Their bill passed the House Banking Committee last year but did not come up for a vote on the floor.

Now, the lawmakers are pushing their bills as a package deal.

"They really need each other," Goodlatte said. "We need the enforcement tool that prohibiting the use of financial instruments offers. Their bill needs the definition of what is illegal."

Critics say Internet gambling can cater to compulsive or underage gamblers, attract organized crime and undermine state laws that ban or restrict gambling.

But cracking down on online casinos has proved tricky because so many are located in countries where Internet gambling is legal or not regulated.

Michael L. Farmer, senior vice president for risk management at Wachovia Bank Card Services, told the subcommittee that his company began declining Internet gambling charges in 1999. But Internet gambling companies found ways around the policy, making themselves appear to be merchants in non-gambling businesses.

The investment firm Bear, Stearns reported in March that Internet gambling sites generated $1.6 billion in revenue worldwide last year and could grow to $5 billion in 2003.

Sue Schneider, chairwoman of the Interactive Gaming Council, an industry group, said Congress should stop trying to ban the practice and instead try regulating and taxing it.

Nevada lawmakers voted last month to prepare their state to be the first in the nation to approve online gambling.