Internet Gaming Ban Clears Senate With Ease


The Senate voted overwhelmingly Thursday to ban gambling on the Internet, an unregulated but booming industry that critics say is too easily accessible to minors and gaming addicts--and may be subject to massive fraud and money-laundering.

The measure, approved on a 90-10 vote, extends to computers and the Internet existing federal prohibitions on interstate gambling via telephone or wire.

“We need to update the law to help it keep up with technology and close the loopholes that have allowed this activity to flourish,” said the ban’s sponsor, Sen. Jon Kyl (R-Ariz.).

A companion measure is moving through the House, co-authored by Reps. Bob Goodlatte (R-Va.) and Frank A. LoBiondo (R-N.J.). Its backers hope the measure will get a boost from the lopsided vote in the Senate.


California’s Democratic senators, Barbara Boxer and Dianne Feinstein, both voted for the ban to outlaw “cybercasinos.”

As many as 140 Internet gambling Web sites have sprung up in recent years, and more than $600 million was wagered online last year on sports alone--a tenfold increase in just one year, according to the Justice Department. Most of the sites are operated by businesses based overseas, which lobbied against Kyl’s measure.

Unchecked, Internet gambling revenues could reach $10 billion by 2000, Kyl warned.

“If we don’t stop this activity now,” he said, “the money that is generated by this kind of illegal activity is going to . . . become so influential in our political process that we will never get it stopped.”


Although Kyl’s provision does not detail enforcement procedures, he said he anticipates that federal law enforcement officials would carry out its requirements by identifying Web sites that provide illegal gambling and seeking court orders enjoining such activity and requiring the Internet service providers to “pull the plug.”

Operators of gambling Web sites may be imprisoned for up to four years and fined as much as $20,000.

The measure would punish Internet gamblers that authorities are able to identify by allowing for a fine equal to three times the amount that a person is found to have wagered online, or $500, whichever is greater. A violator also may be imprisoned for up to three months.

The legislation would exempt the online playing of “fantasy,” or rotisserie, sports leagues, in which people choose rosters of professional athletes and money is exchanged based on the players’ statistics.


Kyl’s proposal is part of the $33.2-billion annual appropriation bill for the departments of Commerce, Justice and State, which the Senate approved later on Thursday.

Before adopting the amendment, the Senate rejected, 82 to 18, a proposal to exempt Indian tribes from the Internet gambling ban--an exemption that Kyl said would have created a gigantic loophole.

Kyl’s amendment enjoyed broad support; backers included all 50 state attorneys general, the Christian Coalition and FBI Director Louis J. Freeh. Also supporting it were major league baseball, the National Football League, the National Basketball Assn., the National Hockey League and the National Collegiate Athletic Assn.

Even the American Gaming Assn. did not oppose the measure. The organization, which represents the nation’s hotel and casino industry, has opposed Internet gambling because it believes that there are no effective mechanisms or technologies to allow states and law enforcement to regulate such activities, said Frank J. Fahrenkopf, the association’s president and chief executive.


Aside from offshore gambling interests, some of the strongest opposition to Kyl’s proposal came from the National Indian Gaming Assn., which represents 159 tribes.

The tribes deserve the same exemptions that are being granted to state lotteries and off-track betting on horse and dog races conducted on “closed-loop, subscriber-based” computer systems that are inaccessible to the general public, said Jacob L. Coin, the group’s executive director.

“We are very disappointed,” he said.

Sue Schneider, a spokeswoman for Internet gambling interests, contended that other countries, such as Australia and New Zealand, have adopted regulatory techniques that address the concerns raised by the foes of Internet gambling.


“All prohibition does is build up a criminal infrastructure,” Schneider said. “The United States could become the odd man out.”

Congress in 1961 enacted the Telephone and Wire Act, which banned the use of phones to receive bets or convey gambling information.

But the Internet’s various technological aspects fall outside the purview of the antiquated law. Kyl’s measure, for instance, would extend current telephone and wire gambling prohibitions to cover emerging technologies, such as microwave transmissions and fiber-optic cables.

“Internet gambling is not regulated by any authority and crosses state lines, preventing states from enforcing laws their communities have established to restrict gambling,” Kyl said.


“That’s why the state attorneys general have come to Washington and asked the federal government for help--by enforcing the current federal law and by updating the law to help it keep up with technology,” he said.

In arguing for the ban, proponents cited an array of statistics to make the case that gambling carries far-reaching consequences. They cited studies that have found that 5% of all gamblers become addicted to wagering, and 90% of that group turn to crime to finance their addictions.

Gambling Web sites are a particular problem, the measure’s backers argued, because operators are free to rig their games to cheat customers or accept bets from children who obtain their parents’ credit cards.

Have you used the Internet to gamble? A survey and a discussion about the Senate’s vote to ban such gambling is on The Times’ Web site: