Report text available as:

  • TXT
  • PDF   (PDF provides a complete and accurate display of this text.) Tip ?
104th Congress                                            Rept. 104-440
                        HOUSE OF REPRESENTATIVES

 1st Session                                                     Part 1
_______________________________________________________________________


 
           NATIONAL GAMBLING IMPACT AND POLICY COMMISSION ACT

                                _______


               December 21, 1995.--Ordered to be printed

_______________________________________________________________________


 Mr. Hyde, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 497]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 497) to create the National Gambling Impact and 
Policy Commission, having considered the same, report favorably 
thereon with an amendment and recommend that the bill as 
amended do pass.

                           TABLE OF CONTENTS

                                                                   Page
The Amendment....................................................     2
Purpose and Summary..............................................     4
Background and Need for Legislation..............................     4
    Background...................................................     4
    The Hyde Substitute..........................................     6
    Specific Issues..............................................     7
        Federal Jurisdiction.....................................     7
        Appointment of the Commission............................     8
        Information Gathering....................................     8
        Budget Considerations....................................     9
Hearing..........................................................     9
Committee Consideration..........................................    11
Vote of the Committee............................................    11
Committee Oversight Findings.....................................    12
Committee on Government Reform and Oversight Findings............    12
New Budget Authority and Tax Expenditures........................    13
Congressional Budget Office Estimate.............................    13
Inflationary Impact Statement....................................    14
Section-by-Section Analysis......................................    14
Agency Views.....................................................    16
Changes in Existing Law Made by the Bill, as Reported............    16
Dissenting Views.................................................    17

    The amendment is as follows:
    Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``National Gambling Impact and Policy 
Commission Act''.

SEC. 2. ESTABLISHMENT OF COMMISSION.

    There is established a commission to be known as the National 
Gambling Impact and Policy Commission (in this Act referred to as the 
``Commission'').

SEC. 3. MEMBERSHIP.

    (a) Number and Appointment.--
          (1) Generally.--The Commission shall be composed of 9 
        members, appointed from persons specially qualified by training 
        and experience to perform the duties of the Commission, as 
        follows:
                  (A) three appointed by the Speaker of the House of 
                Representatives;
                  (B) three appointed by the majority leader of the 
                Senate; and
                  (C) three appointed by the President of the United 
                States.
          (2) Consultation before appointment.--Before the appointment 
        of members of the Commission (including to any vacancies), the 
        appointing authorities shall consult with each other to assure 
        that the overall membership of the Commission reflects a fair 
        and equitable representation of various points of view.
          (3) Timing of appointments.--The appointing authorities shall 
        make their appointments to the Commission not later than 60 
        days after the date of the enactment of this Act.
    (b) Designation of the Chairman.--The Speaker of the House of 
Representatives and majority leader of the Senate shall designate a 
Chairman and Vice Chairman from among the members of the Commission.
    (c) Period of Appointment; Vacancies.--Members shall be appointed 
for the life of the Commission. Any vacancy in the Commission shall not 
affect its powers, but shall be filled in the same manner as the 
original appointment.
    (d) Initial Meeting.--No later than 60 days after the date on which 
all members of the Commission have been appointed, the Commission shall 
hold its first meeting.
    (e) Meetings.--The Commission shall meet at the call of the 
Chairman.
    (f) Quorum.--A majority of the members of the Commission shall 
constitute a quorum, but a lesser number of members may hold hearings.

SEC. 4. DUTIES OF THE COMMISSION.

    (a) Study.--
          (1) In general.--It shall be the duty of the Commission to 
        conduct a comprehensive legal and factual study of--
                  (A) gambling in the United States, including State-
                sponsored lotteries, casino gambling, pari-mutuel 
                betting, and sports betting; and
                  (B) existing Federal, State, and local policy and 
                practices with respect to the legislation or 
                prohibition of gambling activities and to formulate and 
                propose such changes in those policies and practices as 
                the Commission shall deem appropriate.
          (2) Matters studied.--The matters studied by the Commission 
        shall include--
                  (A) the economic impact of gambling on the United 
                States, States, political subdivisions of States, and 
                Indian tribes, both in its positive and negative 
                aspects;
                  (B) the economic impact of gambling on other 
                businesses;
                  (C) an assessment and review of political 
                contributions and their influence on the development of 
                public policy regulating gambling;
                  (D) an assessment of the relationship between 
                gambling and crime;
                  (E) an assessment of the impact of pathological, or 
                problem gambling on individuals, families, social 
                institutions, criminal activity and the economy;
                  (F) a review of the demographics of gamblers;
                  (G) a review of the effectiveness of existing 
                practices in law enforcement, judicial administration, 
                and corrections to combat and deter illegal gambling 
                and illegal activities related to gambling;
                  (H) a review of the costs and effectiveness of State 
                and Federal gambling regulatory polity, including as it 
                relates to Indian gambling;
                  (I) an assessment of the effects of advertising 
                concerning gambling, including--
                          (i) whether advertising has increased 
                        participation in gambling activity;
                          (ii) the effects of various types of 
                        advertising, including the sponsorship of 
                        sporting events;
                          (iii) the relationship between advertising 
                        and the amount of the prize to be awarded; and
                          (iv) an examination of State lottery 
                        advertising practices, including the process by 
                        which States award lottery advertising 
                        contracts;
                  (J) a review of gambling that uses interactive 
                technology, including the Internet;
                  (K) a review of the extent to which casino gambling 
                provides economic opportunity to residents of 
                economically depressed regions and to Indian tribes;
                  (L) a review of the effect of revenues derived from 
                State-sponsored gambling on State budgets; and
                  (M) such other relevant issues and topics as 
                considered appropriate by the Chairman of the 
                Commission
    (b) Report.--No later than 2 years after the Commission first 
meets, the Commission shall submit a report to the President and the 
Congress which shall contain a detailed statement of the findings and 
conclusions of the Commission, together with its recommendations for 
such legislation and administrative actions as it considers 
appropriate.

SEC 5. POWERS OF THE COMMISSION.

    (a) Hearings and Subpoenas.--
          (1) The Commission may hold such hearings, sit and act at 
        such times and places, administer such oaths, take such 
        testimony, receive such evidence, and require by subpoena the 
        attendance and testimony of such witnesses and the production 
        of such materials as the Commission considers advisable to 
        carry out the purposes of this Act.
          (2) Attendance of witnesses.--The attendance of witnesses and 
        the production of evidence may be required from any place 
        within the United States.
          (3) Failure to obey a subpoena.--If a person refuses to obey 
        a subpoena issued under paragraph (1), the Commission may apply 
        to a United States district, court for an order requiring that 
        person to appear before the Commission to give testimony, 
        produce evidence, or both, relating to the matter under 
        investigation. The application may be made within the judicial 
        district where the hearing is conducted or where that person is 
        found, resides, or transacts business. Any failure to obey the 
        order of the court may be punished by the court as civil 
        contempt.
          (4) Service of subpoenas.--The subpoenas of the Commission 
        shall be served in the manner provided for subpoenas issued by 
        a United States district court under the Federal Rules of Civil 
        Procedure for the United States district courts.
          (5) Service of process.--All process of any court to which 
        application is to be made under paragraph (3) may be served in 
        the judicial district in which the person required to be served 
        resides or may be found.
    (b) Information From Federal Agencies.--The Commission may secure 
directly from any Federal department or agency such information as the 
Commission considers necessary to carry out the provisions of this Act. 
Upon request of the Chairman of the Commission, the head of such 
department or agency may furnish such information to the Commission.
    (c) Detail of Government Employees.--Any Federal Government 
employee may be detailed to the Commission without reimbursement, and 
such detail shall be without interruption or loss of civil service 
status or privilege.

SEC. 6. COMMISSION PERSONNEL MATTERS.

    (A) Compensation of Members.--Subject to the limitation provided in 
subsection (e), each member of the Commission who is not an officer or 
employee of the Federal Government shall be compensated at a rate equal 
to the daily equivalent of the annual rate of basic pay prescribed for 
level IV of the Executive Schedule under section 5315 of title 5, 
United States Code, for each day (including travel time) during which 
such member is engaged in the performance of the duties of the 
Commission. All members of the Commission who are officers or employees 
of the United States shall serve without compensation in addition to 
that received for their services as officers or employees of the United 
States.
    (b) Travel Expenses.--Subject to the limitation provided in 
subsection (e), the members of the Commission shall be allowed travel 
expenses, including per diem in lieu of substance, at rates authorized 
for employees of agencies under subchapter I of chapter 57 of title 5, 
United States Code, while away from their homes of regular places of 
business in the performance of services for the Commission.
    (c) Staff.--
          (1) In general.--The Chairman of the Commission may, without 
        regard to the civil service laws and regulations, appoint and 
        terminate an executive director and such other additional 
        personnel as may be necessary to enable the Commission to 
        perform its duties. The employment of an executive director 
        shall be subject to confirmation by the Commission.
          (2) Compensation.--Subject to the requirements of subsection 
        (e), the executive director shall be compensated at the rate 
        payable for level V of the Executive Schedule under section 
        5316 of title 5, United States Code, the Chairman of the 
        Commission may fix the compensation of other personnel without 
        regard to the provisions of chapter 51 and subchapter III of 
        chapter 53 of title 5, United States Code, relating to 
        classification of positions and General Schedule pay rates, 
        except that the rate of pay for such personnel may not exceed 
        the rate payable for level V of the Executive Schedule under 
        section 5316 of such title.
    (d) Procurement of Temporary and Intermittent Services.--The 
Chairman of the Commission may procure temporary and intermittent 
services under section 3109(b) of title 5, United States Code, at rates 
for individuals which do not exceed the daily equivalent of the annual 
rate of basic pay prescribed for level V of the Executive Schedule 
under section 5316 of such title.
    (e) Limitation.--No payment may be made under the authority of this 
section except to the extent provided for in advance in an 
appropriation for this purpose.

SEC. 7. TERMINATION OF THE COMMISSION.

    The Commission shall terminate 30 days after the date on which the 
Commission submits its report under section 4.

                          purpose and summary

    H.R. 497 would establish a national commission to study the 
impact of gambling. The nine-member commission would conduct 
the study over a two-year period. The bill specifies a number 
of topics that the Commission will study encompassing many 
aspects of gambling. At the conclusion of its study, the 
Commission will make recommendations as to any appropriate 
changes to gambling policy. After completing its study, the 
Commission will terminate its existence.

                background and need for the legislation

Background

    The Commission on the Review of the National Policy Toward 
Gambling published the federal government's last national study 
of gambling in 1976. Since that time, legalized gambling has 
grown exponentially. According to the American Gaming 
Association (AGA), some form of legalized gambling now exists 
in 48 of the 50 states. Thirty-six states and the District of 
Columbia now have state lotteries--rapid growth from the one 
state lottery begun by New Hampshire in 1963. The AGA reports 
that in 1994, Americans made more than 125 million visits to 
casinos. In short, legalized gambling is now a significant 
social and economic force in this country.
    Under current law, most gambling operations are regulated 
by state law, either through state-sponsored gambling like 
lotteries or through state regulation of private gambling 
operations. The opponents of gambling claim that in legislative 
battles in the states, those who gambling have vast amounts of 
money to spend on lobbying, whereas the opponents usually do 
not. As a result, the opponents say, the voices of those 
favoring gambling drown out those who oppose gambling. In these 
forums, supporters of gambling typically argue that legalized 
gambling will provide jobs and generate tax revenues. These 
claims of painless revenue generation can be attractive 
politically.
    Legalized gambling may have negative effects. These effects 
include increased crime in the areas around gambling 
establishments and increased incidence of compulsive gambling. 
At its hearing on H.R. 497, the Committee heard testimony about 
the human costs resulting from problem gambling. All of these 
problems have ripple effects--for example, negative effects on 
family members and family life, increased criminal justice 
costs, increased welfare costs, and lost productivity. The 
Committee also heard economic analysis about the negative 
effects of gambling on other businesses. For example, gambling 
opponents argue that the number of restaurants in Atlantic 
City, New Jersey dropped dramatically after the advent of 
casino gambling because the casinos drew money out of those 
businesses. All of this testimony revealed the social costs of 
gambling that may go uncounted.
    At the hearing, gambling proponents countered that any 
increased crime surrounding gambling operations is nothing more 
than the natural result of the increased number of people in 
the area. They argued that a similar effect occurs around other 
entertainment attractions. Likewise, they contended that 
gambling operations do not draw dollars out of surrounding 
businesses more than any other entertainment business does. 
Finally, supporters of gambling acknowledged the existence of 
problem gambling, but contended that the industry is making 
efforts to address it.
    Debates over whether to legalize various forms of gambling 
in the states do not end the issue--other facets of gambling 
also contribute to the overall picture. Gambling operations run 
by Indian tribes have grown rapidly since the passage of the 
Indian Gaming Regulatory Act, a federal law passed in 1988. 
Many state government officials feel that, under this law, they 
do not have sufficient control over Indian gambling operations 
within their states and that Indian gambling operations have 
negative side effects on surrounding areas. On the other hand, 
the Indian tribes that have decided to undertake gambling 
operations generally feel that those operations have provided 
unprecedented economic opportunity to their members. Indian 
tribes, for example, have used gambling revenues to build 
houses, schools, roads, water and sewer systems, and health 
care facilities for their people.
    Illegal gambling operations also exist on a remarkable 
scale. At its hearing, the Committee listened to testimony from 
a former mob bookmaker from Chicago now turned government 
informant. This informant testified about the vast size of 
illegal gambling operations. He also testified that illegal 
gambling operations welcome new forms of legalized gambling 
because they teach more and more people to gamble thereby 
increasing the number of illegal gamblers. Given that 
testimony, illegal gambling must be treated, along with 
legalized gambling, as part of one large interrelated issue.
    The testimony about the social costs and problems 
associated with gambling operations, as well as the testimony 
about the positive effects of gambling raise serious questions 
that should be thoroughly examined by an unbiased body. As a 
result, the Committee believes that there should be a 
comprehensive study of the impact of gambling nationwide. The 
tremendous growth of all forms of gambling is a national issue. 
Once the Commission completes its study, policymakers at all 
levels of government will have access to a broad array of 
information so that they can make the best possible judgments.

The Hyde substitute

    Notwithstanding the demonstrated need for a study, a number 
of groups raised concerns about the language of H.R. 497 as 
introduced. In an effort to improve the bill, Chairman Hyde 
drafted an amendment in the nature of a substitute which 
addressed several of the issues raised by critics. At the 
markup on November 8, 1995, the Committee adopted the Hyde 
substitute by voice vote and rejected all other amendments to 
the substitute.
    Initially, H.R. 497 established a nine-member Commission, 
with one member required to be a Governor of a State. This 
requirement caused some concern among various groups who felt 
that they, too, should have a specific Commissioner appointed 
to safeguard their respective interest. The Hyde substitute 
deletes the language that specifies that a Governor must be on 
the Commission. The appointing authorities may choose any nine 
members whom they believe will do the best and most effective 
job. Rather than dictate the actual makeup of the Commission, 
the Hyde substitute adds language requiring the appointing 
authorities to consult with one another to guarantee that the 
overall makeup of the Commission will reflect a fair and 
equitable representation of various points of view.
    The Hyde substitute modifies several areas of study 
included in the original bill to assure the most thorough 
results possible. For example, some Committee members expressed 
concern that some types of gambling would not be part of the 
Commission's study. The substitute clarifies that the 
Commission is to study all forms of commercial gambling, 
including state lotteries, casino gambling, pari-mutuel 
betting, and sports betting. The substitute also adds language 
to focus the Commission's attention on the effect revenues 
derived from State-sponsored gambling may have on State 
budgets.
    Other critics of the bill, especially representatives of 
Indian gambling, feared that the Commission would not study 
positive economic effects of gambling. Although they do not 
object to a careful review of the overall economic impact, 
these groups believe that gambling generates substantial 
revenue and many positive effects for Indian tribes. The Hyde 
substitute adds language to ensure that both the positive and 
negative economic aspects of gambling will be considered. It 
also adds language to further guarantee that the Commission 
will study the extent to which casino gambling provides 
economic opportunity for economically depressed regions and 
Indian tribes.
    The section of the bill directing the Commission to study 
whether the States, rather than the Federal government, should 
regulate Indian gambling also trouble Indian gambling 
operators. These groups relied on the Indian Gaming Regulatory 
Act of 1988, 25 U.S.C. Sec. 2701 et seq., as well as the 
Supreme Court's decision in California v. Cabazon Band of 
Mission Indians, 480 U.S. 202 (1987), to bolster their claim 
that the regulation of Indian gambling is a matter exclusively 
within the jurisdiction of the Federal government. The Hyde 
substitute narrows the language, but takes into account both 
the States' interests and the Indians' concerns. Specifically, 
it directs the Commission to review the costs and effectiveness 
of State and Federal gambling regulatory policy, including as 
they may relate to Indian gambling.
    Critics also questioned the requirement that the Commission 
only study the political contributions of gambling businesses 
and promoters. The Hyde substitute clarifies that the study of 
political contributions will include all contributions that 
influence public policy on gambling, not just those of gambling 
operators.
    Members of the Committee expressed particular concern about 
the issue of advertising about gambling activities. The Hyde 
substitute adds detailed language directing the Commission to 
assess the impact gambling advertising may have including: 
whether participation in gambling has increased due to 
advertising, the effects of various types of gambling 
advertising, the relationship between advertising and the 
amount of the prize to be awarded, and an examination of state 
lottery advertising practices.
    Witnesses at the hearing expressed interest in the spread 
of gambling through interactive technologies. The Hyde 
substitute adds language requiring the Commission to review 
interactive gambling, specifically gambling on the Internet.
    The Hyde substitute shortens the period for the 
Commission's study. The substitute makes the report due two 
years after the Commission's initial meeting, rather than 
three. The Committee believes this is a much needed study, and 
this modification will expedite the Commission's efforts. 
Moreover, shortening the time period for the study will reduce 
the costs involved.
    Finally, the Hyde substitute adds section 6(e) and related 
language, to clarify that the salaries and travel expenses 
authorized in H.R. 497 should not be construed as entitlements. 
This change assures that the Committee's responsibilities under 
the budget resolution are not altered because of this bill. 
Other technical and conforming changes were also made in the 
Hyde substitute.

Specific issues

            Federal jurisdiction
    Some critics of H.R. 497 have argued that because of the 
Tenth Amendment, Congress has no power to establish the 
Commission. This argument fails for several reasons. The 
critics based this argument on the premise that this Commission 
would regulate gambling and that the regulation of gambling has 
traditionally been a state matter. H.R. 497 empowers the 
Commission to conduct a study--it does not empower the 
Commission to regulate gambling in any way. Federal regulation 
of gambling is not in issue at this time.
    The nationwide phenomenon of gambling involves many aspects 
of interstate commerce. For example, many gamblers cross state 
lines to travel to gambling operations. That alone is enough to 
bring gambling within the interstate commerce clause. In 
addition, insofar as the bill relates to Indian gambling, it 
falls within the power of Congress to regulate commerce with 
the Indian tribes.
    Gambling, and the public corruption that has come with it 
in some instances, implicate a variety of federal criminal 
statues. Moreover, Congress has enacted numerous criminal and 
civil statues directed specifically at gambling, including 
gambling ships, 18 U.S.C. Sec. Sec. 1081-84; Indian gambling 
operations, 18 U.S.C. Sec. Sec. 1166-68; lotteries, 18 U.S.C. 
Sec. Sec. 1301-07; obstruction of state investigations of 
gambling, 18 U.S.C. Sec. 1511; interstate transportation of 
wagering paraphernalia, 18 U.S.C. Sec. 1953; racketeering, 18 
U.S.C. Sec. 1961 (including state crimes relating to gambling 
within the definition of ``racketeering activity''); and the 
Interstate Horse Racing Act, 15 U.S.C. Sec. Sec. 3001-07. The 
Committee is not aware of any instance in which any of these 
statutes has been held to exceed the power of Congress to 
regulate interstate commerce. In short, gambling is within the 
legislative jurisdiction of Congress under Article I of the 
Constitution.
    Even is gambling were not so clearly within the interstate 
commerce power, Congress would have the authority to pursue a 
study. Given its broad oversight authority, Congress can look 
into any matter least for the limited purpose of determining 
whether it is properly within its legislative powers.
            Appointment of the Commission
    As discussed above, the Hyde substitute adds language that 
requires the appointing authorities (i.e., the President, the 
Majority Leader of the Senate, and the Speaker of the House of 
Representatives) to consult together to ensure that the overall 
makeup of the Commission reflects as fair and equitable 
representation of various points of view. In doing so, the 
Committee expects that the authorities may consider for 
appointment representatives of various interested groups 
including, gambling proponents and opponents, state gambling 
regulators, federal and state prosecutors, Indian gambling 
operators, professionals who treat compulsive gamblers, casino 
operators, activists who have opposed gambling referenda, state 
lottery officials, and representatives of non-gambling 
businesses in areas around gambling operations. The foregoing 
list is meant to be illustrative of the types of people who 
might be appointed. Inclusion in the list does not mean that a 
member of that group must be appointed, nor does the failure to 
mention a particular interest group mean that its 
representatives should not be considered. In short, the 
appointing authorities should use their best judgment to bring 
about a fair and equitable commission.
    In addition, the Committee hopes and expects that in making 
their appointments to the Commission, the Majority Leader of 
the Senate and the Speaker of the House of Representatives will 
follow the longstanding custom of allowing the respective 
Minority Leaders to make one of the three appointments allotted 
to each body.
            Information gathering
    Section 5(a) of the Hyde substitute provides for a general 
subpoena power. As with all such general subpoena powers, 
normal restrictions on the subpoena power, including 
privileges, shall apply. See, e.g., United States v. Calandra, 
414 U.S. 338, 346 (1974) (``the grand jury's subpoena is not 
unlimited * * * [the grand jury] may not itself violate a valid 
privilege, whether established by the Constitution, statutes, 
or the common law.'') If the recipient raises objections to the 
subpoena, the Commission may litigate them in federal district 
court in a civil enforcement proceeding.
    Section 5(b) of the Hyde substitute provides that the 
Commission may seek relevant information from federal agencies 
and that the agencies ``may'' provide such information. The 
bill is introduced provided that the agencies ``shall'' provide 
the information. The Department of Justice was concerned that 
the mandatory language might require it to turn over sensitive 
law enforcement information to the Commission. See Agency Views 
Section, below. For that reason, the Hyde substitute changed 
the wording from ``shall'' to ``may.'' However, the Committee 
intends that federal agencies should fully cooperate in 
providing relevant information to the Commission except for the 
law enforcement information described and other categories of 
information protected by law.
            Budget considerations
    Section 5(c) provides that federal government employees may 
be temporarily detailed to work for the Commission. In the same 
spirit of cooperation, the Committee considered placing 
language in the substitute that would have allowed federal 
agencies to provide to the Commission office space, technical 
assistance, and the like. Because of fears that such language 
might be construed as creating new budget authority, the 
Committee did not add it. However, it the extent that it is 
feasible within the existing budgetary framework, the Committee 
intends that federal agencies should provide such assistance to 
the Commission, particularly when such assistance can save 
money for the government as a whole.
    Likewise, the Committee inserted section 6(e) and related 
language into the substitute to clarify that the salaries and 
travel expenses authorized are not entitlements for budget 
purposes. Rather, they are subject to appropriations being made 
in subsequent appropriations acts.

                                hearing

    The full Judiciary Committee held a hearing on H.R. 497 on 
September 29, 1995. Testimony was received from 15 witnesses, 
including eight members of Congress. The Committee received 
additional material submitted by 15 individuals and 
organizations.
    At the September 29 hearing, the first panel of witnesses 
consisted of the eight members of the Senate and House of 
Representatives, including Congressman Frank Wolf of Virginia, 
the principal sponsor of H.R. 497 in the House. Congressman 
Wolf testified about the rapid proliferation of gambling in the 
United States and the harmful side effects associated with this 
growth. He explained that he believed an objective study by a 
national commission would benefit all citizens.
    The Nevada delegation, Congressman John Ensign, 
Congresswoman Barbara Vucanovich, Senator Richard Bryan and 
Senator Harry Reid, testified regarding the positive effects 
the gambling industry has had on the State of Nevada and other 
states. They expressed the view that a federal study is an 
unnecessary waste of government resources because the states 
can conduct their own studies. Congressman Frank LoBiondo, 
whose district includes Atlantic City, New Jersey, testified 
concerning the strict controls his state places on the gambling 
industry and argued that the individual states are the best 
entities to conduct gambling studies.
    Senator Richard Lugar of Indiana, a sponsor of the 
companion Senate legislation, testified that he believed 
communities embrace gambling as a quick fix to budget problems 
without having all the necessary facts, and he further noted 
that the recent growth of gambling via the Internet has broad 
federal implications. Senator Paul Simon of Illinois, also a 
sponsor of the Senate legislation, testified as to the negative 
effects gambling has had on states, including the corruption of 
some state legislatures.
    The second panel consisted of one person, Mr. William 
Jahoda, a former member of the Chicago mob turned Federal 
informant. He testified as to the involvement of organized 
crime in illegal gambling operations and contended that any 
expansion of State-controlled gambling inevitably results in an 
increase in the market share of illegal gambling operations 
because such expansions teach more people to gamble. However, 
Mr. Jahoda also noted that, to the best of his knowledge, 
organized crime does not control legalized gambling operations.
    The third panel consisted of representatives of six 
interested parties. The first to speak was Mr. Paul Ashe, 
President of the National Council on Problem Gambling. He 
testified as to the prevalence and demographics of compulsive 
or problem gambling, as well as the treatment and support 
services which are available. He stated that the American 
Medical Association, American Psychiatric Association, and 
other medical groups, all recognize pathological gambling as a 
health issue. Mr. Frank Fahrenkopf, Jr., President and Chief 
Executive Officer of the American Gaming Association, testified 
that he felt that regulation and studies of gambling should be 
left to the states and contended that the Federal government 
had no jurisdiction over this issue. Mr.. Fahrenkopf 
acknowledged the issue of problem gambling and stated that the 
industry is making efforts to address the problem through 
public education and corporate training programs. Mr. Tom Grey, 
Executive Director of the National Coalition Against Legalized 
Gambling, testified as to his group's grassroots efforts to 
halt the spread of gambling throughout the country. Economics 
Professor Earl L. Grinols of the University of Illinois 
summarized the main economic issues involved in gambling, 
including employment rates, revenue shares, social costs, and 
other externalities. Mr. Richard G. Hill, Chairman of the 
National Indian Gaming Association, testified about positive 
effects gambling operations have had for Indian tribes, 
including economic development, job creation and tribal self-
sufficiency. He stated that his group does not object to a 
fairly conducted study, provided that all forms of commercial 
gambling are studied, not just Indian gambling. The final 
witness was Mr. Jeremy Margolis of Altheimer & Gray, a former 
federal prosecutor and the former director of the Illinois 
State Police Department during the enactment of the Riverboat 
Gambling Act in Illinois. Mr. Margolis testified that he 
believes there is no relationship between casino gambling and 
street crime.

                        committee consideration

    On November 8, 1995, the full Committee met in open session 
and ordered H.R. 497 favorably reported, as amended, by a voice 
vote, a quorum being present.

                         vote of the committee

    The following roll calls occurred during Committee 
deliberations on H.R. 497 (November 8, 1995):
    1. An amendment by Mr. Frank to the Hyde amendment in the 
nature of substitute to add additional items to be studied by 
the Commission. The amendment was defeated by a vote of 4 to 
25. [See attached Rollcall No. 1]

                             rollcall no. 1

    Subject: H.R. 497, National Gambling Impact and Policy 
Commission Act--Frank amendment to the Hyde substitute adding 
additional items to be studied and reported on by the 
Commission. Defeated: 4 to 25.

------------------------------------------------------------------------
                                             Ayes      Nays     Present 
------------------------------------------------------------------------
Mr. Moorhead.............................  ........        X   .........
Mr. Sensenbrenner........................  ........        X   .........
Mr. McCollum.............................  ........        X   .........
Mr. Gekas................................  ........        X   .........
Mr. Coble................................  ........        X   .........
Mr. Smith (TX)...........................  ........        X   .........
Mr. Schiff...............................  ........        X   .........
Mr. Gallegly.............................  ........  ........  .........
Mr. Canady...............................  ........        X   .........
Mr. Inglis...............................  ........        X   .........
Mr. Goodlatte............................  ........        X   .........
Mr. Buyer................................  ........        X   .........
Mr. Hoke.................................  ........        X   .........
Mr. Bono.................................  ........        X   .........
Mr. Heineman.............................  ........        X   .........
Mr. Bryant (TN)..........................  ........        X   .........
Mr. Chabot...............................  ........        X   .........
Mr. Flanagan.............................  ........        X   .........
Mr. Barr.................................  ........        X   .........
Mr. Conyers..............................  ........        X   .........
Mrs. Schroeder...........................  ........  ........  .........
Mr. Frank................................        X   ........  .........
Mr. Schumer..............................  ........  ........  .........
Mr. Berman...............................  ........  ........  .........
Mr. Boucher..............................  ........        X   .........
Mr. Bryant (TX)..........................  ........        X   .........
Mr. Reed.................................  ........        X   .........
Mr. Nadler...............................        X   ........  .........
Mr. Scott................................  ........        X   .........
Mr. Watt.................................  ........  ........  .........
Mr. Becerra..............................  ........  ........  .........
Mr. Serrano..............................        X   ........  .........
Ms. Lofgren..............................        X   ........  .........
Ms. Jackson Lee..........................  ........        X   .........
Mr. Hyde, Chairman.......................  ........        X   .........
                                          ------------------------------
      Total..............................        4        25   .........
------------------------------------------------------------------------

    2. An amendment by Mr. Frank to the Hyde amendment in the 
nature of substitute to strike the compensation provision for 
the members of the Commission. The amendment was defeated by a 
vote of 6 to 24. [See attached Rollcall No. 2]

                             rollcall no. 2

    Subject: H.R. 497, National Gambling Impact and Policy 
Commission Act--Frank Amendment to strike the compensation 
provision for the commissioners. Defeated: 6 to 24.

------------------------------------------------------------------------
                                              Ayes      Nays     Present
------------------------------------------------------------------------
Mr. Moorhead..............................  ........        X   ........
Mr. Sensenbrenner.........................  ........        X   ........
Mr. McCollum..............................  ........        X   ........
Mr. Gekas.................................  ........        X   ........
Mr. Coble.................................        X   ........  ........
Mr. Smith (TX)............................  ........        X   ........
Mr. Schiff................................  ........        X   ........
Mr. Gallegly..............................  ........  ........  ........
Mr. Canady................................  ........        X   ........
Mr. Inglis................................  ........        X   ........
Mr. Goodlatte.............................  ........        X   ........
Mr. Buyer.................................  ........        X   ........
Mr. Hoke..................................  ........        X   ........
Mr. Bono..................................  ........        X   ........
Mr. Heineman..............................  ........        X   ........
Mr. Bryant (TN)...........................  ........        X   ........
Mr. Chabot................................        X   ........  ........
Mr. Flanagan..............................        X   ........  ........
Mr. Barr..................................  ........        X   ........
Mr. Conyers...............................  ........        X   ........
Mrs. Schroeder............................        X   ........  ........
Mr. Frank.................................        X   ........  ........
Mr. Schumer...............................  ........  ........  ........
Mr. Berman................................  ........  ........  ........
Mr. Boucher...............................  ........        X   ........
Mr. Bryant (TX)...........................  ........        X   ........
Mr. Reed..................................  ........        X   ........
Mr. Nadler................................  ........        X   ........
Mr. Scott.................................  ........        X   ........
Mr. Watt..................................  ........  ........  ........
Mr. Becerra...............................  ........  ........  ........
Mr. Serrano...............................  ........        X   ........
Ms. Lofgren...............................        X   ........  ........
Ms. Jackson Lee...........................  ........        X   ........
Mr. Hyde, Chairman........................  ........        X   ........
                                           -----------------------------
      Total...............................        6        24   ........
------------------------------------------------------------------------

                      committee oversight findings

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee reports 
that the findings and recommendations of the Committee, based 
on oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

         committee on government reform and oversight findings

    No findings or recommendations of the Committee on 
Government Reform and Oversight were received as referred to in 
clause 2(l)(3)(D) of rule XI of the House of Representatives.

               new budget authority and tax expenditures

    Clause 2(l)(3)(B) of House rule XI is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               congressional budget office cost estimate

    In compliance with clause 2(l)(3)(C) of rule XI of the 
Rules of the House of Representatives, the Committee sets 
forth, with respect to the bill, H.R. 497, the following 
estimate and comparison prepared by the director of the 
Congressional Budget Office under section 403 of the 
Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, November 17, 1995.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 497, the National 
Gambling Impact and Policy Commission Act.
    Enacting H.R. 497 would not affect direct spending and 
receipts. Therefore, pay-as-you-go procedures would not apply 
to the bill.
    If you wish further details on this estimate, we will be 
pleased to provide them.
            Sincerely,
                                          Paul Van de Water
                                   (For June E. O'Neill, Director).
    Enclosure.

               congressional budget office cost estimate

    1. Bill number: H.R. 497.
    2. Bill title: National Gambling Impact and Policy 
Commission Act.
    3. Bill status: As ordered reported by the House Committee 
on the Judiciary on November 8, 1995.
    4. Bill purpose: This bill would establish a commission to 
study the impact of gambling in the United States. The study 
would cover many issues related to gambling, including the 
relationship between gambling and crime and the cost and 
effectiveness of state and federal gambling regulatory policy 
on Indian gambling. The commission, consisting of nine members, 
would have two years after it first meets to conduct the study 
and to present its findings to Congress. In addition, the 
chairman of the commission would have the authority to appoint 
an executive director and other personnel to assist the 
commission in the performance of its duties. The commission 
could hold hearings and subpoena witnesses.
    5. Estimated cost to the Federal Government: Enacting H.R. 
497 would increase discretionary spending by about $4 million 
over the next three years, assuming appropriations of the 
necessary funds.

----------------------------------------------------------------------------------------------------------------
                                                              1996       1997       1998       1999       2000  
----------------------------------------------------------------------------------------------------------------
Spending subject to appropriations action:                                                                      
    Estimated authorization level........................          2          2  .........  .........  .........
    Estimated outlays....................................          1          2          1  .........  .........
----------------------------------------------------------------------------------------------------------------

    The costs of this bill fall within budget function 750.
    6. Basis of estimate: For purposes of this estimate, CBO 
assumes that H.R. 497 will be enacted by January 1, 1996, and 
that the estimated authorization amounts will be appropriated 
for each year. We estimated outlays based on the historical 
rate of spending for similar commissions.
    To estimate the cost of the commission, we assumed that the 
commission would hire 20 support personnel and have other costs 
similar to the first commission established to study gambling 
in 1974--the Commission on the Review of the National Policy 
Toward Gambling. CBO estimates that the proposed commission 
would cost about $4 million over the next two years. This cost 
would cover per diem expenses of the commission's members, 
salaries of the commission staff, travel expenses and other 
administrative costs.
    7. Pay-as-you-go considerations: None.
    8. Estimated cost to State and local governments: None.
    9. Estimate comparison: None.
    10. Previous CBO estimate: None.
    11. Estimate prepared by: Susanne S. Mehlman.
    12. Estimate approved by: Robert A. Sunshine, for Paul N. 
Van de Water, Assistant Director for Budget Analysis.

                     INFLATIONARY IMPACT STATEMENT

    Pursuant to clause 2(l)(4) of rule XI of the Rules of the 
House of Representatives, the Committee estimates that H.R. 497 
will have no significant inflationary impact on prices and 
costs in the national economy.

                      SECTION-BY-SECTION ANALYSIS

Section 1.--Short title

    Section 1 provides that the short title of the bill is the 
``National Gambling Impact and Policy Commission Act.''

Section 2.--Establishment of Commission

    Section 2 provides that the National Gambling Impact and 
Policy Commission is established.

Section 3.--Membership

    Section 3 provides that the Commission shall consist of 
nine persons qualified by training and experience. Three of the 
members are to be appointed by the Speaker of the House, three 
by the Majority Leader of the Senate, and three by the 
President. Before making their appointments, the three 
appointing authorities are required to consult with one another 
to assure that the overall membership reflects a fair and 
equitable representation of various points of view. These 
appointments are to be made not later than 60 days after the 
date of enactment. Section 3 further provides that members 
shall serve for the life of the Commission, but if a vacancy 
occurs, it shall be filled in the same manner as the original 
appointment. The Commission shall hold its first meeting within 
30 days after the date on which all members are appointed.

Section 4.--Duties of the Commission

    Section 4 provides that it shall be the duty of the 
Commission to conduct a comprehensive legal and factual study 
of gambling in the United States, including State-sponsored 
lotteries, casino gambling, pari-mutuel betting, and sports 
betting, and to propose any changes to the policies governing 
gambling that the Commission may deem appropriate. It further 
sets out the matters that the Commission should study 
including: the positive and negative aspects of the economic 
impact of gambling; the economic impact of gambling on other 
businesses; the impact of political contributions on the 
development of public policy regarding gambling; the 
relationship between gambling and crime; the impact of problem 
gambling; the demographics of gamblers; the effectiveness of 
current laws and policies in combating and deterring illegal 
gambling; the costs and effectiveness of State and Federal 
gambling regulatory policy; the effects of advertising 
concerning gambling; gambling that uses interactive technology; 
the extent to which casino gambling provides economic 
opportunity to residents of economically depressed regions and 
to Indian tribes; the effect of revenues derived from State-
sponsored gambling on State budgets; and other relevant issues 
as determined by the Chairman. Finally, section 4 requires that 
the Commission must submit its report with recommendations not 
later than two years after its first meeting.

Section 5.--Powers of the Commission

    Section 5 provides that the Commission may hold hearings 
and subpoena testimony and materials to carry out the purposes 
of the Act. This section further provides that the Commission 
may serve its subpoenas throughout the United States and that 
it may go to a United States District Court to enforce them. 
Section 5 also provides that the Commission may obtain 
information from federal agencies to carry out the purposes of 
the Act and that the Commission may use employees detailed from 
federal agencies.

Section 6.--Commission personnel matters

    Section 6 provides for the payment of compensation and 
reimbursement of travel expenses to the members of the 
Commission and its staff. It further provides that the 
Commission may employ temporary and intermittent staff, if 
needed.

Section 7.--Termination of the Commission

    Section 7 provides that the Commission shall terminate 30 
days after its report is filed.

                              agency views

                        U.S. Department of Justice,
                             Office of Legislative Affairs,
                                  Washington, DC, November 7, 1995.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: As the Committee prepares to mark up 
H.R. 497, I am writing to convey the views of the Department of 
Justice on this bill, the National Gambling Impact and Policy 
Commission Act.
    One of the duties of the Commission to be established by 
the bill is to conduct a comprehensive study, which will 
include an assessment of the relationship between gambling and 
crime. As President Clinton recently stated in a letter to 
Congressman Wolf, we support the establishment of this 
commission. However, we have a concern about the provision 
relating to the manner in which information for the study may 
be gathered.
    Specifically, Section 5(b) of the bill states that the 
``Commission may secure directly from any Federal department or 
agency such information as the Commission considers necessary 
to carry out the provisions of this Act. Upon request of the 
Chairman of the Commission, the head of such department or 
agency shall furnish such information to the Commission.'' 
(emphasis added). We believe that this provision is too broad. 
This provision appears to empower the Commission to ask for and 
receive information that an agency (and specifically the 
Department of Justice) is not in a position to release. Several 
examples of such information come immediately to mind: comments 
on or information relating to any pending or planned 
investigation; grand jury materials; Title III electronic 
surveillance information; information falling within the 
executive privilege; etc.
    Accordingly, we believe that this provision of the proposed 
bill should be drafted more narrowly to take into account the 
legal obligations, rights, duties, and constraints under which 
the various federal agencies operate. We understand that, in 
response to our concern, your substitute includes an amendment 
to the second sentence of Section 5(b) replacing the word 
``shall'' with the word ``may''. We support this change.
    Please do not hesitate to contact me if I may be of 
assistance on this or any other matter.
            Sincerely,
                                               Andrew Fois,
                                        Assistant Attorney General.

         changes in existing law made by the bill, as reported

    In compliance with clause 3 of rule XIII of the Rules of 
the House of Representatives, the Committee reports that the 
bill, as reported, makes no changes in existing law.
                  HON. BARNEY FRANK'S DISSENTING VIEWS

    Those who believe with Emerson that a foolish consistency 
is the hobgobbin of small minds will doubtless be reassured by 
this legislation that the current Republican majority is, at 
least in some respects, quite large minded. Few things could be 
more inconsistent with the professed principles that the 
majority has claimed as its guiding lights than this proposal.
    We have here a bill which, if passed, will authorize the 
spending of millions of dollars by the federal government to 
investigate matters which are primarily within the jurisdiction 
of the states, and which could lead, if any action is taken, to 
a significant expansion of government restriction on choices 
made by individuals about how to spend their own money. Thus, 
the principles of reducing government expenditures to 
essentials, respect for the states, and reducing the tendency 
of the government to intervene in people's private economic 
decisions are all contravened herein.
    This legislation authorizes a two year investigation by a 
Commission of 9 members into gambling, a subject mostly within 
the jurisdiction of the states. It does not reference to the 
subject of gambling by Indian tribes, but the resolution 
encompasses far more than Indian gambling, and if it were in 
fact restricted simply to an investigation of the federal role 
regarding gambling conducted by Indians, it would not have come 
before this committee, since jurisdiction over the Indian 
Gaming Regulatory Act belongs in the Committee on Natural 
Resources.
    As to the cost, the 9 Commissioners authorized by this 
legislation will be compensated according to the legislation at 
a rate of $115,700 dollars per year, prorated according to the 
number of meetings they have. The legislation calls for two 
years of work, and does not in any way restrict the 
Commissioners' ability to have meetings. Thus these individuals 
will be free to decide how much money they should make from the 
federal government up to a maximum of $231,400 dollars. Of 
course the Commission will also be traveling, with members 
entitled to full reimbursement. It will have a staff. It will 
probably pay witnesses for travel, it will pay for transcripts, 
etc. Obviously millions of dollars will be spent by the federal 
government on this enterprise.
    And it will be millions of dollars spent primarily to 
investigate matters that are now wholly within the jurisdiction 
of the states. State lotteries are one of the issues covered 
here. Another set of issues deals with legalized gambling 
through casinos, slot machines, etc., in the states. Part of 
what the Commission will investigate has to do with Indian 
gaming, but the larger part will be an investigation of whether 
or not state and local governments have acted wisely in 
allowing private citizens to gamble with their own money in 
gambling establishments run by other private citizens. I am 
surprised to find that my Republican colleagues think this is 
an appropriate use of federal money at a time of emphasis on 
balancing the budget.
    In summary, not only does this authorize an expenditure of 
scarce federal dollars on matters primarily within the 
jurisdiction of the states, but the thrust of the legislation 
clearly reflects a view that the states have chosen unwisely by 
allowing their private citizens to spend too much of their own 
funds on gambling. The notion that the federal government 
should rebuke the states for allowing private citizens to 
gamble with their own money in privately run gambling 
enterprises seems to me to be the antithesis of a respect both 
for the rights of states and for individual choices about how 
they should spend their own money. For us to authorize the 
expenditure of millions of dollars by a federal Commission 
roving around the country questioning the judgment of states on 
matters that are wholly within state jurisdiction is a mistake 
in my judgment, and sufficiently at variance with what I had 
understood to be the Republicans' professed principles as to 
thoroughly acquit them of any charge they are overly committed 
to consistency, foolish or otherwise.

                                                      Barney Frank.