Report text available as:

  • TXT
  • PDF   (PDF provides a complete and accurate display of this text.) Tip ?
                                                                       
106th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                             106-655, Part I

======================================================================



 
               INTERNET GAMBLING PROHIBITION ACT OF 2000

                                _______
                                

                  June 7, 2000.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                      together with additional and

                            DISSENTING VIEWS

                        [To accompany H.R. 3125]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 3125) to prohibit Internet gambling, and for other 
purposes, having considered the same, reports favorably thereon 
with an amendment and recommends that the bill as amended do 
pass.

                           TABLE OF CONTENTS

                                                                  

                                                                 Page
The Amendment..............................................           2
Purpose and Summary........................................          10
Background and Need for the Legislation....................          11
Hearings...................................................          12
Committee Consideration....................................          12
Votes of the Committee.....................................          12
Committee Oversight Findings...............................          17
Committee on Government Reform Findings....................          17
New Budget Authority and Tax Expenditures..................          17
Congressional Budget Office Cost Estimate..................          17
Constitutional Authority Statement.........................          21
Section-by-Section Analysis and Discussion.................          21
Changes in Existing Law Made by the Bill, as Reported......          31
Additional Views...........................................          45
Dissenting Views...........................................          47

    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 ``Internet Gambling Prohibition Act of 
2000''.

SEC. 2. PROHIBITION ON INTERNET GAMBLING.

    (a) In General.--Chapter 50 of title 18, United States Code, is 
amended by adding at the end the following:

``Sec. 1085. Internet gambling

    ``(a) Definitions.--In this section the following definitions 
apply:
            ``(1) Bets or wagers.--The term `bets or wagers'--
                    ``(A) means 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, 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;
                    ``(B) includes the purchase of a chance or 
                opportunity to win a lottery or other prize (which 
                opportunity to win is predominantly subject to chance);
                    ``(C) includes any scheme of a type described in 
                section 3702 of title 28; and
                    ``(D) does not include--
                            ``(i) a bona fide business transaction 
                        governed by the securities laws (as that term 
                        is defined in section 3(a)(47) of the 
                        Securities Exchange Act of 1934 (15 U.S.C. 
                        78c(a)(47))) for the purchase or sale at a 
                        future date of securities (as that term is 
                        defined in section 3(a)(10) of the Securities 
                        Exchange Act of 1934 (15 U.S.C. 78c(a)(10)));
                            ``(ii) a transaction on or subject to the 
                        rules of a contract market designated pursuant 
                        to section 5 of the Commodity Exchange Act (7 
                        U.S.C. 7);
                            ``(iii) a contract of indemnity or 
                        guarantee;
                            ``(iv) a contract for life, health, or 
                        accident insurance; or
                            ``(v) participation in a simulation sports 
                        game or an educational game or contest that--
                                    ``(I) is not dependent solely on 
                                the outcome of any single sporting 
                                event or nonparticipant's singular 
                                individual performance in any single 
                                sporting event;
                                    ``(II) has an outcome that reflects 
                                the relative knowledge and skill of the 
                                participants with such outcome 
                                determined predominantly by accumulated 
                                statistical results of sporting events 
                                and nonparticipants accumulated 
                                individual performances therein; and
                                    ``(III) offers a prize or award to 
                                a participant that is established in 
                                advance of the game or contest and is 
                                not determined by the number of 
                                participants or the amount of any fees 
                                paid by those participants.
            ``(2) Closed-loop subscriber-based service.--The term 
        `closed-loop subscriber-based service' means any information 
        service or system that uses--
                    ``(A) a device or combination of devices--
                            ``(i) expressly authorized and operated in 
                        accordance with the laws of a State, 
                        exclusively for placing, receiving, or 
                        otherwise making a bet or wager described in 
                        subsection (f)(1)(B); and
                            ``(ii) by which a person located within any 
                        State must subscribe and be registered with the 
                        provider of the wagering service by name, 
                        address, and appropriate billing information to 
                        be authorized to place, receive, or otherwise 
                        make a bet or wager, and must be physically 
                        located within that State in order to be 
                        authorized to do so;
                    ``(B) an effective customer verification and age 
                verification system, expressly authorized and operated 
                in accordance with the laws of the State in which it is 
                located, to ensure that all applicable Federal and 
                State legal and regulatory requirements for lawful 
                gambling are met; and
                    ``(C) appropriate data security standards to 
                prevent unauthorized access by any person who has not 
                subscribed or who is a minor.
            ``(3) Foreign jurisdiction.--The term `foreign 
        jurisdiction' means a jurisdiction of a foreign country or 
        political subdivision thereof.
            ``(4) Gambling business.--The term `gambling business' 
        means--
                    ``(A) a business that is conducted at a gambling 
                establishment, or that--
                            ``(i) involves--
                                    ``(I) the placing, receiving, or 
                                otherwise making of bets or wagers; or
                                    ``(II) the offering to engage in 
                                the placing, receiving, or otherwise 
                                making of bets or wagers;
                            ``(ii) involves 1 or more persons who 
                        conduct, finance, manage, supervise, direct, or 
                        own all or part of such business; and
                            ``(iii) has been or remains in 
                        substantially continuous operation for a period 
                        in excess of 10 days or has a gross revenue of 
                        $2,000 or more from such business during any 
                        24-hour period; and
                    ``(B) any soliciting agent of a business described 
                in subparagraph (A).
            ``(5) Information assisting in the placing of a bet or 
        wager.--The term `information assisting in the placing of a bet 
        or wager'--
                    ``(A) means information that is intended by the 
                sender or recipient to be used by a person engaged in 
                the business of betting or wagering to place, receive, 
                or otherwise make a bet or wager; and
                    ``(B) does not include--
                            ``(i) information concerning parimutuel 
                        pools that is exchanged exclusively between or 
                        among 1 or more racetracks or other parimutuel 
                        wagering facilities licensed by the State or 
                        approved by the foreign jurisdiction in which 
                        the facility is located, and 1 or more 
                        parimutuel wagering facilities licensed by the 
                        State or approved by the foreign jurisdiction 
                        in which the facility is located, if that 
                        information is used only to conduct common pool 
                        parimutuel pooling under applicable law;
                            ``(ii) information exchanged exclusively 
                        between or among 1 or more racetracks or other 
                        parimutuel wagering facilities licensed by the 
                        State or approved by the foreign jurisdiction 
                        in which the facility is located, and a support 
                        service located in another State or foreign 
                        jurisdiction, if the information is used only 
                        for processing bets or wagers made with that 
                        facility under applicable law;
                            ``(iii) information exchanged exclusively 
                        between or among 1 or more wagering facilities 
                        that are licensed and regulated by the State in 
                        which each facility is located, and any support 
                        service, wherever located, if the information 
                        is used only for the pooling or processing of 
                        bets or wagers made by or with the facility or 
                        facilities under each State's applicable law;
                            ``(iv) any news reporting or analysis of 
                        wagering activity, including odds, racing or 
                        event results, race and event schedules, or 
                        categories of wagering; or
                            ``(v) any posting or reporting of any 
                        educational information on how to make a bet or 
                        wager or the nature of betting or wagering.
            ``(6) Interactive computer service.--The term `interactive 
        computer service' means any information service, system, or 
        access software provider that operates in, or uses a channel or 
        instrumentality of, interstate or foreign commerce to provide 
        or enable access by multiple users to a computer server, which 
        includes the transmission, storage, retrieval, hosting, 
        linking, formatting, or translation of a communication made by 
        another person, and including specifically a service, system, 
        or access software provider that--
                    ``(A) provides access to the Internet; or
                    ``(B) is engaged in the business of providing an 
                information location tool (which means a service that 
                refers or links users to an online location, including 
                a directory, index, reference, pointer, or hypertext 
                link).
            ``(7) Interactive computer service provider.--The term 
        `interactive computer service provider' means any person that 
        provides an interactive computer service, to the extent that 
        such person offers or provides such service.
            ``(8) Internet.--The term `Internet' means the 
        international computer network of both Federal and non-Federal 
        interoperable packet switched data networks.
            ``(9) Person.--The term `person' means any individual, 
        association, partnership, joint venture, corporation (or any 
        affiliate of a corporation), State or political subdivision 
        thereof, department, agency, or instrumentality of a State or 
        political subdivision thereof, or any other government, 
        organization, or entity (including any governmental entity (as 
        defined in section 3701(2) of title 28)).
            ``(10) Private network.--The term `private network' means a 
        communications channel or channels, including voice or computer 
        data transmission facilities, that use either--
                    ``(A) private dedicated lines; or
                    ``(B) the public communications infrastructure, if 
                the infrastructure is secured by means of the 
                appropriate private communications technology to 
                prevent unauthorized access.
            ``(11) State.--The term `State' means a State of the United 
        States, the District of Columbia, the Commonwealth of Puerto 
        Rico, or a commonwealth, territory, or possession of the United 
        States.
            ``(12) Subscriber.--The term `subscriber'--
                    ``(A) means any person with a business relationship 
                with the interactive computer service provider through 
                which such person receives access to the system, 
                service, or network of that provider, even if no formal 
                subscription agreement exists; and
                    ``(B) includes registrants, students who are 
                granted access to a university system or network, and 
                employees or contractors who are granted access to the 
                system or network of their employer.
            ``(13) Soliciting agent.--The term `soliciting agent' means 
        any agent who knowingly solicits for a gambling business 
        described in paragraph (4)(A) of this subsection.
    ``(b) Internet Gambling.--
            ``(1) Prohibition.--Subject to subsection (f), it shall be 
        unlawful for a person engaged in a gambling business knowingly 
        to use the Internet or any other interactive computer service--
                    ``(A) to place, receive, or otherwise make a bet or 
                wager; or
                    ``(B) to send, receive, or invite information 
                assisting in the placing of a bet or wager.
            ``(2) Penalties.--A person engaged in a gambling business 
        who violates this section shall be--
                    ``(A) fined in an amount equal to not more than the 
                greater of--
                            ``(i) the total amount that such person bet 
                        or wagered, or placed, received, or accepted in 
                        bets or wagers, as a result of engaging in that 
                        business in violation of this section; or
                            ``(ii) $20,000;
                    ``(B) imprisoned not more than 4 years; or
                    ``(C) both.
            ``(3) Permanent injunctions.--Upon conviction of a person 
        under this section, the court may enter a permanent injunction 
        enjoining such person from placing, receiving, or otherwise 
        making bets or wagers or sending, receiving, or inviting 
        information assisting in the placing of bets or wagers.
    ``(c) Civil Remedies.--
            ``(1) Jurisdiction.--The district courts of the United 
        States shall have original and exclusive jurisdiction to 
        prevent and restrain violations of this section by issuing 
        appropriate orders in accordance with this section, regardless 
        of whether a prosecution has been initiated under this section.
            ``(2) Proceedings.--
                    ``(A) Institution by federal government.--
                            ``(i) In general.--The United States may 
                        institute proceedings under this subsection to 
                        prevent or restrain a violation of this 
                        section.
                            ``(ii) Relief.--Upon application of the 
                        United States under this subparagraph, the 
                        district court may enter a temporary 
                        restraining order or an injunction against any 
                        person to prevent or restrain a violation of 
                        this section if the court determines, after 
                        notice and an opportunity for a hearing, that 
                        there is a substantial probability that such 
                        violation has occurred or will occur.
                    ``(B) Institution by state attorney general.--
                            ``(i) In general.--The attorney general of 
                        a State (or other appropriate State official) 
                        in which a violation of this section allegedly 
                        has occurred or will occur, after providing 
                        written notice to the United States, may 
                        institute proceedings under this subsection to 
                        prevent or restrain the violation.
                            ``(ii) Relief.--Upon application of the 
                        attorney general (or other appropriate State 
                        official) of an affected State under this 
                        subparagraph, the district court may enter a 
                        temporary restraining order or an injunction 
                        against any person to prevent or restrain a 
                        violation of this section

                        if the court determines, after notice and an 
                        opportunity for a hearing, that there is a 
                        substantial probability that such violation has 
                        occurred or will occur.
                    ``(C) Indian lands.--Notwithstanding subparagraphs 
                (A) and (B), for a violation that is alleged to have 
                occurred, or may occur, on Indian lands (as that term 
                is defined in section 4 of the Indian Gaming Regulatory 
                Act (25 U.S.C. 2703))--
                            ``(i) the United States shall have the 
                        enforcement authority provided under 
                        subparagraph (A); and
                            ``(ii) the enforcement authorities 
                        specified in an applicable Tribal-State compact 
                        negotiated under section 11 of the Indian 
                        Gaming Regulatory Act (25 U.S.C. 2710) shall be 
                        carried out in accordance with that compact.
                    ``(D) Expiration.--Any temporary restraining order 
                or preliminary injunction entered pursuant to 
                subparagraph (A) or (B) shall expire if, and as soon 
                as, the United States, or the attorney general (or 
                other appropriate State official) of the State, as 
                applicable, notifies the court that issued the order or 
                injunction that the United States or the State, as 
                applicable, will not seek a permanent injunction.
            ``(3) Expedited proceedings.--
                    ``(A) In general.--In addition to any proceeding 
                under paragraph (2), a district court may, in exigent 
                circumstances, enter a temporary restraining order 
                against a person alleged to be in violation of this 
                section upon application of the United States under 
                paragraph (2)(A), or the attorney general (or other 
                appropriate State official) of an affected State under 
                paragraph (2)(B), without notice and the opportunity 
                for a hearing as provided in rule 65(b) of the Federal 
                Rules of Civil Procedure (except as provided in 
                subsection (d)(3)), if the United States or the State, 
                as applicable, demonstrates that there is probable 
                cause to believe that the use of the Internet or other 
                interactive computer service at issue violates this 
                section.
                    ``(B) Hearings.--A hearing requested concerning an 
                order entered under this paragraph shall be held at the 
                earliest practicable time.
    ``(d) Interactive Computer Service Providers.--
            ``(1) Immunity from liability for use by another.--
                    ``(A) In general.--An interactive computer service 
                provider described in subparagraph (B) shall not be 
                liable, under this section or any other provision of 
                Federal or State law prohibiting or regulating gambling 
                or gambling-related activities, for the use of its 
                facilities or services by another person to engage in 
                Internet gambling activity or advertising or promotion 
                of Internet gambling activity that violates such law--
                            ``(i) arising out of any transmitting, 
                        routing, or providing of connections for 
                        gambling-related material or activity 
                        (including intermediate and temporary storage 
                        in the course of such transmitting, routing, or 
                        providing connections) by the provider, if--
                                    ``(I) the material or activity was 
                                initiated by or at the direction of a 
                                person other than the provider;
                                    ``(II) the transmitting, routing, 
                                or providing of connections is carried 
                                out through an automatic process 
                                without selection of the material or 
                                activity by the provider;
                                    ``(III) the provider does not 
                                select the recipients of the material 
                                or activity, except as an automatic 
                                response to the request of another 
                                person; and
                                    ``(IV) the material or activity is 
                                transmitted through the system or 
                                network of the provider without 
                                modification of its content; or
                            ``(ii) arising out of any gambling-related 
                        material or activity at an online site residing 
                        on a computer server owned, controlled, or 
                        operated by or for the provider, or arising out 
                        of referring or linking users to an online 
                        location containing such material or activity, 
                        if the material or activity was initiated by or 
                        at the direction of a person other than the 
                        provider, unless the provider fails to take 
                        expeditiously, with respect to the particular 
                        material or activity at issue, the actions 
                        described in paragraph (2)(A) following the 
                        receipt by the provider of a notice described 
                        in paragraph (2)(B).
                    ``(B) Eligibility.--An interactive computer service 
                provider is described in this subparagraph only if the 
                provider--
                            ``(i) maintains and implements a written or 
                        electronic policy that requires the provider to 
                        terminate the account of a subscriber of its 
                        system or network expeditiously following the 
                        receipt by the provider of a notice described 
                        in paragraph (2)(B) alleging that such 
                        subscriber has violated or is violating this 
                        section; and
                            ``(ii) with respect to the particular 
                        material or activity at issue, has not 
                        knowingly permitted its computer server to be 
                        used to engage in activity that the provider 
                        knows is prohibited by this section, with the 
                        specific intent that such server be used for 
                        such purpose.
            ``(2) Notice to interactive computer service providers.--
                    ``(A) In general.--If an interactive computer 
                service provider receives from a Federal or State law 
                enforcement agency, acting within its authority and 
                jurisdiction, a written or electronic notice described 
                in subparagraph (B), that a particular online site 
                residing on a computer server owned, controlled, or 
                operated by or for the provider is being used by 
                another person to violate this section, the provider 
                shall expeditiously--
                            ``(i) remove or disable access to the 
                        material or activity residing at that online 
                        site that allegedly violates this section; or
                            ``(ii) in any case in which the provider 
                        does not control the site at which the subject 
                        material or activity resides, the provider, 
                        through any agent of the provider designated in 
                        accordance with section 512(c)(2) of title 17, 
                        or other responsible identified employee or 
                        contractor--
                                    ``(I) notify the Federal or State 
                                law enforcement agency that the 
                                provider is not the proper recipient of 
                                such notice; and
                                    ``(II) upon receipt of a subpoena, 
                                cooperate with the Federal or State law 
                                enforcement agency in identifying the 
                                person or persons who control the site.
                    ``(B) Notice.--A notice is described in this 
                subparagraph only if it--
                            ``(i) identifies the material or activity 
                        that allegedly violates this section, and 
                        alleges that such material or activity violates 
                        this section;
                            ``(ii) provides information reasonably 
                        sufficient to permit the provider to locate 
                        (and, as appropriate, in a notice issued 
                        pursuant to paragraph (3)(A) to block access 
                        to) the material or activity;
                            ``(iii) is supplied to any agent of a 
                        provider designated in accordance with section 
                        512(c)(2) of title 17, if information regarding 
                        such designation is readily available to the 
                        public;
                            ``(iv) provides information that is 
                        reasonably sufficient to permit the provider to 
                        contact the law enforcement agency that issued 
                        the notice, including the name of the law 
                        enforcement agency, and the name and telephone 
                        number of an individual to contact at the law 
                        enforcement agency (and, if available, the 
                        electronic mail address of that individual); 
                        and
                            ``(v) declares under penalties of perjury 
                        that the person submitting the notice is an 
                        official of the law enforcement agency 
                        described in clause (iv).
            ``(3) Injunctive relief.--
                    ``(A) In general.--The United States, or a State 
                law enforcement agency acting within its authority and 
                jurisdiction, may, not less than 24 hours following the 
                issuance to an interactive computer service provider of 
                a notice described in paragraph (2)(B), in a civil 
                action, obtain a temporary restraining order, or an 
                injunction to prevent the use of the interactive 
                computer service by another person in violation of this 
                section.
                    ``(B) Limitations.--Notwithstanding any other 
                provision of this section, in the case of any 
                application for a temporary restraining order or an 
                injunction against an interactive computer service 
                provider described in paragraph (1)(B) to prevent a 
                violation of this section--
                            ``(i) arising out of activity described in 
                        paragraph (1)(A)(i), the injunctive relief is 
                        limited to--
                                    ``(I) an order restraining the 
                                provider from providing access to an 
                                identified subscriber of the system or 
                                network of the interactive computer 
                                service provider, if the court 
                                determines that there is probable cause 
                                to believe that such subscriber is 
                                using that access to violate this 
                                section (or to engage with another 
                                person in a communication that violates 
                                this section), by terminating the 
                                specified account of that subscriber; 
                                and
                                    ``(II) an order restraining the 
                                provider from providing access, by 
                                taking reasonable steps specified in 
                                the order to block access, to a 
                                specific, identified, foreign online 
                                location;
                            ``(ii) arising out of activity described in 
                        paragraph (1)(A)(ii), the injunctive relief is 
                        limited to--
                                    ``(I) the orders described in 
                                clause (i)(I);
                                    ``(II) an order restraining the 
                                provider from providing access to the 
                                material or activity that violates this 
                                section at a particular online site 
                                residing on a computer server operated 
                                or controlled by the provider; and
                                    ``(III) such other injunctive 
                                remedies as the court considers 
                                necessary to prevent or restrain access 
                                to specified material or activity that 
                                is prohibited by this section at a 
                                particular online location residing on 
                                a computer server operated or 
                                controlled by the provider, that are 
                                the least burdensome to the provider 
                                among the forms of relief that are 
                                comparably effective for that purpose.
                    ``(C) Considerations.--The court, in determining 
                appropriate injunctive relief under this paragraph, 
                shall consider--
                            ``(i) whether such an injunction, either 
                        alone or in combination with other such 
                        injunctions issued, and currently operative, 
                        against the same provider would significantly 
                        (and, in the case of relief under subparagraph 
                        (B)(ii), taking into account, among other 
                        factors, the conduct of the provider, 
                        unreasonably) burden either the provider or the 
                        operation of the system or network of the 
                        provider;
                            ``(ii) whether implementation of such an 
                        injunction would be technically feasible and 
                        effective, and would not materially interfere 
                        with access to lawful material at other online 
                        locations;
                            ``(iii) whether other less burdensome and 
                        comparably effective means of preventing or 
                        restraining access to the illegal material or 
                        activity are available; and
                            ``(iv) the magnitude of the harm likely to 
                        be suffered by the community if the injunction 
                        is not granted.
                    ``(D) Notice and ex parte orders.--Injunctive 
                relief under this paragraph shall not be available 
                without notice to the service provider and an 
                opportunity for such provider to appear before the 
                court, except for orders ensuring the preservation of 
                evidence or other orders having no material adverse 
                effect on the operation of the communications network 
                of the service provider.
            ``(4) Advertising or promotion of non-internet gambling.--
                    ``(A) Definitions.--In this paragraph:
                            ``(i) Conducted.--With respect to a 
                        gambling activity, that activity is `conducted' 
                        in a State if the State is the State in which 
                        the gambling establishment (as defined in 
                        section 1081) that offers the gambling activity 
                        being advertised or promoted is physically 
                        located.
                            ``(ii) Non-internet gambling activity.--The 
                        term `non-Internet gambling activity' means--
                                    ``(I) a gambling activity in which 
                                the placing of the bet or wager is not 
                                conducted by the Internet; or
                                    ``(II) a gambling activity to which 
                                the prohibitions of this section do not 
                                apply.
                    ``(B) Immunity from liability for use by another.--
                            ``(i) In general.--An interactive computer 
                        service provider described in clause (ii) shall 
                        not be liable, under any provision of Federal 
                        or State law prohibiting or regulating gambling 
                        or gambling-related activities, or under any 
                        State law prohibiting or regulating advertising 
                        and promotional activities, for--
                                    ``(I) content, provided by another 
                                person, that advertises or promotes 
                                non-Internet gambling activity that 
                                violates such law (unless the provider 
                                is engaged in the business of such 
                                gambling), arising out of any of the 
                                activities described in paragraph 
                                (1)(A) (i) or (ii); or
                                    ``(II) content, provided by another 
                                person, that advertises or promotes 
                                non-Internet gambling activity that is 
                                lawful under Federal law and the law of 
                                the State in which such gambling 
                                activity is conducted.
                            ``(ii) Eligibility.--An interactive 
                        computer service is described in this clause 
                        only if the provider--
                                    ``(I) maintains and implements a 
                                written or electronic policy that 
                                requires the provider to terminate the 
                                account of a subscriber of its system 
                                or network expeditiously following the 
                                receipt by the provider of a notice 
                                described in paragraph (2)(B) alleging 
                                that such subscriber maintains a 
                                website on a computer server controlled 
                                or operated by the provider for the 
                                purpose of engaging in advertising or 
                                promotion of non-Internet gambling 
                                activity prohibited by a Federal law or 
                                a law of the State in which such 
                                activity is conducted;
                                    ``(II) with respect to the 
                                particular material or activity at 
                                issue, has not knowingly permitted its 
                                computer server to be used to engage in 
                                the advertising or promotion of non-
                                Internet gambling activity that the 
                                provider knows is prohibited by a 
                                Federal law or a law of the State in 
                                which the activity is conducted, with 
                                the specific intent that such server be 
                                used for such purpose; and
                                    ``(III) at reasonable cost, offers 
                                residential customers of the provider's 
                                Internet access service, if the 
                                provider provides Internet access 
                                service to such customers, computer 
                                software, or another filtering or 
                                blocking system that includes the 
                                capability of filtering or blocking 
                                access by minors to online Internet 
                                gambling sites that violate this 
                                section.
                    ``(C) Notice to interactive computer service 
                providers.--
                            ``(i) Notice from federal law enforcement 
                        agency.--If an interactive computer service 
                        provider receives from a Federal law 
                        enforcement agency, acting within its authority 
                        and jurisdiction, a written or electronic 
                        notice described in paragraph (2)(B), that a 
                        particular online site residing on a computer 
                        server owned, controlled, or operated by or for 
                        the provider is being used by another person to 
                        advertise or promote non-Internet gambling 
                        activity that violates a Federal law 
                        prohibiting or regulating gambling or gambling-
                        related activities, the provider shall 
                        expeditiously take the actions described in 
                        paragraph (2)(A) (i) or (ii) with respect to 
                        the advertising or promotion identified in the 
                        notice.
                            ``(ii) Notice from state law enforcement 
                        agency.--If an interactive computer service 
                        provider receives from a State law enforcement 
                        agency, acting within its authority and 
                        jurisdiction, a written or electronic notice 
                        described in paragraph (2)(B), that a 
                        particular online site residing on a computer 
                        server owned, controlled, or operated by or for 
                        the provider is being used by another person to 
                        advertise or promote non-Internet gambling 
                        activity that is conducted in that State and 
                        that violates a law of that State prohibiting 
                        or regulating gambling or gambling-related 
                        activities, the provider shall expeditiously 
                        take the actions described in paragraph (2)(A) 
                        (i) or (ii) with respect to the advertising or 
                        promotion identified in the notice.
                    ``(D) Injunctive relief.--The United States, or a 
                State law enforcement agency, acting within its 
                authority and jurisdiction, may, not less than 24 hours 
                following the issuance to an interactive computer 
                service provider of a notice described in paragraph 
                (2)(B), in a civil action, obtain a temporary 
                restraining order, or an injunction, to prevent the use 
                of the interactive computer service by another person 
                to advertise or promote non-Internet gambling activity 
                that violates a Federal law, or a law of the State in 
                which such activity is conducted that prohibits or 
                regulates gambling or gambling-related activities, as 
                applicable. The procedures described in paragraph 
                (3)(D) shall apply to actions brought under this 
                subparagraph, and the relief in such actions shall be 
                limited to--
                            ``(i) an order requiring the provider to 
                        remove or disable access to the advertising or 
                        promotion of non-Internet gambling activity 
                        that violates Federal law, or the law of the 
                        State in which such activity is conducted, as 
                        applicable, at a particular online site 
                        residing on a computer server controlled or 
                        operated by the provider;
                            ``(ii) an order restraining the provider 
                        from providing access to an identified 
                        subscriber of the system or network of the 
                        provider, if the court determines that such 
                        subscriber maintains a website on a computer 
                        server controlled or operated by the provider 
                        that the subscriber is knowingly using or 
                        knowingly permitting to be used to advertise or 
                        promote non-Internet gambling activity that 
                        violates Federal law or the law of the State in 
                        which such activity is conducted; and
                            ``(iii) an order restraining the provider 
                        of the content of the advertising or promotion 
                        of such illegal gambling activity from 
                        disseminating such advertising or promotion on 
                        the computer server controlled or operated by 
                        the provider of such interactive computer 
                        service.
                    ``(E) Applicability.--The provisions of 
                subparagraphs (C) and (D) do not apply to the content 
                described in subparagraph (B)(i)(II).
            ``(5) Effect on other law.--
                    ``(A) Immunity from liability for compliance.--An 
                interactive computer service provider shall not be 
                liable for any damages, penalty, or forfeiture, civil 
                or criminal, under Federal or State law for taking in 
                good faith any action described in paragraphs (2)(A), 
                (4)(B)(ii)(I), or (4)(C) to comply with a notice 
                described in paragraph (2)(B), or complying with any 
                court order issued under paragraph (3) or (4)(D).
                    ``(B) Disclaimer of obligations.--Nothing in this 
                section may be construed to impose or authorize an 
                obligation on an interactive computer service provider 
                described in paragraph (1)(B)--
                            ``(i) to monitor material or use of its 
                        service; or
                            ``(ii) except as required by a notice or an 
                        order of a court under this subsection, to gain 
                        access to, to remove, or to disable access to 
                        material.
                    ``(C) Rights of subscribers.--Nothing in this 
                section may be construed to prejudice the right of a 
                subscriber to secure an appropriate determination, as 
                otherwise provided by law, in a Federal court or in a 
                State or local tribunal or agency, that the account of 
                such subscriber should not be terminated pursuant to 
                this subsection, or should be restored.
    ``(e) Availability of Relief.--The availability of relief under 
subsections (c) and (d) shall not depend on, or be affected by, the 
initiation or resolution of any action under subsection (b), or under 
any other provision of Federal or State law.
    ``(f) Applicability.--
            ``(1) In general.--Subject to paragraph (2), the 
        prohibition in this section does not apply to--
                    ``(A) any otherwise lawful bet or wager that is 
                placed and received, or otherwise made wholly 
                intrastate for a State lottery, or for a multi-State 
                lottery operated jointly between 2 or more States in 
                conjunction with State lotteries if--
                            ``(i) each such lottery is expressly 
                        authorized, and licensed or regulated, under 
                        applicable State law;
                            ``(ii) the bet or wager is placed on an 
                        interactive computer service that uses a 
                        private network or a closed-loop subscriber 
                        based service regulated and operated by the 
                        State lottery or its expressly designated agent 
                        for such activity;
                            ``(iii) each person placing or otherwise 
                        making that bet or wager is physically located 
                        when such bet or water is placed at a facility 
                        that is open to the general public; and
                            ``(iv) each such lottery complies with 
                        sections 1301 through 1304, and other 
                        applicable provisions of Federal law;
                    ``(B) any otherwise lawful bet or wager that is 
                placed, received, or otherwise made on an interstate or 
                intrastate basis on a live horse or a live dog race or 
                on jai alai, or the sending, receiving, or inviting of 
                information assisting in the placing of such a bet or 
                wager, if such bet or wager, or the transmission of 
                such information, as applicable, is--
                            ``(i) expressly authorized, and licensed or 
                        regulated by the State in which such bet or 
                        wager is received, under applicable Federal and 
                        such State's laws;
                            ``(ii) placed on a closed-loop subscriber-
                        based service;
                            ``(iii) initiated from a State in which 
                        betting or wagering on that same type of live 
                        horse or live dog racing or on jai alai is 
                        lawful and received in a State in which such 
                        betting or wagering is lawful;
                            ``(iv) subject to the regulatory oversight 
                        of the State in which the bet or wager is 
                        received and subject by such State to minimum 
                        control standards for the accounting, 
                        regulatory inspection, and auditing of all such 
                        bets or wagers transmitted from 1 State to 
                        another; and
                            ``(v) in the case of--
                                    ``(I) live horse racing, made in 
                                accordance with the Interstate Horse 
                                Racing Act of 1978 (15 U.S.C. 3001 et 
                                seq.) and the requirements, if any, 
                                established by an appropriate 
                                legislative or regulatory body of the 
                                State in which the bet or wager 
                                originates;
                                    ``(II) live dog racing, subject to 
                                regulatory consent agreements that are 
                                comparable to those required by the 
                                Interstate Horse Racing Act of 1978, 
                                and the requirements, if any, 
                                established by an appropriate 
                                legislative or regulatory body of the 
                                State in which the bet or wager 
                                originates; or
                                    ``(III) live jai alai, subject to 
                                regulatory consent agreements that are 
                                comparable to those required by the 
                                Interstate Horse Racing Act of 1978, 
                                and the requirements, if any, 
                                established by an appropriate 
                                legislative or regulatory body of the 
                                State in which the bet or wager 
                                originates;
                    ``(C) any otherwise lawful bet or wager that is 
                placed, received, or otherwise made wholly intrastate, 
                or the sending, receiving, or inviting of information 
                assisting in the placing of such a bet or wager, if 
                such bet or wager, or the transmission of such 
                information, as applicable is--
                            ``(i) expressly authorized, and licensed or 
                        regulated by the State in which such bet or 
                        wager is initiated and received, under 
                        applicable Federal and such State's laws; and
                            ``(ii) placed on a closed-loop subscriber 
                        based service; or
                    ``(D) any otherwise lawful bet or wager that is--
                            ``(i) placed on a closed-loop subscriber 
                        based service or a private network; and
                            ``(ii) is lawfully received by a federally 
                        recognized Indian tribe, or the sending, 
                        receiving, or inviting of information assisting 
                        in the placing of any such bet or wager, if the 
                        game is permitted under and conducted in 
                        accordance with the Indian Gaming Regulatory 
                        Act, so long as each person placing, receiving, 
                        or otherwise making such a bet or wager, or 
                        transmitting such information, is physically 
                        located on Indian lands (as that term is 
                        defined in section 4 of the Indian Gaming 
                        Regulatory Act) when such person places, 
                        receives, or otherwise makes the bet or wager.
            ``(2) Bets or wagers made by agents or proxies.--
                    ``(A) In general.--Paragraph (1) does not apply in 
                any case in which a bet or wager is placed, received, 
                or otherwise made by the use of an agent or proxy using 
                the Internet or an interactive computer service.
                    ``(B) Qualification.--Nothing in this paragraph may 
                be construed to prohibit the owner operator of a 
                parimutuel wagering facility that is licensed by a 
                State from employing an agent in the operation of the 
                account wagering system owned or operated by the 
                parimutuel facility.
            ``(3) Advertising and promotion.--The prohibition of 
        subsection (b)(1)(B) does not apply to advertising, promotion, 
        or other communication by, or authorized by, anyone licensed to 
        operate a gambling business in a State.
    ``(g) Rule of Construction.--Nothing in this section may be 
construed to affect any prohibition or remedy applicable to a person 
engaged in a gambling business under any other provision of Federal or 
State law.''.
    (b) Technical Amendment.--The analysis for chapter 50 of title 18, 
United States Code, is amended by adding at the end the following:

``1085. Internet gambling.''.

SEC. 3. REPORT ON ENFORCEMENT.

    Not later than 3 years after the date of enactment of this Act, the 
Attorney General shall submit to Congress a report, which shall 
include--
            (1) an analysis of the problems, if any, associated with 
        enforcing section 1085 of title 18, United States Code, as 
        added by section 2 of this Act;
            (2) recommendations for the best use of the resources of 
        the Department of Justice to enforce that section; and
            (3) an estimate of the amount of activity and money being 
        used to gamble on the Internet.

SEC. 4. SEVERABILITY.

    If any provision of this Act, an amendment made by this Act, or the 
application of such provision or amendment to any person or 
circumstance is held to be unconstitutional, the remainder of this Act, 
the amendments made by this Act, and the application of this Act and 
the provisions of such amendments to any other person or circumstance 
shall not be affected thereby.

                          Purpose and Summary

    Under current Federal law, it is unclear that using the 
Internet to operate a gambling business is illegal. H.R. 3125, 
the ``Internet Gambling Prohibition Act of 2000,'' would 
prohibit persons engaged in a gambling business from using the 
Internet or any other interactive computer service to place, 
receive, or otherwise make a bet or wager, or send, receive, or 
invite information assisting in the placing of a bet or wager. 
This legislation also contains mechanisms intended to 
facilitate enforcement through a ``notice and takedown'' civil 
remedy program involving interactive computer service providers 
and illegal gambling websites. The authorized penalties are 
imprisonment up to 4 years and fines as much as $20,000.

                Background and Need for the Legislation

    Over the last few years, gambling websites have 
proliferated on the Internet. What was once a cottage industry 
has become an extremely lucrative and large business. Numerous 
studies have charted the explosive growth of this industry, 
both by the increases in gambling websites available, and via 
industry revenues. Earlier this year, an FBI study reported 
growth from $300 million in 1998 to $651 million in 1999. More 
recently Bear, Stearns & Co. Inc. reported that there were then 
at least 650 Internet gambling websites, and that total 
revenues for 1999 had been $1.2 billion (an 80% increase from 
1998) and would grow to $3 billion by 2002.
    On-line casino operators have created ``virtual strip''--
where gamblers who are tired of one casino can simply ``walk'' 
down the virtual Internet boardwalk into a different casino. 
Internet gambling sites offer everything from sports betting to 
blackjack. Most of these virtual casinos are organized and 
operated from tropical off-shore locations, where the operators 
feel free from both State and Federal interference. Among the 
most popular locales are Antigua, St. Martin and Costa Rica.
    The bill brings the law up to date with Internet technology 
by clarifying Federal law that operating an Internet gambling 
business is illegal. It does not, however, supersede the 
traditional leadership roles of States in enforcing gambling 
border within their borders. It addresses a growing problem 
that no single State, or collection of States, can adequately 
address. Because of the uniquely interstate and international 
nature of the Internet, H.R. 3125 is necessary. The bill sets 
forth an effective Internet gambling regulatory framework that 
recognizes States' leadership role is regulating gambling, and 
avoids intruding the Federal Government into regulating legal 
gaming industries already regulated by the States. At the same 
time H.R. 3125 provides the States and the Federal Government 
with the needed tools to limit and regulate Internet gambling.
    Since the founding of our country, the Federal Government 
has left gambling regulation to the States. The last two 
Federal commissions Congress created to look into gambling have 
concluded that States are best equipped to regulate gambling 
within their own borders, and recommended that Congress 
continue to defer to the States in this respect. The Federal 
Government has largely deferred to the authority of States to 
determine the type and amount of gambling permitted. For over 
100 years, Congress has acted to assist States in enforcing 
their respective policies on gambling when development in 
technology, such as the Internet, have compromised the 
effectiveness of State gambling laws.

                                Hearings

    In the 105th Congress, the Committee's Subcommittee on 
Crime held two day's of hearing on legislation to ban Internet 
gambling businesses. In the 106th Congress, one day of hearings 
on H.R. 3125 was held, on March 9, 2000. Testimony was received 
from the following witnesses: ``John Doe,'' Internet Gambling 
Addict, San Diego, California; The Honorable Jon Kyl, U. S. 
Senator, Arizona; The Honorable Robert W. Goodlatte, 6th 
District, Virginia; Mr. Kevin DiGregory, Deputy Assistant 
Attorney General, Criminal Division, United States Department 
of Justice; Mr. Robert Minnix, Associate Athletics Director, 
Florida State University; The Honorable James E. Doyle, 
Attorney General, State of Wisconsin; Mr. Stephen Walters, 
Chairman, Oregon Racing Commission; Mr. Keith Whyte, Executive 
Director, National Council on Problem Gambling; Bartlett 
Cleland, Policy Director, Center for Technology and Freedom. 
Additional material was submitted by: Jeffrey Pash, Executive 
Vice President and General Counsel, National Football League; 
and, the Honorable Montie Deere, Chairman, National Indian 
Gaming Commission.

                        Committee Consideration

    On November 3, 1999, the Subcommittee on Crime met in open 
session and ordered favorably reported the bill H.R.3125, by a 
vote of 5 to 3, a quorum being present. On April 6, 2000, the 
committee met in open session and ordered favorably reported 
the bill H.R. 3125 with amendment by a recorded vote of 21 to 
8, a quorum being present.

                         Votes of the Committee

    The committee considered the following amendments with 
recorded votes:
    Mr. Goodlatte offered an amendment making largely technical 
amendments to the bill, and providing a limited exemption for 
certain Indian gaming activities. Mr. Watt made a request for a 
division of the question on the technical amendments and the 
limited Indian gaming exemption, which Chairman Hyde granted.
    Part I of the amendment offered by Mr. Goodlatte to H.R. 
3125. By a rollcall vote of 24 yeas to 0 nays, the amendment 
was agreed to.

                                                   ROLLCALL NO. 1
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................              X   ..............  ..............
Mr. McCollum....................................................              X   ..............  ..............
Mr. Gekas.......................................................              X   ..............  ..............
Mr. Coble.......................................................              X   ..............  ..............
Mr. Smith (TX)..................................................              X   ..............  ..............
Mr. Gallegly....................................................  ..............  ..............  ..............
Mr. Canady......................................................  ..............  ..............  ..............
Mr. Goodlatte...................................................              X   ..............  ..............
Mr. Chabot......................................................              X   ..............  ..............
Mr. Barr........................................................              X   ..............  ..............
Mr. Jenkins.....................................................              X   ..............  ..............
Mr. Hutchinson..................................................  ..............  ..............  ..............
Mr. Pease.......................................................              X   ..............  ..............
Mr. Cannon......................................................              X   ..............  ..............
Mr. Rogan.......................................................              X   ..............  ..............
Mr. Graham......................................................              X   ..............  ..............
Ms. Bono........................................................              X   ..............  ..............
Mr. Bachus......................................................              X   ..............  ..............
Mr. Scarborough.................................................  ..............  ..............  ..............
Mr. Vitter......................................................              X   ..............  ..............
Mr. Conyers.....................................................              X   ..............  ..............
Mr. Frank.......................................................  ..............  ..............  ..............
Mr. Berman......................................................  ..............  ..............  ..............
Mr. Boucher.....................................................  ..............  ..............  ..............
Mr. Nadler......................................................  ..............  ..............  ..............
Mr. Scott.......................................................              X   ..............  ..............
Mr. Watt........................................................              X   ..............  ..............
Ms. Lofgren.....................................................  ..............  ..............  ..............
Ms. Jackson Lee.................................................  ..............  ..............  ..............
Ms. Waters......................................................              X   ..............  ..............
Mr. Meehan......................................................  ..............  ..............  ..............
Mr. Delahunt....................................................  ..............  ..............  ..............
Mr. Wexler......................................................              X   ..............  ..............
Mr. Rothman.....................................................              X   ..............  ..............
Ms. Baldwin.....................................................  ..............  ..............  ..............
Mr. Weiner......................................................              X   ..............  ..............
Mr. Hyde, Chairman..............................................              X   ..............  ..............
                                                                 -----------------------------------------------
    Total.......................................................             24               0   ..............
----------------------------------------------------------------------------------------------------------------

    Part II of the Goodlatte amendment, providing a limited 
exemption for certain Indian gaming activities, was agreed to 
by a rollcall vote of 19 yeas to 5 nays.

                                                   ROLLCALL NO. 2
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................  ..............              X   ..............
Mr. McCollum....................................................              X   ..............  ..............
Mr. Gekas.......................................................              X   ..............  ..............
Mr. Coble.......................................................              X   ..............  ..............
Mr. Smith (TX)..................................................              X   ..............  ..............
Mr. Gallegly....................................................  ..............  ..............  ..............
Mr. Canady......................................................  ..............  ..............  ..............
Mr. Goodlatte...................................................              X   ..............  ..............
Mr. Chabot......................................................              X   ..............  ..............
Mr. Barr........................................................              X   ..............  ..............
Mr. Jenkins.....................................................              X   ..............  ..............
Mr. Hutchinson..................................................  ..............  ..............  ..............
Mr. Pease.......................................................              X   ..............  ..............
Mr. Cannon......................................................              X   ..............  ..............
Mr. Rogan.......................................................              X   ..............  ..............
Mr. Graham......................................................              X   ..............  ..............
Ms. Bono........................................................              X   ..............  ..............
Mr. Bachus......................................................              X   ..............  ..............
Mr. Scarborough.................................................  ..............  ..............  ..............
Mr. Vitter......................................................              X   ..............  ..............
Mr. Conyers.....................................................  ..............              X   ..............
Mr. Frank.......................................................  ..............  ..............  ..............
Mr. Berman......................................................  ..............  ..............  ..............
Mr. Boucher.....................................................  ..............  ..............  ..............
Mr. Nadler......................................................  ..............  ..............  ..............
Mr. Scott.......................................................  ..............              X   ..............
Mr. Watt........................................................  ..............              X   ..............
Ms. Lofgren.....................................................  ..............  ..............  ..............
Ms. Jackson Lee.................................................  ..............  ..............  ..............
Ms. Waters......................................................  ..............              X   ..............
Mr. Meehan......................................................  ..............  ..............  ..............
Mr. Delahunt....................................................  ..............  ..............  ..............
Mr. Wexler......................................................              X   ..............  ..............
Mr. Rothman.....................................................              X   ..............  ..............
Ms. Baldwin.....................................................  ..............  ..............  ..............
Mr. Weiner......................................................              X   ..............  ..............
Mr. Hyde, Chairman..............................................              X   ..............  ..............
                                                                 -----------------------------------------------
    Total.......................................................             19               5   ..............
----------------------------------------------------------------------------------------------------------------

    Mr. Pease offered an amendment to strike the portion of the 
State lottery exemption that would allow the sale of State 
lottery tickets over the Internet at home. By a vote of 24 to 
11, the amendment was agreed to.

                                                   ROLLCALL NO. 3
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................              X   ..............  ..............
Mr. McCollum....................................................              X   ..............  ..............
Mr. Gekas.......................................................              X   ..............  ..............
Mr. Coble.......................................................              X   ..............  ..............
Mr. Smith (TX)..................................................              X   ..............  ..............
Mr. Gallegly....................................................              X   ..............  ..............
Mr. Canady......................................................              X   ..............  ..............
Mr. Goodlatte...................................................              X   ..............  ..............
Mr. Chabot......................................................  ..............              X   ..............
Mr. Barr........................................................              X   ..............  ..............
Mr. Jenkins.....................................................              X   ..............  ..............
Mr. Hutchinson..................................................              X   ..............  ..............
Mr. Pease.......................................................              X   ..............  ..............
Mr. Cannon......................................................  ..............              X   ..............
Mr. Rogan.......................................................              X   ..............  ..............
Mr. Graham......................................................              X   ..............  ..............
Ms. Bono........................................................              X   ..............  ..............
Mr. Bachus......................................................              X   ..............  ..............
Mr. Scarborough.................................................              X   ..............  ..............
Mr. Vitter......................................................              X   ..............  ..............
Mr. Conyers.....................................................  ..............              X   ..............
Mr. Frank.......................................................  ..............              X   ..............
Mr. Berman......................................................  ..............              X   ..............
Mr. Boucher.....................................................              X   ..............  ..............
Mr. Nadler......................................................  ..............              X   ..............
Mr. Scott.......................................................  ..............              X   ..............
Mr. Watt........................................................  ..............              X   ..............
Ms. Lofgren.....................................................  ..............  ..............  ..............
Ms. Jackson Lee.................................................              X   ..............  ..............
Ms. Waters......................................................  ..............              X   ..............
Mr. Meehan......................................................  ..............  ..............  ..............
Mr. Delahunt....................................................  ..............              X   ..............
Mr. Wexler......................................................              X   ..............  ..............
Mr. Rothman.....................................................              X   ..............  ..............
Ms. Baldwin.....................................................              X   ..............  ..............
Mr. Weiner......................................................  ..............              X   ..............
Mr. Hyde, Chairman..............................................              X   ..............  ..............
                                                                 -----------------------------------------------
    Total.......................................................             24              11   ..............
----------------------------------------------------------------------------------------------------------------

    Mr. Scott offered an amendment that would extend criminal 
liability under the bill to individuals.
    The amendment was defeated 7-24.

                                                   ROLLCALL NO. 4
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................  ..............              X   ..............
Mr. McCollum....................................................  ..............              X   ..............
Mr. Gekas.......................................................  ..............              X   ..............
Mr. Coble.......................................................  ..............              X   ..............
Mr. Smith (TX)..................................................  ..............              X   ..............
Mr. Gallegly....................................................              X   ..............  ..............
Mr. Canady......................................................  ..............              X   ..............
Mr. Goodlatte...................................................  ..............              X   ..............
Mr. Chabot......................................................  ..............              X   ..............
Mr. Barr........................................................  ..............              X   ..............
Mr. Jenkins.....................................................  ..............              X   ..............
Mr. Hutchinson..................................................  ..............              X   ..............
Mr. Pease.......................................................  ..............  ..............  ..............
Mr. Cannon......................................................  ..............              X   ..............
Mr. Rogan.......................................................  ..............              X   ..............
Mr. Graham......................................................  ..............  ..............  ..............
Ms. Bono........................................................  ..............              X   ..............
Mr. Bachus......................................................  ..............  ..............  ..............
Mr. Scarborough.................................................              X   ..............  ..............
Mr. Vitter......................................................              X   ..............  ..............
Mr. Conyers.....................................................  ..............              X   ..............
Mr. Frank.......................................................  ..............              X   ..............
Mr. Berman......................................................  ..............              X   ..............
Mr. Boucher.....................................................  ..............              X   ..............
Mr. Nadler......................................................  ..............              X   ..............
Mr. Scott.......................................................              X   ..............  ..............
Mr. Watt........................................................  ..............              X   ..............
Ms. Lofgren.....................................................  ..............  ..............  ..............
Ms. Jackson Lee.................................................              X   ..............  ..............
Ms. Waters......................................................              X   ..............  ..............
Mr. Meehan......................................................  ..............  ..............  ..............
Mr. Delahunt....................................................  ..............              X   ..............
Mr. Wexler......................................................  ..............              X   ..............
Mr. Rothman.....................................................  ..............  ..............  ..............
Ms. Baldwin.....................................................              X   ..............  ..............
Mr. Weiner......................................................  ..............              X   ..............
Mr. Hyde, Chairman..............................................  ..............              X   ..............
                                                                 -----------------------------------------------
    Total.......................................................              7              24   ..............
----------------------------------------------------------------------------------------------------------------

    Ms. Waters offered an amendment restating that the bill 
would not diminish any rights available to Indian tribes under 
the Indian Gaming Regulatory Act. The amendment was defeated 7-
17.

                                                   ROLLCALL NO. 5
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................  ..............  ..............  ..............
Mr. McCollum....................................................  ..............  ..............  ..............
Mr. Gekas.......................................................  ..............              X   ..............
Mr. Coble.......................................................  ..............              X   ..............
Mr. Smith (TX)..................................................  ..............              X   ..............
Mr. Gallegly....................................................  ..............  ..............  ..............
Mr. Canady......................................................  ..............              X   ..............
Mr. Goodlatte...................................................  ..............              X   ..............
Mr. Chabot......................................................  ..............              X   ..............
Mr. Barr........................................................  ..............              X   ..............
Mr. Jenkins.....................................................  ..............              X   ..............
Mr. Hutchinson..................................................  ..............              X   ..............
Mr. Pease.......................................................  ..............  ..............  ..............
Mr. Cannon......................................................  ..............              X   ..............
Mr. Rogan.......................................................  ..............              X   ..............
Mr. Graham......................................................  ..............  ..............  ..............
Ms. Bono........................................................  ..............              X   ..............
Mr. Bachus......................................................  ..............              X   ..............
Mr. Scarborough.................................................  ..............              X   ..............
Mr. Vitter......................................................  ..............              X   ..............
Mr. Conyers.....................................................  ..............  ..............  ..............
Mr. Frank.......................................................  ..............  ..............  ..............
Mr. Berman......................................................  ..............  ..............  ..............
Mr. Boucher.....................................................  ..............  ..............  ..............
Mr. Nadler......................................................              X   ..............  ..............
Mr. Scott.......................................................              X   ..............  ..............
Mr. Watt........................................................              X   ..............  ..............
Ms. Lofgren.....................................................  ..............  ..............  ..............
Ms. Jackson Lee.................................................  ..............  ..............  ..............
Ms. Waters......................................................              X   ..............  ..............
Mr. Meehan......................................................  ..............  ..............  ..............
Mr. Delahunt....................................................  ..............  ..............  ..............
Mr. Wexler......................................................  ..............              X   ..............
Mr. Rothman.....................................................              X   ..............  ..............
Ms. Baldwin.....................................................              X   ..............  ..............
Mr. Weiner......................................................              X   ..............  ..............
Mr. Hyde, Chairman..............................................  ..............              X   ..............
                                                                 -----------------------------------------------
    Total.......................................................              7              17   ..............
----------------------------------------------------------------------------------------------------------------

    Final passage motion to report H.R. 3125 favorably, as 
amended. The motion passed 21-8.

                                                   ROLLCALL NO. 6
----------------------------------------------------------------------------------------------------------------
                                                                       Ayes            Nays           Present
----------------------------------------------------------------------------------------------------------------
Mr. Sensenbrenner...............................................              X   ..............  ..............
Mr. McCollum....................................................              X   ..............  ..............
Mr. Gekas.......................................................              X   ..............  ..............
Mr. Coble.......................................................  ..............  ..............  ..............
Mr. Smith (TX)..................................................              X   ..............  ..............
Mr. Gallegly....................................................  ..............  ..............  ..............
Mr. Canady......................................................              X   ..............  ..............
Mr. Goodlatte...................................................              X   ..............  ..............
Mr. Chabot......................................................              X   ..............  ..............
Mr. Barr........................................................              X   ..............  ..............
Mr. Jenkins.....................................................              X   ..............  ..............
Mr. Hutchinson..................................................              X   ..............  ..............
Mr. Pease.......................................................  ..............  ..............  ..............
Mr. Cannon......................................................  ..............              X   ..............
Mr. Rogan.......................................................              X   ..............  ..............
Mr. Graham......................................................              X   ..............  ..............
Ms. Bono........................................................              X   ..............  ..............
Mr. Bachus......................................................  ..............  ..............  ..............
Mr. Scarborough.................................................              X   ..............  ..............
Mr. Vitter......................................................              X   ..............  ..............
Mr. Conyers.....................................................  ..............              X   ..............
Mr. Frank.......................................................  ..............              X   ..............
Mr. Berman......................................................  ..............              X   ..............
Mr. Boucher.....................................................  ..............  ..............  ..............
Mr. Nadler......................................................              X   ..............  ..............
Mr. Scott.......................................................  ..............              X   ..............
Mr. Watt........................................................  ..............              X   ..............
Ms. Lofgren.....................................................  ..............  ..............  ..............
Ms. Jackson Lee.................................................              X   ..............  ..............
Ms. Waters......................................................              X   ..............  ..............
Mr. Meehan......................................................  ..............  ..............  ..............
Mr. Delahunt....................................................  ..............  ..............  ..............
Mr. Wexler......................................................              X   ..............  ..............
Mr. Rothman.....................................................              X   ..............  ..............
Ms. Baldwin.....................................................  ..............              X   ..............
Mr. Weiner......................................................  ..............              X   ..............
Mr. Hyde, Chairman..............................................              X   ..............  ..............
                                                                 -----------------------------------------------
    Total.......................................................             21               8   ..............
----------------------------------------------------------------------------------------------------------------

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII 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 Findings

    No findings or recommendations of the Committee on 
Government Reform were received as referred to in clause 
3(c)(4) of rule XIII of the Rules of the House of 
Representatives.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of House Rule XIII is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 3125, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                       Washington, DC, May 1, 2000.
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. 3125, the Internet 
Gambling Prohibition Act of 2000.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Susanne S. 
Mehlman (for federal costs), who can be reached at 226-2860, 
Shelley Finlayson (for the state and local impact), who can be 
reached at 225-3220, and John Harris (for the private-sector 
impact), who can be reached at 226-2618.
            Sincerely,
                                  Dan L. Crippen, Director.

Enclosure

cc:
        Honorable John Conyers Jr.
        Ranking Democratic Member
H.R. 3125--Internet Gambling Prohibition Act of 2000.

                                SUMMARY

    H.R. 3125 would prohibit gambling conducted over the 
Internet or an interactive computer service. CBO estimates that 
implementing this legislation would not result in any 
significant cost to the federal government. Because enactment 
of H.R. 3125 could affect direct spending and receipts, pay-as-
you-go procedures would apply to the bill. However, CBO 
estimates that any impact on direct spending and receipts would 
not be significant.
    H.R. 3125 contains intergovernmental mandates as defined in 
the Unfunded Mandates Reform Act (UMRA) because it would 
preempt certain state liability laws and prohibit certain state 
and local lottery activities. However, CBO estimates that these 
mandates would currently impose no costs on state, local, or 
tribal governments and that future costs, if any, would not 
exceed the threshold established by the act during the next 
five years ($55 million in 2000, adjusted annually for 
inflation).
    H.R. 3125 would impose new private-sector mandates, as 
defined in UMRA, on operators of Internet sweepstakes and 
contests, certain gambling businesses that would use wireless 
communication systems to transfer data, and providers of 
Internet service. CBO expects that the costs of those mandates 
would not exceed the threshold in UMRA for private-sector 
mandates ($109 million in 2000, adjusted annually for 
inflation).

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    Because H.R. 3125 would establish a new federal crime 
relating to gambling, the federal government would be able to 
pursue cases that it otherwise would not be able to prosecute. 
CBO expects, however, that most cases would be pursued under 
state law. Therefore, we estimate that any increase in federal 
costs for law enforcement, court proceedings, or prison 
operations would not be significant. Any such additional costs 
would be subject to the availability of appropriated funds.
    H.R. 3125 would require the Department of Justice, not 
later than three years after enactment, to submit a report on 
the enforcement of the bill's provisions and on the extent of 
Internet gambling. CBO estimates that preparing and completing 
the report would cost less than $500,000, subject to the 
availability of appropriated funds.
    Because those prosecuted and convicted under the bill could 
be subject to criminal fines, the federal government might 
collect additional fines if the bill is enacted. Collections of 
such fines are recorded in the budget as governmental receipts 
(i.e., revenues), which are deposited in the Crime Victims Fund 
and spent in subsequent years. Any additional collections are 
likely to be negligible because of the small number of cases 
involved. Because any increase in direct spending would equal 
the amount of fines collected (with a lag of one year or more), 
the additional direct spending also would be negligible.

                      PAY-AS-YOU-GO CONSIDERATIONS

    The Balanced Budget and Emergency Deficit Control Act sets 
up pay-as-you-go procedures for legislation affecting direct 
spending or receipts. Enacting H.R. 3125 could affect both 
direct spending and receipts, but CBO estimates that any such 
effects would be negligible.

        ESTIMATED IMPACT ON STATE, LOCAL, AND TRIBAL GOVERNMENTS

    H.R. 3125 contains intergovernmental mandates as defined by 
UMRA. CBO estimates that these mandates would currently impose 
no costs on state, local, or tribal governments and that future 
costs, if any, would not exceed the threshold established by 
the act in the next five years ($55 million in 2000, adjusted 
annually for inflation).
    The bill would impose two types of mandates on the state 
and local governments. First, it would preempt state liability 
laws by granting immunity to providers of interactive computer 
services if third parties use their facilities in ways that 
violate federal and state laws regulating gambling. CBO 
estimates that states would incur no direct costs to comply 
with this mandate.
    H.R. 3125 also would prohibit state and local governments 
that conduct lotteries from using the Internet or other 
technology covered by the bill to provide access to the lottery 
in any place that is not public. While no governments currently 
use or plan to use the Internet for these purposes, as 
technology expands and becomes more widely used in the home (a 
nonpublic place), it is possible that, in the absence of this 
bill, some would offer such options. CBO cannot estimate the 
future loss of income from this prohibition because it is not 
clear if or when such access to lotteries would be provided by 
state and local governments. However, we do not expect that 
such losses would exceed the threshold established by UMRA ($55 
million in 2000, adjusted annually for inflation) in the next 
five years.

                 ESTIMATED IMPACT ON THE PRIVATE SECTOR

    H.R. 3125 would have only a limited effect on the private 
sector because the Federal Interstate Wire Act (``Wire Act'') 
currently prohibits the use of wire communication facilities to 
place or receive bets or wagers or to transmit information that 
assists persons who place bets or wagers on sporting events and 
certain contests. The Wire Act applies to all wires and cables 
used to transmit information across state lines, including 
telephone lines, cable television systems, and the Internet, 
and effectively prohibits many forms of Internet gambling. 
Other federal statutes, such as racketeering laws, also apply 
to Internet gambling. It is not clear, however, that existing 
federal law prohibits all forms of Internet gambling. The 
status of some Internet contests, particularly lotteries or 
raffles that require entry fees, is ambiguous.
    H.R. 3125 would impose new private-sector mandates, as 
defined in UMRA, on operators of Internet sweepstakes and 
contests, certain gambling businesses that use wireless 
communication systems to transfer data, and providers of 
Internet service. CBO expects that the costs of these mandates 
would not exceed the threshold in UMRA for private-sector 
mandates ($109 million in 2000, adjusted annually for 
inflation).
    First, the bill would prohibit persons engaged in a 
gambling business from conducting lotteries, raffles, or other, 
similar contests over the Internet. Specifically, the bill 
would forbid any Internet contest in which participants stake 
or risk ``something of value'' and the ``opportunity to win is 
predominantly subject to chance.'' According to the National 
Gambling Impact Study Commission Report, no known privately-
operated Internet lotteries are located in the United States. 
Privately-operated lotteries are generally illegal under state 
laws, and most businesses that would be affected by the 
prohibition are located in foreign countries. Domestic 
lotteries are generally run by states and Indian tribes. 
Further, the prohibition would not affect privately-operated 
Internet contests that do not require entry fees. The 
prohibition would also not apply to certain other popular legal 
games that charge fees, including sports and educational 
contests, such as the popular fantasy sports leagues. 
Consequently, CBO expects that the costs of this mandate would 
not be significant.
    Second, H.R. 3125 would impose a new mandate on some 
gambling businesses. The bill would prohibit the use of certain 
interactive computer services ``to place, receive, or otherwise 
make a bet or wager.'' Under H.R. 3125 it would be illegal for 
gambling businesses to operate electronic gaming devices linked 
together by a wireless means of communication that do not meet 
certain technical requirements. Devices of this type are legal 
in some states, but are not popular with gambling businesses. 
Linked electronic gaming devices, such as progressive slot 
machines, typically use dedicated phone lines rather than 
wireless systems, which are susceptible to interference from 
other signals. The bill, moreover, would not prohibit wireless 
systems that are regulated by the states and meet the technical 
requirements. For these reasons, CBO estimates that the costs 
of the mandate would be low.
    Finally, the bill would impose new mandates on Internet 
service providers (ISPs). H.R. 3125 would require Internet 
service providers to terminate the accounts of customers who 
run gambling businesses or promote illegal gambling and to 
block specific foreign gambling Internet sites when given an 
official notice of noncompliance by state or federal law 
enforcement agencies. Based on information from the Department 
of Justice, CBO estimates that the number of Internet service 
providers that would receive such notices would be low. Because 
such notices would apply to specific subscriber accounts (or 
foreign sites), the cost per order would also be low. 
Consequently, CBO estimates that the costs to Internet service 
providers of complying with this mandate would be small.
    H.R. 3125 would impose an additional mandate on Internet 
service providers by requiring them to offer their residential 
customers filtering software (or equivalent systems) that would 
block access by children to gambling Internet sites. CBO 
estimates that the cost of complying with the mandate would be 
small because such software is commonly available. The bill 
would permit providers to charge reasonable fees for the use of 
the software, allowing them to pass the cost on to their 
customers.

                         PREVIOUS CBO ESTIMATE

    On July 15, 1999, CBO transmitted a cost estimate for S. 
692, a similar bill reported by the Senate Committee on the 
Judiciary on June 17, 1999. Both bills would prohibit gambling 
conducted over the Internet or an interactive computer service, 
but would provide for different exemptions from this 
prohibition. H.R. 3125, unlike S. 692, would not prohibit 
tribal governments from operating certain games of chance and 
therefore would not impose intergovernmental mandates with 
costs exceeding the threshold specified in UMRA.

                         ESTIMATE PREPARED BY:

Federal Costs: Susanne S. Mehlman (226-2860)
Impact on State, Local, and Tribal Governments: Shelley 
        Finlayson (225-3220)
Impact on the Private Sector: John Harris (226-2618)

                         ESTIMATE APPROVED BY:

Robert A. Sunshine
Assistant Director for Budget Analysis

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in Article I, section 8, of the Constitution.

               Section-by-Section Analysis and Discussion

Section 1. Short Title.
    Section 1 states the short title as the ``Internet Gambling 
Prohibition Act of 2000.''
Section 2. Prohibition on Internet Gambling.
    Section 2(a) adds a new Section 1085 to title 18 of the 
United States Code.
Section 1085(a). Definitions.
    Subsection 1085(a)(1) defines ``bets or wagers'' as the 
staking or risking, by any person, of something of value upon 
the outcome of either: (1) a contest of others; (2) a sporting 
event; or (3) a game predominantly subject to chance, upon an 
agreement or understanding that such person or another person 
will receive something of value based on that outcome. It is 
important to note that the term includes the purchase of a 
chance or opportunity to win a lottery or other prize (if the 
opportunity is predominantly subject to chance) and any scheme 
of a type prohibited by Federal laws prohibiting betting on 
professional and amateur sports. The term ``bets or wagers'' 
does not include bona fide business transactions governed by 
Federal securities law; certain specified transactions governed 
by Federal commodities law; contracts of indemnity or 
guarantee; or, contracts for life, health, or accident 
insurance.
    It is the view of the committee that the term ``bets or 
wagers'' does not include participation in a simulation sports 
game or educational game or contest that: (1) is not dependent 
solely on the outcome of any single sporting event or 
nonparticipant's singular individual performance in any single 
sporting event; (2) has an outcome that reflects the knowledge 
and skill of the participants, with an outcome determined 
predominantly by accumulated statistical results of sporting 
events; and, (3) offers a prize or award established in advance 
of the game and not determined by the number of participants. 
This exclusion is intended to cover ``fantasy sports league 
games'' which are simulation sports games in which the outcome 
is determined using the results of actual sporting events, and 
the outcome reflects the relative knowledge and skill of the 
participants in determining those results. It is the view of 
the committee that fantasy sport leagues operated in this 
manner are not gambling. It is important to note, however, that 
this exclusion from the definition of a bet or wager for the 
purposes of 18 U.S.C. Sec. 1085 is not intended to change the 
legality of fantasy sports league games or contests under the 
laws of any State, or under any other applicable Federal law.
    It is the view of the committee that not all games offered 
on the Internet are ``games of chance'' for purposes of this 
definition. The committee recognizes that many computer and 
video games played on the Internet are based predominantly on 
skill, and are not intended to be included within the 
definition of ``bets or wagers.'' The committee intends that 
the courts will continue to perform their traditional functions 
in determining whether games are ``games of chance.''
    Subsection 1085(a)(2) defines a ``closed-loop subscriber-
based service'' as an information service or system meeting 
specified conditions restricting use, including: 1) express 
State authorization of the particular customer and age 
verification system proposed to be used by the service, 
requiring a person within that State to subscribe and be 
registered with the provider of the wagering service by name, 
address, appropriate billing information, and the physical 
location of that subscribing person within that State; and 2) 
an effective customer and age verification system, expressly 
authorized under State law; and, 3) that appropriate date 
security standards to prevent unauthorized access by any person 
who has not lawfully subscribed or who is a minor. The 
committee intends that this term be narrowly construed to 
include only a closed-loop service that cannot be circumvented, 
or disabled, and is effective in preventing use by unauthorized 
persons, especially minors. The committee expects the States, 
in ensuring that any such system is truly effective in 
preventing unauthorized use, to consult with information 
security experts who are not current or prospective employees 
of or consultants to, and who have no financial relationship, 
direct or indirect, with any gambling business or closed-loop 
subscriber-based service.
    Subsection 1085(a)(3) defines ``foreign jurisdiction'' as a 
foreign country or political subdivision thereof.
    Subsection 1085(a)(4) defines a ``gambling business'' as 
(i) a business that is conducted at a gambling establishment, 
or that involves the placing, receiving, or otherwise making 
bets or wagers, or the offering to engage in doing so, and that 
either has been in substantially continuous operation for more 
than 10 days or has a gross revenue of $2,000 or more from such 
business during any 24-hour period; and (ii) any soliciting 
agent of such a business.
    This subsection contains a further qualification that a 
gambling business ``involves 1 or more persons who conduct, 
finance, manage, supervise, direct, or own all or part of such 
business.'' With respect to this qualification, it is the view 
of the committee that, in enforcing this section, it is 
appropriate for law enforcement agencies to pierce the 
corporate veil and prosecute individuals less directly involved 
in illegal Internet gambling business operations, such as 
silent financiers of illegal gambling businesses. However, the 
definition of ``gambling business'' is not intended to include 
credit card companies, or their cardholders, based only on the 
use of such credit cards for prohibited Internet gambling 
activities.
    Subsection 1085(a)(5) defines ``information assisting in 
the placing of a bet or wager'' to include information intended 
by the sender or recipient to be used by a gambling business to 
place, receive, or otherwise make a bet or wager. It is the 
view of the committee that the definition does not include: (1) 
information concerning parimutuel pools exchanged exclusively 
between or among parimutuel wagering facilities, if the 
information is used only to conduct common pool parimutuel 
pooling; (2) information exchanged exclusively between or among 
parimutuel wagering facilities and a support service, if the 
information is used only for processing bets or wagers; (3) 
information exchanged exclusively between or among wagering 
facilities in the same State and a support service, if the 
information is used only for the pooling or processing of bets 
or wagers made by or with the facility or facilities; (4) 
information exchanged via private network if the information is 
used only to monitor gaming device play, display prize amounts, 
provide security information, and provide other accounting 
information; (5) news reporting or analysis of wagering 
activity; and (6) posting or reporting of educational 
information on how to make a bet or wager or the nature of 
betting or wagering. The exclusion of items (1) through (3) 
from the definition means that parimutuel wagering facilities 
and other wagering facilities will not be prohibited by Section 
1085 from transmitting a narrow category of specified 
information in the course of conducting their parimutuel or 
wagering activity, subject to the laws of the States in which 
they operate. Additionally, the committee notes, and Section 
1085(f) makes explicit, that H.R. 3125 does not prohibit 
advertising or promotion of gambling opportunities at casinos, 
at racetracks, or at other ``brick-and-mortar'' establishments.
    Subsection 1085(a)(6) defines an ``interactive computer 
service'' as any information service, system, or access 
software provider that operates in, or uses a channel or 
instrumentality of, interstate or foreign commerce to provide 
or enable access by multiple users to a computer server. The 
definition of the term ``interactive computer service'' is 
intended to encompass all the interactive computer service 
functions defined elsewhere in Federal law, including functions 
such as Internet access and transmission, storage, hosting web 
sites, providing online services such as chatrooms and online 
bulletin boards in which users communicate with each other, and 
offering online links or directories of online content. The 
definition applies to interactive computer services performing 
these functions. It does not apply to these entities to the 
extent that they are operating a gambling business that 
violates H.R. 3125.
    Subsection 1085(a)(7) defines ``interactive computer 
service provider'' as any person that provides an interactive 
computer service, to the extent that such person offers or 
provides such service. This term encompasses persons who 
provide an interactive computer service as defined in 
subsection (6). A person is treated as an interactive computer 
service provider only to the extent that the person provides an 
interactive computer service. To the extent that a person is 
engaged in a gambling business or otherwise violating 
Subsection (b), that person (to the extent of engaging in those 
activities) is not an interactive computer service provider 
and, therefore, is fully subject to the provisions of Section 
1085 and other applicable Federal and State laws that apply to 
persons other than interactive computer service providers.
    Subsection 1085(a)(8) defines ``Internet'' as the 
international computer network of both Federal and non-Federal 
interoperable packet switched data networks. The committee 
intends the terms ``Internet'' and ``interactive computer 
service'' to encompass technologies that in the future may 
perform functions similar or analogous to those that the 
Internet and interactive computer services perform today.
    Subsection 1085(a)(9) defines ``person'' as any individual, 
association, partnership, joint venture, corporation (or any 
affiliate of a corporation), State or political subdivision 
thereof, department, agency, or instrumentality of a State or 
political subdivision thereof, or any other government, 
organization, or entity.
    Subsection 1085(a)(10) defines ``private network'' as a 
communications channel meeting specified conditions restricting 
use, such as either private dedicated lines, or, the public 
communications infrastructure, if the infrastructure is secured 
by means of the appropriate private communications technology 
to prevent unauthorized access. It is the view of the committee 
that this term be narrowly construed to include only services 
that are (a) effective in preventing use by unauthorized 
persons and (b) specifically authorized by statute or 
regulation by the States involved.
    Subsection 1085(a)(11) defines ``State'' as a State of the 
United States, the District of Columbia, the Commonwealth of 
Puerto Rico, or a commonwealth, territory, or possession of the 
United States.
    Subsection 1085(a)(12) defines ``subscriber'' as any person 
with a business relationship with the interactive computer 
service provider through which such person receives access to 
the system, service, or network of that provider, even if no 
formal subscription agreement exists, and, includes 
registrants, students who are granted access to a university 
system or network, and employees or contractors who are granted 
access to the system or network of their employer.
    Subsection 1085(a)(13) defines ``soliciting agent'' as a 
person who knowingly solicits for a gambling business, as 
described in subsection 1085(a)(4). It is the view of the 
committee that a soliciting agent is an agent of such business 
who has actual knowledge of the illegal aspect of such a 
gambling business. However, the term would not include those 
parties lacking knowledge and who merely accept and/or run 
advertisements for such a business.
Section 1085(b). Prohibitions and Penalties.
    Subsection 1085(b)(1) sets forth the prohibitions regarding 
Internet gambling. The subsection provides that it shall be 
unlawful for a person engaged in a gambling business to use the 
Internet or any other interactive computer service: (A) to 
place, receive, or otherwise make a bet or wager; or (B) to 
send, receive, or invite information assisting in the placing 
of a bet or wager. Paragraph (2) sets forth the penalties. 
These include a fine equal to, but not more than the greater 
of: (A) the total amount bet or wagered, or placed, received, 
or accepted in bets or wagers, by the person, or (B) $20,000. 
The subsection also provides for imprisonment of not more than 
4 years, in lieu of or in addition to any fine. Paragraph (3) 
authorizes the court, upon conviction, to enter a permanent 
injunction enjoining such person from placing, receiving, or 
otherwise making bets or wagers or sending, receiving, or 
inviting information assisting in the placing of bets or 
wagers. It is important to note that the prohibitions of 
Section 1085(b) apply only to persons engaged in the gambling 
business, and not to individual bettors or communication 
services not engaged in a gambling business, but simply used by 
illegal gambling businesses to offer such activity. However, 
individual bettors who engage in Internet gambling (as well as 
persons engaged in a gambling business using the Internet) 
continue to be fully subject to prosecution under other laws, 
if applicable.
Section 1085(c). Civil Remedies.
    Subsection 1085(c)(1) provides the district courts of the 
United States with jurisdiction to prevent and restrain 
violations of section 1085. Subsection (c)(2)(A) authorizes the 
United States to apply to a district court for a temporary 
restraining order or an injunction against any person to 
prevent or restrain a violation. Subsection (c)(2)(B) provides 
similar authority to the Attorney General or other appropriate 
State official of a State in which a violation allegedly has 
occurred or will occur. The court is authorized to grant relief 
upon determining, after notice and an opportunity for hearing, 
that there is a substantial probability that a violation has 
occurred or will occur. Subsections (c)(2)(C) and (D) cover 
proceedings on Indian lands and expiration of temporary 
restraining orders issued. Subsection (c)(3) permits temporary 
relief to be obtained on an expedited basis.
Section 1085(d). Interactive Computer Service Providers.
    Section 1085(d) establishes a mechanism through which 
interactive computer service providers (``providers '') may be 
required to terminate accounts, and/or remove, disable, or 
block access to material or activity that violates Section 
1085. This scheme provides limitations on liability for 
qualifying providers, subject to providers meeting conditions 
for eligibility which involve certain responsibilities with 
regard to material that violates this section.
    The Internet is a communications medium of great importance 
for both national and international commerce and human 
communication. Although illegal content, including illegal 
gambling sites, exist on the Internet, it is a very small 
percentage of content on the Internet. The committee does not 
intend to create remedies for illegal activity that burden the 
operation of online networks for lawful purposes, or that 
impose unreasonable burdens on interactive computer services 
who are not active participants in, and do not profit from, the 
illegal gambling activity.
    Subsection 1085(d)(1)(A) clarifies that providers shall not 
be held liable for the use of their services by others to 
violate laws prohibiting gambling. It is important to note that 
the intent of this limitation is to avoid unintended criminal 
prosecution of interactive service providers under this new 
section 1085. Subsection 1085(d)(1)(A) limits liability under 
this section or ``any other provision of Federal or State law 
prohibiting or regulating gambling or gambling-related 
activities for the use of its facilities or services by another 
person to engage in Internet gambling activity or advertising 
or promotion of Internet gambling activity.'' It is important 
to clarify the committee's view that this limitation of 
liability extends only to criminal offenses and penalties.
    This liability limitation applies to providers with regard 
to gambling-related material for functions described in 
subsections 1085(d)(1)(i) & (ii), and it applies only to 
content provided by another person. For example, the provider 
of a hyperlink or Internet directory service would not be 
liable for links to a site containing an illegal gambling 
business run by a third party, if the directory service met the 
conditions for eligibility set forth in subsection (d)(1)(B). 
The committee intends that content provided by another person 
include content provided by third parties, including users, 
volunteers, or a different content provider. Qualifying 
providers also receive immunity with regard to conduit and 
server caching functions, such as those described in 17 U.S.C. 
Sec. 512(a) & (b), to the extent that those functions are not 
initiated by the provider so as to evade the requirements of 
Section 1085. With regard to material that violates this 
section (as well as links to such material) posted to an online 
site controlled by the provider, a provider has 
responsibilities if it receives appropriate notice from a law 
enforcement official under subsection 1085(d)(2)(B).
    Subsection 1085(d)(1)(B) sets forth the conditions of 
eligibility that a provider must meet to qualify for these 
criminal liability limitations. The provider must adopt and 
implement, in a reasonable fashion, a policy of terminating the 
accounts of subscribers whom the provider is notified (in 
accordance with subsection 1085(d)(2)(B)) are using their 
accounts to engage in an Internet gambling business prohibited 
by this bill. The provider also must not knowingly permit its 
computer server to be used to engage in the particular 
violation at issue with the specific intent that its server be 
used for such purpose.
    Subsection 1085(d)(2)(A) establishes a ``notice and 
takedown'' regime under which certain law enforcement officials 
and providers will cooperate in removing or disabling access to 
online sites that violate Sec. 1085(b). A provider receiving a 
notice that conforms to the requirements of subsection 
(d)(2)(B), and that relates to gambling material that violates 
Sec. 1085(b), should expeditiously remove or disable access to 
the material described in the notice. If the notice relates to 
an online reference or hypertext link, then the provider should 
remove or disable access to the reference or the link to the 
illegal material. One of the purposes of this provision is to 
create an orderly process for the notice and take down of 
illegal materials. To ensure proper take down, notice must come 
from the law enforcement officials specified in subsection 
(d)(2)(A) and follow the procedures set forth in subsection 
(d)(2)(B). Therefore, it is the view of the committee that any 
notice that does not conform to the requirements of this 
subsection may not be considered as evidence bearing on whether 
a provider has met the conditions of eligibility in subsection 
(d)(1)(B).
    It is the view of the committee that H.R. 3125 does not 
require a provider to take down content on any computer server 
that the provider does not control. For example, subsection 
(d)(2)(A)(ii) provides that if a provider receives notice from 
a law enforcement official regarding the site at which the 
illegal material or activity resides, but which is not under 
the control of such provider, then the provider should notify 
the law enforcement official that the provider is not the 
proper recipient of the notice and upon receipt of lawful 
process cooperate in identifying the entity that is the proper 
recipient of the notice. With respect to subsection (d)(1)(B), 
the committee intends that an interactive computer service 
provider not be deemed to fail to satisfy this specific intent 
condition unless at least one of the employees of such service 
had the requisite intent and the provider knowingly permitted 
the violation, or engaged in deliberate acts constituting a 
purposeful effort to avoid learning the true and accurate basis 
of such information. It is the view of the committee that the 
``collective knowledge'' doctrine employed in some Federal 
circuit courts of appeals should not apply to aggregate the 
knowledge of intent of various employees of an interactive 
service provider.
    Subsection 1085(d)(3) allows Federal or State law 
enforcement agencies to seek an injunction not less than 24 
hours after providing notice under subsection (d)(2)(B). 
However, it limits injunctions that may be issued against 
providers in subsection (d)(3)(B) to orders restraining 
providers to terminate specified accounts of subscribers 
engaging in an activity that violates this section, to remove 
or disable access to material on a site residing on a computer 
server that the provider controls, and, in rare circumstances, 
to foreign online locations, as well as other injunctive 
remedies regarding material residing on a computer server that 
the provider controls that the court considers necessary and 
that are the least burdensome to the provider among comparably 
effective forms of relief.
    It also requires that prior to issuing any injunction 
against an interactive computer service provider, a court weigh 
each of the considerations set forth in subsection (d)(3)(C). 
Subsection 1085(d)(3)(c) sets forth the factors a court shall 
consider in determining whether injunctive relief is 
appropriate, including: (i) whether the injunction would 
significantly burden the provider, or the operation that 
provider's system or network; (ii) that the injunction in 
question is technically feasible and effective and that it will 
not materially interfere with access to lawful material at 
other online locations; (iii) whether less burdensome 
preventative means are available; and, (iv) the magnitude of 
the harm likely to be suffered by the community. With respect 
to subsection (d)(3)(C)(iii), in many cases remedies against 
other entities or industries may be equally, or more, effective 
than an injunction against an interactive computer service. In 
such cases, it is the view of the committee that an injunction 
against the interactive computer service is not appropriate and 
that the court may instead issue other injunctions available 
under Sec. 1085(c) against other persons.
    Subsection 1085(d)(4) creates a notice and take down regime 
for advertising of non-Internet gambling activity, and preempts 
all other liability for such content under any Federal or State 
criminal law. The section applies to gambling activity that 
either is not conducted via the Internet, or is not prohibited 
by Section 1085. It is important to note that subsection (d)(4) 
concerns the advertising of criminal activity which is not 
protected by the first amendment, and that it does not regulate 
or restrict content of any commercial advertising of lawful 
activity. Subsection (d)(4)(E) clarifies that providers have no 
obligation to take down non-Internet gambling activity that is 
lawful where the gambling business is physically located and 
not prohibited by Federal law.
    The injunctive relief available under this subsection is 
also different than under subsection 1085(d)(3). Providers are 
subject to an injunction: (1) to take down illegal advertising 
of gambling; or (2) to terminate the account of a subscriber of 
the provider who is knowingly using the site or permitting it 
to be used to engage in advertising of non-Internet gambling 
activity that violates Federal law, or the law of the State in 
which the gambling establishment is physically located. In 
addition, Federal or State law enforcement officials acting 
within their authority and jurisdiction may obtain an order 
against the provider of the illegal advertising content 
enjoining that provider from disseminating the illegal 
advertising in question on the provider's computer server.
    Subsection 1085(d)(5)(A) makes clear that providers are not 
liable under any Federal, State or local law for good faith 
efforts to comply with the take down requests and injunctions 
authorized by this section. Subsection (d)(5)(B) makes clear 
that providers have no obligation to monitor particular 
material or use of their networks, or to take down illegal 
gambling material except pursuant to a notice or court order 
under this section. Subsection (d)(5)(C) provides that this 
section does not in any way interfere with the right of a 
subscriber to secure under other provisions of law, a 
determination that his or her account should not be terminated 
or that it should be restored, notwithstanding the account 
termination procedures set forth in this section.
    To be eligible for this provision, the provider must abide 
by conditions for eligibility similar to those set forth in 
Sec. (d)(1)(B), as well as an additional condition of 
eligibility for providers of residential access service, 
offering residential customers at reasonable cost software that 
has some capability of filtering or blocking access by minors 
to online Internet gambling sites that violate Sec. 1085. The 
committee understands that such user empowerment software deals 
with a wide array of objectionable content on the Internet and 
may not be fully effective in blocking access to illegal sites.
    The committee notes that section 1085(d) is not a form of 
Internet regulation. It does not establish mandatory regulatory 
requirements for providers. The committee notes that subsection 
(d)(2)(A) is simply a law enforcement mechanism, conditioning a 
provider's eligibility for limitations on liability under 
existing laws on certain actions described in that subsection. 
This mechanism is conceptually modeled after the ``Wire Act,'' 
18 U.S.C. Sec. 1084, which prohibits gambling businesses from 
using a ``wire communication facility'' (such as a telephone or 
the Internet) to place or receive bets or wagers. Specifically, 
Sec. 1084(d) protects common carriers from ``civil or 
criminal'' liability if they ``discontinue or refuse, the 
leasing, furnishing, or maintaining of such facility,'' upon 
proper notice from a law enforcement agency that ``any facility 
furnished by it is being used or will be used for the purpose 
of transmitting or receiving gambling information in interstate 
or foreign commerce in violation of Federal, State, or local 
law.'' The committee notes that Sec. 1084 was adopted by 
Congress in 1961 (Public Law 87-216). The 1961 legislation, 
which later was enacted as the Wire Act, was referred to and 
reported by the Committee on the Judiciary (House Report 87-
967), and was not referred to any other committee.
    Additionally, the liability immunity provisions in H.R. 
3125 are similar to those within the ``Electronic 
Communications Privacy Act of 1986,'' 18 U.S.C. Sec. 3124(d), 
which immunize communications service providers that assist 
State and Federal law enforcement authorities to install pen 
registers or trap and trace devices. Specifically, Sec. 3124(d) 
provides that ``no cause of action shall lie in any court 
against any provider of a wire or electronic communications 
service, its officers, employees, agents, or other specified 
persons for providing information, facilities, or assistance in 
accordance with the terms of a court order under this chapter. 
. . .'' Moreover, Sec. 3124(e) provides that a ``good faith 
reliance on a court order under this chapter . . . is a 
complete defense against any civil or criminal action brought 
under this chapter or any other law.'' The Electronic 
Communications Privacy Act (Public Law 99-508) originated as 
H.R. 4952, a bill referred to and reported out by the Committee 
on the Judiciary, and which was not referred to any other 
committee.
Section 1085(e). Availability of Relief.
    This section clarifies that the availability of relief 
under sections (c) and (d), which is civil in nature, is 
independent of any criminal action under section (b) or any 
other Federal or State law.
Section 1085(f). Applicability.
    It is the view of the committee that, if otherwise lawful, 
certain regulated gaming activities within this section are not 
subject to the prohibition of Sec. 1085(b).
    Subsection (f)(1)(A) clarifies that the prohibitions of 
Sec. 1085 do not apply to any otherwise lawful bets or wagers 
placed, received, or otherwise made wholly intrastate for a 
State lottery, or for a multi-State lottery operated jointly 
between two or more States in conjunction with State lotteries, 
subject to four conditions: (i) express authorization, and 
licensing or regulation, under applicable State law; (ii) use 
of a ``private network''; (iii) use of facilities open to the 
general public to place the bet or wager, where each person 
placing or otherwise making the bet or wager must be physically 
located when such bet or wager is placed; and (iv) compliance 
with applicable Federal lottery laws (18 U.S.C. Sec. Sec. 1301-
1304) and other applicable Federal laws.
    Subsection (f)(1)(B) clarifies that the prohibitions of 
Sec. 1085 do not apply to any otherwise lawful bet or wager 
placed, received, or otherwise made on an interstate or 
intrastate basis on a live horse or a live dog race, or on jai 
alai, or the sending, receiving, or inviting of information 
assisting in the placing of such a bet or wager, subject to 
five specified conditions, which require: (i) express 
authorization, and licensing or regulation, by the State in 
which the bet or wager is received, under applicable Federal 
and such State's laws; (ii) use of a ``closed-loop subscriber-
based service''; (iii) initiation from a State in which betting 
or wagering on that same type of live horse racing, or on that 
same type of live dog racing, or jai alai, as applicable, is 
lawful, and receipt in a State in which such betting or 
wagering is lawful; (iv) specified regulatory oversight by the 
State in which the bet or wager is received; and (v) compliance 
with the Interstate Horse Racing Act of 1978 (15 U.S.C. 
Sec. 3001 et seq.), or with comparable consent agreements 
between the participating States applicable to dog racing and 
jai alai.
    Subsection (f)(1)(C) clarifies that the prohibitions of 
Sec. 1085 do not apply to any otherwise lawful bet or wager, 
placed and received wholly intrastate on a closed-loop 
subscriber based service, and subject to the express 
authorization, licensing, and regulation by that State.
    Subsection (f)(1)(D) clarifies that the prohibitions of 
Sec. 1085 do not apply to any otherwise lawful bet or wager, 
placed on a closed-loop subscriber based service, and lawfully 
received by a federally recognized Indian tribe, subject to 
being permitted under and conducted in accordance with the 
Indian Gaming Regulatory Act (``IGRA''), and, so long as each 
person placing, receiving, or otherwise making such a bet or 
wager is physically located on Indian lands (as that term is 
defined in section 4 of IGRA) when such person places, 
receives, or otherwise makes the bet or wager.
Section 1085(g). Rule of Construction.
    Section 1085(g) specifies that Sec. 1085 is not to be 
construed to affect any prohibition or remedy applicable to a 
person engaged in a gambling business under any other provision 
of Federal or State law. This means that a person engaged in a 
gambling business who is subject to prosecution or the 
imposition of civil remedies under Sec. 1085 continues to be 
subject to any other prohibitions or remedies applicable under 
any other provision of Federal or State law. Section 2(b) of 
the bill concerns codification of Sec. 1085.
Section 3. Report on Enforcement.
    Section 3 directs the Attorney General, not later than 3 
years after the date of enactment, to submit to Congress a 
report including (1) an analysis of the problems, if any, 
associated with enforcing Sec. 1085; (2) recommendations for 
the best use of Department of Justice resources to enforce 
Sec. 1085; and (3) an estimate of the amount of activity and 
money being used to gamble on the Internet.
Section 4. Severability.
    Section 4 is a severability provision that provides that 
any provisions within the act found to be unconstitutional 
shall not affect any other provisions within the act.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italics and existing law in which no change is 
proposed is shown in roman):

               CHAPTER 50 OF TITLE 18, UNITED STATES CODE

                          CHAPTER 50--GAMBLING

Sec.
1081. Definitions.
     * * * * * * *
1085. Internet gambling.

           *       *       *       *       *       *       *


Sec. 1085. Internet gambling

    (a) Definitions.--In this section the following definitions 
apply:
            (1) Bets or wagers.--The term ``bets or wagers''--
                    (A) means 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, 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;
                    (B) includes the purchase of a chance or 
                opportunity to win a lottery or other prize 
                (which opportunity to win is predominantly 
                subject to chance);
                    (C) includes any scheme of a type described 
                in section 3702 of title 28; and
                    (D) does not include--
                            (i) a bona fide business 
                        transaction governed by the securities 
                        laws (as that term is defined in 
                        section 3(a)(47) of the Securities 
                        Exchange Act of 1934 (15 U.S.C. 
                        78c(a)(47))) for the purchase or sale 
                        at a future date of securities (as that 
                        term is defined in section 3(a)(10) of 
                        the Securities Exchange Act of 1934 (15 
                        U.S.C. 78c(a)(10)));
                            (ii) a transaction on or subject to 
                        the rules of a contract market 
                        designated pursuant to section 5 of the 
                        Commodity Exchange Act (7 U.S.C. 7);
                            (iii) a contract of indemnity or 
                        guarantee;
                            (iv) a contract for life, health, 
                        or accident insurance; or
                            (v) participation in a simulation 
                        sports game or an educational game or 
                        contest that--
                                    (I) is not dependent solely 
                                on the outcome of any single 
                                sporting event or 
                                nonparticipant's singular 
                                individual performance in any 
                                single sporting event;
                                    (II) has an outcome that 
                                reflects the relative knowledge 
                                and skill of the participants 
                                with such outcome determined 
                                predominantly by accumulated 
                                statistical results of sporting 
                                events and nonparticipants 
                                accumulated individual 
                                performances therein; and
                                    (III) offers a prize or 
                                award to a participant that is 
                                established in advance of the 
                                game or contest and is not 
                                determined by the number of 
                                participants or the amount of 
                                any fees paid by those 
                                participants.
            (2) Closed-loop subscriber-based service.--The term 
        ``closed-loop subscriber-based service'' means any 
        information service or system that uses--
                    (A) a device or combination of devices--
                            (i) expressly authorized and 
                        operated in accordance with the laws of 
                        a State, exclusively for placing, 
                        receiving, or otherwise making a bet or 
                        wager described in subsection 
                        (f)(1)(B); and
                            (ii) by which a person located 
                        within any State must subscribe and be 
                        registered with the provider of the 
                        wagering service by name, address, and 
                        appropriate billing information to be 
                        authorized to place, receive, or 
                        otherwise make a bet or wager, and must 
                        be physically located within that State 
                        in order to be authorized to do so;
                    (B) an effective customer verification and 
                age verification system, expressly authorized 
                and operated in accordance with the laws of the 
                State in which it is located, to ensure that 
                all applicable Federal and State legal and 
                regulatory requirements for lawful gambling are 
                met; and
                    (C) appropriate data security standards to 
                prevent unauthorized access by any person who 
                has not subscribed or who is a minor.
            (3) Foreign jurisdiction.--The term ``foreign 
        jurisdiction'' means a jurisdiction of a foreign 
        country or political subdivision thereof.
            (4) Gambling business.--The term ``gambling 
        business'' means--
                    (A) a business that is conducted at a 
                gambling establishment, or that--
                            (i) involves--
                                    (I) the placing, receiving, 
                                or otherwise making of bets or 
                                wagers; or
                                    (II) the offering to engage 
                                in the placing, receiving, or 
                                otherwise making of bets or 
                                wagers;
                            (ii) involves 1 or more persons who 
                        conduct, finance, manage, supervise, 
                        direct, or own all or part of such 
                        business; and
                            (iii) has been or remains in 
                        substantially continuous operation for 
                        a period in excess of 10 days or has a 
                        gross revenue of $2,000 or more from 
                        such business during any 24-hour 
                        period; and
                    (B) any soliciting agent of a business 
                described in subparagraph (A).
            (5) Information assisting in the placing of a bet 
        or wager.--The term ``information assisting in the 
        placing of a bet or wager''--
                    (A) means information that is intended by 
                the sender or recipient to be used by a person 
                engaged in the business of betting or wagering 
                to place, receive, or otherwise make a bet or 
                wager; and
                    (B) does not include--
                            (i) information concerning 
                        parimutuel pools that is exchanged 
                        exclusively between or among 1 or more 
                        racetracks or other parimutuel wagering 
                        facilities licensed by the State or 
                        approved by the foreign jurisdiction in 
                        which the facility is located, and 1 or 
                        more parimutuel wagering facilities 
                        licensed by the State or approved by 
                        the foreign jurisdiction in which the 
                        facility is located, if that 
                        information is used only to conduct 
                        common pool parimutuel pooling under 
                        applicable law;
                            (ii) information exchanged 
                        exclusively between or among 1 or more 
                        racetracks or other parimutuel wagering 
                        facilities licensed by the State or 
                        approved by the foreign jurisdiction in 
                        which the facility is located, and a 
                        support service located in another 
                        State or foreign jurisdiction, if the 
                        information is used only for processing 
                        bets or wagers made with that facility 
                        under applicable law;
                            (iii) information exchanged 
                        exclusively between or among 1 or more 
                        wagering facilities that are licensed 
                        and regulated by the State in which 
                        each facility is located, and any 
                        support service, wherever located, if 
                        the information is used only for the 
                        pooling or processing of bets or wagers 
                        made by or with the facility or 
                        facilities under each State's 
                        applicable law;
                            (iv) any news reporting or analysis 
                        of wagering activity, including odds, 
                        racing or event results, race and event 
                        schedules, or categories of wagering; 
                        or
                            (v) any posting or reporting of any 
                        educational information on how to make 
                        a bet or wager or the nature of betting 
                        or wagering.
            (6) Interactive computer service.--The term 
        ``interactive computer service'' means any information 
        service, system, or access software provider that 
        operates in, or uses a channel or instrumentality of, 
        interstate or foreign commerce to provide or enable 
        access by multiple users to a computer server, which 
        includes the transmission, storage, retrieval, hosting, 
        linking, formatting, or translation of a communication 
        made by another person, and including specifically a 
        service, system, or access software provider that--
                    (A) provides access to the Internet; or
                    (B) is engaged in the business of providing 
                an information location tool (which means a 
                service that refers or links users to an online 
                location, including a directory, index, 
                reference, pointer, or hypertext link).
            (7) Interactive computer service provider.--The 
        term ``interactive computer service provider'' means 
        any person that provides an interactive computer 
        service, to the extent that such person offers or 
        provides such service.
            (8) Internet.--The term ``Internet'' means the 
        international computer network of both Federal and non-
        Federal interoperable packet switched data networks.
            (9) Person.--The term ``person'' means any 
        individual, association, partnership, joint venture, 
        corporation (or any affiliate of a corporation), State 
        or political subdivision thereof, department, agency, 
        or instrumentality of a State or political subdivision 
        thereof, or any other government, organization, or 
        entity (including any governmental entity (as defined 
        in section 3701(2) of title 28)).
            (10) Private network.--The term ``private network'' 
        means a communications channel or channels, including 
        voice or computer data transmission facilities, that 
        use either--
                    (A) private dedicated lines; or
                    (B) the public communications 
                infrastructure, if the infrastructure is 
                secured by means of the appropriate private 
                communications technology to prevent 
                unauthorized access.
            (11) State.--The term ``State'' means a State of 
        the United States, the District of Columbia, the 
        Commonwealth of Puerto Rico, or a commonwealth, 
        territory, or possession of the United States.
            (12) Subscriber.--The term ``subscriber''--
                    (A) means any person with a business 
                relationship with the interactive computer 
                service provider through which such person 
                receives access to the system, service, or 
                network of that provider, even if no formal 
                subscription agreement exists; and
                    (B) includes registrants, students who are 
                granted access to a university system or 
                network, and employees or contractors who are 
                granted access to the system or network of 
                their employer.
            (13) Soliciting agent.--The term ``soliciting 
        agent'' means any agent who knowingly solicits for a 
        gambling business described in paragraph (4)(A) of this 
        subsection.
    (b) Internet Gambling.--
            (1) Prohibition.--Subject to subsection (f), it 
        shall be unlawful for a person engaged in a gambling 
        business knowingly to use the Internet or any other 
        interactive computer service--
                    (A) to place, receive, or otherwise make a 
                bet or wager; or
                    (B) to send, receive, or invite information 
                assisting in the placing of a bet or wager.
            (2) Penalties.--A person engaged in a gambling 
        business who violates this section shall be--
                    (A) fined in an amount equal to not more 
                than the greater of--
                            (i) the total amount that such 
                        person bet or wagered, or placed, 
                        received, or accepted in bets or 
                        wagers, as a result of engaging in that 
                        business in violation of this section; 
                        or
                            (ii) $20,000;
                    (B) imprisoned not more than 4 years; or
                    (C) both.
            (3) Permanent injunctions.--Upon conviction of a 
        person under this section, the court may enter a 
        permanent injunction enjoining such person from 
        placing, receiving, or otherwise making bets or wagers 
        or sending, receiving, or inviting information 
        assisting in the placing of bets or wagers.
    (c) Civil Remedies.--
            (1) Jurisdiction.--The district courts of the 
        United States shall have original and exclusive 
        jurisdiction to prevent and restrain violations of this 
        section by issuing appropriate orders in accordance 
        with this section, regardless of whether a prosecution 
        has been initiated under this section.
            (2) Proceedings.--
                    (A) Institution by federal government.--
                            (i) In general.--The United States 
                        may institute proceedings under this 
                        subsection to prevent or restrain a 
                        violation of this section.
                            (ii) Relief.--Upon application of 
                        the United States under this 
                        subparagraph, the district court may 
                        enter a temporary restraining order or 
                        an injunction against any person to 
                        prevent or restrain a violation of this 
                        section if the court determines, after 
                        notice and an opportunity for a 
                        hearing, that there is a substantial 
                        probability that such violation has 
                        occurred or will occur.
                    (B) Institution by state attorney 
                general.--
                            (i) In general.--The attorney 
                        general of a State (or other 
                        appropriate State official) in which a 
                        violation of this section allegedly has 
                        occurred or will occur, after providing 
                        written notice to the United States, 
                        may institute proceedings under this 
                        subsection to prevent or restrain the 
                        violation.
                            (ii) Relief.--Upon application of 
                        the attorney general (or other 
                        appropriate State official) of an 
                        affected State under this subparagraph, 
                        the district court may enter a 
                        temporary restraining order or an 
                        injunction against any person to 
                        prevent or restrain a violation of this 
                        section if the court determines, after 
                        notice and an opportunity for a 
                        hearing, that there is a substantial 
                        probability that such violation has 
                        occurred or will occur.
                    (C) Indian lands.--Notwithstanding 
                subparagraphs (A) and (B), for a violation that 
                is alleged to have occurred, or may occur, on 
                Indian lands (as that term is defined in 
                section 4 of the Indian Gaming Regulatory Act 
                (25 U.S.C. 2703))--
                            (i) the United States shall have 
                        the enforcement authority provided 
                        under subparagraph (A); and
                            (ii) the enforcement authorities 
                        specified in an applicable Tribal-State 
                        compact negotiated under section 11 of 
                        the Indian Gaming Regulatory Act (25 
                        U.S.C. 2710) shall be carried out in 
                        accordance with that compact.
                    (D) Expiration.--Any temporary restraining 
                order or preliminary injunction entered 
                pursuant to subparagraph (A) or (B) shall 
                expire if, and as soon as, the United States, 
                or the attorney general (or other appropriate 
                State official) of the State, as applicable, 
                notifies the court that issued the order or 
                injunction that the United States or the State, 
                as applicable, will not seek a permanent 
                injunction.
            (3) Expedited proceedings.--
                    (A) In general.--In addition to any 
                proceeding under paragraph (2), a district 
                court may, in exigent circumstances, enter a 
                temporary restraining order against a person 
                alleged to be in violation of this section upon 
                application of the United States under 
                paragraph (2)(A), or the attorney general (or 
                other appropriate State official) of an 
                affected State under paragraph (2)(B), without 
                notice and the opportunity for a hearing as 
                provided in rule 65(b) of the Federal Rules of 
                Civil Procedure (except as provided in 
                subsection (d)(3)), if the United States or the 
                State, as applicable, demonstrates that there 
                is probable cause to believe that the use of 
                the Internet or other interactive computer 
                service at issue violates this section.
                    (B) Hearings.--A hearing requested 
                concerning an order entered under this 
                paragraph shall be held at the earliest 
                practicable time.
    (d) Interactive Computer Service Providers.--
            (1) Immunity from liability for use by another.--
                    (A) In general.--An interactive computer 
                service provider described in subparagraph (B) 
                shall not be liable, under this section or any 
                other provision of Federal or State law 
                prohibiting or regulating gambling or gambling-
                related activities, for the use of its 
                facilities or services by another person to 
                engage in Internet gambling activity or 
                advertising or promotion of Internet gambling 
                activity that violates such law--
                            (i) arising out of any 
                        transmitting, routing, or providing of 
                        connections for gambling-related 
                        material or activity (including 
                        intermediate and temporary storage in 
                        the course of such transmitting, 
                        routing, or providing connections) by 
                        the provider, if--
                                    (I) the material or 
                                activity was initiated by or at 
                                the direction of a person other 
                                than the provider;
                                    (II) the transmitting, 
                                routing, or providing of 
                                connections is carried out 
                                through an automatic process 
                                without selection of the 
                                material or activity by the 
                                provider;
                                    (III) the provider does not 
                                select the recipients of the 
                                material or activity, except as 
                                an automatic response to the 
                                request of another person; and
                                    (IV) the material or 
                                activity is transmitted through 
                                the system or network of the 
                                provider without modification 
                                of its content; or
                            (ii) arising out of any gambling-
                        related material or activity at an 
                        online site residing on a computer 
                        server owned, controlled, or operated 
                        by or for the provider, or arising out 
                        of referring or linking users to an 
                        online location containing such 
                        material or activity, if the material 
                        or activity was initiated by or at the 
                        direction of a person other than the 
                        provider, unless the provider fails to 
                        take expeditiously, with respect to the 
                        particular material or activity at 
                        issue, the actions described in 
                        paragraph (2)(A) following the receipt 
                        by the provider of a notice described 
                        in paragraph (2)(B).
                    (B) Eligibility.--An interactive computer 
                service provider is described in this 
                subparagraph only if the provider--
                            (i) maintains and implements a 
                        written or electronic policy that 
                        requires the provider to terminate the 
                        account of a subscriber of its system 
                        or network expeditiously following the 
                        receipt by the provider of a notice 
                        described in paragraph (2)(B) alleging 
                        that such subscriber has violated or is 
                        violating this section; and
                            (ii) with respect to the particular 
                        material or activity at issue, has not 
                        knowingly permitted its computer server 
                        to be used to engage in activity that 
                        the provider knows is prohibited by 
                        this section, with the specific intent 
                        that such server be used for such 
                        purpose.
            (2) Notice to interactive computer service 
        providers.--
                    (A) In general.--If an interactive computer 
                service provider receives from a Federal or 
                State law enforcement agency, acting within its 
                authority and jurisdiction, a written or 
                electronic notice described in subparagraph 
                (B), that a particular online site residing on 
                a computer server owned, controlled, or 
                operated by or for the provider is being used 
                by another person to violate this section, the 
                provider shall expeditiously--
                            (i) remove or disable access to the 
                        material or activity residing at that 
                        online site that allegedly violates 
                        this section; or
                            (ii) in any case in which the 
                        provider does not control the site at 
                        which the subject material or activity 
                        resides, the provider, through any 
                        agent of the provider designated in 
                        accordance with section 512(c)(2) of 
                        title 17, or other responsible 
                        identified employee or contractor--
                                    (I) notify the Federal or 
                                State law enforcement agency 
                                that the provider is not the 
                                proper recipient of such 
                                notice; and
                                    (II) upon receipt of a 
                                subpoena, cooperate with the 
                                Federal or State law 
                                enforcement agency in 
                                identifying the person or 
                                persons who control the site.
                    (B) Notice.--A notice is described in this 
                subparagraph only if it--
                            (i) identifies the material or 
                        activity that allegedly violates this 
                        section, and alleges that such material 
                        or activity violates this section;
                            (ii) provides information 
                        reasonably sufficient to permit the 
                        provider to locate (and, as 
                        appropriate, in a notice issued 
                        pursuant to paragraph (3)(A) to block 
                        access to) the material or activity;
                            (iii) is supplied to any agent of a 
                        provider designated in accordance with 
                        section 512(c)(2) of title 17, if 
                        information regarding such designation 
                        is readily available to the public;
                            (iv) provides information that is 
                        reasonably sufficient to permit the 
                        provider to contact the law enforcement 
                        agency that issued the notice, 
                        including the name of the law 
                        enforcement agency, and the name and 
                        telephone number of an individual to 
                        contact at the law enforcement agency 
                        (and, if available, the electronic mail 
                        address of that individual); and
                            (v) declares under penalties of 
                        perjury that the person submitting the 
                        notice is an official of the law 
                        enforcement agency described in clause 
                        (iv).
            (3) Injunctive relief.--
                    (A) In general.--The United States, or a 
                State law enforcement agency acting within its 
                authority and jurisdiction, may, not less than 
                24 hours following the issuance to an 
                interactive computer service provider of a 
                notice described in paragraph (2)(B), in a 
                civil action, obtain a temporary restraining 
                order, or an injunction to prevent the use of 
                the interactive computer service by another 
                person in violation of this section.
                    (B) Limitations.--Notwithstanding any other 
                provision of this section, in the case of any 
                application for a temporary restraining order 
                or an injunction against an interactive 
                computer service provider described in 
                paragraph (1)(B) to prevent a violation of this 
                section--
                            (i) arising out of activity 
                        described in paragraph (1)(A)(i), the 
                        injunctive relief is limited to--
                                    (I) an order restraining 
                                the provider from providing 
                                access to an identified 
                                subscriber of the system or 
                                network of the interactive 
                                computer service provider, if 
                                the court determines that there 
                                is probable cause to believe 
                                that such subscriber is using 
                                that access to violate this 
                                section (or to engage with 
                                another person in a 
                                communication that violates 
                                this section), by terminating 
                                the specified account of that 
                                subscriber; and
                                    (II) an order restraining 
                                the provider from providing 
                                access, by taking reasonable 
                                steps specified in the order to 
                                block access, to a specific, 
                                identified, foreign online 
                                location;
                            (ii) arising out of activity 
                        described in paragraph (1)(A)(ii), the 
                        injunctive relief is limited to--
                                    (I) the orders described in 
                                clause (i)(I);
                                    (II) an order restraining 
                                the provider from providing 
                                access to the material or 
                                activity that violates this 
                                section at a particular online 
                                site residing on a computer 
                                server operated or controlled 
                                by the provider; and
                                    (III) such other injunctive 
                                remedies as the court considers 
                                necessary to prevent or 
                                restrain access to specified 
                                material or activity that is 
                                prohibited by this section at a 
                                particular online location 
                                residing on a computer server 
                                operated or controlled by the 
                                provider, that are the least 
                                burdensome to the provider 
                                among the forms of relief that 
                                are comparably effective for 
                                that purpose.
                    (C) Considerations.--The court, in 
                determining appropriate injunctive relief under 
                this paragraph, shall consider--
                            (i) whether such an injunction, 
                        either alone or in combination with 
                        other such injunctions issued, and 
                        currently operative, against the same 
                        provider would significantly (and, in 
                        the case of relief under subparagraph 
                        (B)(ii), taking into account, among 
                        other factors, the conduct of the 
                        provider, unreasonably) burden either 
                        the provider or the operation of the 
                        system or network of the provider;
                            (ii) whether implementation of such 
                        an injunction would be technically 
                        feasible and effective, and would not 
                        materially interfere with access to 
                        lawful material at other online 
                        locations;
                            (iii) whether other less burdensome 
                        and comparably effective means of 
                        preventing or restraining access to the 
                        illegal material or activity are 
                        available; and
                            (iv) the magnitude of the harm 
                        likely to be suffered by the community 
                        if the injunction is not granted.
                    (D) Notice and ex parte orders.--Injunctive 
                relief under this paragraph shall not be 
                available without notice to the service 
                provider and an opportunity for such provider 
                to appear before the court, except for orders 
                ensuring the preservation of evidence or other 
                orders having no material adverse effect on the 
                operation of the communications network of the 
                service provider.
            (4) Advertising or promotion of non-internet 
        gambling.--
                    (A) Definitions.--In this paragraph:
                            (i) Conducted.--With respect to a 
                        gambling activity, that activity is 
                        ``conducted'' in a State if the State 
                        is the State in which the gambling 
                        establishment (as defined in section 
                        1081) that offers the gambling activity 
                        being advertised or promoted is 
                        physically located.
                            (ii) Non-internet gambling 
                        activity.--The term ``non-Internet 
                        gambling activity'' means--
                                    (I) a gambling activity in 
                                which the placing of the bet or 
                                wager is not conducted by the 
                                Internet; or
                                    (II) a gambling activity to 
                                which the prohibitions of this 
                                section do not apply.
                    (B) Immunity from liability for use by 
                another.--
                            (i) In general.--An interactive 
                        computer service provider described in 
                        clause (ii) shall not be liable, under 
                        any provision of Federal or State law 
                        prohibiting or regulating gambling or 
                        gambling-related activities, or under 
                        any State law prohibiting or regulating 
                        advertising and promotional activities, 
                        for--
                                    (I) content, provided by 
                                another person, that advertises 
                                or promotes non-Internet 
                                gambling activity that violates 
                                such law (unless the provider 
                                is engaged in the business of 
                                such gambling), arising out of 
                                any of the activities described 
                                in paragraph (1)(A) (i) or 
                                (ii); or
                                    (II) content, provided by 
                                another person, that advertises 
                                or promotes non-Internet 
                                gambling activity that is 
                                lawful under Federal law and 
                                the law of the State in which 
                                such gambling activity is 
                                conducted.
                            (ii) Eligibility.--An interactive 
                        computer service is described in this 
                        clause only if the provider--
                                    (I) maintains and 
                                implements a written or 
                                electronic policy that requires 
                                the provider to terminate the 
                                account of a subscriber of its 
                                system or network expeditiously 
                                following the receipt by the 
                                provider of a notice described 
                                in paragraph (2)(B) alleging 
                                that such subscriber maintains 
                                a website on a computer server 
                                controlled or operated by the 
                                provider for the purpose of 
                                engaging in advertising or 
                                promotion of non-Internet 
                                gambling activity prohibited by 
                                a Federal law or a law of the 
                                State in which such activity is 
                                conducted;
                                    (II) with respect to the 
                                particular material or activity 
                                at issue, has not knowingly 
                                permitted its computer server 
                                to be used to engage in the 
                                advertising or promotion of 
                                non-Internet gambling activity 
                                that the provider knows is 
                                prohibited by a Federal law or 
                                a law of the State in which the 
                                activity is conducted, with the 
                                specific intent that such 
                                server be used for such 
                                purpose; and
                                    (III) at reasonable cost, 
                                offers residential customers of 
                                the provider's Internet access 
                                service, if the provider 
                                provides Internet access 
                                service to such customers, 
                                computer software, or another 
                                filtering or blocking system 
                                that includes the capability of 
                                filtering or blocking access by 
                                minors to online Internet 
                                gambling sites that violate 
                                this section.
                    (C) Notice to interactive computer service 
                providers.--
                            (i) Notice from federal law 
                        enforcement agency.--If an interactive 
                        computer service provider receives from 
                        a Federal law enforcement agency, 
                        acting within its authority and 
                        jurisdiction, a written or electronic 
                        notice described in paragraph (2)(B), 
                        that a particular online site residing 
                        on a computer server owned, controlled, 
                        or operated by or for the provider is 
                        being used by another person to 
                        advertise or promote non-Internet 
                        gambling activity that violates a 
                        Federal law prohibiting or regulating 
                        gambling or gambling-related 
                        activities, the provider shall 
                        expeditiously take the actions 
                        described in paragraph (2)(A) (i) or 
                        (ii) with respect to the advertising or 
                        promotion identified in the notice.
                            (ii) Notice from state law 
                        enforcement agency.--If an interactive 
                        computer service provider receives from 
                        a State law enforcement agency, acting 
                        within its authority and jurisdiction, 
                        a written or electronic notice 
                        described in paragraph (2)(B), that a 
                        particular online site residing on a 
                        computer server owned, controlled, or 
                        operated by or for the provider is 
                        being used by another person to 
                        advertise or promote non-Internet 
                        gambling activity that is conducted in 
                        that State and that violates a law of 
                        that State prohibiting or regulating 
                        gambling or gambling-related 
                        activities, the provider shall 
                        expeditiously take the actions 
                        described in paragraph (2)(A) (i) or 
                        (ii) with respect to the advertising or 
                        promotion identified in the notice.
                    (D) Injunctive relief.--The United States, 
                or a State law enforcement agency, acting 
                within its authority and jurisdiction, may, not 
                less than 24 hours following the issuance to an 
                interactive computer service provider of a 
                notice described in paragraph (2)(B), in a 
                civil action, obtain a temporary restraining 
                order, or an injunction, to prevent the use of 
                the interactive computer service by another 
                person to advertise or promote non-Internet 
                gambling activity that violates a Federal law, 
                or a law of the State in which such activity is 
                conducted that prohibits or regulates gambling 
                or gambling-related activities, as applicable. 
                The procedures described in paragraph (3)(D) 
                shall apply to actions brought under this 
                subparagraph, and the relief in such actions 
                shall be limited to--
                            (i) an order requiring the provider 
                        to remove or disable access to the 
                        advertising or promotion of non-
                        Internet gambling activity that 
                        violates Federal law, or the law of the 
                        State in which such activity is 
                        conducted, as applicable, at a 
                        particular online site residing on a 
                        computer server controlled or operated 
                        by the provider;
                            (ii) an order restraining the 
                        provider from providing access to an 
                        identified subscriber of the system or 
                        network of the provider, if the court 
                        determines that such subscriber 
                        maintains a website on a computer 
                        server controlled or operated by the 
                        provider that the subscriber is 
                        knowingly using or knowingly permitting 
                        to be used to advertise or promote non-
                        Internet gambling activity that 
                        violates Federal law or the law of the 
                        State in which such activity is 
                        conducted; and
                            (iii) an order restraining the 
                        provider of the content of the 
                        advertising or promotion of such 
                        illegal gambling activity from 
                        disseminating such advertising or 
                        promotion on the computer server 
                        controlled or operated by the provider 
                        of such interactive computer service.
                    (E) Applicability.--The provisions of 
                subparagraphs (C) and (D) do not apply to the 
                content described in subparagraph (B)(i)(II).
            (5) Effect on other law.--
                    (A) Immunity from liability for 
                compliance.--An interactive computer service 
                provider shall not be liable for any damages, 
                penalty, or forfeiture, civil or criminal, 
                under Federal or State law for taking in good 
                faith any action described in paragraphs 
                (2)(A), (4)(B)(ii)(I), or (4)(C) to comply with 
                a notice described in paragraph (2)(B), or 
                complying with any court order issued under 
                paragraph (3) or (4)(D).
                    (B) Disclaimer of obligations.--Nothing in 
                this section may be construed to impose or 
                authorize an obligation on an interactive 
                computer service provider described in 
                paragraph (1)(B)--
                            (i) to monitor material or use of 
                        its service; or
                            (ii) except as required by a notice 
                        or an order of a court under this 
                        subsection, to gain access to, to 
                        remove, or to disable access to 
                        material.
                    (C) Rights of subscribers.--Nothing in this 
                section may be construed to prejudice the right 
                of a subscriber to secure an appropriate 
                determination, as otherwise provided by law, in 
                a Federal court or in a State or local tribunal 
                or agency, that the account of such subscriber 
                should not be terminated pursuant to this 
                subsection, or should be restored.
    (e) Availability of Relief.--The availability of relief 
under subsections (c) and (d) shall not depend on, or be 
affected by, the initiation or resolution of any action under 
subsection (b), or under any other provision of Federal or 
State law.
    (f) Applicability.--
            (1) In general.--Subject to paragraph (2), the 
        prohibition in this section does not apply to--
                    (A) any otherwise lawful bet or wager that 
                is placed and received, or otherwise made 
                wholly intrastate for a State lottery, or for a 
                multi-State lottery operated jointly between 2 
                or more States in conjunction with State 
                lotteries if--
                            (i) each such lottery is expressly 
                        authorized, and licensed or regulated, 
                        under applicable State law;
                            (ii) the bet or wager is placed on 
                        an interactive computer service that 
                        uses a private network or a closed-loop 
                        subscriber based service regulated and 
                        operated by the State lottery or its 
                        expressly designated agent for such 
                        activity;
                            (iii) each person placing or 
                        otherwise making that bet or wager is 
                        physically located when such bet or 
                        water is placed at a facility that is 
                        open to the general public; and
                            (iv) each such lottery complies 
                        with sections 1301 through 1304, and 
                        other applicable provisions of Federal 
                        law;
                    (B) any otherwise lawful bet or wager that 
                is placed, received, or otherwise made on an 
                interstate or intrastate basis on a live horse 
                or a live dog race or on jai alai, or the 
                sending, receiving, or inviting of information 
                assisting in the placing of such a bet or 
                wager, if such bet or wager, or the 
                transmission of such information, as 
                applicable, is--
                            (i) expressly authorized, and 
                        licensed or regulated by the State in 
                        which such bet or wager is received, 
                        under applicable Federal and such 
                        State's laws;
                            (ii) placed on a closed-loop 
                        subscriber-based service;
                            (iii) initiated from a State in 
                        which betting or wagering on that same 
                        type of live horse or live dog racing 
                        or on jai alai is lawful and received 
                        in a State in which such betting or 
                        wagering is lawful;
                            (iv) subject to the regulatory 
                        oversight of the State in which the bet 
                        or wager is received and subject by 
                        such State to minimum control standards 
                        for the accounting, regulatory 
                        inspection, and auditing of all such 
                        bets or wagers transmitted from 1 State 
                        to another; and
                            (v) in the case of--
                                    (I) live horse racing, made 
                                in accordance with the 
                                Interstate Horse Racing Act of 
                                1978 (15 U.S.C. 3001 et seq.) 
                                and the requirements, if any, 
                                established by an appropriate 
                                legislative or regulatory body 
                                of the State in which the bet 
                                or wager originates;
                                    (II) live dog racing, 
                                subject to regulatory consent 
                                agreements that are comparable 
                                to those required by the 
                                Interstate Horse Racing Act of 
                                1978, and the requirements, if 
                                any, established by an 
                                appropriate legislative or 
                                regulatory body of the State in 
                                which the bet or wager 
                                originates; or
                                    (III) live jai alai, 
                                subject to regulatory consent 
                                agreements that are comparable 
                                to those required by the 
                                Interstate Horse Racing Act of 
                                1978, and the requirements, if 
                                any, established by an 
                                appropriate legislative or 
                                regulatory body of the State in 
                                which the bet or wager 
                                originates;
                    (C) any otherwise lawful bet or wager that 
                is placed, received, or otherwise made wholly 
                intrastate, or the sending, receiving, or 
                inviting of information assisting in the 
                placing of such a bet or wager, if such bet or 
                wager, or the transmission of such information, 
                as applicable is--
                            (i) expressly authorized, and 
                        licensed or regulated by the State in 
                        which such bet or wager is initiated 
                        and received, under applicable Federal 
                        and such State's laws; and
                            (ii) placed on a closed-loop 
                        subscriber based service; or
                    (D) any otherwise lawful bet or wager that 
                is--
                            (i) placed on a closed-loop 
                        subscriber based service or a private 
                        network; and
                            (ii) is lawfully received by a 
                        federally recognized Indian tribe, or 
                        the sending, receiving, or inviting of 
                        information assisting in the placing of 
                        any such bet or wager, if the game is 
                        permitted under and conducted in 
                        accordance with the Indian Gaming 
                        Regulatory Act, so long as each person 
                        placing, receiving, or otherwise making 
                        such a bet or wager, or transmitting 
                        such information, is physically located 
                        on Indian lands (as that term is 
                        defined in section 4 of the Indian 
                        Gaming Regulatory Act) when such person 
                        places, receives, or otherwise makes 
                        the bet or wager.
            (2) Bets or wagers made by agents or proxies.--
                    (A) In general.--Paragraph (1) does not 
                apply in any case in which a bet or wager is 
                placed, received, or otherwise made by the use 
                of an agent or proxy using the Internet or an 
                interactive computer service.
                    (B) Qualification.--Nothing in this 
                paragraph may be construed to prohibit the 
                owner operator of a parimutuel wagering 
                facility that is licensed by a State from 
                employing an agent in the operation of the 
                account wagering system owned or operated by 
                the parimutuel facility.
            (3) Advertising and promotion.--The prohibition of 
        subsection (b)(1)(B) does not apply to advertising, 
        promotion, or other communication by, or authorized by, 
        anyone licensed to operate a gambling business in a 
        State.
    (g) Rule of Construction.--Nothing in this section may be 
construed to affect any prohibition or remedy applicable to a 
person engaged in a gambling business under any other provision 
of Federal or State law.
                            Additional Views

    While I support the overall thrust of H.R. 3125, the 
Internet Gambling Prohibition Act, I have serious concerns 
relating to the tribal gaming exemption provided by Section 2: 
(f)(1)(D).
    The provision exempts gambling on a closed loop system, as 
the term is defined in H.R. 3125. It requires both the sender 
and the receiver to be on Indian lands. This is not limited to 
the Indian lands on which the game is conducted, therefore, it 
would allow linking of all Indian lands nationwide.
    Because the language is broad enough to authorize just 
about any type of wagering on a closed loop system between 
tribal lands, language must also be added to ensure that no 
Class III gaming activity can occur without the explicit 
authorization of a Tribal/State compact.
    The language that a bet be ``lawfully received'' by a tribe 
is ambiguous, because it is unclear if the Act itself will make 
the receipt of the wager ``lawful,'' independent of any 
Compact. The requirement that the ``game is permitted under and 
conducted in accordance with IGRA'' is ambiguous, because if 
the underlying game (i.e. slot machines) is authorized by a 
Compact, without specific authorization for a closed loop 
system, the requirement would appear to be met.
    Let me provide an example: If State A's compact allows for 
slots, and State B's compact allows for blackjack and slots, 
absent clarification, the tribe in State A would argue it can 
now participate in blackjack.
    In conclusion, the ambiguous provision, combined with the 
rules of statutory construction, require that the language be 
clarified so that the carefully negotiated Tribal/State 
compacts are not at risk.

                                   F. James Sensenbrenner, Jr.
                            Dissenting Views

    Although we are opposed to illegal gambling, whether done 
over the Internet or otherwise, we cannot support the 
legislation reported by the Judiciary Committee. H.R. 3125 not 
only expands gambling over the Internet, it arbitrarily favors 
certain forms of gambling over others. In addition, the bill 
inappropriately requires Internet service providers and others 
to police websites, threatens the privacy and civil liberty of 
all Americans, and creates a patchwork of inconsistent laws. By 
approving this legislation, the Majority reveals its 
insensitivity to the growth of the Internet and the interests 
of our citizens in the information age.
    Concerns or outright opposition with regard to the 
legislation (or similar predecessor versions of it) have been 
expressed by the Justice Department and a wide variety of 
groups. These include Internet and telecommunications concerns 
such as the Computer & Communications Industry Association 
(CCIA), Covad Communications, and AT&T; civil liberties groups 
such as the Center for Democracy and Technology (CDT) and the 
ACLU; and groups harmed by the bill's arbitrary preference for 
pari-mutuel betting \1\ and its equally arbitrary dismissal of 
other forms of gambling,\2\ including State lotteries, 
charitable gaming, and gambling on Indian reservations.
---------------------------------------------------------------------------
    \1\ The Christian Coalition, Family Research Council, and Madison 
Project oppose the expansion of gambling in the bill.
    \2\ These groups include the National Governors Association, 
lottery.com, the Association of Lottery Retailers, and the Lac Vieux 
Band of Lake Superior Chippewa Indians.
---------------------------------------------------------------------------
    H.R. 3125 would make it unlawful for a person \3\ engaged 
in a gambling business \4\ knowingly to use the Internet to 
place, receive or otherwise make a bet or wager or to send, 
receive or invite information assisting in the placing of a bet 
or wager.\5\ At the same time the bill vitiates the existing 
Federal wire statute prohibition \6\ on certain bets from the 
home by making it legal to place a bet or wager at home over 
the Internet on a horse race, dog race or jai alai match,\7\ 
the bill also discriminates against regulated gambling by 
church and non-profit organizations,\8\ in-State lottery 
sales,\9\ and Native American tribes \10\ by severely 
restricting their legality over the Internet. The bill excludes 
fantasy sports leagues from its coverage by defining a ``bet or 
wager'' to exclude such activities.\11\
---------------------------------------------------------------------------
    \3\ Subsection (a)(9) of H.R. 3125 would broadly define ``person'' 
to include individuals and entities with indirect or highly attenuated 
connections to the activity in question, such as shareholders of a 
corporation or officers of a holding company.
    \4\ Subsection (a)(4) of H.R. 3125 would define a person engaged 
gambling business to include those persons who place or receive bets 
and is in continuous operation for more than 10 days or has a gross 
revenue of at least $2,000. This definition could be construed to apply 
to an individual gambler.
    \5\ H.R. 3125, subsection (b)(1). The bill would institute new 
civil and criminal penalties for violating its provisions. Civil 
penalties would include the greater of the amount of bets and wagers 
placed or received by the defendant or $20,000. Criminal penalties 
would include imprisonment up to 4 years. A defendant could be subject 
to both the civil and criminal penalties. H.R. 3125, subsection (b)(2).
    \6\ The Wire Communications Act, 18 U.S.C. Sec. 1084, prohibits 
persons who are ``engaged in the business of betting or wagering 
knowingly [to] use[ ] a wire communication facility for the 
transmission in interstate or foreign commerce of bets or wagers or 
information assisting in the placing of bets or wagers.'' As defined by 
18 U.S.C. Sec. 1081, a ``wire communication facility'' includes the 
Internet.
    \7\ H.R. 3125, subsection (f). Such bets would be permitted if 
allowed by the State and placed on a closed-loop subscriber service, 
broadly defined, which would include the purchase of a diskette with a 
credit card which could be used to access the system.
    \8\ Charitable donations that are placed through bets are neither 
excluded from definition of ``bet or wager,'' nor from the prohibition 
on Internet gambling.
    \9\ Subsection (f)(1)(A) of H.R. 3125 would permit the purchase of 
lottery tickets on the Internet only by a person who ``is physically 
located when such bet or water [sic] is physically located when such 
bet or water [sic] is placed at a facility that is open to the general 
public.''
    \10\ Subsection (f)(1)(D) of H.R. 3125 would restrict the placement 
and receipt of Indian gambling bets over the Internet to situations in 
which the person is ``physically located on Indian lands.'' The 1988 
Indian Gambling Regulatory Act currently permits Native Americans to 
use the Internet and telecommunications technologies to link Bingo that 
is played on different Reservations. This legislation expressly 
encouraged tribes to deploy the latest technology and communications 
for Bingo. Like its treatment of State lotteries, H.R. 3125 would 
eliminate the ability of tribes to conduct lawful Bingo games at the 
same time that it opens the floodgates for currently unlawful horse 
races, dog races, and jai alai.
    \11\ H.R. 3125, subsection (a)(1)(D)(v). The bill defines fantasy 
sports leagues as contests that do not depend on the outcome of any 
single sporting event or a singular individual performance, that have 
an outcome reflecting the skill and knowledge of contestants, and that 
offer a prize that is determined in advance of the event and do not 
depend on the number of participants or the fees paid by those 
participants.
---------------------------------------------------------------------------
    The bill's enforcement scheme is premised on several broad 
``notice and take down,'' blocking, and injunctive 
requirements, which principally rely on so-called ``interactive 
computer service'' (ICS) providers to act as surrogates for law 
enforcement (presumably, this would include Internet service 
providers, such as AOL or the Microsoft Network (MSN), but 
potentially include a far broader range of companies such as 
search engines and portals \12\). With regard to ``notice-and-
takedown,'' the bill specifies that after notice from a law 
enforcement agency, an ICS is required to ``take down'' any web 
site, customer account, or other offending material which is 
seen as facilitating illegal Internet gambling or advertising 
thereof.\13\ This requirement would attach merely upon a court 
order based on probable cause and is written so broadly that 
even individual consumers engaging in a form of gambling which 
is not illegal for them can lose their accounts without any 
advance notice.\14\ In terms of blocking, H.R. 3125 would 
require any ICS to mandatorily block an individual's access to 
specified foreign websites.\15\ Again, this provision is not 
premised on the individual whose access is being blocked having 
violated any Federal or State gambling law. (In nominal 
exchange for these new burdens, the bill immunizes qualifying 
ICSs from liability under Federal or State law for the use of 
its facilities to violate the Act.) \16\
---------------------------------------------------------------------------
    \12\ Subsection (a)(7) of H.R. 3125 would define an ``interactive 
computer service provider'' to be ``any person that provides an 
interactive computer service, to the extent that such person offers or 
provides such service.'' Since the essence of the Internet is to 
provide its users with interactive computer services, the definition 
would encompass not only Internet Service Providers like AOL, but also 
on any search engine, portal, website, or even a website 
infrastructure, all of which provide interactive services to users.
    \13\ Two subsections of H.R. 3125 establish the notice and takedown 
requirements. First, subsection (b)(2) of H.R. 3125 provides that an 
ICS, upon receipt of a notice that a website is violating the 
prohibitions on Internet gambling, must ``expeditiously remove or 
disable'' access to the material or notify law enforcement that it 
incorrectly received the notice. If the ICS fails to take either of 
these steps within 24 hours of receiving the notice, law enforcement 
may seek a temporary restraining order or an injunction preventing the 
ICS from being used to violate this section. Parallel provisions apply 
to online advertising of Internet gambling websites. Subsection (3)(D) 
of H.R. 3125.
    \14\ See infra.
    \15\ Subsection (d)(3)(B)(II) of H.R. 3125 would authorize law 
enforcement to go into court to obtain an order requiring the ICS to 
block access to ``specific, foreign online location[s].''
    \16\ Subsection (d)(1) of H.R. 3125. The immunity would apply under 
the following conditions: (1) the violating material or activity was 
not initiated by or at the direction of the interactive computer 
service providers; (2) the material or activity was automatically 
processed without selection by the interactive computer service 
providers; and (3) the interactive computer service providers played no 
role in modifying the content of the site. The bill would further 
immunize qualifying interactive computer service providers from 
liability under Federal or State gambling law if another person 
advertised legal or illegal gambling activity.
    Interactive computer service providers would only qualify for these 
immunities, however, if they: (1) maintain a written or electronic 
policy that requires them to terminate a subscriber's account 
expeditiously following the receipt of a notice; (2) prevent their 
server from being used to engage in activity which violates the Act, 
with the specific intent that the server be used for that purpose; (3) 
do not knowingly permit their server to be used to advertise non-
Internet gambling activity that violates the law; and (4) offer 
blocking software that would assist in blocking minors' access to 
Internet gambling sites.
---------------------------------------------------------------------------
    Finally, the legislation includes a very broad court-
ordered injunction provision. This relief can be obtained upon 
a mere showing of ``probable cause.'' The authorization for an 
injunction can be brought against any person other than an ICS 
to prevent or restrain a violation of the law.\17\ A summary of 
our concerns with the legislation follows.
---------------------------------------------------------------------------
    \17\ Subsection (d)(3) of H.R. 3125. This provision, by its own 
terms, would authorize injunctive relief ``to prevent the use of the 
interactive computer service by another person'' (emphasis supplied). 
Since ``person'' is broadly defined in subsection (a)(9) to include 
``any individual,'' the bill plainly would authorize a court to enjoin 
any person that is in violation of the bill without notice or an 
opportunity to be heard.
---------------------------------------------------------------------------

I. H.R. 3125 Expands Gambling Over the Internet, and Arbitrarily Favors 
               Certain Forms of Gambling Over Other Forms

    Amazingly, a bill that purportedly originated as an anti-
gambling initiative would significantly expand the availability 
of gambling over the Internet. Rather then calling the bill the 
``Internet Gambling Prohibition Act of 2000,'' the bill more 
appropriately should be referred to as the ``Internet Gambling 
Expansion Act of 2000.'' The sponsors of H.R. 3125 have catered 
to special interests by ripping gaping loopholes in a bill 
originally drafted to prohibit Internet gambling. At the same 
time, perhaps in a transparent effort to innoculate the bill 
against charges that it opens up more loopholes than it closes, 
the bill's sponsors have effectively barred State lotteries, 
charitable organizations, and Tribes from merging onto the 
information superhighway.
    This result, though denied or ignored by the legislation's 
proponents, is indisputable. In testimony before the 
Subcommittee on Crime, the Department of Justice described how 
the bill prohibits Internet gambling in name only:

        [T]he Department is concerned that the bill does not 
        really prohibit Internet gambling, but rather 
        facilitates certain types of gambling from the home 
        and, therefore, arguably expands gambling 
        opportunities. Specifically, the Department recognizes 
        that H.R. 3125 exempts pari-mutuel wagering from the 
        prohibition against Internet gambling. The result is 
        that people will be able to bet on horse racing, dog 
        racing, and jai alai from their living rooms. While the 
        bill provides that such gambling must be done on a 
        ``closed loop subscriber based service,'' the 
        definition of that term is extremely broad. I could 
        receive a free disk in the mail, load it on my 
        computer, connect through my regular Internet service 
        provider, and start betting on horse racing from my 
        living room. Additionally, if my children have access 
        to that same computer, they may also be able to get 
        online and bet and wager on pari-mutual activities. 
        Simply stated, the Department does not understand why 
        the pari-mutuel wagering industry should be allowed to 
        accept bets from people in their homes, when other 
        forms of gambling have rightly been prohibited from 
        doing so.\18\
---------------------------------------------------------------------------
    \18\ Hearing on H.R. 3125 Before the House Comm. on the Judiciary, 
Subcomm. on Crime, 106th Cong., 2d Sess. (March 9, 2000) (testimony by 
Deputy Assistant Attorney General Kevin DiGregory).

    Federal law enforcement is not alone in expressing its 
concerns regarding a bill that expands Internet gambling. 
Socially conservative advocacy groups pleaded with the bill's 
sponsors to eliminate the bill's exemptions--to no avail. The 
Christian Coalition declared that ``it cannot support any 
legislation that purports to restrict gambling on the Internet 
and at the same time expands gambling opportunities on the 
Internet.'' \19\ The Family Research Council found ``the 
`exemptions' in the bill unnecessary.'' \20\ In a letter signed 
by Paul Weyrich, the Free Congress Foundation wrote to voice 
its ``strong opposition'':
---------------------------------------------------------------------------
    \19\ Letter to Judiciary Chairman Hyde from Jeffrey K. Taylor, 
Director of Government Relations, the Christian Coalition (March 22, 
2000).
    \20\ Letter to Judiciary Chairman Hyde from Michael D. Bowman, 
Director of State & Local Affairs, the Family Research Council (March 
22, 2000).

        The bill seems to fly in the face of a number of core 
        principles of conservatism. It turns federalism on its 
        head by taking the power away from the States to 
        regulate their own State lotteries . . . There are also 
        substantive concerns about even achieving the goal of 
        regulating gambling on the Internet. . . . But are we 
        going to create a national police force to monitor 
        individuals or the server industry? \21\
---------------------------------------------------------------------------
    \21\ Letter to House Majority Leader Armey and Majority Whip DeLay 
from Paul M. Weyrich, President, the Free Congress Foundation (May 11, 
2000).

Finally, the Madison Project noted that ``this bill contains 
loop-holes that actually expand [Internet gambling]. . . . Why 
would Congress want to pass a law that encourages the expansion 
of a problem that already affects 15.4 million Americans. . . . 
Please do not allow this bill to be used as a vehicle for 
expanding the scope of gambling in America.'' \22\
---------------------------------------------------------------------------
    \22\ Letter to Judiciary Chairman Hyde from Michael P. Farris, 
Chairman, the Madison Project (April 3, 2000).
---------------------------------------------------------------------------
    Recognizing that the prohibition on Internet gambling in 
H.R. 3125 has become a proxy for the expansion of Internet 
gambling, the Legal Times of Washington described the bill's 
posture:

        Thanks to some swift lobbying, the proposed ban carves 
        out some big exemptions for online gambling by any 
        State-regulated industry. . . . Translation: The bill 
        that aims to rein in online gambling would nonetheless 
        allow online versions of some of the most popular 
        gaming attractions--horse racing, dog tracks, . . . and 
        jai alai.\23\
---------------------------------------------------------------------------
    \23\ Ron Eckstein, ``Rolling the Dice,'' Legal Times, at 1 (March 
13, 2000). See also, Thomas E. Weber, ``Playing the Ponies In Your 
Underwear,'' The Wall Street Journal Interactive Edition, http://
interactive.wsj.com/archive/retrieve.cgi?id=SB957138139977057683.djm 
(May 1, 2000).

    The result of this expansion of Internet gambling could 
carry with it potentially devastating results for those 
Americans who are at risk for gambling addiction or are 
compulsive gamblers. This is completely contrary to the 
findings of the congressionally created National Gambling 
Impact Study Commission, which issued a report to President 
Clinton and found that gambling is a widespread problem, and 
criticized the carve-outs and exemptions contained in H.R. 
---------------------------------------------------------------------------
3125:

        The Commission recommends to the President, Congress, 
        and the Department of Justice (DOJ) that the Federal 
        Government should prohibit, without allowing new 
        exemptions or the expansion of existing Federal 
        exemptions to other jurisdictions, Internet gambling 
        not already authorized within the United States.\24\
---------------------------------------------------------------------------
    \24\ National Gambling Impact Study Commission, Final Report, 
Recommendation 5.1 (June 18, 1999).

    At the Crime Subcommittee hearing on the bill, a self-
described gambling addict described the allure of gambling on 
---------------------------------------------------------------------------
the Internet:

          Mr. Weiner: Now, if there were other types of 
        gambling that were available, for example, we 
        particularly take note in this legislation of horse 
        racing and dog racing, and I guess jai alai is also 
        included, if there were other types of gambling 
        available, would you simply move? Do you have a desire 
        to gamble or is it just a desire to play blackjack?
          Mr. Doe: It is mainly a desire to gamble. My game of 
        choice--well, it is my desire and win money, so it is 
        my passion for gambling that was driven uncontrollably 
        with the ease of the Internet.
          Mr. Weiner: So if you had a sure shot on a 25 to 1 
        horse that you thought for sure was going to win, you 
        would have a desire to gamble on that horse race, just 
        like you would have a desire to double down on 11?
          Mr. Doe: I would consider that.\25\
---------------------------------------------------------------------------
    \25\ Hearing on H.R. 3125 Before the House Comm. on the Judiciary, 
Subcomm. on Crime, 106th Cong., 2d Sess. (March 9, 2000) (testimony by 
John Doe).

    In addition to gambling addicts, the bill also could open 
the way for children, who are prohibited by law from gambling 
in ``bricks and mortar'' casinos, to become gambling addicts 
using the Internet. Although the supporters of H.R. 3125 assert 
that by requiring permitted Internet gambling to be carried out 
on a closed-loop subscriber-based system, website operators can 
effectively screen out minors, a closed-loop system does not, 
by itself, adequately ensure that minors will be unable to 
access gambling sites. In fact, the nation's largest Internet 
Service Provider, AOL, available in tens of millions of 
American homes, would fit the definition of a closed-loop, 
subscriber-based system.
    Just as disturbing, from a policy perspective, is the fact 
that the bill arbitrarily discriminates against certain forms 
of gambling as it elevates the legality of some types of 
gambling over others. The victims of this discrimination are 
State lotteries, charitable contests, and gambling on Indian 
reservations. Ironically, the very entities that one would 
expect Congress to protect in a bill to regulate Internet 
gambling--those that have the greatest overall benefit to 
society, State lotteries, charitable giving, and those that are 
essential to the livelihood of Native Americans--have been 
disregarded in H.R. 3125.
    H.R. 3125 would prevent State lotteries from entering the 
Internet age. Lotteries are the only form of gaming that return 
profits directly to the public.\26\ H.R. 3125 does this by 
allowing the online purchase of in-state lottery tickets only 
in facilities ``open to the general public.'' In other words, 
States may not allow their own residents to purchase lottery 
tickets over the Internet from the convenience of their homes. 
As a result, whether online gaming activities supplant or 
supplement physical gaming activities, State lotteries stand to 
lose even more ground to other forms of gaming that provide no 
direct return to the public whatsoever. The Association of 
Lottery Retailers noted that the real beneficiaries of the 
bill's restrictions on State lotteries would be the offshore 
operators of Internet lotteries, and pointed out the irony that 
the professed opponents of Internet gambling have only 
benefitted ``a handful of offshore, illegal operators of 
unregulated and unregulatable internet lotteries [who] could 
not be happier.'' \27\
---------------------------------------------------------------------------
    \26\ In fiscal year 1999 alone, lotteries generated more than $12 
billion nationwide for essential public education, seniors, and 
environmental programs, as well as for local governments, State general 
coffers, and a variety of other programs. Since 1964, thirty-seven 
States, the District of Columbia, and Puerto Rico have opted to offer 
their citizens lotteries, and use the proceeds to fund critical 
programs and projects.
    \27\ Letter to Judiciary Chairman Hyde from Mark F. Jones, 
Executive Director, the Association of Lottery Retailers (May 16, 
2000). The Free Congress Foundation reached the same conclusion: ``The 
only thing that will be accomplished [by H.R. 3125] is that money will 
be sent abroad as foreign governments and companies set up their own 
online lottery games for American consumers.'' Letter to House Majority 
Leader Armey and Majority Whip DeLay from Paul M. Weyrich, President, 
the Free Congress Foundation (May 11, 2000).
---------------------------------------------------------------------------
    The anti-lottery provision has also drawn the ire of the 
National Governors Association, which wrote:

        States possess the authority to regulate gambling 
        within their own borders and must continue to be 
        allowed to do so. An incursion into this area with 
        respect to online gambling would establish a dangerous 
        precedent with respect to gambling in general as well 
        as broader principles of State sovereignty.\28\
---------------------------------------------------------------------------
    \28\ Letter to Judiciary Chairman Henry Hyde and Ranking Member 
John Conyers from Governors Michael O. Leavitt and Parris N. 
Glendening, National Governors Association (April 4, 2000). In addition 
to the Governors, representatives of the lottery industry wrote that 
permitting States to determine the format of their lotteries is 
fundamental to States' rights. The North American Association of State 
& Provincial Lotteries asserted:

      [G]aming is a States-rights issue. . . . Lottery profits 
      support much needed programs and services, and each State 
      must maintain the right to decide the best ways to raise 
      revenue so that these programs and services do not suffer. 
      . . . We strongly believe that the States determination to 
      provide gaming is appropriately left at the State 
---------------------------------------------------------------------------
      legislative and gubernatorial levels.

Letter to Representative Robert Goodlatte from David B. Gale, Executive 
Director of the North American Association of State & Provincial 
Lotteries (March 29, 2000). See also, Letter to Judiciary Chairman Hyde 
from Mark F. Jones, Executive Director, the Association of Lottery 
Retailers (May 16, 2000) (noting the ``heavy-handed effort by some in 
Congress to take a Federal slap at State lotteries''); Letter to 
Judiciary Chairman Hyde from Steven M. Saferin, President & Chief 
Executive Officer, MDI Entertainment, Inc. (May 12, 2000) (``The 
consequences of this Bill may be extreme . . . To continue to provide 
valuable revenues to the good causes they serve, lotteries must be able 
to compete on a level playing field and the use of the Internet as a 
distribution method for existing and future games should clearly be a 
decision left to each individual State and the lottery it operates.''); 
Letter to Judiciary Ranking Member Conyers from Roger W. Ach, II, 
President & Chief Executive Officer, lottery.com (May 12, 2000) (``By 
eliminating the ability of State lotteries to sell lottery tickets on-
line, Congress will cause a detrimental impact on lottery revenues and 
on lottery.com business.'').

    H.R. 3125 also would discriminate against charities (as 
compared to pari-mutuel gambling), completely preventing non-
profits from raising funds through Internet lotteries and 
bingo. Although section 1955 of title 18 and most State laws 
permit charitable gaming, H.R. 3125 would block charities from 
raising funds through online games. Despite the fact that 
charitable gaming accounts for a mere 1.5% of all wagering in 
the United States and is not the game of choice for compulsive 
gamblers, H.R. 3125 deprives charitable organizations of 
conducting activities in cyberspace which are perfectly legal 
in the physical world. Such an exclusion will place charitable 
organizations at a competitive disadvantage as the Internet 
becomes an increasingly important tool of commerce and 
communication in our society. Individuals who wish to 
participate in games of chance that have social value will have 
no ability to do so on-line.
    Finally, H.R. 3125 discriminates against Native-Americans 
by requiring that the player of a game be ``physically located 
on Indian lands.'' This would outlaw a form of online gambling 
in which a Tribe conducts a Class II Bingo game and the player 
need not be physically on the Reservation. This type of Bingo 
was developed at great expense to some tribes, in reliance on 
the letter and spirit of the Indian Gambling Regulatory Act 
(IGRA).\29\ Indeed, in testimony before a Senate Committee on 
Indian Affairs Oversight Hearing on Internet Gaming, one Tribe 
acknowledged its expenditure of ``millions of dollars and 
countless hours developing a Bingo game that utilizes Internet 
technology to expand its participation levels.'' \30\ The Lac 
Vieux Desert Band of Lake Superior Chippewa Indians of Michigan 
wrote:
---------------------------------------------------------------------------
    \29\ 25 U.S.C. Sec. 2703(7)(A)(i). This provision of the IGRA 
applies to ``Class II'' games, such as Bingo, but does not include 
other forms of gambling such as parimutuel wagering, slot machines, 
blackjack, and other ``casino'' type games.
    \30\ Oversight Hearing on Internet Gaming, Before the Senate 
Committee on Indian Affairs, on Crime, 106th Cong., 1st Sess. (June 9, 
1999) (testimony by Richard Williams, Chairman, Lac Vieux Desert Band 
of Lake Superior Chippewa Indians).

        [T]he Tribe opposes passage of this legislation . . . 
        [because] such a broad-sweeping prohibition runs 
        counter to the letter and spirit of the 1988 Indian 
        Gambling Regulatory Act (IGRA) and deals a serious blow 
        to tribal sovereign rights to enter into legal Class II 
        gaming activities, via the Internet. . . . In essence, 
        H.R. 3125 takes away existing legal rights of tribes 
        authorized under the IGRA, while expanding more 
        privileges to non-Indian gaming interests.\31\
---------------------------------------------------------------------------
    \31\ Letter to Judiciary Ranking Member Conyers from the Lac Vieux 
Desert Band of Lake Superior Chippewa Indians of Michigan (April 3, 
2000). See also, Letter to Judiciary Ranking Member Conyers from 
Anthony C. Minthorn, Chairman of the Board of Trustees, Confederated 
Tribes of the Umatilla Reservation of Oregon (March 23, 2000) 
(``Without a tribal gaming exemption, H.R. 3125 will bear the dubious 
distinction of not only treating tribal governments in an arbitrary--if 
not discriminatory--fashion, but of stifling one of the few successful 
economic engines available to our communities within memory.'')

    The Tribe also noted that H.R. 3125 has been universally 
condemned by tribes and national tribal organization throughout 
the country. These include the National Congress of American 
Indians, the United South and Eastern Tribes, the Midwest 
Alliance of Sovereign Tribes, and the National Indian Gaming 
Association.

II. The Notice and Takedown Provisions Violate the Rights and Liberties 
             of Website Operators and Individual Customers

    The notice and takedown provisions in H.R. 3125 operate to 
allow any local or Federal law enforcement official to require 
ICSs and ISPs to take down a supposedly offending sight with no 
prior notice or any semblance of due process. This 
inappropriately deputizes these parties to serve as law 
enforcement authorities. As the Computer and Communications 
Industry Association wrote:

        [R]equiring ISPs to `take down' websites based solely 
        on the request of a law enforcement official from the 
        Federal Government or any of the fifty States is a 
        dangerously broad new grant of censorship power to 
        Federal and State governments. . . . The provision sets 
        forth a flawed precedent. . . . We believe it is more 
        appropriate to adhere to well-established procedures of 
        notice and opportunity to be heard, court review, and 
        judicially imposed injunctions.'' \32\
---------------------------------------------------------------------------
    \32\ Letter to Judiciary Ranking Member Conyers from Ed Black, 
President and CEO, the Computer & Communications Industry Association 
(April 3, 2000).

    These concerns were echoed by the Center for Democracy and 
Technology (CDT), perhaps the nation's leading authority on 
rights and liberties on the Internet, which observed that the 
bill's takedown provisions place ``too much discretion in the 
hands of government officials, who get to decide in the first 
instance, without any independent review, what is legal and 
what is illegal.'' \33\ CDT noted further that it is not those 
government officials, but the ISPs, which are required to 
deliver the notice or face injunctive relief:
---------------------------------------------------------------------------
    \33\ Position Paper, Center for Democracy and Technology.

        This approach, were it to serve as a precedent for 
        other similar burdens on ISPs to cooperate with mere 
        requests that they take down other illegal or 
        undesirable content, would fundamentally change the 
        nature of the Internet. While ISPs can decide what to 
        host and what not to host, they should not be required 
        to police their systems, nor should the government, 
        through immunity provisions, dictate their terms of 
        service with their customers.\34\
---------------------------------------------------------------------------
    \34\ Id.

    We also have a separate concern that H.R. 3125 will operate 
to allow individual Internet users who have not violated the 
statute to have their accounts taken down, also without any 
prior warning. Under the bill, if a government actor notifies 
an ISP that a ``subscriber'' is in violation of the Act's 
provisions, the ISP must take action against the offending 
``subscriber.'' As reported by the committee, the definition of 
``subscribers'' includes both the operators of gambling 
websites, as well as the individual consumers who log on to the 
targeted websites.\35\ This is because the definition of 
``subscriber'' would cover anyone with a business relationship 
with the ICS through which the person receives access to the 
system.\36\
---------------------------------------------------------------------------
    \35\ The plain language of H.R. 3125 cannot fairly construed to 
limit the definition of ``subscriber.'' H.R. 3125 defines 
``subscriber'' in section 1085(a)(12)(A) to mean (emphasis supplied):

      any person with a business relationship with the 
      interactive computer service provider through which such 
      person receives access to the system, service, or network 
      of that provider, even if no formal subscription agreement 
      exists.
---------------------------------------------------------------------------
    \36\ In addition, in discussing the scope of injunctive relief 
available, the bill states that the relief is limited to:

      an order restraining the provider from providing access to 
      an identified subscriber of the system or network of the 
      interactive computer service provider, if the court 
      determines that there is probable cause to believe that 
      such subscriber is using that access to violate this 
      section (or to engage with another person in a 
      communication that violates this section), by terminating 
---------------------------------------------------------------------------
      the specified account of that subscriber.

H.R. 3125, subsection (d)(3)(B)(i)(I).
    The notice and takedown provisions fail to include the 
process and legal safeguards specified in the Digital 
Millennium Copyright Act (DMCA), which the legislation 
purportedly uses as a model.\37\ The DMCA included language to 
protect people from becoming the subject of wrongful or 
erroneous takedowns. This is because the DMCA includes a 
requirement that the ISP give notice to the website operator 
and gives the website the opportunity to file a counter-
notification.\38\ This ensures that the website operator at 
least has the opportunity to register its objections to the 
action by the ISP if the website believes that the allegation 
of copyright infringement is not supported by the law. By 
contrast, under H.R. 3125, without the ability to file a 
counter-notification, the website will have no protection from 
a takedown by an ICS or ISP that incorrectly believes that the 
site facilitates or promotes illegal gambling or that is acting 
in response to an overzealous prosecutor.\39\
---------------------------------------------------------------------------
    \37\ Pub. L. 105-304 (105th Cong., 2d Sess.).
    \38\ The counter-notification provisions appear in section 
512(g)(3) of the DMCA and in section 202(a) of Pub. L. 105-34, 112 
Stat. 2282 (105th Congress, 2d Sess.). An effective counter-
notification must ``substantially'' include a physical or electronic 
signature of the subscriber; information that enables the 
identification and location of the material in question; a statement of 
the subscriber's good-faith belief that the material was removed or 
disabled due to mistake or misidentification; and identifying 
information about the subscriber along with the subscriber's consent to 
Federal jurisdiction.
    \39\ Subsection (e) of H.R. 3125 also departs from the DMCA by 
allowing takedowns and injunctions without any accompanying prosecution 
for violations of the prohibition on Internet gambling:

      The availability of relief . . . shall not depend on, or be 
      affected by, the initiation or resolution of any action 
      under subsection (b), or under any other provision of 
      Federal or State law.

 III. The Blocking Provisions Will Harm the Operation of the Internet 
          and Constitute a Threat to Individual Privacy Rights

    The legislation's provisions mandating blocking of foreign 
websites are also far broader than any existing law. The 
requirement not only represents a real and viable threat to our 
own privacy and our nation's birthright as an exemplar of 
individual liberty, but it will have the likely effect of 
slowing down and interfering with the operation of the 
Internet.
    Not only is it inappropriate to place ICSs in the position 
of becoming Internet hall monitors, it would have the effect of 
chilling unfettered expression on the Internet. For example, 
H.R. 3125 authorizes court orders to shut off subscriber 
accounts based merely on a showing of probable cause that the 
subscriber is betting at a prohibited website, even if the 
subscriber's activities are lawful under Federal and State 
laws. In a letter filed with the Senate during the debate on 
Senator Kyl's version of the Internet gambling bill, the ACLU 
noted the threat to privacy that arises from ill-conceived 
measures to regulate the Internet:

        [R]espect for issues of personal privacy and content 
        freedom should be central to this and any other debate 
        on Internet policy. We oppose any effort by States to 
        regulate content on the internet, a national and global 
        communications medium that the Supreme Court has found 
        to be especially valuable because of the breadth and 
        diversity of the speech found there. We also oppose all 
        attempts to turn internet service providers into de 
        facto government agents.\40\
---------------------------------------------------------------------------
    \40\ Letter to Senate Judiciary Chairman Hatch from the American 
Civil Liberties Union, Americans for Tax Reform, the Association of 
Concerned Taxpayers, Citizens for a Sound Economy, the Competitive 
Enterprise Institute, the First Amendment Coalition for Expression, the 
Interactive Services Association, the Small Business Survival 
Committee, and the United States Internet Council (October 8, 1997).

    The CCIA also has explained that the blocking obligation 
---------------------------------------------------------------------------
imposed under H.R. 3125 is inappropriate and discriminatory:

        It is not appropriate for Congress to mandate that ISPs 
        police the content of the millions of websites 
        accessible through their facilities, but the risk of 
        criminal sanctions would clearly force any responsible 
        ISP to do so. . . . [L]ike many new content 
        regulations, these requirements unfairly discriminate 
        against the Internet as a medium of communication. 
        Newspapers, magazines, telephone companies, and mail 
        delivery services need not fear criminal prosecution 
        for facilitating illegal gambling, although undoubtedly 
        these media are much more central to illegal gambling 
        activities.\41\
---------------------------------------------------------------------------
    \41\ Letter to Judiciary Ranking Member Conyers from Ed Black, 
President and CEO, CCIA (May 5, 2000).

    Similar concerns were echoed by the Center for Democracy 
---------------------------------------------------------------------------
and Technology:

        [T]his mandatory filtering approach is fundamentally 
        incompatible with the user empowerment vision of the 
        Internet: filtering is appropriate at the user level 
        [when voluntary], but it is inappropriate at the ISP or 
        server level, particularly when mandated by the 
        government. The Internet's power stems from its 
        decentralized, user-controlled nature. Installing ISPs 
        as chokepoints or gatekeepers turns the Internet into 
        something different, akin to the broadcast media.\42\
---------------------------------------------------------------------------
    \42\ Position Paper, Center for Democracy and Technology.

    Intruding on individual privacy by denying individual 
Internet users access to websites of their own choosing 
establishes a very poor precedent for other nations that look 
to the United States as the leader in safeguarding individual 
liberty. It would be ironic indeed if Congress passed 
legislation that required private parties to act as censorship 
agents for government officials in a medium that virtually 
everyone agrees should be left alone. There is a national 
consensus that the Internet is the singlemost significant force 
driving this nation's unprecedented economic expansion and 
corresponding explosion of information and communication. H.R. 
3125 would represent a dramatic departure from that 
objective.\43\
---------------------------------------------------------------------------
    \43\ See, e.g., the DMCA, Pub. L. 105-304 (105th Cong., 2d Sess.); 
the Internet Tax Freedom Act, Pub. L. 105-277 (105th Cong., 2d Sess.).
---------------------------------------------------------------------------
    By requiring ISPs to block individual access to specified 
Internet locations, H.R. 3125 would send an unintended signal 
to China, Cuba, and other autocratic regimes, that they too may 
block their citizens access to the Internet. As Time Digital 
editor Joshua Quittner has observed, ``I find it objectionable 
that the government would feel the need to act as a proxy in 
this way [mandating blocking of foreign websites]. . . . This 
is exactly the kind of thing a totalitarian regime would 
undertake--in fact, it's exactly what the Chinese government 
has already done.'' \44\
---------------------------------------------------------------------------
    \44\ Time.com Digital Daily Edition, http://www.time.com/time/
daily/0,2960,42462-101000405,00.html (April 9, 2000).
---------------------------------------------------------------------------
    As the ACLU noted in its analysis of similar blockage 
provisions in the Senate version of the Internet gambling bill, 
efforts to require ISPs to block overseas websites ``would 
attempt to segment the Internet--in effect, placing an 
electronic wall around the United States--to `protect us from 
ourselves' much like China and Singapore have tried to do. The 
idea of making U.S. ISPs responsible for policing the content 
of offshore Internet sites is clearly unworkable.'' \45\ For 
example, in China, the Ministry of Education recently took 
steps to police content on the Internet by requiring distance 
learning websites to register. The Ministry is expected to have 
direct supervision of a website's content. In addition, the 
State Council Information Office created the Internet 
Information Management Bureau, which is responsible for 
overseeing the Internet news industry and is requiring pre-
approval of all news that is published on the Internet.
---------------------------------------------------------------------------
    \45\ Letter to Senate Judiciary Chairman Orrin Hatch from the ACLU, 
Americans for Tax Reform, the Association of Concerned Taxpayers, 
Citizens for a Sound Economy, the Competitive Enterprise Institute, the 
First Amendment Coalition for Expression, the Interactive Services 
Association, the Small Business Survival Committee, and the United 
States Internet Council (October 8, 1997).
---------------------------------------------------------------------------
    Turkey, a country whose leadership has repeatedly cracked 
down on dissenting political views, is considering requirements 
for patrolling Internet content that is strikingly similar to 
the framework proposed in H.R. 3125. The Turkish government is 
considering creating a watchdog body of government officials 
who could order ``registered Internet corporations, public and 
private, to take any measures the watchdog body may request'' 
against Internet communications by those with ``evil 
intentions.'' \46\
---------------------------------------------------------------------------
    \46\ Elif Unal, ``Turkey Debates Cyberspace Controls,'' 
Reuters.com, http://dailynews.yahoo.com/h/nm/20000416/wr/turkey--
internet--1.html (April 18, 2000).
---------------------------------------------------------------------------
    Finally, the potential for blocking to become a tool for 
government censorship is demonstrated by Saudi Arabia, which 
requires all ISPs to be linked through a central node in 
Riyadh. This enables the Saudi government to block all 
pornographic websites as well as access to any site that the 
government believes could stir up religious hatred.\47\ These 
are not precedents this country or this Congress should 
support.
---------------------------------------------------------------------------
    \47\ Frank Gardner, ``Saudi censors say they're winning the war 
against porn,'' POLITECH, http://www.politech.bot.com (May 10, 2000).
---------------------------------------------------------------------------
    Another concern that we have stems from the harm that H.R. 
3125's mandatory blockage provisions will cause to the Internet 
in general and to smaller ISPs in particular. The burdens on 
smaller ISPs could prove particularly devastating. It is one 
thing to ask a multi-billion dollar company such as AOL to 
institute complex blocking requirements; it is quite another to 
ask a fledgling ISP provider or a new technology firm to change 
his or her business to conform to the blocking requirements of 
this bill. Thus, for the thousands of small start-up ISPs and 
other telecommunications firms, compliance with the blockage 
provisions would be expensive and invasive. Either the small 
ISP would have to dedicate personnel and resources to 
repeatedly reprogram its computer systems to block an ever-
changing list of online locations where the gambling sites are 
located--resources that could have been spent on innovation and 
growth--or the ISP would have to spend funds that otherwise 
could be used for capital investment on paying lawyers to 
defend against a temporary restraining order or an injunction.
    Supporters of the bill would argue that much of its 
framework was drawn from the Digital Millennium Copyright Act 
(DMCA),\48\ which contains a similar blocking provision. 
However, there are important differences between the DMCA and 
H.R. 3125. Unlike H.R. 3125, the DMCA's blocking provisions 
require that the ISP be in violation of the law before a 
blocking injunction can issue. Under H.R. 3125, a blocking 
injunction can issue regardless of whether the ISP has any 
complicity in illegal activity. And, as discussed below, the 
threshold for issuing an injunction under the DMCA appears to 
be substantially higher than under H.R. 3125.
---------------------------------------------------------------------------
    \48\ Section 512(c) of the DMCA, Pub. L. 105-304, 112 Stat. 2879-
2881 (105th Cong. 2d Sess.).
---------------------------------------------------------------------------
    We are also concerned that despite all of the threats this 
bill poses to civil liberties and privacy, it will all be for 
naught, as the provisions are likely to carry little real 
enforcement value. As one representative of the ISP industry 
noted in testimony during consideration of a substantially 
similar bill that was considered in the last Congress:

        If an ISP receives a court order specifying a list of 
        sites to be blocked, it can attempt to block access to 
        these sites. However, as soon as the targeted site 
        moves to another IP (Internet Protocol) address, as it 
        inevitably will do, the block is worthless. Sites can 
        change addresses within hours. Efforts to keep the 
        blocks updated would require hundreds of thousands of 
        employee hours, while employees attempt, with dubious 
        likelihood of timely success, to track down the new 
        location of the targeted site.\49\
---------------------------------------------------------------------------
    \49\ Testimony of David G. Jemmett, President, WinStar GoodNet, 
Hearing on H.R. 2380 before the House Comm. on the Judiciary, Subcomm. 
On Crime, 105th Cong., 2d Sess. (June 24, 1998).
---------------------------------------------------------------------------

          IV. The General Injunction Provisions are Overbroad

    It is also important to note that H.R. 3125 includes a 
broad general injunction provision which applies to anyone 
other than an ISP or Interactive Computer Service Provider.\50\ 
Although this provision does require a court order, its scope 
is incredibly broad, and it could well burden all sorts of 
unsuspecting parties with little obvious relationship to 
illegal gambling. As talking points provided by AT&T; explained, 
the injunctive relief provisions ``would give courts sweeping 
power to issue injunctions against `any person to prevent a 
violation' of the statute, regardless of whether that person 
had any involvement in criminal activity.''
---------------------------------------------------------------------------
    \50\ Subsections (d)(3) and (d)(4)(D) of H.R. 3125.
---------------------------------------------------------------------------
    These general injunction provisions could allow a State 
attorney general to launch a ``fishing expedition'' in which it 
enlists the help of an e-mail service to review all of its 
subscriber accounts for gambling references, seeking to prevent 
search engines from accessing any website with any gambling in 
it (no matter how benign, such as Gamblers Anonymous), and to 
limit advertising for these websites in newspapers, television, 
radio and other outlets, to cite but a few possible examples. 
Moreover, it is not a stretch to realize that this provision 
could authorize a State attorney general to search through 
millions of credit card receipts or to prohibit extending 
credit to users of certain specified websites, legitimate or 
otherwise. In this regard, the Department of Justice has 
previously noted that the Internet gambling prohibition ``may 
have serious economic and societal consequences for Internet 
usage generally'' and ``is likely to promote a spate of 
litigation over what solutions are feasible.''
    The standard for issuing injunctive relief under the bill 
may well encourage law enforcement officials to abuse this 
authority. Not only would H.R. 3125 authorize injunctive relief 
against any person, the bill would empower a court to issue 
such relief if there is ``probable cause to believe that such 
subscriber is using that access to violate this section.'' It 
is inappropriate to import the probable cause standard from 
fourth amendment search and seizure criminal law jurisprudence 
to the injunctive relief criteria under H.R. 3125. It is 
arguably lower--and certainly different--from the criteria for 
preliminary injunctive relief under rule 65 of Federal Rules of 
Civil Procedure, which requires a court to find a reasonable 
likelihood of success on the merits, no adequate remedy at law, 
irreparable injury, and a balance of hardships weighing in the 
moving party's favor; or the DMCA, which also requires a court 
to weigh the burdens and balance the hardships.\51\ Not only is 
the standard itself easier to satisfy than that which is in 
place under rule 65 or the DMCA, H.R. 3125 would authorize its 
issuance against a party without any requirement that law 
enforcement give the enjoined party notice and an opportunity 
to be heard.
---------------------------------------------------------------------------
    \51\ F.R.C.P. Rule 65. The criteria for injunctive relief under 
Sec. 512(j) of the DMCA, Pub. L. 105-304, 112 Stat. 2885 (Oct. 28, 
1998), require the court to consider:

        (A) whether such an injunction, either alone or in 
      combination with other such injunctions issued against the 
      same service provider under this subsection, would 
      significantly burden either the provider or the operation 
      of the provider's system or network;
        (B) the magnitude of the harm likely to be suffered by 
      the copyright owner in the digital network environment if 
      steps are not taken to prevent or restrain the 
      infringement;
        (C) whether implementation of such an injunction would be 
      technically feasible and effective, and would not interfere 
      with access to noninfringing material at other online 
      locations; and
        (D) whether other less burdensome and comparably 
      effective means of preventing or restraining access to the 
      infringing material are available.

 V. H.R. 3125 Creates a Confusing Patchwork of Inconsistent Laws that 
                         Regulate the Internet

    H.R. 3125 sets up the wrong model for how to regulate the 
Internet because it creates a patchwork of inconsistent 
Internet laws that conflict with existing laws that govern the 
physical world. The Wire Communications Act, 18 U.S.C. 
Sec. 1084, already governs Internet gambling in that the 
Internet is a ``wire communications facility'' under the Act. 
Rather than amending this statute to clarify its applicability 
to new types of Internet communications, H.R. 3125 would create 
a new section of the code, 18 U.S.C. Sec. 1085, that would 
overlap with--and be inconsistent with--existing law.
    The proposed section 1085 would conflict with existing laws 
on gambling. Whereas the Wire Communications Act outlaws all 
interstate bets or wagers that use a ``wire communications 
facility'' (including those that use the Internet), H.R. 3125 
would create a special set of rules and exceptions that apply 
to Internet activity only. Thus, some activity would be legal 
under the proposed Section 1085, but illegal under the existing 
Section 1084. One sure way to spur litigation and quelch 
innovation is to create a patchwork of laws that conflict with 
each other. Yet that is exactly what H.R. 3125 does.
    If we are going to regulate content on the Internet--as 
supporters of the bill are intent on doing--we should not 
create a hodge-podge of Internet-specific laws that layer on 
top of and conflict with existing law. Legislation should treat 
physical activity and cyber-activity the same way. As the 
Department of Justice has stated, ``If activity is prohibited 
in the physical world but not on the Internet, then the 
Internet becomes a safe haven for that criminal activity.'' 
\52\ It is hard to understand why conduct previously deemed 
unacceptable in the physical world and over the telephone 
should now be legal when carried out in cyberspace.
---------------------------------------------------------------------------
    \52\ Department of Justice Letter, at 1.
---------------------------------------------------------------------------
    The distinction between ``Internet'' activity and other 
types of ``wire communications'' activity is a false one. 
Indeed, any effort to distinguish Internet transmissions from 
other methods of communication will likely create artificial 
and unworkable distinctions. For example, many expect digital 
Internet telephony to grow in popularity over the next few 
years. How would we deal with gambling that occurred over this 
technology, which would use the Internet for voice 
communications? Would the applicable law be the proposed 
Section 1085, which is designed specifically for the Internet, 
or under Section 1084, which deals with wire communications in 
general, but also includes the Internet? \53\
---------------------------------------------------------------------------
    \53\ DiGregory Testimony, at 2.
---------------------------------------------------------------------------
    Finally, we note the inconsistency that is created by H.R. 
3125's treatment of individual Internet subscribers. Although 
individuals come within the definition of ``subscribers'' who 
may be the target of a notice and takedown, and are 
``person[s]'' who may be enjoined, the criminal penalties of 
H.R. 3125 would apply only to a ``person engaged in a gambling 
business.'' \54\ This term is not defined in current law by 18 
U.S.C. Sec. 1081, but it has been interpreted by courts to mean 
persons who facilitate or accept bets,\55\ and to exclude the 
individual bettors.\56\ Thus, individuals not engaged in 
gambling businesses are subject to sanctions under H.R. 3125, 
but not under current law.
---------------------------------------------------------------------------
    \54\ Subsections (b)(1) and (b)(2) of H.R. 3125.
    \55\ See, e.g., United States v. Reeder, 614 F.2d 1179 (8th Cir. 
1980); Cohen v. United States, 378 F.2d 751 (7th Cir. 1967); 5th 
Circuit Pattern Jury Instruction (Instructing jurors to find that a 
person is engaged in a gambling business when the ``defendant was 
prepared on a regular basis to accept bets placed by others, that is, 
the defendant was a `bookie'.'').
    \56\ See, e.g., United States v. Anderson, 542 F.2d 428, 436 (7th 
Cir. 1976); United States v. Baborian, 528 F. Supp. 324 (D.R.I. 1981).
---------------------------------------------------------------------------

                               Conclusion

    H.R. 3125 will establish an unfortunate and dangerous 
precedent for selective regulation of content on the Internet. 
The exemptions in the bill eliminate the ability of the bill's 
sponsors to claim that they are taking a principled or coherent 
approach to the regulation of Internet gambling. With respect 
to the purported policy goals of the bill's sponsors and the 
concern for regulating the Internet, the bill represents the 
worst of both worlds. The bill would legalize the use of the 
Internet for the most addictive types of gambling, while 
excluding the use of the Internet for more benign activities, 
like State lotteries, charitable gaming, or Bingo. And to carry 
out its goals, the bill would conscript anyone who provides 
computer services into serving as a handmaiden for law 
enforcement officials who want to remove sites that law 
enforcement deems unlawful.
    As more and more activity--both commercial and criminal--
migrates to the Internet, we should resist the urge to create 
Internet-specific legislation that sets a different standard 
for cyber-activity as compared to activity in the physical 
world. A checkerboard of inconsistent and overlapping laws will 
only create legal uncertainty and will not benefit Internet 
providers or Internet users. It is hardly surprising that this 
scattershot and unprincipled approach to content-based 
regulation of the Internet would give rise to an enforcement 
scheme that disregards the due process and privacy rights of 
website operators and individual subscribers. Given the 
significant concerns that have been voiced concerning privacy 
rights and effective law enforcement on the Internet, we must 
oppose H.R. 3125.

                                   John Conyers, Jr.
                                   Robert C. Scott.
                                   Melvin L. Watt.
                                   Anthony D. Weiner.