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111th Congress                                            Rept. 111-656
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 1

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



 
 INTERNET GAMBLING REGULATION, CONSUMER PROTECTION, AND ENFORCEMENT ACT

                                _______
                                

               September 29, 2010.--Ordered to be printed

                                _______
                                

 Mr. Frank of Massachusetts, from the Committee on Financial Services, 
                        submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 2267]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 2267) to amend title 31, United States Code, to 
provide for the licensing of Internet gambling activities by 
the Secretary of the Treasury, to provide for consumer 
protections on the Internet, to enforce the tax code, and for 
other purposes, having considered the same, report favorably 
thereon with an amendment and recommend that the bill as 
amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................    18
Background and Need for Legislation..............................    18
Hearings.........................................................    20
Committee Consideration..........................................    21
Committee Votes..................................................    21
Committee Oversight Findings.....................................    24
Performance Goals and Objectives.................................    25
New Budget Authority, Entitlement Authority, and Tax Expenditures    25
Committee Cost Estimate..........................................    25
Congressional Budget Office Estimate.............................    25
Federal Mandates Statement.......................................    28
Advisory Committee Statement.....................................    28
Constitutional Authority Statement...............................    28
Applicability to Legislative Branch..............................    28
Earmark Identification...........................................    29
Exchange of Committee Correspondence.............................    29
Section-by-Section Analysis of the Legislation...................    29
Changes in Existing Law Made by the Bill, as Reported............    29
Dissenting Views.................................................    56

                               Amendment

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Internet Gambling Regulation, 
Consumer Protection, and Enforcement Act''.

SEC. 2. FEDERAL LICENSING REQUIREMENT FOR INTERNET GAMBLING OPERATORS.

    (a) In General.--Chapter 53 of title 31, United States Code, is 
amended by adding at the end the following new subchapter:

         ``SUBCHAPTER V--REGULATION OF LAWFUL INTERNET GAMBLING

``Sec. 5381. Congressional findings

    ``The Congress finds the following:
          ``(1) Since the development of the Internet, millions of 
        people have chosen to gamble online, and today Internet 
        gambling is offered by operators located in many different 
        countries under a variety of licensing and regulatory regimes.
          ``(2) Despite the increasing use of the Internet for gambling 
        by persons in the United States, there is no Federal or State 
        regulatory regime in place to protect United States citizens 
        who choose to engage in this interstate activity, or to oversee 
        operators to establish and enforce standards of integrity and 
        fairness.
          ``(3) In the United States, gambling activities, equipment, 
        and operations have been subject to various forms of Federal 
        and State control, regulation, and enforcement, with some form 
        of gambling being permitted in nearly every State and by many 
        Indian tribes.
          ``(4) Internet gambling in the United States should be 
        controlled by a strict Federal, State, and tribal licensing and 
        regulatory framework to protect underage and otherwise 
        vulnerable individuals, to ensure the games are fair, to 
        address the concerns of law enforcement, and to enforce any 
        limitations on the activity established by the States and 
        Indian tribes.
          ``(5) An effective Federal, State, and tribal licensing 
        system would ensure that licenses are issued only to Internet 
        gambling operators which meet strict criteria to protect 
        consumers, and which--
                  ``(A) are in good financial and legal standing, and 
                of good character, honesty, and integrity;
                  ``(B) utilize appropriate technology to determine the 
                age and location of users;
                  ``(C) adopt and implement systems to protect minors 
                and problem gamblers;
                  ``(D) adopt and implement systems to enforce any 
                applicable Federal, State, and Indian tribe limitations 
                on Internet gambling; and
                  ``(E) have in place risk-based methods to identify 
                and combat money laundering and fraud relating to 
                Internet gambling, and to protect the privacy and 
                security of users.
          ``(6) There is a need to extend the regulatory provisions of 
        this Act to all persons, locations, equipment, practices, and 
        associations related to Internet gambling, with each State and 
        Indian tribe having the ability to limit Internet gambling 
        operators from offering Internet gambling to persons located 
        within its territory by opting out of the provisions of this 
        Act.

``Sec. 5382. Definitions

    ``For purposes of this subchapter, the following definitions shall 
apply:
          ``(1) Applicant.--The term `applicant' means any person who 
        has applied for a license pursuant to this subchapter.
          ``(2) Bet or wager.--The term `bet or wager' has the same 
        meaning as in section 5362(1).
          ``(3) Enforcement agent.--The term `enforcement agent' means 
        any individual authorized by the Secretary to enforce the 
        provisions of this subchapter and regulations prescribed under 
        this subchapter.
          ``(4) Indian lands and indian tribe.--The terms `Indian 
        lands' and `Indian tribe' have the same meanings as in section 
        4 of the Indian Gaming Regulatory Act.
          ``(5) Internet.--The term `Internet' has the same meaning as 
        in section 5362(5).
          ``(6) Licensee.--The term `licensee' means an entity 
        authorized to operate an Internet gambling facility in 
        accordance with this subchapter.
          ``(7) Operate an internet gambling facility.--The term 
        `operate an Internet gambling facility' or `operation of an 
        Internet gambling facility' means the direction, management, 
        supervision, or control of an Internet site through which bets 
        or wagers are initiated, received, or otherwise made, whether 
        by telephone, Internet, satellite, or other wire or wireless 
        communication.
          ``(8) Secretary.--The term `Secretary' means the Secretary of 
        the Treasury, or any person designated by the Secretary.
          ``(9) State.--The term `State' means any State of the United 
        States, the District of Columbia, or any commonwealth, 
        territory, or other possession of the United States.
          ``(10) Sporting event.--The term `sporting event' means any 
        athletic competition, whether professional, scholastic, or 
        amateur.

``Sec. 5383. Establishment and administration of licensing program

    ``(a) Treasury Responsibilities.--The Secretary shall have 
responsibility for the following activities:
          ``(1) Exercising full regulatory jurisdiction over--
                  ``(A) the operation of Internet gambling facilities 
                by licensees; and
                  ``(B) the licensure and regulation of all applicants, 
                except to the extent that powers have been delegated to 
                qualified State and tribal regulatory bodies pursuant 
                to this subchapter.
          ``(2) Prescribing such regulations as may be necessary to 
        administer and enforce the requirements of this subchapter.
          ``(3) Employing enforcement agents with sufficient training 
        and experience to administer the requirements of this 
        subchapter and the regulations prescribed under this 
        subchapter.
          ``(4) Enforcing the requirements of this subchapter through 
        all appropriate means provided under this subchapter and other 
        provisions of law.
    ``(b) Internet Gambling Licensing Program.--
          ``(1) Licensing required for certain internet gambling.--No 
        person may operate an Internet gambling facility that knowingly 
        accepts bets or wagers from persons located in the United 
        States without a license issued by the Secretary in accordance 
        with this subchapter.
          ``(2) Authority under valid license.--A licensee may accept 
        bets or wagers from persons located in the United States, 
        subject to the limitations set forth in this subchapter, so 
        long as its license remains in good standing.
    ``(c) Application for License.--
          ``(1) In general.--Any person seeking authority to operate an 
        Internet gambling facility offering services to persons in the 
        United States may apply for a license issued by the Secretary.
          ``(2) Information required.--Any application for a license 
        under this subchapter shall contain such information as may be 
        required by the Secretary, including the following:
                  ``(A) The criminal and credit history of the 
                applicant, any senior executive and director of the 
                applicant, and any person deemed to be in control of 
                the applicant.
                  ``(B) The financial statements of the applicant.
                  ``(C) Documentation showing the corporate structure 
                of the applicant and all related businesses and 
                affiliates.
                  ``(D) Documentation containing detailed evidence of 
                the applicant's plan for complying with all applicable 
                regulations should a license be issued, with particular 
                emphasis on the applicant's ability to--
                          ``(i) protect underage and problem gamblers;
                          ``(ii) ensure games are being operated 
                        fairly; and
                          ``(iii) comply with and address the concerns 
                        of law enforcement.
                  ``(E) Certification that the applicant agrees to 
                submit to United States jurisdiction and all applicable 
                United States laws relating to acceptance by the 
                applicant of bets or wagers over the Internet from 
                persons located in the United States and all associated 
                activities.
                  ``(F) Certification that the applicant has 
                established a corporate entity or other separate 
                business entity in the United States, a majority of 
                whose officers are United States persons and, if there 
                is a board of directors, that the board is majority-
                controlled by directors who are United States persons.
    ``(d) Standards for License Issuance; Suitability Qualifications 
and Disqualification Standards.--
          ``(1) Suitability for licensing standards.--
                  ``(A) In general.--No person shall be eligible to 
                obtain a license unless the Secretary or an appropriate 
                State officer or agency has determined, upon completion 
                of a background check and investigation, that the 
                applicant, and any person deemed to be in control of 
                the applicant, is suitable for licensing.
                  ``(B) Associates of applicants.--If the applicant is 
                a corporation, partnership, or other business entity, a 
                background check and investigation shall occur with 
                respect to the president or other chief executive of 
                the corporation, partnership, or other business entity 
                and other partners or senior executives and directors 
                of the corporation, partnership, or entity, as 
                determined appropriate by the Secretary or any 
                appropriate State or tribal officer or agency.
                  ``(C) Background check and investigation.--The 
                Secretary shall establish standards and procedures for 
                conducting background checks and investigations for 
                purposes of this subsection.
          ``(2) Suitability for licensing standards described.--For 
        purposes of this subchapter, an applicant and any other person 
        associated with the applicant, as applicable, is suitable for 
        licensing if the applicant demonstrates to the Secretary or 
        appropriate State or tribal officer or agency by clear and 
        convincing evidence that the applicant (or individual 
        associated with the applicant, as applicable)--
                  ``(A) is a person of good character, honesty, and 
                integrity;
                  ``(B) is a person whose prior activities, reputation, 
                habits, and associations do not--
                          ``(i) pose a threat to the public interest or 
                        to the effective regulation and control of the 
                        licensed activities; or
                          ``(ii) create or enhance the dangers of 
                        unsuitable, unfair, or illegal practices, 
                        methods, and activities in the conduct of the 
                        licensed activities or the carrying on of the 
                        business and financial arrangements incidental 
                        to such activities;
                  ``(C) is capable of and likely to conduct the 
                activities for which the applicant is licensed in 
                accordance with the provisions of this subchapter and 
                any regulations prescribed under this subchapter;
                  ``(D) has or guarantees acquisition of adequate 
                business competence and experience in the operation of 
                Internet gambling facilities; and
                  ``(E) has or will obtain sufficient financing for the 
                nature of the proposed operation and from a suitable 
                source.
          ``(3) Unsuitable for licensing.--An applicant or any other 
        person may not be determined to be suitable for licensing 
        within the meaning of this subchapter if the applicant or such 
        person--
                  ``(A) has failed to provide information and 
                documentation material to a determination of 
                suitability for licensing under paragraph (1);
                  ``(B) has supplied information which is untrue or 
                misleading as to a material fact pertaining to any such 
                determination;
                  ``(C) has been convicted of an offense punishable by 
                imprisonment of more than 1 year;
                  ``(D) is delinquent in filing any applicable Federal 
                or State tax returns or in the payment of any taxes, 
                penalties, additions to tax, or interest owed to a 
                State or the United States;
                  ``(E) has, on or after the date of the enactment of 
                the Unlawful Internet Gambling Enforcement Act of 
                2006--
                          ``(i) knowingly participated in, or should 
                        have known they were participating in, any 
                        illegal Internet gambling activity, including 
                        the taking of an illegal Internet wager, the 
                        payment of winnings on an illegal Internet 
                        wager, the promotion through advertising of any 
                        illegal Internet gambling website or service, 
                        or the collection of any payments to an entity 
                        operating an illegal Internet gambling website; 
                        or
                          ``(ii) knowingly been owned, operated, 
                        managed, or employed by, or should have known 
                        they were owned, operated, managed, or employed 
                        by, any person who was knowingly participating 
                        in, or should have known they were 
                        participating in, any illegal Internet gambling 
                        activity, including the taking of an illegal 
                        Internet wager, the payment of winnings on an 
                        illegal Internet wager, the promotion through 
                        advertising of any illegal Internet gambling 
                        website or service, or the collection of any 
                        payments to an entity operating an illegal 
                        Internet gambling website;
                  ``(F) has--
                          ``(i) received any assistance, financial or 
                        otherwise, from any person who has, before the 
                        date of the enactment of the Internet Gambling 
                        Regulation, Consumer Protection, and 
                        Enforcement Act, knowingly accepted bets or 
                        wagers from a person located in the United 
                        States in violation of Federal or State law; or
                          ``(ii) provided any assistance, financial or 
                        otherwise, to any person who has, before the 
                        date of the enactment of the Internet Gambling 
                        Regulation, Consumer Protection, and 
                        Enforcement Act, knowingly accepted bets or 
                        wagers from a person located in the United 
                        States in violation of Federal or State law;
                  ``(G) with respect to another entity that has 
                accepted a bet or wager from any individual in 
                violation of United States law, has purchased or 
                otherwise obtained--
                          ``(i) such entity;
                          ``(ii) a list of the customers of such 
                        entity; or
                          ``(iii) any other part of the equipment or 
                        operations of such entity;
                  ``(H) is listed on a State gambling excluded persons 
                list; or
                  ``(I) fails to certify in writing, under penalty of 
                perjury, that the applicant or other such person, and 
                all affiliated business entities (including all 
                entities under common control), has through its entire 
                history--
                          ``(i) not committed an intentional felony 
                        violation of Federal or State gambling laws; 
                        and
                          ``(ii) used diligence to prevent any United 
                        States person from placing a bet on an Internet 
                        site in violation of Federal or State gambling 
                        laws.
          ``(4) Appeal of determination.--With respect to any applicant 
        or other person that the Secretary determines is not suitable 
        for licensing within the meaning of this subchapter by reason 
        of subparagraph (E) or (F) of paragraph (3), and where the 
        Secretary has not determined that such applicant or person was 
        acting in their capacity as a managerial employee of an 
        Internet gambling website, the Secretary shall establish an 
        appeals process by which such applicant or person may appeal 
        the Secretary's determination.
          ``(5) Ongoing requirement.--A licensee (and any other person 
        who is required to be determined to be suitable for licensing 
        in connection with such licensee) shall meet the standards 
        necessary to be suitable for licensing throughout the term of 
        the license.
          ``(6) Protection of the public trust.--The Secretary may take 
        such action as is necessary to protect the public trust, 
        including the implementation of such safeguards as may be 
        necessary to ensure the operation of an Internet gambling 
        facility licensed under this subchapter is controlled only by 
        persons who are suitable for licensing.
          ``(7) Enforcement actions.--
                  ``(A) Determination of unsuitability for continued 
                licensure.--If the Secretary finds that an individual 
                owner or holder of a security of a licensee, or of a 
                holding or intermediary company of a licensee or any 
                person with an economic interest in a licensee or a 
                director, partner, or officer of a licensee is not 
                suitable for licensing, the Secretary may determine 
                that the licensee is not qualified to continue as a 
                licensee.
                  ``(B) Action to protect the public interest, 
                including suspension.--If the Secretary may determine 
                that the licensee is not qualified to continue as a 
                licensee, the Secretary shall propose action necessary 
                to protect the public interest, including, if deemed 
                necessary, the suspension of the authority of the 
                licensee to engage in licensed activities.
                  ``(C) Imposition of conditions including removal of 
                parties.--Notwithstanding a determination under 
                subparagraph (A), the Secretary may allow a licensee to 
                continue engaging in licensed activities by imposing 
                conditions on the licensee under penalty of revocation 
                or suspension of the authority of the licensee to 
                engage in licensed activities, including--
                          ``(i) the identification of any person 
                        determined to be unsuitable for licensing; and
                          ``(ii) the establishment of appropriate 
                        safeguards to ensure such person is excluded 
                        from any interest in the licensed activities.
    ``(e) Assessments for Administrative Expenses.--
          ``(1) User fees.--
                  ``(A) In general.--The cost of administering this 
                subchapter with respect to each licensee, including the 
                cost of any review or examination of a licensee to 
                ensure compliance with the terms of the license and 
                this subchapter, shall be assessed by the Secretary 
                against the licensee institution by written notice in 
                an amount appropriate to meet the Secretary's expenses 
                in carrying out such administration, review, or 
                examination.
                  ``(B) Disposition.--Amounts assessed by the Secretary 
                as user fees under subparagraph (A) shall--
                          ``(i) be maintained by the Secretary solely 
                        for use in accordance with clause (ii);
                          ``(ii) be available to the Secretary to cover 
                        all expenses incurred by the Secretary in 
                        carrying out this subchapter; and
                          ``(iii) not be construed to be Government 
                        funds or appropriated monies, or subject to 
                        apportionment for the purposes of chapter 15 or 
                        any other authority.
                  ``(C) Hearing.--Any licensee against whom an 
                assessment is assessed under this paragraph shall be 
                afforded an agency hearing if such person submits a 
                request for such hearing within 20 days after the 
                issuance of the notice of assessment.
                  ``(D) Collection.--
                          ``(i) Referral.--If any licensee fails to pay 
                        an assessment under this paragraph after the 
                        assessment has become final, the Secretary 
                        shall recover the amount assessed by action in 
                        the appropriate United States district court.
                          ``(ii) Appropriateness of assessment not 
                        reviewable.--In any civil action under clause 
                        (i), the validity and appropriateness of the 
                        assessment shall not be subject to review.
          ``(2) Direct and exclusive obligation of licensee.--The user 
        fee shall be the direct and exclusive obligation of the 
        licensee and may not be deducted from amounts available as 
        deposits to any person placing a bet.
    ``(f) Approval of License.--The Secretary shall grant licenses 
under this subchapter if the applicant meets the criteria set by the 
Secretary set forth in this subchapter and in any regulations 
promulgated thereunder.
    ``(g) Safeguards Required of Licensee.--No person may operate an 
Internet gambling facility in accordance with this subchapter unless 
the person maintains or requires mechanisms so that the following 
requirements, and the standards established under section 5384, are met 
with respect to any Internet bet or wager:
          ``(1) Legal age.--Appropriate safeguards to ensure that the 
        individual placing a bet or wager is of legal age as defined by 
        the law of the State or tribal area in which the individual is 
        located at the time the bet or wager is placed.
          ``(2) Permissible location.--Appropriate safeguards to ensure 
        that the individual placing a bet or wager is physically 
        located in a jurisdiction that permits Internet gambling at the 
        time the bet or wager is placed.
          ``(3) Collection of customer taxes.--Appropriate mechanisms 
        to ensure that all taxes relating to Internet gambling from 
        persons engaged in Internet gambling are collected at the time 
        of any payment of any proceeds of Internet gambling.
          ``(4) Collection of taxes of licensee.--Appropriate 
        mechanisms to ensure that all taxes relating to Internet 
        gambling from any licensee are collected and disbursed as 
        required by law, and that adequate records to enable later 
        audit or verification are maintained.
          ``(5) Safeguards against financial crime.--Appropriate 
        safeguards to combat fraud, money laundering, and terrorist 
        finance.
          ``(6) Safeguards against compulsive gambling.--Appropriate 
        safeguards to combat compulsive Internet gambling.
          ``(7) Privacy safeguards.--Appropriate safeguards to protect 
        the privacy and security of any person engaged in Internet 
        gambling.
          ``(8) Payment of assessments.--Appropriate mechanisms to 
        ensure that any assessment under subsection (e) is paid to the 
        Secretary.
          ``(9) Other requirements.--Such other requirements as the 
        Secretary may establish by regulation or order.
    ``(h) Term and Renewal of License.--
          ``(1) Term.--Any license issued under this section shall be 
        issued for a 5-year term beginning on the date of issuance.
          ``(2) Renewal.--Licenses may be renewed in accordance with 
        the requirements prescribed by the Secretary pursuant to this 
        subchapter.
    ``(i) Revocation of License.--
          ``(1) In general.--Any license granted under this subchapter 
        may be revoked by the Secretary if--
                  ``(A) the licensee fails to comply with any provision 
                of this subchapter;
                  ``(B) the licensee is determined to be unsuitable for 
                licensing, within the meaning of this subchapter; or
                  ``(C) the licensee is determined to be targeting 
                marketing or advertising materials at individuals who 
                are not of legal age to place a bet or wager, as 
                defined by the law of the State or tribal area in which 
                the individuals are located.
          ``(2) Final action.--Any revocation of a license under 
        paragraph (1) shall be treated as a final action by the 
        Secretary.
    ``(j) Regulations.--The regulations prescribed by the Secretary 
under this subchapter shall include regulations to fully implement--
          ``(1) safeguards required for licensees under subsection (g); 
        and
          ``(2) the requirements for programs relating to the Problem 
        Gambling, Responsible Gambling, and Self-Exclusion Program 
        under section 5384.
    ``(k) Administrative Provisions.--
          ``(1) General powers of secretary.--
                  ``(A) In general.--The Secretary shall have the 
                authority to engage in the following:
                          ``(i) Investigate the suitability of each 
                        licensee to ensure compliance with this 
                        subchapter and regulations prescribed under 
                        this subchapter.
                          ``(ii) Require licensees to maintain 
                        appropriate procedures to ensure compliance 
                        with this subchapter and regulations prescribed 
                        under this subchapter.
                          ``(iii) Require licensees to maintain 
                        substantial facilities involved with the 
                        processing of bets or wagers from the United 
                        States within the United States.
                          ``(iv) Require that a majority of all of the 
                        employees of the applicant or licensee, and of 
                        its affiliated business entities, be residents 
                        or citizens of the United States. All entities 
                        under common control shall be considered 
                        affiliated business entities for the purposes 
                        of this subparagraph.
                          ``(v) Require licensees to maintain in the 
                        United States all facilities that are essential 
                        to the regulation of bets or wagers placed from 
                        the United States at a location that is 
                        accessible to the appropriate regulatory 
                        personnel at all times.
                          ``(vi) Examine any licensee and any books, 
                        papers, records, or other data of licensees 
                        relevant to any recordkeeping or reporting 
                        requirements imposed by the Secretary under 
                        this subchapter.
                          ``(vii) Require licensees to maintain all 
                        facilities within the United States for 
                        processing of bets or wagers made or placed 
                        from the United States.
                          ``(viii) When determined by the Secretary to 
                        be necessary, summon a licensee or an applicant 
                        for a license, an officer or employee of a 
                        licensee or any such applicant (including a 
                        former officer or employee), or any person 
                        having possession, custody, or care of the 
                        reports and records required by the Secretary 
                        under this subchapter, to appear before the 
                        Secretary or a designee of the Secretary at a 
                        time and place named in the summons and to 
                        produce such books, papers, records, or other 
                        data, and to give testimony, under oath, as may 
                        be relevant or material to any investigation in 
                        connection with the enforcement of this 
                        subchapter or any application for a license 
                        under this subchapter.
                          ``(ix) Investigate any violation of this 
                        subchapter and any regulation under this 
                        subchapter and any other violation of law 
                        relating to the operation of an Internet 
                        gambling facility.
                          ``(x) Conduct continuing reviews of 
                        applicants and licensees and the operation of 
                        Internet gambling facilities by use of 
                        technological means, onsite observation of 
                        facilities, including servers, or other 
                        reasonable means to assure compliance with this 
                        subchapter and any regulations promulgated 
                        hereunder.
                          ``(xi) Prohibit inappropriate advertising 
                        practices by licensees, including unsolicited 
                        emails targeting members of vulnerable 
                        populations, including problem gamblers and 
                        minors, or Internet advertising linked to 
                        search terms associated with children, problem 
                        gamblers, or other topics deemed inappropriate.
                  ``(B) Effect of wto ruling.--Clauses (iii) and (iv) 
                of subparagraph (A) shall cease to have effect if a 
                tribunal of the World Trade Organization of final 
                arbitration rules that the implementation of such 
                clauses would violate the trade commitments of the 
                United States under the World Trade Organization.
          ``(2) Consultation with indian tribes.--In implementing this 
        subchapter, the Secretary shall conduct meaningful consultation 
        with Indian tribes regarding all aspects of this subchapter 
        which affect Indian tribes, both as potential licensing 
        entities or operating entities.
          ``(3) Administrative aspects of summons.--
                  ``(A) Production at designated site.--A summons 
                issued pursuant to this subsection may require that 
                books, papers, records, or other data stored or 
                maintained at any place be produced at any business 
                location of a licensee or applicant for a license or 
                any designated location in any State or in any 
                territory or other place subject to the jurisdiction of 
                the United States not more than 500 miles distant from 
                any place where the licensee or applicant for a license 
                operates or conducts business in the United States.
                  ``(B) No liability for expenses.--The United States 
                shall not be liable for any expense incurred in 
                connection with the production of books, papers, 
                records, or other data under this subsection.
                  ``(C) Service of summons.--Service of a summons 
                issued under this subsection may be by registered mail 
                or in such other manner calculated to give actual 
                notice as the Secretary may prescribe by regulation.
          ``(4) Contumacy or refusal.--
                  ``(A) Referral to attorney general.--In case of 
                contumacy by a person issued a summons under this 
                subsection or a refusal by such person to obey such 
                summons or to allow the Secretary to conduct an 
                examination, the Secretary shall refer the matter to 
                the Secretary of the Treasury for referral to the 
                Attorney General.
                  ``(B) Jurisdiction of court.--The Attorney General 
                may invoke the aid of any court of the United States to 
                compel compliance with the summons within the 
                jurisdiction of which--
                          ``(i) the investigation which gave rise to 
                        the summons or the examination is being or has 
                        been carried on;
                          ``(ii) the person summoned is an inhabitant; 
                        or
                          ``(iii) the person summoned carries on 
                        business or may be found.
                  ``(C) Court order.--The court may issue an order 
                requiring the person summoned to appear before the 
                Secretary or a delegate of the Secretary to produce 
                books, papers, records, and other data, to give 
                testimony as may be necessary to explain how such 
                material was compiled and maintained, to allow the 
                Secretary to examine the business of a licensee, and to 
                pay the costs of the proceeding.
                  ``(D) Failure to comply with order.--Any failure to 
                obey the order of the court may be punished by the 
                court as a contempt thereof.
                  ``(E) Service of process.--All process in any case 
                under this subsection may be served in any judicial 
                district in which such person may be found.
          ``(5) Compilation of datasets on player behavior.--
                  ``(A) In general.--The Secretary shall compile and 
                make available to the public, on the website of the 
                Secretary, datasets on player behavior.
                  ``(B) Regulations requiring submission of 
                information.--The Secretary shall prescribe regulations 
                to require licensees under this subchapter to provide 
                information on player behavior that the Secretary 
                determines is appropriate for the datasets under 
                subparagraph (A).
                  ``(C) Information required to be included.--Datasets 
                prepared under this paragraph shall include information 
                on any individual player, if requested by the 
                Secretary, including but not limited to information 
                concerning gambling frequency, gaming duration, the 
                amount wagered, the number of bets placed, and net 
                losses, provided that such request complies with the 
                provisions of subparagraph (D).
                  ``(D) Protection of privacy.--All information 
                provided pursuant to this paragraph shall be aggregated 
                and anonymized, and shall not contain information that 
                either alone or in combination with other data elements 
                would permit identification of any individual player.
    ``(l) Civil Money Penalties.--
          ``(1) In general.--The Secretary may assess upon any licensee 
        or other person subject to the requirements of this subchapter 
        for any willful violation of this subchapter or any regulation 
        prescribed or order issued under this subchapter, a civil 
        penalty of not more than the greater of--
                  ``(A) the amount (not to exceed $100,000) involved in 
                the violation, if any; or
                  ``(B) $25,000.
          ``(2) Assessment.--
                  ``(A) Written notice.--Any penalty imposed under 
                paragraph (1) may be assessed and collected by the 
                Secretary by written notice.
                  ``(B) Finality of assessment.--If, with respect to 
                any assessment under paragraph (1), a hearing is not 
                requested pursuant to subparagraph (E) within the 
                period of time allowed under such subparagraph, the 
                assessment shall constitute a final and unappealable 
                order.
                  ``(C) Authority to modify or remit penalty.--The 
                Secretary may compromise, modify, or remit any penalty 
                which the Secretary may assess or has already assessed 
                under paragraph (1).
                  ``(D) Mitigating factors.--In determining the amount 
                of any penalty imposed under paragraph (1), the 
                Secretary shall take into account the appropriateness 
                of the penalty with respect to--
                          ``(i) the size of the financial resources and 
                        the good faith of the person against whom the 
                        penalty is assessed;
                          ``(ii) the gravity of the violation;
                          ``(iii) the history of previous violations; 
                        and
                          ``(iv) such other matters as justice may 
                        require.
                  ``(E) Hearing.--The person against whom any penalty 
                is assessed under paragraph (1) shall be afforded an 
                agency hearing if such person submits a request for 
                such hearing within 20 days after the issuance of the 
                notice of assessment.
                  ``(F) Collection.--
                          ``(i) Referral.--If any person fails to pay 
                        an assessment after any penalty assessed under 
                        this paragraph has become final, the Secretary 
                        shall recover the amount assessed by action in 
                        the appropriate United States district court.
                          ``(ii) Appropriateness of penalty not 
                        reviewable.--In any civil action under clause 
                        (i), the validity and appropriateness of the 
                        penalty shall not be subject to review.
                  ``(G) Disbursement.--All penalties collected under 
                authority of this subsection shall be deposited into 
                the Treasury.
          ``(3) Condition for licensure.--Payment by a licensee of any 
        civil penalty assessed under this subsection that has become 
        final shall be a requirement for the retention of its license.
    ``(m) Treatment of Records.--In light of business competition, 
confidentiality, and privacy concerns, the Secretary shall protect from 
disclosure information submitted in support of a license application 
under this subchapter and information collected in the course of 
regulating licensees to the full extent permitted by sections 552 and 
552a of title 5.
    ``(n) Suitability for Licensing Requirements for Certain Service 
Providers.--
          ``(1) In general.--Any person that knowingly--
                  ``(A) manages, administers, or controls bets or 
                wagers that are initiated, received, or otherwise made 
                within the United States,
                  ``(B) otherwise manages or administers the games with 
                which such bets or wagers are associated, or
                  ``(C) develops, maintains or operates, or distributes 
                or makes available for downloading software, other 
                system programs or hardware that create, operate, or 
                otherwise affect the outcome of a game,
        shall meet all of the suitability for licensing criteria 
        established under this section in the same manner and to the 
        same extent as if that person were itself a licensee.
          ``(2) Suitability for licensing requirements for certain 
        service providers.--Any failure on the part of person described 
        in any subparagraph of paragraph (1) to remain suitable for 
        licensing shall be grounds for revocation of the authority of 
        the licensee for whom such service is provided to operate an 
        Internet gambling facility, in the same manner and in 
        accordance with subsection (i).
    ``(o) Reliance on State and Tribal Regulatory Body Certifications 
of Suitability for Applicants.--
          ``(1) Qualification of state and tribal regulatory bodies.--
                  ``(A) Application for determination.--Any State or 
                tribal regulatory body with expertise in regulating 
                gambling may--
                          ``(i) notify the Secretary of its willingness 
                        to review prospective applicants to certify 
                        whether any such applicant meets the 
                        qualifications established under this 
                        subchapter; and
                          ``(ii) provide the Secretary with such 
                        documentation as the Secretary determines 
                        necessary for the Secretary to determine 
                        whether such State or tribal regulatory body is 
                        qualified to conduct such review and may be 
                        relied upon by the Secretary to make any such 
                        certification.
                  ``(B) Determination and notice.--Within 60 days after 
                receiving any notice under subparagraph(A)(i), the 
                Secretary shall--
                          ``(i) make the determination as to whether a 
                        State or tribal regulatory body is qualified to 
                        conduct a review of prospective applicants and 
                        may be relied upon to certify whether any such 
                        applicant meets the qualifications established 
                        under this subchapter; and
                          ``(ii) notify the State or tribal regulatory 
                        body of such determination.
          ``(2) Actions by qualified authorities.--During the period 
        that any determination of qualification under paragraph (1)(B) 
        is in effect with respect to any such State or tribal 
        regulatory body, the State or tribal regulatory body--
                  ``(A) may undertake reviews of any applicant to 
                determine whether the applicant or any person 
                associated with the applicant meets the criteria for 
                suitability for licensing established under this 
                subchapter;
                  ``(B) may impose on each such applicant an 
                administrative fee or assessment for conducting such 
                review in an amount the regulatory body determines to 
                be necessary to meet its expenses in the conduct of 
                such review; and
                  ``(C) shall process and assess each applicant fairly 
                and equally based on objective criteria, regardless of 
                any prior licensing of an applicant by the State or 
                tribal regulatory body.
          ``(3) Reliance on state or tribal certification.--Any 
        applicant may provide a certification of suitability for 
        licensing made by any State or tribal regulatory body under 
        paragraph (2), together with all documentation the applicant 
        has submitted to any such State or tribal regulatory body, to 
        the Secretary, and any such certification and documentation 
        shall be relied on by the Secretary as evidence that an 
        applicant has met the suitability for licensing requirements 
        under this section.
          ``(4) Authority of secretary to review.--Notwithstanding any 
        certification of suitability for licensing made by any State or 
        tribal regulatory body, the Secretary retains the authority to 
        review, withhold, or revoke any license if the Secretary has 
        reason to believe that any applicant or licensee does not meet 
        the suitability requirements for licensing established under 
        this section, or any other requirement of a licensee.
          ``(5) Reliance on qualified regulatory body for other 
        purposes, including examination and enforcement.--The Secretary 
        shall rely on any State and tribal regulatory body found 
        qualified under this subsection for such other regulatory and 
        enforcement activities as the Secretary finds to be useful and 
        appropriate to carry out the purposes of this subchapter, 
        including authority under paragraph (6).
          ``(6) Additional authority of qualified state or tribal 
        authorities.--The qualified state or tribal authorities may--
                  ``(A) examine licensees who are licensed under a 
                State or tribal program referred to in paragraph (1);
                  ``(B) employ enforcement agents with sufficient 
                training and experience to administer the requirements 
                of this subchapter; and
                  ``(C) enforce any requirement of this subchapter that 
                is within the jurisdiction of the qualified state or 
                tribal authority through all appropriate means provided 
                under this subchapter and other provisions of law.
          ``(7) Revocation of qualification.--The Secretary may revoke, 
        at any time and for any reason, the qualification of any State 
        or tribal regulatory body to certify or to conduct any other 
        regulatory or enforcement activity to carry out the purposes of 
        this subchapter.
    ``(p) Prevention of Minors From Placing Bets or Wagers.--The 
Secretary shall--
          ``(1) frequently monitor, evaluate, and measure compliance 
        effectiveness of each licensee's software, mechanisms, and 
        other systems for preventing minors from placing bets or wagers 
        through the Internet site of the licensee; and
          ``(2) impose a sanction of either a fine, a revocation of 
        license, or both, on a licensee whose minor protection 
        software, mechanisms, and other systems are found to be 
        insufficiently effective.
    ``(q) Requirements With Respect to Child Support Delinquents.--
          ``(1) In general.--When it is made known to the Secretary by 
        a Federal or State court or a competent State agency involved 
        with the administration or enforcement of a court-ordered child 
        support payment that a particular individual is delinquent with 
        respect to court-ordered child support payments, the Secretary 
        shall include that individual on the list established under 
        section 5384(c)(1)(A).
          ``(2) Removal from list.--Individuals placed on the list 
        pursuant to paragraph (1) shall be removed from such list if 
        the court or agency that made such individual's delinquency 
        known to the Secretary notifies the Secretary that such 
        individual is no longer delinquent.

``Sec. 5384. Problem Gambling, Responsible Gambling, Consumer 
                    Safeguards, and Self-Exclusion Program

    ``(a) Regulations Required.--The Secretary and any State or tribal 
regulatory body that has been qualified under subsection 5383(o) shall 
prescribe regulations for the development of a Problem Gambling, 
Responsible Gambling, Consumer Safeguards, and Self-Exclusion Program 
on the basis of standards that each licensee shall implement as a 
condition of licensure.
    ``(b) Minimum Requirements.--
          ``(1) In general.--Any application for a license shall 
        include a submission to the Secretary or qualified State or 
        tribal regulatory body setting forth a comprehensive program 
        that is intended--
                  ``(A) to verify the identity and age of each customer 
                through the use of commercially available data sources 
                or any approved government database that is available 
                for access in real-time through an automated process;
                  ``(B) to ensure that no customers under the legal age 
                21 may initiate or otherwise make any bets or wagers 
                for real money;
                  ``(C) to verify the State or tribal land in which the 
                customer is located at the time the customer attempts 
                to initiate a bet or wager;
                  ``(D) to ensure that no customer who is located in a 
                State or tribal land that opts out pursuant to section 
                5387 can initiate or otherwise make a bet or wager 
                prohibited by such opt-out;
                  ``(E) to ensure that responsible gambling materials 
                including materials on problem gambling, services and 
                resources to address problem gambling, descriptions of 
                games offered by the licensee, and when appropriate, 
                odds of winning or payout rates of games, and any other 
                materials that the Secretary or qualified State or 
                tribal regulatory body may deem appropriate are made 
                available to customers;
                  ``(F) to make available player-selectable responsible 
                gambling options that may include, as appropriate to 
                specific gambling games, a stake limit, loss limit, 
                time-based loss limits, deposit limit, session time 
                limit, time-based exclusion from all gambling and other 
                similar options that the Secretary or qualified State 
                or tribal regulatory body may deem appropriate and 
                require to be made available;
                  ``(G) to require each customer, before making or 
                placing any bet or wager, to establish personal limits 
                as a condition of play that apply across all betting 
                sites, which may be in hourly, daily, weekly or monthly 
                increments, at the discretion of the customer;
                  ``(H) to protect the privacy and security of any 
                customer in connection with any lawful Internet 
                gambling activity;
                  ``(I) to protect against fraud and to provide for 
                dispute resolution relating to internet gambling 
                activity through programs to insure the integrity and 
                fairness of the games; and
                  ``(J) to protect against money laundering relating to 
                Internet gambling activities.
          ``(2) Requirements for programs ensuring integrity and 
        fairness.--The programs referred to in paragraph (1)(I) to 
        insure the integrity and fairness of the games shall include 
        requirements for--
                  ``(A) real-time, multiparty cryptographic protocols 
                for random number generation where 1 of the parties is 
                the player;
                  ``(B) secure audit trails;
                  ``(C) detailed player betting logs that record and 
                store each wager placed by the player;
                  ``(D) real time confirmation of high value bets or 
                wagers, where appropriate; or
                  ``(E) equally effective options that the Secretary or 
                qualified State or tribal regulatory officer or agency 
                may determine to be appropriate.
    ``(c) Periodic Review.--
          ``(1) In general.--The Secretary shall, on a regular basis, 
        review the minimum requirements under this section and may, 
        based on the best available technology, update the standards 
        that each licensee shall implement as a condition of licensure.
          ``(2) Consultation.--In conducting the review required under 
        paragraph (1), the Secretary shall consult with--
                  ``(A) State and tribal gaming regulatory officials;
                  ``(B) law enforcement officials;
                  ``(C) experts in underage and problem gaming;
                  ``(D) experts on individual privacy;
                  ``(E) consumers;
                  ``(F) on-line retailers of other age restricted 
                materials such as tobacco and alcohol products;
                  ``(G) licensees and other representatives of the 
                gaming industry;
                  ``(H) software developers with expertise in gaming, 
                privacy, the payments systems available, and other 
                relevant areas; and
                  ``(I) such other relevant individuals as the 
                Secretary may determine to be appropriate.
    ``(d) List of Persons Self-excluded From Gambling Activities.--
          ``(1) Establishment.--
                  ``(A) In general.--The Secretary shall provide by 
                regulation for the establishment of a list of persons 
                self-excluded from gambling activities at all licensee 
                sites.
                  ``(B) Placement request.--Any person may request 
                placement on the list of self-excluded persons by--
                          ``(i) acknowledging in a manner to be 
                        established by the Secretary that the person 
                        wishes to be denied gambling privileges; and
                          ``(ii) agreeing that, during any period of 
                        voluntary exclusion, the person may not collect 
                        any winnings or recover any losses resulting 
                        from any gambling activity at any licensee 
                        sites.
          ``(2) Placement and removal procedures.--The regulations 
        prescribed by the Secretary under paragraph (1)(A) shall 
        establish procedures for placements on, and removals from, the 
        list of self-excluded persons.
          ``(3) Limitation on liability.--
                  ``(A) In general.--The United States, the Secretary, 
                an enforcement agent, or a licensee, or any employee or 
                agent of the United States, the Secretary, an 
                enforcement agent, or a licensee, shall not be liable 
                to any self-excluded person or to any other party in 
                any judicial or administrative proceeding for any harm, 
                monetary or otherwise, which may arise as a result of--
                          ``(i) any failure to withhold gambling 
                        privileges from, or to restore gambling 
                        privileges to, a self-excluded person; or
                          ``(ii) otherwise permitting a self-excluded 
                        person to engage in gambling activity while on 
                        the list of self-excluded persons.
                  ``(B) Rule of construction.--No provision of 
                subparagraph (A) shall be construed as preventing the 
                Director from assessing any regulatory sanction against 
                a licensee for failing to comply with the minimum 
                standards prescribed pursuant to this subsection.
          ``(4) Disclosure provisions.--
                  ``(A) In general.--Notwithstanding any other 
                provision of Federal or State law, the list of self-
                excluded persons shall not be open to public 
                inspection.
                  ``(B) Affiliate disclosure.--Any licensees may 
                disclose the identities of persons on the self-excluded 
                list to any affiliated company or, where required to 
                comply with this subsection, any service provider, to 
                the extent that the licensee ensures that any 
                affiliated company or service provider maintains such 
                information under confidentiality provisions comparable 
                to those in this subsection.
          ``(5) Limitation on liability for disclosure.--A licensee or 
        an employee, agent, or affiliate of a licensee shall not be 
        liable to any self-excluded person or to any other party in any 
        judicial proceeding for any harm, monetary or otherwise, which 
        may arise as a result of disclosure or publication in any 
        manner.
    ``(e) Gambling by Prohibited Persons.--
          ``(1) Prohibition benefitting from prohibited gambling 
        activity.--A person who is prohibited from gambling with a 
        licensee by law, or by order of the Secretary or any court of 
        competent jurisdiction, including any person on the self-
        exclusion list as established in accordance with subsection 
        (d), shall not collect, in any manner or proceeding, any 
        winnings or recover any losses arising as a result of any 
        prohibited gambling activity.
          ``(2) Forfeiture.--In addition to any other penalty provided 
        by law, any money or thing of value that has been obtained by, 
        or is owed to, any prohibited person by a licensee as a result 
        of bets or wagers made by a prohibited person shall be subject 
        to forfeiture by order of the Secretary, following notice to 
        the prohibited person and opportunity to be heard.
          ``(3) Deposit of forfeited funds.--Any funds forfeited 
        pursuant to this subsection shall be deposited into the general 
        fund of the Treasury.
          ``(4) Persons self-excluded.--Licensees may not accept bets 
        or wagers from persons on the list established pursuant to 
        subsection (d)(1)(A).
    ``(f) Problem or Compulsive Gamblers Not on the List of Self-
excluded Persons.--
          ``(1) Public awareness program.--
                  ``(A) In general.--The Secretary and any State or 
                tribal regulatory body that has been qualified under 
                subsection 5383(o) shall provide by regulation for the 
                establishment of a program to alert the public to the 
                existence, consequences, and availability of the self-
                exclusion list, and shall prepare and promulgate 
                written materials to be used in such a program.
                  ``(B) Licensee-provided publicity.--Regulations 
                prescribed under subparagraph (A) may require a 
                licensee to make available literature or screen 
                displays relating to the existence of the program.
          ``(2) Rule of construction.--No provision of this subsection 
        shall be construed as creating a legal duty in the Secretary, a 
        qualified State or tribal regulatory body, a licensee, or any 
        representative of a licensee to identify or to exclude problem 
        or compulsive gamblers not on the list of self-excluded 
        persons.
          ``(3) Immunity.--The United States, the Secretary, a 
        qualified State or tribal regulatory body, a licensee, and any 
        employee or agent of a licensee, shall not be liable to any 
        person in any proceeding for losses or other damages of any 
        kind arising out of that person's gambling activities based on 
        a claim that the person was a compulsive, problem, or 
        pathological gambler.

``Sec. 5385. Financial transaction providers

    ``(a) In General.--No financial transaction provider shall be held 
liable for engaging in financial activities and transactions for or on 
behalf of a licensee or involving a licensee, including payments 
processing activities, unless such provider has knowledge that the 
specific financial activities or transactions are conducted in 
violation of this subchapter and with applicable Federal and State 
laws.
    ``(b) Definitions.--For purposes of this section, the following 
definitions shall apply:
          ``(1) Financial transaction provider.--The term `financial 
        transaction provider' means a creditor, credit card issuer, 
        financial institution, operator of a terminal at which an 
        electronic fund transfer may be initiated, money transmitting 
        business, or international, national, regional, or local 
        payment network utilized to effect a credit transaction, 
        electronic fund transfer, stored value product transaction, or 
        money transmitting service, or a participant in such network, 
        or other participant in a payment system.
          ``(2) Other terms.--
                  ``(A) Credit, creditor, credit card, and card 
                issuer.--The terms `credit', `creditor', `credit card', 
                and `card issuer' have the meanings given the terms in 
                section 103 of the Truth in Lending Act.
                  ``(B) Electronic fund transfer.--The term `electronic 
                fund transfer'--
                          ``(i) has the meaning given the term in 
                        section 903 of the Electronic Fund Transfer 
                        Act, except that the term includes transfers 
                        that would otherwise be excluded under section 
                        903(6)(E) of such Act; and
                          ``(ii) includes any fund transfer covered by 
                        Article 4A of the Uniform Commercial Code, as 
                        in effect in any State.
                  ``(C) Financial institution.--The term `financial 
                institution' has the meaning given the term in section 
                903 of the Electronic Fund Transfer Act, except that 
                such term does not include a casino, sports book, or 
                other business at or through which bets or wagers may 
                be placed or received.
                  ``(D) Insured depository institution.--The term 
                `insured depository institution'--
                          ``(i) has the meaning given the term in 
                        section 3(c) of the Federal Deposit Insurance 
                        Act; and
                          ``(ii) includes an insured credit union (as 
                        defined in section 101 of the Federal Credit 
                        Union Act).
                  ``(E) Money transmitting business and money 
                transmitting service.--The terms `money transmitting 
                business' and `money transmitting service' have the 
                meanings given the terms in section 5330(d) (determined 
                without regard to any regulations prescribed by the 
                Secretary under such section).

``Sec. 5386. List of unlawful Internet gambling enterprises

    ``(a) Definitions.--For purposes of this section, the following 
definitions shall apply:
          ``(1) Unlawful internet gambling enterprise.--The term 
        `unlawful Internet gambling enterprise' means any person who, 
        more than 10 days after the date of the enactment of this 
        section--
                  ``(A) violates a provision of section 5363;
                  ``(B) knowingly receives or transmits funds intended 
                primarily for a person described in subparagraph (A); 
                or
                  ``(C) knowingly assists in the conduct of a person 
                described in subparagraph (A) or (B).
          ``(2) Director.--The term `Director' means the Director of 
        the Financial Crimes Enforcement Network.
    ``(b) List of Unlawful Internet Gambling Enterprises.--
          ``(1) In general.--Not later than 120 days after the date of 
        the enactment of this section, the Director shall submit to the 
        Secretary a list of unlawful Internet gambling enterprises and 
        shall regularly update such list in accordance with the 
        procedures described in paragraph (3).
          ``(2) Contents of list.--The list prepared under paragraph 
        (1) shall include the following information for each such 
        unlawful Internet gambling enterprise:
                  ``(A) All known Internet website addresses of the 
                enterprise.
                  ``(B) The names of all known owners and operators of 
                the enterprise.
                  ``(C) To the extent known, information identifying 
                the financial agents and account numbers of the 
                enterprise and the persons listed under subparagraph 
                (B).
          ``(3) Distribution of list by secretary.--The Secretary shall 
        make available--
                  ``(A) a copy of the information provided under 
                subparagraphs (A) and (B) of paragraph (2) on the 
                Internet website of the Secretary of the Treasury;
                  ``(B) to all persons who are required to comply with 
                the regulations prescribed under the authority provided 
                in section 5364 a copy of all the information provided 
                under paragraph (1) in an electronic format compatible 
                with the Specially Designated Nationals list maintained 
                by the Office of Foreign Assets Control; and
                  ``(C) any information required under this paragraph 
                not later than 10 days after receiving any new or 
                updated list from the Director.
          ``(4) Procedures.--The procedures described in this paragraph 
        are the following:
                  ``(A) Investigation.--The Director shall investigate 
                entities that appear to be unlawful Internet gambling 
                enterprises. An initial investigation shall be 
                completed before the end of the 60-day period beginning 
                on the date of enactment of this section. After the 
                initial investigation, the Director shall regularly 
                investigate entities that appear to be unlawful 
                Internet gambling enterprises. If the Director 
                discovers evidence sufficient to prove a prima facie 
                case that any person is an unlawful Internet gambling 
                enterprise, the Director shall provide the notice 
                required under subparagraph (C).
                  ``(B) Requests.--Any Federal, State, tribal, or local 
                law enforcement official, any affected sports 
                organization, any person directly harmed by unlawful 
                Internet gambling, any financial transaction provider, 
                and any interactive computer service (as such terms are 
                defined in section 5362) shall have the right, but not 
                the obligation, to make a written request to the 
                Director for the addition of any person to the list of 
                unlawful Internet gambling enterprises. If the Director 
                determines that the evidence submitted is sufficient to 
                prove a prima facie case that such person is an 
                unlawful Internet gambling enterprise, the Director 
                shall provide the notice required under subparagraph 
                (C) to each person identified as an alleged unlawful 
                Internet gambling enterprise. The Director also shall 
                provide written notice of its decision under this 
                subparagraph, including a decision not to add a person 
                to the list required under paragraph (1), to the 
                requesting party no later than 30 days after the 
                request is received.
                  ``(C) Notice.--Not fewer than 30 days before adding 
                an unlawful Internet gambling enterprise, or an owner 
                or operator thereof, to the list required under 
                paragraph (1), the Director shall provide written 
                notice to such enterprise, owner, or operator. Any 
                enterprise, owner, or operator receiving such notice 
                may contest the Director's determination by written 
                appeal to the Director not more than 30 days after 
                receiving notice.
                  ``(D) Opportunity for hearing.--If a person properly 
                submits a written appeal under subparagraph (C), the 
                Director shall not include such person in the list 
                required under paragraph (1) unless and until the 
                Director provides such person with an opportunity for a 
                hearing not more than 30 days after receiving written 
                notice of appeal. Not more than 10 days after an 
                opportunity for hearing is afforded, whether or not the 
                person requesting the hearing appears at such hearing, 
                the Director shall proceed to add such person to the 
                list of unlawful Internet gambling enterprises unless 
                the Director determines, based on a preponderance of 
                the evidence, that such person is not an unlawful 
                Internet gambling enterprise.
                  ``(E) Injunctive relief.--Any person that the 
                Director determines shall be included in the list 
                required under paragraph (1) after such person appears 
                at a hearing described in subparagraph (D) and any 
                person included in such list who did not receive the 
                notice required under subparagraph (C), may petition 
                for injunctive relief in the United States District 
                Court for the District of Columbia, which shall have 
                exclusive jurisdiction to hear challenges pursuant to 
                this section. The petitioner shall have the burden of 
                establishing by a preponderance of the evidence that 
                such person is not an unlawful Internet gambling 
                enterprise. Only persons designated by the Director for 
                inclusion on the list of unlawful Internet gambling 
                enterprises, and other owners or operators of an 
                enterprise to be so listed, shall have standing to 
                contest the Director's determination. The court may 
                enjoin the Director and the Secretary not to add or 
                remove the petitioner from the list of unlawful 
                Internet gambling enterprises, and no other judicial 
                recourse shall be permitted.
    ``(c) Effect of List.--A financial transaction provider shall be 
deemed to have actual knowledge that a person is an unlawful Internet 
gambling enterprise to the extent that such person is identified on the 
list available to the public, or on a non-public list made available to 
such financial transaction provider, by the Secretary as described in 
subsection (b)(2), provided that the list shall not be deemed to be the 
sole source of actual knowledge.

``Sec. 5387. Limitation of licenses in States and Indian lands

    ``(a) State Opt-Out Exercise.--
          ``(1) Limitations imposed by states.--
                  ``(A) In general.--No licensee may engage, under any 
                license issued under this subchapter, in the operation 
                of an Internet gambling facility that knowingly accepts 
                bets or wagers initiated by persons who reside in any 
                State which provides notice that it will limit such 
                bets or wagers, if the Governor or other chief 
                executive officer of such State informs the Director of 
                such limitation, in a manner which clearly identifies 
                the nature and extent of such limitation, before the 
                end of the period beginning on the date of the 
                enactment of the Internet Gambling Regulation, Consumer 
                Protection, and Enforcement Act and ending on the date 
                on which such State's legislature has conducted one 
                full general legislative session, where such session 
                began after the date of the enactment of such Act, or 
                in accordance with paragraph (2), until such time as 
                any notice of any amendment or repeal of such specific 
                limitation becomes effective under paragraph (2).
                  ``(B) Coordination between state and tribal opt-out 
                exercises.--Any State limitation under subparagraph (A) 
                shall not apply to the acceptance by a licensee of bets 
                or wagers from persons located within the tribal lands 
                of an Indian tribe that--
                          ``(i) has itself opted out pursuant to 
                        subsection (b) (in which case the tribal opt-
                        out exercise under such subsection shall 
                        apply); or
                          ``(ii) would be entitled pursuant to other 
                        applicable law to permit such bets or wagers to 
                        be initiated and received within its territory 
                        without use of the Internet.
                  ``(C) Coordination with indian gaming regulatory 
                act.--No decision by a State under this subsection 
                shall be considered in making any determination with 
                regard to the ability of an Indian tribe to offer any 
                class of gambling activity pursuant to section 11 of 
                the Indian Gaming Regulatory Act.
                  ``(D) Tribal status or category not impacted.--Tribal 
                operations of Internet gambling facilities under this 
                subchapter shall not impact an Indian tribe's status or 
                category or class under its land-based activities.
                  ``(E) New negotiations not required.--Operating under 
                a license issued pursuant to this subchapter shall not 
                require, or impose any requirement on, an Indian tribe 
                to negotiate a new agreement, or renegotiate any 
                existing agreement, limitation or other provision of a 
                tribal-State compact, agreement, or other understanding 
                with respect to gaming or revenue-sharing, with regard 
                to any Internet bet or wager occurring pursuant to a 
                license issued by the Secretary under this subchapter.
          ``(2) Changes to state limitations.--The establishment, 
        repeal, or amendment by any State of any limitation referred to 
        in paragraph (1) after the end of the period referred to in 
        paragraph (1) shall apply, for purposes of this subchapter, 
        beginning on the first January 1 that occurs after the end of 
        the 60-day period beginning on the later of--
                  ``(A) the date a notice of such establishment, 
                repeal, or amendment is provided by the Governor or 
                other chief executive officer of such State in writing 
                to the Secretary; or
                  ``(B) the effective date of such establishment, 
                repeal, or amendment.
    ``(b) Indian Tribe Opt-Out Exercise.--
          ``(1) Limitations imposed by indian tribes.--No Internet 
        gambling licensee knowingly may accept a bet or wager from a 
        person located in the tribal lands of any Indian tribe which 
        limits such gambling activities or other contests if the 
        principal chief or other chief executive officer of such Indian 
        tribe informs the Secretary of such limitation, in a manner 
        which clearly identifies the nature and extent of such 
        limitation, before the end of the 90-day period beginning on 
        the date of the enactment of the Internet Gambling Regulation, 
        Consumer Protection, and Enforcement Act, or in accordance with 
        paragraph (2), until such time as any notice of any amendment 
        or repeal of such specific limitation becomes effective under 
        paragraph (2).
          ``(2) Changes to indian tribe limitations.--The 
        establishment, repeal, or amendment by any Indian tribe of any 
        limitation referred to in paragraph (1) after the end of the 
        90-day period beginning on the date of the enactment of this 
        subchapter shall apply, for purposes of this subchapter, 
        beginning on the first January 1 that occurs after the end of 
        the 60-day period beginning on the later of--
                  ``(A) the date a notice of such establishment, 
                repeal, or amendment is provided by the principal chief 
                or other chief executive officer of such Indian tribe 
                in writing to the Secretary; or
                  ``(B) the effective date of such establishment, 
                repeal, or amendment.
    ``(c) Notification and Enforcement of State and Indian Tribe 
Limitations.--
          ``(1) In general.--The Secretary shall notify all licensees 
        and applicants of all States and Indian tribes that have 
        provided notice pursuant to paragraph (1) or (2) of subsection 
        (a) or (b), as the case may be, promptly upon receipt of such 
        notice and in no event fewer than 30 days before the effective 
        date of such notice.
          ``(2) Compliance.--The Secretary shall take effective 
        measures to ensure that any licensee under this subchapter, as 
        a condition of the license, complies with any limitation or 
        prohibition imposed by any State or Indian tribe to which the 
        licensee is subject under subsection (a) or (b), as the case 
        may be.
          ``(3) Violations.--It shall be a violation of this subchapter 
        for any licensee knowingly to accept bets or wagers initiated 
        or otherwise made by persons located within any State or in the 
        tribal lands of any Indian tribe for which a notice is in 
        effect under subsection (a) or (b), as the case may be.
          ``(4) State attorney general enforcement.--In any case in 
        which the attorney general of a State, or any State or local 
        law enforcement agency authorized by the State attorney general 
        or by State statute to prosecute violations of consumer 
        protection law, has reason to believe that an interest of the 
        residents of that State has been or is threatened or adversely 
        affected by a violation by a licensee pursuant to paragraph 
        (2), the State, or the State or local law enforcement agency on 
        behalf of the residents of the agency's jurisdiction, may bring 
        a civil action on behalf of the residents of that State or 
        jurisdiction in a district court of the United States located 
        therein, to--
                  ``(A) enjoin that practice; or
                  ``(B) enforce compliance with this subchapter.

``Sec. 5388. Sports betting prohibited on Internet

    ``No licensee under this subchapter shall accept Internet bets or 
wagers on sporting events, with the exception of pari-mutuel racing as 
permitted by law.

``Sec. 5389. Prohibition on the use of credit cards for Internet 
                    gambling

    ``(a) In General.--No licensee, no person operating on behalf of a 
licensee, and no person accepting payment for or settlement of a bet or 
wager who intends to transmit such payment to a person licensee, may 
accept a bet or wager or payment for or settlement of a bet or wager 
that is transmitted or otherwise facilitated with a credit card (as 
defined in section 5362(11)).
    ``(b) Exception.--
          ``(1) Clarification of scope.--For any person licensed to 
        take bets or wagers in accordance with the Interstate 
        Horseracing Act of 1978, the prohibition in subsection (a) 
        shall only apply to those activities conducted pursuant to a 
        license under this subchapter.
          ``(2) Intrastate activities.--For any person involved in 
        legal, land-based or State- or tribal-regulated intrastate 
        gambling, the prohibition in subsection (a) shall only apply to 
        those activities conducted pursuant to a license under this 
        subchapter.

``Sec. 5390. State and tribal lotteries

    ``(a) In General.--Notwithstanding any other provision of this 
subchapter, this subchapter shall not apply to Internet gambling 
conducted by any State or tribal lottery authority when conducted in 
accordance with subparagraph (B) or (C) of section 5362(10), as 
clarified by section 5362(10)(E).
    ``(b) Rule of Construction.--For purposes of the clarification made 
by subparagraph (E) of section 5362(10) to the meaning and intent of 
subparagraphs (B) and (C) of such section, Internet gambling described 
in subsection (a) is hereby expressly permitted, and operators of any 
State or tribal lottery authority conducting Internet gambling 
facilities operating in accordance with such subparagraph (B) or (C), 
as clarified by such subparagraph (E), and vendors, suppliers and 
service providers to such State or tribal lottery authority, shall not 
be required to be licensed under this subchapter.
    ``(c) Applicability of Other Provisions to Lottery Activity.-- To 
clarify existing law, section 1084 of title 18 shall not apply to any 
of the following that occurs in connection with any Internet gambling 
conducted by any State or tribal lottery authority when conducted in 
accordance with subparagraph (B) or (C) of section 5362(10), as 
clarified by section 5362(10)(E):
          ``(1) Any Internet bet or wager, including any transmission 
        thereof.
          ``(2) Any transmission of information assisting in the 
        placing of bets or wagers.
          ``(3) any transmission entitling the recipient to receive 
        money or credit as a result of bets or wagers, or for 
        information assisting in the placing of bets or wagers.
    ``(d) Authorization of Sponsor.--No licensee may offer services 
relating to any lottery sponsored by a State, tribal, or other 
governmental body without the authorization of the official sponsor.

``Sec. 5391. Safe harbors

    ``It shall be a complete defense against any prosecution or 
enforcement action under any Federal or State law against any person 
possessing a valid license under this subchapter that the activity is 
authorized under and has been carried out lawfully under the terms of 
this subchapter.

``Sec. 5392. Relation to section 1084 of title 18 and the Unlawful 
                    Internet Gambling Enforcement Act

    ``Section 1084 of title 18 and subchapter IV of this chapter shall 
not apply to any Internet bet or wager occurring pursuant to a license 
issued in accordance with this subchapter.

``Sec. 5393. Cheating and other fraud

    ``(a) Electronic Cheating Devices Prohibited.--No person 
initiating, receiving, or otherwise making a bet or wager with a 
licensee, or sending, receiving, or inviting information assisting with 
a bet or wager with a licensee, knowingly shall use, or assist another 
in the use of, an electronic, electrical, or mechanical device which is 
designed, constructed, or programmed specifically for use in obtaining 
an advantage in any game authorized under this subchapter, where such 
advantage is prohibited or otherwise violates the rules of play 
established by the licensee.
    ``(b) Additional Offense.--No person initiating, receiving, or 
otherwise making a bet or wager with a licensee, or sending, receiving, 
or inviting information assisting with a bet or wager with a licensee, 
knowingly shall use or possess any cheating device with intent to cheat 
or defraud any licensee or other persons placing bets or wagers with 
such licensee.
    ``(c) Permanent Injunction.--Upon conviction of a person for 
violation of this section, the court may enter a permanent injunction 
enjoining such person from initiating, receiving, or otherwise making 
bets or wagers or sending, receiving, or inviting information assisting 
in the placing of bets or wagers.
    ``(d) Criminal Penalty.--Whoever violates subsection (a) or (b) of 
this section shall be fined under title 18 or imprisoned for not more 
than 5 years, or both.''.
    (b) Rules of Construction.--
          (1) Technical and conforming amendment.--Section 310(b)(2) of 
        title 31, United States Code is amended--
                  (A) by redesignating subparagraph (J) as subparagraph 
                (K); and
                  (B) by inserting after subparagraph (I) the following 
                new subparagraph:
                  ``(J) Administer the requirements of subchapter V of 
                chapter 53.''.
    (c) Clerical Amendment.--The table of sections for chapter 53 of 
title 31, United States Code, is amended by adding at the end the 
following:

         ``subchapter v--regulation of lawful internet gambling

``5381. Congressional findings.
``5382. Definitions.
``5383. Establishment and administration of licensing program.
``5384. Problem Gambling, Responsible Gambling, Consumer Safeguards, 
and Self-Exclusion Program.
``5385. Financial transaction providers.
``5386. List of unlawful Internet gambling enterprises.
``5387. Limitation of licenses in States and Indian lands.
``5388. Sports betting prohibited on Internet.
``5389. Prohibition on the use of credit cards for Internet gambling.
``5390. State and tribal lotteries.
``5391. Safe harbors.
``5392. Relation to section 1084 of title 18 and the Unlawful Internet 
Gambling Enforcement Act.
``5393. Cheating and other fraud.''.

SEC. 3. REPORT REQUIRED.

    (a) In General.--Before the end of the 1-year period beginning on 
the effective date of the regulations prescribed under section 5(a), 
and annually thereafter, the Secretary shall submit a report to the 
Congress on the licensing and regulation of Internet gambling 
operators.
    (b) Information Required.--Each report submitted under subsection 
(a) shall include the following information:
          (1) A comprehensive statement regarding the prohibitions 
        notified by the States and Indian tribes pursuant to section 
        5387 of title 31, United States Code.
          (2) Relevant statistical information on applicants and 
        licenses.
          (3) The amount of licensing and user fees collected during 
        the period covered by the report.
          (4) Information on regulatory or enforcement actions 
        undertaken during the period.
          (5) Any other information that may be useful to the Congress 
        in evaluating the effectiveness of the Act in meeting its 
        purpose, including the provision of protections against 
        underage gambling, compulsive gambling, money laundering, and 
        fraud, and in combating tax avoidance relating to Internet 
        gambling.

SEC. 4. FEASIBILITY STUDY.

    The Secretary of the Treasury, in consultation with appropriate 
State or tribal officers or agencies, shall conduct a feasibility study 
on safeguards to address gambling while impaired through programs such 
as periodic notices, periodic testing of individuals to establish 
cognitive competence, and any other similar option that the Secretary 
or appropriate State or tribal officers or agencies may determine to be 
appropriate.

SEC. 5. EFFECTIVE DATE.

    (a) Regulations.--The Secretary of the Treasury shall prescribe 
such regulations as the Secretary may determine to be appropriate to 
implement subchapter V of chapter 53 of title 31, United States Code 
(as added by section 2(a) of this Act) and shall publish such 
regulations in final form in the Federal Register before the end of the 
180-day period beginning on the date of the enactment of this Act.
    (b) Scope of Application.--The amendment made by section 2(a) shall 
apply after the end of the 90-day period beginning on the date of the 
publication of the regulations in final form in accordance with 
subsection (a).

                          Purpose and Summary

    H.R. 2267, the Internet Gambling Regulation, Consumer 
Protection, and Enforcement Act, would establish a federal 
regulatory and enforcement framework under which Internet 
gambling operators could obtain licenses authorizing them to 
accept bets and wagers from individuals in the U.S., on the 
condition that they maintain effective protections against 
underage gambling, compulsive gambling, money laundering and 
fraud, and enforce prohibitions or restrictions on types of 
gambling prohibited by States, and Indian Tribes.

                  Background and Need for Legislation

    The U.S. government has faced profound difficulties in 
preventing people from engaging in online gambling, which the 
Justice Department has deemed to be illegal from the earliest 
days of the Internet. The Department of Justice has generally 
interpreted the 1961 Wire Act to prohibit all online interstate 
betting, regardless of type, notwithstanding that the only 
federal appellate court to consider the issue has ruled that 
the Wire Act prohibits sports gambling online but does not 
prohibit non sports online gambling.\1\ The Justice Department 
chose not to appeal that case.
---------------------------------------------------------------------------
    \1\In re Mastercard, 313 F. 3d 257, 262, 263 & n. 20 (5th cir. 
2002) ([A] plain reading of the statutory language [of the Wire Act] 
clearly requires that the object of the gambling be a sporting event or 
contest).
---------------------------------------------------------------------------
    In 2006, Congress enacted the Unlawful Internet Gambling 
Enforcement Act (UIGEA), which restricts the use of the 
payments system for U.S. citizens who seek to gamble online. 
During consideration of the UIGEA, supporters of the 
legislation frequently cited the following concerns about 
Internet gambling: fraud, money laundering, compulsive 
gambling, underage gambling and criminal infiltration, all of 
which are better policed in a licensed, regulated system, 
rather than an unregulated environment.
    In October 2006, the Financial Action Task Force (FATF), 
the intergovernmental body whose purpose is the development and 
promotion of national and international policies to combat 
money laundering and terrorist financing, issued a report on 
new Internet payment systems and their vulnerabilities to money 
laundering and terrorism financing. The editor of the FATF 
report was quoted in Business Week regarding how moving 
payments from online gambling away from the regulated credit 
card industry and into less regulated realms provides room for 
exploitation by money launderers and financiers of terrorism:

          According to the report, it would be difficult for 
        individual countries to compel Internet services based 
        outside their borders to stop processing transactions 
        that are legal in the nation from which they operate. 
        Thus, it would be problematic for U.S. law enforcement 
        officials to stop Internet payment services from 
        processing illegal gambling transactions made from U.S. 
        computers. With this thorny question of Internet 
        gambling, where the United States has made a decision 
        on policy that is not unanimous in the world community 
        there will be ways that these systems will be 
        exploited, kind of like the old days in prohibition, 
        says Vincent Schmoll, principal administrator with the 
        FATF secretariat and editor of the report. Quite 
        honestly, in the criminal financial world exploiting 
        differences in jurisdictions has been the key thing all 
        along.

    The UIGEA required the Fed and Treasury to issue 
regulations to cover financial institutions. These regulations 
have been the source of much controversy and Committee 
consideration. On Wednesday, April 2, 2008, the Committee on 
Financial Services Subcommittee on Domestic and International 
and Monetary Policy held a hearing entitled, ``Proposed UIGEA 
Regulations: Burden Without Benefit?'' to examine the proposed 
regulations, which garnered more than 200 comment letters. At 
that hearing, the testimony of the regulators and the industry 
made it clear that the regulations were unworkable. 
Subsequently, Chairman Frank introduced legislation, H.R. 6870, 
which would transition the rulemaking process to a formal 
rulemaking process and clarify the definition of unlawful 
Internet gambling. H.R. 6870 was favorably reported out of the 
Financial Services Committee on September 16, and a report was 
filed October 3, 2008, but the House adjourned before further 
action could be taken. The final rules were issued on November 
18, 2008, with an effective date of January 19, 2009, and an 
implementation date of December 1, 2009. H.R. 2266, The 
Reasonable Prudence in Regulation Act, introduced by Chairman 
Frank on May 6, 2009, would have extended the compliance 
deadline for the regulations to December 1, 2010. On November 
27, 2009, in response to a petition filed by the National 
Thoroughbred Racing Association, the Poker Players Association 
and the American Greyhound Track Operators Association, the 
Federal Reserve and Treasury delayed the implementation of 
these regulations to June 1, 2010. Many letters were written in 
support of this petition for delayed implementation, including: 
a letter dated October 1 by 19 bipartisan members of the 
Financial Services Committee; a letter headed by Congressman 
Cohen and 24 other members on September 26; a letter headed by 
Congressmen Sessions and 15 other members on October 26, a 
Kentucky delegation letter sent on November 19, and letters 
from Senators Reid, McConnell and Menendez. In addition, 
letters in support of the petition were sent by the American 
Bankers Association, Independent Community Bankers Association, 
National Association of Federal Credit Unions, Credit Union 
National Association, NACHA-The Electronic Payments 
Association, and other financial institutions.
    The regulations, like the underlying legislation, fail to 
define the term unlawful Internet gambling, leaving it to each 
financial institution to reconcile conflicting state and 
federal laws, court decisions and inconsistent Department of 
Justice interpretations, when determining whether to process a 
transaction. Furthermore, some of the information needed to 
make this determination would generally be unavailable to banks 
because customers or financial institutions in foreign 
jurisdictions will likely be unwilling or unable to provide it.
    On May 6, 2009, Chairman Frank introduced H.R. 2267, the 
Internet Gambling Regulation, Consumer Protection, and 
Enforcement Act. The legislation would establish a federal 
regulatory and enforcement framework under which Internet 
gambling operators could obtain licenses authorizing them to 
accept bets and wagers from individuals in the U.S., on the 
condition that they maintain effective protections against 
underage gambling, compulsive gambling, money laundering and 
fraud, and enforce prohibitions or restrictions on types of 
gambling prohibited by states, and Indian Tribes. H.R. 2267, as 
amended in committee, explicitly prohibits Internet wagers on 
professional and amateur sports. This language reaffirms 
decades of federal statutory policy against sports betting.
    This bill currently has 70 cosponsors.

                                Hearings

    The Committee on Financial Services held a hearing on 
``H.R. 2266, the Reasonable Prudence in Regulation Act, and 
H.R. 2267, the Internet Gambling Regulation, Consumer 
Protection, and Enforcement Act'' on Thursday, December 3, 
2009. The following witnesses testified:
     The Honorable Robert Martin, Tribal Chairman, 
Morongo Band of Mission Indians
     Ms. Parry Aftab, Executive Director, WiredSafety
     Professor Malcolm K. Sparrow, John F. Kennedy 
School of Government, Harvard University
     Mr. Keith S. Whyte, Executive Director, National 
Council on Problem Gambling
     Mr. Jim Dowling, Dowling Advisory Group
     Mr. Samuel A. Vallandingham, Chief Information 
Officer and Vice President, The First State Bank on behalf of 
the Independent Community Bankers of America
     Mr. Mike Brodsky, Executive Chairman, Youbet.com
    The Committee held an additional hearing on ``H.R. 2267, 
the Internet Gambling Regulation, Consumer Protection, and 
Enforcement Act'' on Wednesday, July 21, 2010. The following 
witnesses testified:
     Mr. Edwin Williams, President and Chief Executive 
Officer, Discovery Federal Credit Union
     Mr. Tom Malkasian, Vice Chairman and Director of 
Strategic Planning, Commerce Casino
     The Honorable Lynn Malerba, Tribal Chairwoman, 
Mohegan Tribe of Connecticut
     Mr. Michael K. Fagan, Law Enforcement and Anti-
Terrorism Consultant
     Ms. Annie Duke, professional poker player, on 
behalf of the Poker Players Alliance

                        Committee Consideration

    The Committee on Financial Services met in open session on 
July 28, 2010, and ordered H.R. 2267, Internet Gambling, 
Consumer Protection, and Enforcement Act, as amended, favorably 
reported to the House by a record vote of 41 yeas, 22 nays, and 
1 present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. A 
motion by Mr. Frank to report the bill, as amended, to the 
House with a favorable recommendation was agreed to by a record 
vote of 41 yeas, 22 nays, and 1 present (Record vote no. FC-
135). The names of Members voting for, against, and present 
follow:

                                             RECORD VOTE NO. FC-135
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................        X   ........  .........  Mr. Bachus.......  ........        X   .........
Mr. Kanjorski..................        X   ........  .........  Mr. Castle.......  ........        X   .........
Ms. Waters.....................        X   ........  .........  Mr. King (NY)....        X   ........  .........
Mrs. Maloney...................        X   ........  .........  Mr. Royce........  ........        X   .........
Mr. Gutierrez..................        X   ........  .........  Mr. Lucas........  ........  ........  .........
Ms. Velazquez..................        X   ........  .........  Mr. Paul.........  ........  ........         X
Mr. Watt.......................        X   ........  .........  Mr. Manzullo.....  ........        X   .........
Mr. Ackerman...................        X   ........  .........  Mr. Jones........  ........        X   .........
Mr. Sherman....................  ........  ........  .........  Mrs. Biggert.....        X   ........  .........
Mr. Meeks......................        X   ........  .........  Mr. Miller (CA)..  ........  ........  .........
Mr. Moore (KS).................        X   ........  .........  Mrs. Capito......  ........  ........  .........
Mr. Capuano....................        X   ........  .........  Mr. Hensarling...  ........        X   .........
Mr. Hinojosa...................        X   ........  .........  Mr. Garrett (NJ).  ........        X   .........
Mr. Clay.......................        X   ........  .........  Mr. Barrett (SC).  ........        X   .........
Mrs. McCarthy..................        X   ........  .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................  ........        X   .........  Mr. Neugebauer...  ........        X   .........
Mr. Lynch......................  ........  ........  .........  Mr. Price (GA)...  ........        X   .........
Mr. Miller (NC)................        X   ........  .........  Mr. McHenry......  ........        X   .........
Mr. Scott......................  ........        X   .........  Mr. Campbell.....        X   ........  .........
Mr. Green......................        X   ........  .........  Mr. Putnam.......  ........        X   .........
Mr. Cleaver....................        X   ........  .........  Mrs. Bachmann....  ........        X   .........
Ms. Bean.......................        X   ........  .........  Mr. Marchant.....        X   ........  .........
Ms. Moore (WI).................        X   ........  .........  Mr. McCotter.....  ........        X   .........
Mr. Hodes......................        X   ........  .........  Mr. McCarthy.....  ........        X   .........
Mr. Ellison....................        X   ........  .........  Mr. Posey........  ........        X   .........
Mr. Klein......................        X   ........  .........  Ms. Jenkins......  ........        X   .........
Mr. Wilson.....................        X   ........  .........  Mr. Lee..........        X   ........  .........
Mr. Perlmutter.................        X   ........  .........  Mr. Paulsen......  ........        X   .........
Mr. Donnelly...................  ........        X   .........  Mr. Lance........        X   ........  .........
Mr. Foster.....................        X   ........  .........
Mr. Carson.....................        X   ........  .........
Ms. Speier.....................  ........        X   .........
Mr. Childers...................  ........  ........  .........
Mr. Minnick....................  ........  ........  .........
Mr. Adler......................        X   ........  .........
Ms. Kilroy.....................        X   ........  .........
Mr. Driehaus...................        X   ........  .........
Ms. Kosmas.....................        X   ........  .........
Mr. Grayson....................        X   ........  .........
Mr. Himes......................        X   ........  .........
Mr. Peters.....................        X   ........  .........
Mr. Maffei.....................        X   ........  .........
----------------------------------------------------------------------------------------------------------------

    During the consideration of the bill, the following 
amendments were disposed of by record votes. The names of 
Members voting for, against, and present follow:
    An amendment by Mr. Baca, no. 7, regarding State and Indian 
tribe opt-in, was not agreed to by a record vote of 22 yeas and 
37 nays (Record vote no. FC-133):

                                             RECORD VOTE NO. FC-133
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................  ........        X   .........  Mr. King (NY)....  ........  ........  .........
Mrs. Maloney...................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. Lucas........  ........  ........  .........
Ms. Velazquez..................  ........        X   .........  Mr. Paul.........  ........  ........  .........
Mr. Watt.......................  ........  ........  .........  Mr. Manzullo.....        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Jones........        X   ........  .........
Mr. Sherman....................        X   ........  .........  Mrs. Biggert.....  ........        X   .........
Mr. Meeks......................  ........        X   .........  Mr. Miller (CA)..  ........  ........  .........
Mr. Moore (KS).................  ........        X   .........  Mrs. Capito......  ........  ........  .........
Mr. Capuano....................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Hinojosa...................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mr. Gerlach......        X   ........  .........
Mr. Baca.......................        X   ........  .........  Mr. Neugebauer...        X   ........  .........
Mr. Lynch......................  ........  ........  .........  Mr. Price (GA)...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. McHenry......  ........  ........  .........
Mr. Scott......................  ........        X   .........  Mr. Campbell.....  ........        X   .........
Mr. Green......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Ms. Bean.......................  ........  ........  .........  Mr. Marchant.....        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Posey........        X   ........  .........
Mr. Klein......................  ........        X   .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Lee..........  ........        X   .........
Mr. Perlmutter.................  ........        X   .........  Mr. Paulsen......        X   ........  .........
Mr. Donnelly...................        X   ........  .........  Mr. Lance........  ........        X   .........
Mr. Foster.....................  ........        X   .........
Mr. Carson.....................  ........        X   .........
Ms. Speier.....................  ........        X   .........
Mr. Childers...................  ........  ........  .........
Mr. Minnick....................  ........  ........  .........
Mr. Adler......................  ........  ........  .........
Ms. Kilroy.....................  ........        X   .........
Mr. Driehaus...................  ........        X   .........
Ms. Kosmas.....................  ........        X   .........
Mr. Grayson....................  ........        X   .........
Mr. Himes......................  ........        X   .........
Mr. Peters.....................  ........        X   .........
Mr. Maffei.....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    An amendment in the nature of a substitute offered by Mr. 
Bachus, no. 18, was not agreed to by a record vote of 22 yeas 
and 43 nays (Record vote no. FC-134):

                                             RECORD VOTE NO. FC-134
----------------------------------------------------------------------------------------------------------------
         Representative             Aye       Nay     Present     Representative      Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Frank......................  ........        X   .........  Mr. Bachus.......        X   ........  .........
Mr. Kanjorski..................  ........        X   .........  Mr. Castle.......        X   ........  .........
Ms. Waters.....................  ........        X   .........  Mr. King (NY)....  ........        X   .........
Mrs. Maloney...................  ........        X   .........  Mr. Royce........        X   ........  .........
Mr. Gutierrez..................  ........        X   .........  Mr. Lucas........  ........  ........  .........
Ms. Velazquez..................  ........        X   .........  Mr. Paul.........  ........        X   .........
Mr. Watt.......................  ........        X   .........  Mr. Manzullo.....        X   ........  .........
Mr. Ackerman...................  ........        X   .........  Mr. Jones........        X   ........  .........
Mr. Sherman....................  ........        X   .........  Mrs. Biggert.....  ........        X   .........
Mr. Meeks......................  ........        X   .........  Mr. Miller (CA)..  ........  ........  .........
Mr. Moore (KS).................  ........        X   .........  Mrs. Capito......  ........  ........  .........
Mr. Capuano....................  ........        X   .........  Mr. Hensarling...        X   ........  .........
Mr. Hinojosa...................  ........        X   .........  Mr. Garrett (NJ).        X   ........  .........
Mr. Clay.......................  ........        X   .........  Mr. Barrett (SC).        X   ........  .........
Mrs. McCarthy..................  ........        X   .........  Mr. Gerlach......  ........        X   .........
Mr. Baca.......................        X   ........  .........  Mr. Neugebauer...        X   ........  .........
Mr. Lynch......................  ........  ........  .........  Mr. Price (GA)...        X   ........  .........
Mr. Miller (NC)................  ........        X   .........  Mr. McHenry......        X   ........  .........
Mr. Scott......................  ........        X   .........  Mr. Campbell.....  ........        X   .........
Mr. Green......................  ........        X   .........  Mr. Putnam.......        X   ........  .........
Mr. Cleaver....................  ........        X   .........  Mrs. Bachmann....        X   ........  .........
Ms. Bean.......................  ........        X   .........  Mr. Marchant.....        X   ........  .........
Ms. Moore (WI).................  ........        X   .........  Mr. McCotter.....        X   ........  .........
Mr. Hodes......................  ........        X   .........  Mr. McCarthy.....        X   ........  .........
Mr. Ellison....................  ........        X   .........  Mr. Posey........        X   ........  .........
Mr. Klein......................  ........        X   .........  Ms. Jenkins......        X   ........  .........
Mr. Wilson.....................  ........        X   .........  Mr. Lee..........  ........        X   .........
Mr. Perlmutter.................  ........        X   .........  Mr. Paulsen......        X   ........  .........
Mr. Donnelly...................        X   ........  .........  Mr. Lance........  ........        X   .........
Mr. Foster.....................  ........        X   .........
Mr. Carson.....................  ........        X   .........
Ms. Speier.....................        X   ........  .........
Mr. Childers...................  ........  ........  .........
Mr. Minnick....................  ........  ........  .........
Mr. Adler......................  ........        X   .........
Ms. Kilroy.....................  ........        X   .........
Mr. Driehaus...................  ........        X   .........
Ms. Kosmas.....................  ........        X   .........
Mr. Grayson....................  ........        X   .........
Mr. Himes......................  ........        X   .........
Mr. Peters.....................  ........        X   .........
Mr. Maffei.....................  ........        X   .........
----------------------------------------------------------------------------------------------------------------

    The following other amendments were also considered:
    An amendment by Mr. Frank, no. 1, a manager's amendment, 
was offered and withdrawn. The amendment was subsequently re-
offered as amendment no. 12, and was agreed to by a voice vote.
    An amendment by Mr. Sherman, no. 2, regarding ``bad 
actors'', was agreed to by a voice vote.
    An amendment by Mr. King (and Mr. Meeks), no. 3, 
prohibiting sports betting on the Internet, was agreed to by a 
voice vote.
    An amendment by Ms. Kilroy, no. 4, prohibiting 
inappropriate advertising, was agreed to by a voice vote.
    An amendment by Mr. Bachus (and Mrs. Bachmann), no. 5, 
regarding licensing requirements, was offered and withdrawn.
    An amendment by Mr. Baca, no. 6, regarding relation to the 
Act of January 2, 1951, was ruled out of order as not germane.
    An amendment by Mr. Campbell, no. 8, dealing with 
miscellaneous subjects, was agreed to, as modified, by a voice 
vote.
    An amendment by Mr. Sherman, no. 9, regarding opt-out 
timing, was agreed to by a voice vote.
    An amendment by Mrs. Bachmann, no. 10, regarding legal age 
requirement for marketing and advertising material, was agreed 
to by a voice vote.
    An amendment by Ms. Bean (and Ms. Kilroy), no. 11, 
regarding prevention of minors from placing bets or wagers, was 
agreed to by a voice vote.
    An amendment by Mrs. Bachmann, no. 13, regarding screening 
for child support delinquents, as amended by the amendment by 
Mr. Frank, no. 13a (as modified), to the amendment, was agreed 
to by a voice vote.
    An amendment by Mr. Peters (and Mr. Hodes), no. 14, 
regarding State and tribal lotteries, was agreed to by a voice 
vote.
    An amendment by Mr. Bachus (and Mrs. Bachmann), no. 15, 
regarding licensing requirements, was agreed to by voice vote.
    An amendment by Mr. Sherman, no. 16, regarding U.S. 
presence, was agreed to by a voice vote.
    An amendment by Ms. Kilroy, no. 17, regarding compilation 
of datasets on player behavior, was agreed to by a voice vote.

                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee held a hearing and made 
findings that are reflected in this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee establishes the 
following performance related goals and objectives for this 
legislation:
    H.R. 2267 would establish a federal regulatory and 
enforcement framework under which Internet gambling operators 
could obtain licenses authorizing them to accept bets and 
wagers from individuals in the U.S., on the condition that they 
maintain effective protections against underage gambling, 
compulsive gambling, money laundering and fraud, and enforce 
prohibitions or restrictions on types of gambling prohibited by 
states, and Indian Tribes.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                  Congressional Budget Office Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:
                                                September 22, 2010.
Hon. Barney Frank,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2267, the Internet 
Gambling Regulation, Consumer Protection, and Enforcement Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Matthew 
Pickford.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

H.R. 2267--Internet Gambling Regulation, Consumer Protection, and 
        Enforcement Act

    Summary: H.R. 2267 would amend existing law that regulates 
Internet gambling. The legislation would establish a framework 
for federal regulations and enforcement and would require 
Internet gambling operators to obtain licenses to accept wagers 
from individuals in the United States.
    CBO and the staff of the Joint Committee on Taxation (JCT) 
estimate that enacting H.R. 2267 would increase revenues by 
$971 million and direct spending by $688 million over the 2011-
2020 period. Those changes in revenues and direct spending 
would reduce future budget deficits by $283 million over the 
same period. Because the legislation would affect direct 
spending and revenues, pay-as-you-go procedures apply.
    H.R. 2267 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA) and would not affect 
the budgets of state, local, or tribal governments.
    By requiring all Internet gambling facilities to be 
licensed by the federal government, H.R. 2267 would impose a 
private-sector mandate, as defined in UMRA, on businesses that 
are currently authorized to offer online gambling services. 
Based on information from industry sources and the Department 
of the Treasury, CBO estimates that the aggregate cost of the 
mandate would fall below the annual threshold established in 
UMRA for private-sector mandates ($141 million in 2010, 
adjusted annually for inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 2267 is shown in the following table. 
The costs of this legislation fall within budget function 800 
(general government).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   By fiscal year, in millions of dollars--
                                                    ----------------------------------------------------------------------------------------------------
                                                      2011   2012    2013    2014    2015    2016    2017    2018    2019    2020   2011-2015  2011-2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               CHANGES IN DIRECT SPENDINGEstimated Budget Authority.........................     20      40      60      80      82      83      85      87      88      90       282        715
Estimated Outlays..................................     14      34      54      74      81      83      84      86      88      90       257        688                                                                   CHANGES IN REVENUESTreasury User Fees.................................     15      30      45      60      61      62      64      65      66      68       211        536
Taxes on Increased Gambling Income.................      1      17      25      34      41      47      54      62      72      82       118        435
    Total Changes in Revenues......................     16      47      70      94     102     109     118     127     138     150       329        971                             NET INCREASE OR DECREASE (-) IN THE BUDGET DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUESNet Deficit Impact.................................     -2     -13     -16     -20     -21     -27     -33     -41     -50     -60       -72       -283
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Amounts may not sum to totals because of rounding.

    Basis of estimate: For this estimate, CBO assumes that the 
legislation will be enacted in 2010. Enacting the bill would 
increase both direct spending and revenues, but have no 
significant impact on spending subject to appropriation.

Direct spending

    CBO expects that enacting H.R. 2267 would increase the 
workload of the U.S. Treasury because the department would be 
required to establish regulations and to issue licenses to 
operators of Internet gambling sites. The department would be 
required to review an applicant's financial condition and 
corporate structure, business experience, suitability, and 
stability and conduct a background check before issuing those 
license. The legislation also would allow the Treasury to 
revoke or terminate the license of any operator.
    Under the legislation, the department would be authorized 
to collect a fee to offset the costs of regulating the Internet 
gambling industry. Amounts collected would be available for the 
Treasury's use without further appropriation. Based on 
information from the department and the cost of similar 
programs, such as the Financial Crimes Enforcement Network, 
CBO, estimates that when fully implemented, H.R. 2267 would 
cost about $85 million annually, mostly for salaries, benefits, 
expenses, and training of additional lawyers, accountants, and 
computer specialists. We expect that it would take about four 
years to reach that level of effort; over the 2011-2020 period, 
CBO estimates that costs would total about $670 million.

Revenues

    Because the fees that would be collected under this bill 
would be compulsory payments arising from an exercise of the 
government's sovereign authority, CBO believes that those 
amounts should appear in the budget as revenues. Furthermore, 
because fees paid to the Treasury would reduce the based income 
and payroll taxes, those new fees would lead to reductions in 
revenues from income and payroll taxes. As a result, the fees 
collected by the Treasury from gambling operators would be 
partially offset by a loss of receipts from income and payroll 
taxes estimated to total 25 percent of the fees. CBO estimates 
that net receipts would total $536 million over the next 10 
years.
    Staff of the JCT expects that enacting this bill would 
increase taxable income and federal revenues. Those increases 
would occur because gambling winnings and losses would both 
increase under this legislation and are treated differently in 
the tax system. For nonprofessional gamblers, winnings are 
taxable under the individual income tax, and such winnings can 
be offset by gambling losses only for taxpayers who itemize 
their deductions. In addition, gambling losses that exceed 
gambling winnings are not deductible from income for such 
taxpayers. Staff of the JCT estimates that additional revenues 
would total $435 million over the 2011-2020 period.
    H.R. 2267 also would establish new federal crimes related 
to Internet gambling, enacting the bill thus could increase 
civil and criminal penalties. CBo estimates that any additional 
collections would not be significant because of the small 
number of cases likely to result. Civil crimes are recorded in 
the budget as revenues. Criminal fines also are recorded as 
revenues, deposited in the Crime Victims Fund, and subsequently 
spend without further appropriation.
    Pay-as-you-go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The changes in outlays and revenues that are subject 
to those pay-as-you-go procedures are shown in the following 
table.

          CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 2267 AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON FINANCIAL SERVICES ON JULY 27, 2010
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               By fiscal year, in millions of dollars--
                                             -----------------------------------------------------------------------------------------------------------
                                               2010   2011   2012    2013    2014    2015    2016    2017    2018    2019    2020   2010-2015  2010-2020
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       NET INCREASE OR DECREASE (-) IN THE DEFICITStatutory Pay-As-You-Go Impact..............      0     -2     -13     -16     -20     -21     -27     -33     -41     -50     -60       -72       -283
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Estimated impact on State, local, and tribal governments: 
H.R. 2267 contains no intergovernmental mandates as defined in 
UMRA and would not affect the budgets of state, local, or 
tribal governments.
    Estimated impact on the private sector: By requiring all 
Internet gambling facilities to be licensed by the federal 
government, H.R. 2267 contains a private-sector mandate, as 
defined in UMRA, on businesses that are currently authorized to 
offer online gambling services. Online services, for example, 
facilities that offer gambling where permitted by state or 
tribal law and facilities that offer gambling on horse races, 
would have to comply with new federal standards for Internet 
gambling. According to information from industry sources, 
approximately 20 facilities offer online gambling on horse 
races, earning about $100 million in annual revenues, and no 
Web sites currently offer other types of gambling either within 
a state or on tribal land.
    The cost of the mandate would include redesigning Web 
sites, changing business operations to meet the new federal 
standards, and paying user fees to the Department of the 
Treasury. Based on the current number of online gambling sites 
and information from industry sources on the costs of adhering 
to licensing requirements, CBO estimates that the cost of the 
mandate would fall below the annual threshold established in 
UMRA for private-sector mandates ($141 million in 2010, 
adjusted annually for inflation).
    Estimate prepared by: Federal Spending: Matthew Pickford; 
Federal Revenues: Pamela Greene; Impact on State, Local, and 
Tribal Governments: Elizabeth Cove Delisle; Impact on the 
Private Sector: Samuel Wice.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that the 
Constitutional Authority of Congress to enact this legislation 
is provided by Article 1, section 8, clause 1 (relating to the 
general welfare of the United States) and clause 3 (relating to 
the power to regulate interstate commerce).

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    H.R. 2267 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                  Exchange of Committee Correspondence


             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section establishes the short title of the bill, the 
``Internet Gambling Regulation, Consumer Protection, and 
Enforcement Act.''

Section 2. Federal licensing requirement for Internet gambling 
        operations

    This section includes Congressional findings; definitions; 
provides for the administration of a licensing program; 
establishes suitability qualification and disqualification 
standards for the issuance of a license, and for service 
providers; permits reliance on qualified state and tribal 
regulatory body certifications of suitability for applicants; 
provides for a problem gambling, responsible gambling, and 
self-exclusion program; prohibits sports betting; prohibits the 
use of credit cards for Internet gambling; requires Treasury to 
create and maintain of a list of unlawful Internet gambling 
enterprises; provides procedures for states and tribes to opt 
out; provides an exemption for state and tribal lotteries; 
provides a safe harbor from prosecution for activities carried 
out lawfully, under a valid license authorized under this 
subchapter; prohibits the use of electronic cheating devices, 
and authorizes criminal penalties including permanent 
injunction for anyone convicted of such use.

Section 3. Report required

    Provides for an annual Report to Congress regarding the 
licensing and regulation of Internet gambling operators.

Section 4. Feasibility study

    Requires Treasury to conduct a study regarding safeguards 
to address gambling while impaired.

Section 5. Effective date

    Authorizes the Secretary to issue implementing regulations 
which shall be published within 180 days after enactment, which 
shall be applicable 90 days after publication.

         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 (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

TITLE 31, UNITED STATES CODE

           *       *       *       *       *       *       *


SUBTITLE I--GENERAL

           *       *       *       *       *       *       *


CHAPTER 3--DEPARTMENT OF THE TREASURY

           *       *       *       *       *       *       *


SUBCHAPTER I--ORGANIZATION

           *       *       *       *       *       *       *


Sec. 310. Financial Crimes Enforcement Network

  (a) * * *
  (b) Director.--
          (1) * * *
          (2) Duties and powers.--The duties and powers of the 
        Director are as follows:
                  (A) * * *

           *       *       *       *       *       *       *

                  (J) Administer the requirements of subchapter 
                V of chapter 53.
                  [(J)] (K) Such other duties and powers as the 
                Secretary of the Treasury may delegate or 
                prescribe.

           *       *       *       *       *       *       *


SUBTITLE IV--MONEY

           *       *       *       *       *       *       *


                   CHAPTER 53--MONETARY TRANSACTIONS

               SUBCHAPTER I--CREDIT AND MONETARY EXPANSION

Sec.
5301.  Buying obligations of the United States Government.
     * * * * * * *

          SUBCHAPTER V--REGULATION OF LAWFUL INTERNET GAMBLING

5381.  Congressional findings.
5382.  Definitions.
5383.  Establishment and administration of licensing program.
5384.  Problem Gambling, Responsible Gambling, Consumer Safeguards, and 
          Self-Exclusion Program.
5385.  Financial transaction providers.
5386.  List of unlawful Internet gambling enterprises.
5387.  Limitation of licenses in States and Indian lands.
5388.  Sports betting prohibited on Internet.
5389.  Prohibition on the use of credit cards for Internet gambling.
5390.  State and tribal lotteries.
5391.  Safe harbors.
5392.  Relation to section 1084 of title 18 and the Unlawful Internet 
          Gambling Enforcement Act.
5393.  Cheating and other fraud.

           *       *       *       *       *       *       *


          SUBCHAPTER V--REGULATION OF LAWFUL INTERNET GAMBLING

Sec. 5381. Congressional findings

  The Congress finds the following:
          (1) Since the development of the Internet, millions 
        of people have chosen to gamble online, and today 
        Internet gambling is offered by operators located in 
        many different countries under a variety of licensing 
        and regulatory regimes.
          (2) Despite the increasing use of the Internet for 
        gambling by persons in the United States, there is no 
        Federal or State regulatory regime in place to protect 
        United States citizens who choose to engage in this 
        interstate activity, or to oversee operators to 
        establish and enforce standards of integrity and 
        fairness.
          (3) In the United States, gambling activities, 
        equipment, and operations have been subject to various 
        forms of Federal and State control, regulation, and 
        enforcement, with some form of gambling being permitted 
        in nearly every State and by many Indian tribes.
          (4) Internet gambling in the United States should be 
        controlled by a strict Federal, State, and tribal 
        licensing and regulatory framework to protect underage 
        and otherwise vulnerable individuals, to ensure the 
        games are fair, to address the concerns of law 
        enforcement, and to enforce any limitations on the 
        activity established by the States and Indian tribes.
          (5) An effective Federal, State, and tribal licensing 
        system would ensure that licenses are issued only to 
        Internet gambling operators which meet strict criteria 
        to protect consumers, and which--
                  (A) are in good financial and legal standing, 
                and of good character, honesty, and integrity;
                  (B) utilize appropriate technology to 
                determine the age and location of users;
                  (C) adopt and implement systems to protect 
                minors and problem gamblers;
                  (D) adopt and implement systems to enforce 
                any applicable Federal, State, and Indian tribe 
                limitations on Internet gambling; and
                  (E) have in place risk-based methods to 
                identify and combat money laundering and fraud 
                relating to Internet gambling, and to protect 
                the privacy and security of users.
          (6) There is a need to extend the regulatory 
        provisions of this Act to all persons, locations, 
        equipment, practices, and associations related to 
        Internet gambling, with each State and Indian tribe 
        having the ability to limit Internet gambling operators 
        from offering Internet gambling to persons located 
        within its territory by opting out of the provisions of 
        this Act.

Sec. 5382. Definitions

  For purposes of this subchapter, the following definitions 
shall apply:
          (1) Applicant.--The term ``applicant'' means any 
        person who has applied for a license pursuant to this 
        subchapter.
          (2) Bet or wager.--The term ``bet or wager'' has the 
        same meaning as in section 5362(1).
          (3) Enforcement agent.--The term ``enforcement 
        agent'' means any individual authorized by the 
        Secretary to enforce the provisions of this subchapter 
        and regulations prescribed under this subchapter.
          (4) Indian lands and indian tribe.--The terms 
        ``Indian lands'' and ``Indian tribe'' have the same 
        meanings as in section 4 of the Indian Gaming 
        Regulatory Act.
          (5) Internet.--The term ``Internet'' has the same 
        meaning as in section 5362(5).
          (6) Licensee.--The term ``licensee'' means an entity 
        authorized to operate an Internet gambling facility in 
        accordance with this subchapter.
          (7) Operate an internet gambling facility.--The term 
        ``operate an Internet gambling facility'' or 
        ``operation of an Internet gambling facility'' means 
        the direction, management, supervision, or control of 
        an Internet site through which bets or wagers are 
        initiated, received, or otherwise made, whether by 
        telephone, Internet, satellite, or other wire or 
        wireless communication.
          (8) Secretary.--The term ``Secretary'' means the 
        Secretary of the Treasury, or any person designated by 
        the Secretary.
          (9) State.--The term ``State'' means any State of the 
        United States, the District of Columbia, or any 
        commonwealth, territory, or other possession of the 
        United States.
          (10) Sporting event.--The term ``sporting event'' 
        means any athletic competition, whether professional, 
        scholastic, or amateur.

Sec. 5383. Establishment and administration of licensing program

  (a) Treasury Responsibilities.--The Secretary shall have 
responsibility for the following activities:
          (1) Exercising full regulatory jurisdiction over--
                  (A) the operation of Internet gambling 
                facilities by licensees; and
                  (B) the licensure and regulation of all 
                applicants, except to the extent that powers 
                have been delegated to qualified State and 
                tribal regulatory bodies pursuant to this 
                subchapter.
          (2) Prescribing such regulations as may be necessary 
        to administer and enforce the requirements of this 
        subchapter.
          (3) Employing enforcement agents with sufficient 
        training and experience to administer the requirements 
        of this subchapter and the regulations prescribed under 
        this subchapter.
          (4) Enforcing the requirements of this subchapter 
        through all appropriate means provided under this 
        subchapter and other provisions of law.
  (b) Internet Gambling Licensing Program.--
          (1) Licensing required for certain internet 
        gambling.--No person may operate an Internet gambling 
        facility that knowingly accepts bets or wagers from 
        persons located in the United States without a license 
        issued by the Secretary in accordance with this 
        subchapter.
          (2) Authority under valid license.--A licensee may 
        accept bets or wagers from persons located in the 
        United States, subject to the limitations set forth in 
        this subchapter, so long as its license remains in good 
        standing.
  (c) Application for License.--
          (1) In general.--Any person seeking authority to 
        operate an Internet gambling facility offering services 
        to persons in the United States may apply for a license 
        issued by the Secretary.
          (2) Information required.--Any application for a 
        license under this subchapter shall contain such 
        information as may be required by the Secretary, 
        including the following:
                  (A) The criminal and credit history of the 
                applicant, any senior executive and director of 
                the applicant, and any person deemed to be in 
                control of the applicant.
                  (B) The financial statements of the 
                applicant.
                  (C) Documentation showing the corporate 
                structure of the applicant and all related 
                businesses and affiliates.
                  (D) Documentation containing detailed 
                evidence of the applicant's plan for complying 
                with all applicable regulations should a 
                license be issued, with particular emphasis on 
                the applicant's ability to--
                          (i) protect underage and problem 
                        gamblers;
                          (ii) ensure games are being operated 
                        fairly; and
                          (iii) comply with and address the 
                        concerns of law enforcement.
                  (E) Certification that the applicant agrees 
                to submit to United States jurisdiction and all 
                applicable United States laws relating to 
                acceptance by the applicant of bets or wagers 
                over the Internet from persons located in the 
                United States and all associated activities.
                  (F) Certification that the applicant has 
                established a corporate entity or other 
                separate business entity in the United States, 
                a majority of whose officers are United States 
                persons and, if there is a board of directors, 
                that the board is majority-controlled by 
                directors who are United States persons.
  (d) Standards for License Issuance; Suitability 
Qualifications and Disqualification Standards.--
          (1) Suitability for licensing standards.--
                  (A) In general.--No person shall be eligible 
                to obtain a license unless the Secretary or an 
                appropriate State officer or agency has 
                determined, upon completion of a background 
                check and investigation, that the applicant, 
                and any person deemed to be in control of the 
                applicant, is suitable for licensing.
                  (B) Associates of applicants.--If the 
                applicant is a corporation, partnership, or 
                other business entity, a background check and 
                investigation shall occur with respect to the 
                president or other chief executive of the 
                corporation, partnership, or other business 
                entity and other partners or senior executives 
                and directors of the corporation, partnership, 
                or entity, as determined appropriate by the 
                Secretary or any appropriate State or tribal 
                officer or agency.
                  (C) Background check and investigation.--The 
                Secretary shall establish standards and 
                procedures for conducting background checks and 
                investigations for purposes of this subsection.
          (2) Suitability for licensing standards described.--
        For purposes of this subchapter, an applicant and any 
        other person associated with the applicant, as 
        applicable, is suitable for licensing if the applicant 
        demonstrates to the Secretary or appropriate State or 
        tribal officer or agency by clear and convincing 
        evidence that the applicant (or individual associated 
        with the applicant, as applicable)--
                  (A) is a person of good character, honesty, 
                and integrity;
                  (B) is a person whose prior activities, 
                reputation, habits, and associations do not--
                          (i) pose a threat to the public 
                        interest or to the effective regulation 
                        and control of the licensed activities; 
                        or
                          (ii) create or enhance the dangers of 
                        unsuitable, unfair, or illegal 
                        practices, methods, and activities in 
                        the conduct of the licensed activities 
                        or the carrying on of the business and 
                        financial arrangements incidental to 
                        such activities;
                  (C) is capable of and likely to conduct the 
                activities for which the applicant is licensed 
                in accordance with the provisions of this 
                subchapter and any regulations prescribed under 
                this subchapter;
                  (D) has or guarantees acquisition of adequate 
                business competence and experience in the 
                operation of Internet gambling facilities; and
                  (E) has or will obtain sufficient financing 
                for the nature of the proposed operation and 
                from a suitable source.
          (3) Unsuitable for licensing.--An applicant or any 
        other person may not be determined to be suitable for 
        licensing within the meaning of this subchapter if the 
        applicant or such person--
                  (A) has failed to provide information and 
                documentation material to a determination of 
                suitability for licensing under paragraph (1);
                  (B) has supplied information which is untrue 
                or misleading as to a material fact pertaining 
                to any such determination;
                  (C) has been convicted of an offense 
                punishable by imprisonment of more than 1 year;
                  (D) is delinquent in filing any applicable 
                Federal or State tax returns or in the payment 
                of any taxes, penalties, additions to tax, or 
                interest owed to a State or the United States;
                  (E) has, on or after the date of the 
                enactment of the Unlawful Internet Gambling 
                Enforcement Act of 2006--
                          (i) knowingly participated in, or 
                        should have known they were 
                        participating in, any illegal Internet 
                        gambling activity, including the taking 
                        of an illegal Internet wager, the 
                        payment of winnings on an illegal 
                        Internet wager, the promotion through 
                        advertising of any illegal Internet 
                        gambling website or service, or the 
                        collection of any payments to an entity 
                        operating an illegal Internet gambling 
                        website; or
                          (ii) knowingly been owned, operated, 
                        managed, or employed by, or should have 
                        known they were owned, operated, 
                        managed, or employed by, any person who 
                        was knowingly participating in, or 
                        should have known they were 
                        participating in, any illegal Internet 
                        gambling activity, including the taking 
                        of an illegal Internet wager, the 
                        payment of winnings on an illegal 
                        Internet wager, the promotion through 
                        advertising of any illegal Internet 
                        gambling website or service, or the 
                        collection of any payments to an entity 
                        operating an illegal Internet gambling 
                        website;
                  (F) has--
                          (i) received any assistance, 
                        financial or otherwise, from any person 
                        who has, before the date of the 
                        enactment of the Internet Gambling 
                        Regulation, Consumer Protection, and 
                        Enforcement Act, knowingly accepted 
                        bets or wagers from a person located in 
                        the United States in violation of 
                        Federal or State law; or
                          (ii) provided any assistance, 
                        financial or otherwise, to any person 
                        who has, before the date of the 
                        enactment of the Internet Gambling 
                        Regulation, Consumer Protection, and 
                        Enforcement Act, knowingly accepted 
                        bets or wagers from a person located in 
                        the United States in violation of 
                        Federal or State law;
                  (G) with respect to another entity that has 
                accepted a bet or wager from any individual in 
                violation of United States law, has purchased 
                or otherwise obtained--
                          (i) such entity;
                          (ii) a list of the customers of such 
                        entity; or
                          (iii) any other part of the equipment 
                        or operations of such entity;
                  (H) is listed on a State gambling excluded 
                persons list; or
                  (I) fails to certify in writing, under 
                penalty of perjury, that the applicant or other 
                such person, and all affiliated business 
                entities (including all entities under common 
                control), has through its entire history--
                          (i) not committed an intentional 
                        felony violation of Federal or State 
                        gambling laws; and
                          (ii) used diligence to prevent any 
                        United States person from placing a bet 
                        on an Internet site in violation of 
                        Federal or State gambling laws.
          (4) Appeal of determination.--With respect to any 
        applicant or other person that the Secretary determines 
        is not suitable for licensing within the meaning of 
        this subchapter by reason of subparagraph (E) or (F) of 
        paragraph (3), and where the Secretary has not 
        determined that such applicant or person was acting in 
        their capacity as a managerial employee of an Internet 
        gambling website, the Secretary shall establish an 
        appeals process by which such applicant or person may 
        appeal the Secretary's determination.
          (5) Ongoing requirement.--A licensee (and any other 
        person who is required to be determined to be suitable 
        for licensing in connection with such licensee) shall 
        meet the standards necessary to be suitable for 
        licensing throughout the term of the license.
          (6) Protection of the public trust.--The Secretary 
        may take such action as is necessary to protect the 
        public trust, including the implementation of such 
        safeguards as may be necessary to ensure the operation 
        of an Internet gambling facility licensed under this 
        subchapter is controlled only by persons who are 
        suitable for licensing.
          (7) Enforcement actions.--
                  (A) Determination of unsuitability for 
                continued licensure.--If the Secretary finds 
                that an individual owner or holder of a 
                security of a licensee, or of a holding or 
                intermediary company of a licensee or any 
                person with an economic interest in a licensee 
                or a director, partner, or officer of a 
                licensee is not suitable for licensing, the 
                Secretary may determine that the licensee is 
                not qualified to continue as a licensee.
                  (B) Action to protect the public interest, 
                including suspension.--If the Secretary may 
                determine that the licensee is not qualified to 
                continue as a licensee, the Secretary shall 
                propose action necessary to protect the public 
                interest, including, if deemed necessary, the 
                suspension of the authority of the licensee to 
                engage in licensed activities.
                  (C) Imposition of conditions including 
                removal of parties.--Notwithstanding a 
                determination under subparagraph (A), the 
                Secretary may allow a licensee to continue 
                engaging in licensed activities by imposing 
                conditions on the licensee under penalty of 
                revocation or suspension of the authority of 
                the licensee to engage in licensed activities, 
                including--
                          (i) the identification of any person 
                        determined to be unsuitable for 
                        licensing; and
                          (ii) the establishment of appropriate 
                        safeguards to ensure such person is 
                        excluded from any interest in the 
                        licensed activities.
  (e) Assessments for Administrative Expenses.--
          (1) User fees.--
                  (A) In general.--The cost of administering 
                this subchapter with respect to each licensee, 
                including the cost of any review or examination 
                of a licensee to ensure compliance with the 
                terms of the license and this subchapter, shall 
                be assessed by the Secretary against the 
                licensee institution by written notice in an 
                amount appropriate to meet the Secretary's 
                expenses in carrying out such administration, 
                review, or examination.
                  (B) Disposition.--Amounts assessed by the 
                Secretary as user fees under subparagraph (A) 
                shall--
                          (i) be maintained by the Secretary 
                        solely for use in accordance with 
                        clause (ii);
                          (ii) be available to the Secretary to 
                        cover all expenses incurred by the 
                        Secretary in carrying out this 
                        subchapter; and
                          (iii) not be construed to be 
                        Government funds or appropriated 
                        monies, or subject to apportionment for 
                        the purposes of chapter 15 or any other 
                        authority.
                  (C) Hearing.--Any licensee against whom an 
                assessment is assessed under this paragraph 
                shall be afforded an agency hearing if such 
                person submits a request for such hearing 
                within 20 days after the issuance of the notice 
                of assessment.
                  (D) Collection.--
                          (i) Referral.--If any licensee fails 
                        to pay an assessment under this 
                        paragraph after the assessment has 
                        become final, the Secretary shall 
                        recover the amount assessed by action 
                        in the appropriate United States 
                        district court.
                          (ii) Appropriateness of assessment 
                        not reviewable.--In any civil action 
                        under clause (i), the validity and 
                        appropriateness of the assessment shall 
                        not be subject to review.
          (2) Direct and exclusive obligation of licensee.--The 
        user fee shall be the direct and exclusive obligation 
        of the licensee and may not be deducted from amounts 
        available as deposits to any person placing a bet.
  (f) Approval of License.--The Secretary shall grant licenses 
under this subchapter if the applicant meets the criteria set 
by the Secretary set forth in this subchapter and in any 
regulations promulgated thereunder.
  (g) Safeguards Required of Licensee.--No person may operate 
an Internet gambling facility in accordance with this 
subchapter unless the person maintains or requires mechanisms 
so that the following requirements, and the standards 
established under section 5384, are met with respect to any 
Internet bet or wager:
          (1) Legal age.--Appropriate safeguards to ensure that 
        the individual placing a bet or wager is of legal age 
        as defined by the law of the State or tribal area in 
        which the individual is located at the time the bet or 
        wager is placed.
          (2) Permissible location.--Appropriate safeguards to 
        ensure that the individual placing a bet or wager is 
        physically located in a jurisdiction that permits 
        Internet gambling at the time the bet or wager is 
        placed.
          (3) Collection of customer taxes.--Appropriate 
        mechanisms to ensure that all taxes relating to 
        Internet gambling from persons engaged in Internet 
        gambling are collected at the time of any payment of 
        any proceeds of Internet gambling.
          (4) Collection of taxes of licensee.--Appropriate 
        mechanisms to ensure that all taxes relating to 
        Internet gambling from any licensee are collected and 
        disbursed as required by law, and that adequate records 
        to enable later audit or verification are maintained.
          (5) Safeguards against financial crime.--Appropriate 
        safeguards to combat fraud, money laundering, and 
        terrorist finance.
          (6) Safeguards against compulsive gambling.--
        Appropriate safeguards to combat compulsive Internet 
        gambling.
          (7) Privacy safeguards.--Appropriate safeguards to 
        protect the privacy and security of any person engaged 
        in Internet gambling.
          (8) Payment of assessments.--Appropriate mechanisms 
        to ensure that any assessment under subsection (e) is 
        paid to the Secretary.
          (9) Other requirements.--Such other requirements as 
        the Secretary may establish by regulation or order.
  (h) Term and Renewal of License.--
          (1) Term.--Any license issued under this section 
        shall be issued for a 5-year term beginning on the date 
        of issuance.
          (2) Renewal.--Licenses may be renewed in accordance 
        with the requirements prescribed by the Secretary 
        pursuant to this subchapter.
  (i) Revocation of License.--
          (1) In general.--Any license granted under this 
        subchapter may be revoked by the Secretary if--
                  (A) the licensee fails to comply with any 
                provision of this subchapter;
                  (B) the licensee is determined to be 
                unsuitable for licensing, within the meaning of 
                this subchapter; or
                  (C) the licensee is determined to be 
                targeting marketing or advertising materials at 
                individuals who are not of legal age to place a 
                bet or wager, as defined by the law of the 
                State or tribal area in which the individuals 
                are located.
          (2) Final action.--Any revocation of a license under 
        paragraph (1) shall be treated as a final action by the 
        Secretary.
  (j) Regulations.--The regulations prescribed by the Secretary 
under this subchapter shall include regulations to fully 
implement--
          (1) safeguards required for licensees under 
        subsection (g); and
          (2) the requirements for programs relating to the 
        Problem Gambling, Responsible Gambling, and Self-
        Exclusion Program under section 5384.
  (k) Administrative Provisions.--
          (1) General powers of secretary.--
                  (A) In general.--The Secretary shall have the 
                authority to engage in the following:
                          (i) Investigate the suitability of 
                        each licensee to ensure compliance with 
                        this subchapter and regulations 
                        prescribed under this subchapter.
                          (ii) Require licensees to maintain 
                        appropriate procedures to ensure 
                        compliance with this subchapter and 
                        regulations prescribed under this 
                        subchapter.
                          (iii) Require licensees to maintain 
                        substantial facilities involved with 
                        the processing of bets or wagers from 
                        the United States within the United 
                        States.
                          (iv) Require that a majority of all 
                        of the employees of the applicant or 
                        licensee, and of its affiliated 
                        business entities, be residents or 
                        citizens of the United States. All 
                        entities under common control shall be 
                        considered affiliated business entities 
                        for the purposes of this subparagraph.
                          (v) Require licensees to maintain in 
                        the United States all facilities that 
                        are essential to the regulation of bets 
                        or wagers placed from the United States 
                        at a location that is accessible to the 
                        appropriate regulatory personnel at all 
                        times.
                          (vi) Examine any licensee and any 
                        books, papers, records, or other data 
                        of licensees relevant to any 
                        recordkeeping or reporting requirements 
                        imposed by the Secretary under this 
                        subchapter.
                          (vii) Require licensees to maintain 
                        all facilities within the United States 
                        for processing of bets or wagers made 
                        or placed from the United States.
                          (viii) When determined by the 
                        Secretary to be necessary, summon a 
                        licensee or an applicant for a license, 
                        an officer or employee of a licensee or 
                        any such applicant (including a former 
                        officer or employee), or any person 
                        having possession, custody, or care of 
                        the reports and records required by the 
                        Secretary under this subchapter, to 
                        appear before the Secretary or a 
                        designee of the Secretary at a time and 
                        place named in the summons and to 
                        produce such books, papers, records, or 
                        other data, and to give testimony, 
                        under oath, as may be relevant or 
                        material to any investigation in 
                        connection with the enforcement of this 
                        subchapter or any application for a 
                        license under this subchapter.
                          (ix) Investigate any violation of 
                        this subchapter and any regulation 
                        under this subchapter and any other 
                        violation of law relating to the 
                        operation of an Internet gambling 
                        facility.
                          (x) Conduct continuing reviews of 
                        applicants and licensees and the 
                        operation of Internet gambling 
                        facilities by use of technological 
                        means, onsite observation of 
                        facilities, including servers, or other 
                        reasonable means to assure compliance 
                        with this subchapter and any 
                        regulations promulgated hereunder.
                          (xi) Prohibit inappropriate 
                        advertising practices by licensees, 
                        including unsolicited emails targeting 
                        members of vulnerable populations, 
                        including problem gamblers and minors, 
                        or Internet advertising linked to 
                        search terms associated with children, 
                        problem gamblers, or other topics 
                        deemed inappropriate.
                  (B) Effect of wto ruling.--Clauses (iii) and 
                (iv) of subparagraph (A) shall cease to have 
                effect if a tribunal of the World Trade 
                Organization of final arbitration rules that 
                the implementation of such clauses would 
                violate the trade commitments of the United 
                States under the World Trade Organization.
          (2) Consultation with indian tribes.--In implementing 
        this subchapter, the Secretary shall conduct meaningful 
        consultation with Indian tribes regarding all aspects 
        of this subchapter which affect Indian tribes, both as 
        potential licensing entities or operating entities.
          (3) Administrative aspects of summons.--
                  (A) Production at designated site.--A summons 
                issued pursuant to this subsection may require 
                that books, papers, records, or other data 
                stored or maintained at any place be produced 
                at any business location of a licensee or 
                applicant for a license or any designated 
                location in any State or in any territory or 
                other place subject to the jurisdiction of the 
                United States not more than 500 miles distant 
                from any place where the licensee or applicant 
                for a license operates or conducts business in 
                the United States.
                  (B) No liability for expenses.--The United 
                States shall not be liable for any expense 
                incurred in connection with the production of 
                books, papers, records, or other data under 
                this subsection.
                  (C) Service of summons.--Service of a summons 
                issued under this subsection may be by 
                registered mail or in such other manner 
                calculated to give actual notice as the 
                Secretary may prescribe by regulation.
          (4) Contumacy or refusal.--
                  (A) Referral to attorney general.--In case of 
                contumacy by a person issued a summons under 
                this subsection or a refusal by such person to 
                obey such summons or to allow the Secretary to 
                conduct an examination, the Secretary shall 
                refer the matter to the Secretary of the 
                Treasury for referral to the Attorney General.
                  (B) Jurisdiction of court.--The Attorney 
                General may invoke the aid of any court of the 
                United States to compel compliance with the 
                summons within the jurisdiction of which--
                          (i) the investigation which gave rise 
                        to the summons or the examination is 
                        being or has been carried on;
                          (ii) the person summoned is an 
                        inhabitant; or
                          (iii) the person summoned carries on 
                        business or may be found.
                  (C) Court order.--The court may issue an 
                order requiring the person summoned to appear 
                before the Secretary or a delegate of the 
                Secretary to produce books, papers, records, 
                and other data, to give testimony as may be 
                necessary to explain how such material was 
                compiled and maintained, to allow the Secretary 
                to examine the business of a licensee, and to 
                pay the costs of the proceeding.
                  (D) Failure to comply with order.--Any 
                failure to obey the order of the court may be 
                punished by the court as a contempt thereof.
                  (E) Service of process.--All process in any 
                case under this subsection may be served in any 
                judicial district in which such person may be 
                found.
          (5) Compilation of datasets on player behavior.--
                  (A) In general.--The Secretary shall compile 
                and make available to the public, on the 
                website of the Secretary, datasets on player 
                behavior.
                  (B) Regulations requiring submission of 
                information.--The Secretary shall prescribe 
                regulations to require licensees under this 
                subchapter to provide information on player 
                behavior that the Secretary determines is 
                appropriate for the datasets under subparagraph 
                (A).
                  (C) Information required to be included.--
                Datasets prepared under this paragraph shall 
                include information on any individual player, 
                if requested by the Secretary, including but 
                not limited to information concerning gambling 
                frequency, gaming duration, the amount wagered, 
                the number of bets placed, and net losses, 
                provided that such request complies with the 
                provisions of subparagraph (D).
                  (D) Protection of privacy.--All information 
                provided pursuant to this paragraph shall be 
                aggregated and anonymized, and shall not 
                contain information that either alone or in 
                combination with other data elements would 
                permit identification of any individual player.
  (l) Civil Money Penalties.--
          (1) In general.--The Secretary may assess upon any 
        licensee or other person subject to the requirements of 
        this subchapter for any willful violation of this 
        subchapter or any regulation prescribed or order issued 
        under this subchapter, a civil penalty of not more than 
        the greater of--
                  (A) the amount (not to exceed $100,000) 
                involved in the violation, if any; or
                  (B) $25,000.
          (2) Assessment.--
                  (A) Written notice.--Any penalty imposed 
                under paragraph (1) may be assessed and 
                collected by the Secretary by written notice.
                  (B) Finality of assessment.--If, with respect 
                to any assessment under paragraph (1), a 
                hearing is not requested pursuant to 
                subparagraph (E) within the period of time 
                allowed under such subparagraph, the assessment 
                shall constitute a final and unappealable 
                order.
                  (C) Authority to modify or remit penalty.--
                The Secretary may compromise, modify, or remit 
                any penalty which the Secretary may assess or 
                has already assessed under paragraph (1).
                  (D) Mitigating factors.--In determining the 
                amount of any penalty imposed under paragraph 
                (1), the Secretary shall take into account the 
                appropriateness of the penalty with respect 
                to--
                          (i) the size of the financial 
                        resources and the good faith of the 
                        person against whom the penalty is 
                        assessed;
                          (ii) the gravity of the violation;
                          (iii) the history of previous 
                        violations; and
                          (iv) such other matters as justice 
                        may require.
                  (E) Hearing.--The person against whom any 
                penalty is assessed under paragraph (1) shall 
                be afforded an agency hearing if such person 
                submits a request for such hearing within 20 
                days after the issuance of the notice of 
                assessment.
                  (F) Collection.--
                          (i) Referral.--If any person fails to 
                        pay an assessment after any penalty 
                        assessed under this paragraph has 
                        become final, the Secretary shall 
                        recover the amount assessed by action 
                        in the appropriate United States 
                        district court.
                          (ii) Appropriateness of penalty not 
                        reviewable.--In any civil action under 
                        clause (i), the validity and 
                        appropriateness of the penalty shall 
                        not be subject to review.
                  (G) Disbursement.--All penalties collected 
                under authority of this subsection shall be 
                deposited into the Treasury.
          (3) Condition for licensure.--Payment by a licensee 
        of any civil penalty assessed under this subsection 
        that has become final shall be a requirement for the 
        retention of its license.
  (m) Treatment of Records.--In light of business competition, 
confidentiality, and privacy concerns, the Secretary shall 
protect from disclosure information submitted in support of a 
license application under this subchapter and information 
collected in the course of regulating licensees to the full 
extent permitted by sections 552 and 552a of title 5.
  (n) Suitability for Licensing Requirements for Certain 
Service Providers.--
          (1) In general.--Any person that knowingly--
                  (A) manages, administers, or controls bets or 
                wagers that are initiated, received, or 
                otherwise made within the United States,
                  (B) otherwise manages or administers the 
                games with which such bets or wagers are 
                associated, or
                  (C) develops, maintains or operates, or 
                distributes or makes available for downloading 
                software, other system programs or hardware 
                that create, operate, or otherwise affect the 
                outcome of a game,
        shall meet all of the suitability for licensing 
        criteria established under this section in the same 
        manner and to the same extent as if that person were 
        itself a licensee.
          (2) Suitability for licensing requirements for 
        certain service providers.--Any failure on the part of 
        person described in any subparagraph of paragraph (1) 
        to remain suitable for licensing shall be grounds for 
        revocation of the authority of the licensee for whom 
        such service is provided to operate an Internet 
        gambling facility, in the same manner and in accordance 
        with subsection (i).
  (o) Reliance on State and Tribal Regulatory Body 
Certifications of Suitability for Applicants.--
          (1) Qualification of state and tribal regulatory 
        bodies.--
                  (A) Application for determination.--Any State 
                or tribal regulatory body with expertise in 
                regulating gambling may--
                          (i) notify the Secretary of its 
                        willingness to review prospective 
                        applicants to certify whether any such 
                        applicant meets the qualifications 
                        established under this subchapter; and
                          (ii) provide the Secretary with such 
                        documentation as the Secretary 
                        determines necessary for the Secretary 
                        to determine whether such State or 
                        tribal regulatory body is qualified to 
                        conduct such review and may be relied 
                        upon by the Secretary to make any such 
                        certification.
                  (B) Determination and notice.--Within 60 days 
                after receiving any notice under 
                subparagraph(A)(i), the Secretary shall--
                          (i) make the determination as to 
                        whether a State or tribal regulatory 
                        body is qualified to conduct a review 
                        of prospective applicants and may be 
                        relied upon to certify whether any such 
                        applicant meets the qualifications 
                        established under this subchapter; and
                          (ii) notify the State or tribal 
                        regulatory body of such determination.
          (2) Actions by qualified authorities.--During the 
        period that any determination of qualification under 
        paragraph (1)(B) is in effect with respect to any such 
        State or tribal regulatory body, the State or tribal 
        regulatory body--
                  (A) may undertake reviews of any applicant to 
                determine whether the applicant or any person 
                associated with the applicant meets the 
                criteria for suitability for licensing 
                established under this subchapter;
                  (B) may impose on each such applicant an 
                administrative fee or assessment for conducting 
                such review in an amount the regulatory body 
                determines to be necessary to meet its expenses 
                in the conduct of such review; and
                  (C) shall process and assess each applicant 
                fairly and equally based on objective criteria, 
                regardless of any prior licensing of an 
                applicant by the State or tribal regulatory 
                body.
          (3) Reliance on state or tribal certification.--Any 
        applicant may provide a certification of suitability 
        for licensing made by any State or tribal regulatory 
        body under paragraph (2), together with all 
        documentation the applicant has submitted to any such 
        State or tribal regulatory body, to the Secretary, and 
        any such certification and documentation shall be 
        relied on by the Secretary as evidence that an 
        applicant has met the suitability for licensing 
        requirements under this section.
          (4) Authority of secretary to review.--
        Notwithstanding any certification of suitability for 
        licensing made by any State or tribal regulatory body, 
        the Secretary retains the authority to review, 
        withhold, or revoke any license if the Secretary has 
        reason to believe that any applicant or licensee does 
        not meet the suitability requirements for licensing 
        established under this section, or any other 
        requirement of a licensee.
          (5) Reliance on qualified regulatory body for other 
        purposes, including examination and enforcement.--The 
        Secretary shall rely on any State and tribal regulatory 
        body found qualified under this subsection for such 
        other regulatory and enforcement activities as the 
        Secretary finds to be useful and appropriate to carry 
        out the purposes of this subchapter, including 
        authority under paragraph (6).
          (6) Additional authority of qualified state or tribal 
        authorities.--The qualified state or tribal authorities 
        may--
                  (A) examine licensees who are licensed under 
                a State or tribal program referred to in 
                paragraph (1);
                  (B) employ enforcement agents with sufficient 
                training and experience to administer the 
                requirements of this subchapter; and
                  (C) enforce any requirement of this 
                subchapter that is within the jurisdiction of 
                the qualified state or tribal authority through 
                all appropriate means provided under this 
                subchapter and other provisions of law.
          (7) Revocation of qualification.--The Secretary may 
        revoke, at any time and for any reason, the 
        qualification of any State or tribal regulatory body to 
        certify or to conduct any other regulatory or 
        enforcement activity to carry out the purposes of this 
        subchapter.
  (p) Prevention of Minors From Placing Bets or Wagers.--The 
Secretary shall--
          (1) frequently monitor, evaluate, and measure 
        compliance effectiveness of each licensee's software, 
        mechanisms, and other systems for preventing minors 
        from placing bets or wagers through the Internet site 
        of the licensee; and
          (2) impose a sanction of either a fine, a revocation 
        of license, or both, on a licensee whose minor 
        protection software, mechanisms, and other systems are 
        found to be insufficiently effective.
  (q) Requirements With Respect to Child Support Delinquents.--
          (1) In general.--When it is made known to the 
        Secretary by a Federal or State court or a competent 
        State agency involved with the administration or 
        enforcement of a court-ordered child support payment 
        that a particular individual is delinquent with respect 
        to court-ordered child support payments, the Secretary 
        shall include that individual on the list established 
        under section 5384(c)(1)(A).
          (2) Removal from list.--Individuals placed on the 
        list pursuant to paragraph (1) shall be removed from 
        such list if the court or agency that made such 
        individual's delinquency known to the Secretary 
        notifies the Secretary that such individual is no 
        longer delinquent.

Sec. 5384. Problem Gambling, Responsible Gambling, Consumer Safeguards, 
                    and Self-Exclusion Program

  (a) Regulations Required.--The Secretary and any State or 
tribal regulatory body that has been qualified under subsection 
5383(o) shall prescribe regulations for the development of a 
Problem Gambling, Responsible Gambling, Consumer Safeguards, 
and Self-Exclusion Program on the basis of standards that each 
licensee shall implement as a condition of licensure.
  (b) Minimum Requirements.--
          (1) In general.--Any application for a license shall 
        include a submission to the Secretary or qualified 
        State or tribal regulatory body setting forth a 
        comprehensive program that is intended--
                  (A) to verify the identity and age of each 
                customer through the use of commercially 
                available data sources or any approved 
                government database that is available for 
                access in real-time through an automated 
                process;
                  (B) to ensure that no customers under the 
                legal age 21 may initiate or otherwise make any 
                bets or wagers for real money;
                  (C) to verify the State or tribal land in 
                which the customer is located at the time the 
                customer attempts to initiate a bet or wager;
                  (D) to ensure that no customer who is located 
                in a State or tribal land that opts out 
                pursuant to section 5387 can initiate or 
                otherwise make a bet or wager prohibited by 
                such opt-out;
                  (E) to ensure that responsible gambling 
                materials including materials on problem 
                gambling, services and resources to address 
                problem gambling, descriptions of games offered 
                by the licensee, and when appropriate, odds of 
                winning or payout rates of games, and any other 
                materials that the Secretary or qualified State 
                or tribal regulatory body may deem appropriate 
                are made available to customers;
                  (F) to make available player-selectable 
                responsible gambling options that may include, 
                as appropriate to specific gambling games, a 
                stake limit, loss limit, time-based loss 
                limits, deposit limit, session time limit, 
                time-based exclusion from all gambling and 
                other similar options that the Secretary or 
                qualified State or tribal regulatory body may 
                deem appropriate and require to be made 
                available;
                  (G) to require each customer, before making 
                or placing any bet or wager, to establish 
                personal limits as a condition of play that 
                apply across all betting sites, which may be in 
                hourly, daily, weekly or monthly increments, at 
                the discretion of the customer;
                  (H) to protect the privacy and security of 
                any customer in connection with any lawful 
                Internet gambling activity;
                  (I) to protect against fraud and to provide 
                for dispute resolution relating to internet 
                gambling activity through programs to insure 
                the integrity and fairness of the games; and
                  (J) to protect against money laundering 
                relating to Internet gambling activities.
          (2) Requirements for programs ensuring integrity and 
        fairness.--The programs referred to in paragraph (1)(I) 
        to insure the integrity and fairness of the games shall 
        include requirements for--
                  (A) real-time, multiparty cryptographic 
                protocols for random number generation where 1 
                of the parties is the player;
                  (B) secure audit trails;
                  (C) detailed player betting logs that record 
                and store each wager placed by the player;
                  (D) real time confirmation of high value bets 
                or wagers, where appropriate; or
                  (E) equally effective options that the 
                Secretary or qualified State or tribal 
                regulatory officer or agency may determine to 
                be appropriate.
  (c) Periodic Review.--
          (1) In general.--The Secretary shall, on a regular 
        basis, review the minimum requirements under this 
        section and may, based on the best available 
        technology, update the standards that each licensee 
        shall implement as a condition of licensure.
          (2) Consultation.--In conducting the review required 
        under paragraph (1), the Secretary shall consult with--
                  (A) State and tribal gaming regulatory 
                officials;
                  (B) law enforcement officials;
                  (C) experts in underage and problem gaming;
                  (D) experts on individual privacy;
                  (E) consumers;
                  (F) on-line retailers of other age restricted 
                materials such as tobacco and alcohol products;
                  (G) licensees and other representatives of 
                the gaming industry;
                  (H) software developers with expertise in 
                gaming, privacy, the payments systems 
                available, and other relevant areas; and
                  (I) such other relevant individuals as the 
                Secretary may determine to be appropriate.
  (d) List of Persons Self-Excluded From Gambling Activities.--
          (1) Establishment.--
                  (A) In general.--The Secretary shall provide 
                by regulation for the establishment of a list 
                of persons self-excluded from gambling 
                activities at all licensee sites.
                  (B) Placement request.--Any person may 
                request placement on the list of self-excluded 
                persons by--
                          (i) acknowledging in a manner to be 
                        established by the Secretary that the 
                        person wishes to be denied gambling 
                        privileges; and
                          (ii) agreeing that, during any period 
                        of voluntary exclusion, the person may 
                        not collect any winnings or recover any 
                        losses resulting from any gambling 
                        activity at any licensee sites.
          (2) Placement and removal procedures.--The 
        regulations prescribed by the Secretary under paragraph 
        (1)(A) shall establish procedures for placements on, 
        and removals from, the list of self-excluded persons.
          (3) Limitation on liability.--
                  (A) In general.--The United States, the 
                Secretary, an enforcement agent, or a licensee, 
                or any employee or agent of the United States, 
                the Secretary, an enforcement agent, or a 
                licensee, shall not be liable to any self-
                excluded person or to any other party in any 
                judicial or administrative proceeding for any 
                harm, monetary or otherwise, which may arise as 
                a result of--
                          (i) any failure to withhold gambling 
                        privileges from, or to restore gambling 
                        privileges to, a self-excluded person; 
                        or
                          (ii) otherwise permitting a self-
                        excluded person to engage in gambling 
                        activity while on the list of self-
                        excluded persons.
                  (B) Rule of construction.--No provision of 
                subparagraph (A) shall be construed as 
                preventing the Director from assessing any 
                regulatory sanction against a licensee for 
                failing to comply with the minimum standards 
                prescribed pursuant to this subsection.
          (4) Disclosure provisions.--
                  (A) In general.--Notwithstanding any other 
                provision of Federal or State law, the list of 
                self-excluded persons shall not be open to 
                public inspection.
                  (B) Affiliate disclosure.--Any licensees may 
                disclose the identities of persons on the self-
                excluded list to any affiliated company or, 
                where required to comply with this subsection, 
                any service provider, to the extent that the 
                licensee ensures that any affiliated company or 
                service provider maintains such information 
                under confidentiality provisions comparable to 
                those in this subsection.
          (5) Limitation on liability for disclosure.--A 
        licensee or an employee, agent, or affiliate of a 
        licensee shall not be liable to any self-excluded 
        person or to any other party in any judicial proceeding 
        for any harm, monetary or otherwise, which may arise as 
        a result of disclosure or publication in any manner.
  (e) Gambling by Prohibited Persons.--
          (1) Prohibition benefitting from prohibited gambling 
        activity.--A person who is prohibited from gambling 
        with a licensee by law, or by order of the Secretary or 
        any court of competent jurisdiction, including any 
        person on the self-exclusion list as established in 
        accordance with subsection (d), shall not collect, in 
        any manner or proceeding, any winnings or recover any 
        losses arising as a result of any prohibited gambling 
        activity.
          (2) Forfeiture.--In addition to any other penalty 
        provided by law, any money or thing of value that has 
        been obtained by, or is owed to, any prohibited person 
        by a licensee as a result of bets or wagers made by a 
        prohibited person shall be subject to forfeiture by 
        order of the Secretary, following notice to the 
        prohibited person and opportunity to be heard.
          (3) Deposit of forfeited funds.--Any funds forfeited 
        pursuant to this subsection shall be deposited into the 
        general fund of the Treasury.
          (4) Persons self-excluded.--Licensees may not accept 
        bets or wagers from persons on the list established 
        pursuant to subsection (d)(1)(A).
  (f) Problem or Compulsive Gamblers Not on the List of Self-
Excluded Persons.--
          (1) Public awareness program.--
                  (A) In general.--The Secretary and any State 
                or tribal regulatory body that has been 
                qualified under subsection 5383(o) shall 
                provide by regulation for the establishment of 
                a program to alert the public to the existence, 
                consequences, and availability of the self-
                exclusion list, and shall prepare and 
                promulgate written materials to be used in such 
                a program.
                  (B) Licensee-provided publicity.--Regulations 
                prescribed under subparagraph (A) may require a 
                licensee to make available literature or screen 
                displays relating to the existence of the 
                program.
          (2) Rule of construction.--No provision of this 
        subsection shall be construed as creating a legal duty 
        in the Secretary, a qualified State or tribal 
        regulatory body, a licensee, or any representative of a 
        licensee to identify or to exclude problem or 
        compulsive gamblers not on the list of self-excluded 
        persons.
          (3) Immunity.--The United States, the Secretary, a 
        qualified State or tribal regulatory body, a licensee, 
        and any employee or agent of a licensee, shall not be 
        liable to any person in any proceeding for losses or 
        other damages of any kind arising out of that person's 
        gambling activities based on a claim that the person 
        was a compulsive, problem, or pathological gambler.

Sec. 5385. Financial transaction providers

  (a) In General.--No financial transaction provider shall be 
held liable for engaging in financial activities and 
transactions for or on behalf of a licensee or involving a 
licensee, including payments processing activities, unless such 
provider has knowledge that the specific financial activities 
or transactions are conducted in violation of this subchapter 
and with applicable Federal and State laws.
  (b) Definitions.--For purposes of this section, the following 
definitions shall apply:
          (1) Financial transaction provider.--The term 
        ``financial transaction provider'' means a creditor, 
        credit card issuer, financial institution, operator of 
        a terminal at which an electronic fund transfer may be 
        initiated, money transmitting business, or 
        international, national, regional, or local payment 
        network utilized to effect a credit transaction, 
        electronic fund transfer, stored value product 
        transaction, or money transmitting service, or a 
        participant in such network, or other participant in a 
        payment system.
          (2) Other terms.--
                  (A) Credit, creditor, credit card, and card 
                issuer.--The terms ``credit'', ``creditor'', 
                ``credit card'', and ``card issuer'' have the 
                meanings given the terms in section 103 of the 
                Truth in Lending Act.
                  (B) Electronic fund transfer.--The term 
                ``electronic fund transfer''--
                          (i) has the meaning given the term in 
                        section 903 of the Electronic Fund 
                        Transfer Act, except that the term 
                        includes transfers that would otherwise 
                        be excluded under section 903(6)(E) of 
                        such Act; and
                          (ii) includes any fund transfer 
                        covered by Article 4A of the Uniform 
                        Commercial Code, as in effect in any 
                        State.
                  (C) Financial institution.--The term 
                ``financial institution'' has the meaning given 
                the term in section 903 of the Electronic Fund 
                Transfer Act, except that such term does not 
                include a casino, sports book, or other 
                business at or through which bets or wagers may 
                be placed or received.
                  (D) Insured depository institution.--The term 
                ``insured depository institution''--
                          (i) has the meaning given the term in 
                        section 3(c) of the Federal Deposit 
                        Insurance Act; and
                          (ii) includes an insured credit union 
                        (as defined in section 101 of the 
                        Federal Credit Union Act).
                  (E) Money transmitting business and money 
                transmitting service.--The terms ``money 
                transmitting business'' and ``money 
                transmitting service'' have the meanings given 
                the terms in section 5330(d) (determined 
                without regard to any regulations prescribed by 
                the Secretary under such section).

Sec. 5386. List of unlawful Internet gambling enterprises

  (a) Definitions.--For purposes of this section, the following 
definitions shall apply:
          (1) Unlawful internet gambling enterprise.--The term 
        ``unlawful Internet gambling enterprise'' means any 
        person who, more than 10 days after the date of the 
        enactment of this section--
                  (A) violates a provision of section 5363;
                  (B) knowingly receives or transmits funds 
                intended primarily for a person described in 
                subparagraph (A); or
                  (C) knowingly assists in the conduct of a 
                person described in subparagraph (A) or (B).
          (2) Director.--The term ``Director'' means the 
        Director of the Financial Crimes Enforcement Network.
  (b) List of Unlawful Internet Gambling Enterprises.--
          (1) In general.--Not later than 120 days after the 
        date of the enactment of this section, the Director 
        shall submit to the Secretary a list of unlawful 
        Internet gambling enterprises and shall regularly 
        update such list in accordance with the procedures 
        described in paragraph (3).
          (2) Contents of list.--The list prepared under 
        paragraph (1) shall include the following information 
        for each such unlawful Internet gambling enterprise:
                  (A) All known Internet website addresses of 
                the enterprise.
                  (B) The names of all known owners and 
                operators of the enterprise.
                  (C) To the extent known, information 
                identifying the financial agents and account 
                numbers of the enterprise and the persons 
                listed under subparagraph (B).
          (3) Distribution of list by secretary.--The Secretary 
        shall make available--
                  (A) a copy of the information provided under 
                subparagraphs (A) and (B) of paragraph (2) on 
                the Internet website of the Secretary of the 
                Treasury;
                  (B) to all persons who are required to comply 
                with the regulations prescribed under the 
                authority provided in section 5364 a copy of 
                all the information provided under paragraph 
                (1) in an electronic format compatible with the 
                Specially Designated Nationals list maintained 
                by the Office of Foreign Assets Control; and
                  (C) any information required under this 
                paragraph not later than 10 days after 
                receiving any new or updated list from the 
                Director.
          (4) Procedures.--The procedures described in this 
        paragraph are the following:
                  (A) Investigation.--The Director shall 
                investigate entities that appear to be unlawful 
                Internet gambling enterprises. An initial 
                investigation shall be completed before the end 
                of the 60-day period beginning on the date of 
                enactment of this section. After the initial 
                investigation, the Director shall regularly 
                investigate entities that appear to be unlawful 
                Internet gambling enterprises. If the Director 
                discovers evidence sufficient to prove a prima 
                facie case that any person is an unlawful 
                Internet gambling enterprise, the Director 
                shall provide the notice required under 
                subparagraph (C).
                  (B) Requests.--Any Federal, State, tribal, or 
                local law enforcement official, any affected 
                sports organization, any person directly harmed 
                by unlawful Internet gambling, any financial 
                transaction provider, and any interactive 
                computer service (as such terms are defined in 
                section 5362) shall have the right, but not the 
                obligation, to make a written request to the 
                Director for the addition of any person to the 
                list of unlawful Internet gambling enterprises. 
                If the Director determines that the evidence 
                submitted is sufficient to prove a prima facie 
                case that such person is an unlawful Internet 
                gambling enterprise, the Director shall provide 
                the notice required under subparagraph (C) to 
                each person identified as an alleged unlawful 
                Internet gambling enterprise. The Director also 
                shall provide written notice of its decision 
                under this subparagraph, including a decision 
                not to add a person to the list required under 
                paragraph (1), to the requesting party no later 
                than 30 days after the request is received.
                  (C) Notice.--Not fewer than 30 days before 
                adding an unlawful Internet gambling 
                enterprise, or an owner or operator thereof, to 
                the list required under paragraph (1), the 
                Director shall provide written notice to such 
                enterprise, owner, or operator. Any enterprise, 
                owner, or operator receiving such notice may 
                contest the Director's determination by written 
                appeal to the Director not more than 30 days 
                after receiving notice.
                  (D) Opportunity for hearing.--If a person 
                properly submits a written appeal under 
                subparagraph (C), the Director shall not 
                include such person in the list required under 
                paragraph (1) unless and until the Director 
                provides such person with an opportunity for a 
                hearing not more than 30 days after receiving 
                written notice of appeal. Not more than 10 days 
                after an opportunity for hearing is afforded, 
                whether or not the person requesting the 
                hearing appears at such hearing, the Director 
                shall proceed to add such person to the list of 
                unlawful Internet gambling enterprises unless 
                the Director determines, based on a 
                preponderance of the evidence, that such person 
                is not an unlawful Internet gambling 
                enterprise.
                  (E) Injunctive relief.--Any person that the 
                Director determines shall be included in the 
                list required under paragraph (1) after such 
                person appears at a hearing described in 
                subparagraph (D) and any person included in 
                such list who did not receive the notice 
                required under subparagraph (C), may petition 
                for injunctive relief in the United States 
                District Court for the District of Columbia, 
                which shall have exclusive jurisdiction to hear 
                challenges pursuant to this section. The 
                petitioner shall have the burden of 
                establishing by a preponderance of the evidence 
                that such person is not an unlawful Internet 
                gambling enterprise. Only persons designated by 
                the Director for inclusion on the list of 
                unlawful Internet gambling enterprises, and 
                other owners or operators of an enterprise to 
                be so listed, shall have standing to contest 
                the Director's determination. The court may 
                enjoin the Director and the Secretary not to 
                add or remove the petitioner from the list of 
                unlawful Internet gambling enterprises, and no 
                other judicial recourse shall be permitted.
  (c) Effect of List.--A financial transaction provider shall 
be deemed to have actual knowledge that a person is an unlawful 
Internet gambling enterprise to the extent that such person is 
identified on the list available to the public, or on a non-
public list made available to such financial transaction 
provider, by the Secretary as described in subsection (b)(2), 
provided that the list shall not be deemed to be the sole 
source of actual knowledge.

Sec. 5387. Limitation of licenses in States and Indian lands

  (a) State Opt-Out Exercise.--
          (1) Limitations imposed by states.--
                  (A) In general.--No licensee may engage, 
                under any license issued under this subchapter, 
                in the operation of an Internet gambling 
                facility that knowingly accepts bets or wagers 
                initiated by persons who reside in any State 
                which provides notice that it will limit such 
                bets or wagers, if the Governor or other chief 
                executive officer of such State informs the 
                Director of such limitation, in a manner which 
                clearly identifies the nature and extent of 
                such limitation, before the end of the period 
                beginning on the date of the enactment of the 
                Internet Gambling Regulation, Consumer 
                Protection, and Enforcement Act and ending on 
                the date on which such State's legislature has 
                conducted one full general legislative session, 
                where such session began after the date of the 
                enactment of such Act, or in accordance with 
                paragraph (2), until such time as any notice of 
                any amendment or repeal of such specific 
                limitation becomes effective under paragraph 
                (2).
                  (B) Coordination between state and tribal 
                opt-out exercises.--Any State limitation under 
                subparagraph (A) shall not apply to the 
                acceptance by a licensee of bets or wagers from 
                persons located within the tribal lands of an 
                Indian tribe that--
                          (i) has itself opted out pursuant to 
                        subsection (b) (in which case the 
                        tribal opt-out exercise under such 
                        subsection shall apply); or
                          (ii) would be entitled pursuant to 
                        other applicable law to permit such 
                        bets or wagers to be initiated and 
                        received within its territory without 
                        use of the Internet.
                  (C) Coordination with indian gaming 
                regulatory act.--No decision by a State under 
                this subsection shall be considered in making 
                any determination with regard to the ability of 
                an Indian tribe to offer any class of gambling 
                activity pursuant to section 11 of the Indian 
                Gaming Regulatory Act.
                  (D) Tribal status or category not impacted.--
                Tribal operations of Internet gambling 
                facilities under this subchapter shall not 
                impact an Indian tribe's status or category or 
                class under its land-based activities.
                  (E) New negotiations not required.--Operating 
                under a license issued pursuant to this 
                subchapter shall not require, or impose any 
                requirement on, an Indian tribe to negotiate a 
                new agreement, or renegotiate any existing 
                agreement, limitation or other provision of a 
                tribal-State compact, agreement, or other 
                understanding with respect to gaming or 
                revenue-sharing, with regard to any Internet 
                bet or wager occurring pursuant to a license 
                issued by the Secretary under this subchapter.
          (2) Changes to state limitations.--The establishment, 
        repeal, or amendment by any State of any limitation 
        referred to in paragraph (1) after the end of the 
        period referred to in paragraph (1) shall apply, for 
        purposes of this subchapter, beginning on the first 
        January 1 that occurs after the end of the 60-day 
        period beginning on the later of--
                  (A) the date a notice of such establishment, 
                repeal, or amendment is provided by the 
                Governor or other chief executive officer of 
                such State in writing to the Secretary; or
                  (B) the effective date of such establishment, 
                repeal, or amendment.
  (b) Indian Tribe Opt-Out Exercise.--
          (1) Limitations imposed by indian tribes.--No 
        Internet gambling licensee knowingly may accept a bet 
        or wager from a person located in the tribal lands of 
        any Indian tribe which limits such gambling activities 
        or other contests if the principal chief or other chief 
        executive officer of such Indian tribe informs the 
        Secretary of such limitation, in a manner which clearly 
        identifies the nature and extent of such limitation, 
        before the end of the 90-day period beginning on the 
        date of the enactment of the Internet Gambling 
        Regulation, Consumer Protection, and Enforcement Act, 
        or in accordance with paragraph (2), until such time as 
        any notice of any amendment or repeal of such specific 
        limitation becomes effective under paragraph (2).
          (2) Changes to indian tribe limitations.--The 
        establishment, repeal, or amendment by any Indian tribe 
        of any limitation referred to in paragraph (1) after 
        the end of the 90-day period beginning on the date of 
        the enactment of this subchapter shall apply, for 
        purposes of this subchapter, beginning on the first 
        January 1 that occurs after the end of the 60-day 
        period beginning on the later of--
                  (A) the date a notice of such establishment, 
                repeal, or amendment is provided by the 
                principal chief or other chief executive 
                officer of such Indian tribe in writing to the 
                Secretary; or
                  (B) the effective date of such establishment, 
                repeal, or amendment.
  (c) Notification and Enforcement of State and Indian Tribe 
Limitations.--
          (1) In general.--The Secretary shall notify all 
        licensees and applicants of all States and Indian 
        tribes that have provided notice pursuant to paragraph 
        (1) or (2) of subsection (a) or (b), as the case may 
        be, promptly upon receipt of such notice and in no 
        event fewer than 30 days before the effective date of 
        such notice.
          (2) Compliance.--The Secretary shall take effective 
        measures to ensure that any licensee under this 
        subchapter, as a condition of the license, complies 
        with any limitation or prohibition imposed by any State 
        or Indian tribe to which the licensee is subject under 
        subsection (a) or (b), as the case may be.
          (3) Violations.--It shall be a violation of this 
        subchapter for any licensee knowingly to accept bets or 
        wagers initiated or otherwise made by persons located 
        within any State or in the tribal lands of any Indian 
        tribe for which a notice is in effect under subsection 
        (a) or (b), as the case may be.
          (4) State attorney general enforcement.--In any case 
        in which the attorney general of a State, or any State 
        or local law enforcement agency authorized by the State 
        attorney general or by State statute to prosecute 
        violations of consumer protection law, has reason to 
        believe that an interest of the residents of that State 
        has been or is threatened or adversely affected by a 
        violation by a licensee pursuant to paragraph (2), the 
        State, or the State or local law enforcement agency on 
        behalf of the residents of the agency's jurisdiction, 
        may bring a civil action on behalf of the residents of 
        that State or jurisdiction in a district court of the 
        United States located therein, to--
                  (A) enjoin that practice; or
                  (B) enforce compliance with this subchapter.

Sec. 5388. Sports betting prohibited on Internet

  No licensee under this subchapter shall accept Internet bets 
or wagers on sporting events, with the exception of pari-mutuel 
racing as permitted by law.

Sec. 5389. Prohibition on the use of credit cards for Internet gambling

  (a) In General.--No licensee, no person operating on behalf 
of a licensee, and no person accepting payment for or 
settlement of a bet or wager who intends to transmit such 
payment to a person licensee, may accept a bet or wager or 
payment for or settlement of a bet or wager that is transmitted 
or otherwise facilitated with a credit card (as defined in 
section 5362(11)).
  (b) Exception.--
          (1) Clarification of scope.--For any person licensed 
        to take bets or wagers in accordance with the 
        Interstate Horseracing Act of 1978, the prohibition in 
        subsection (a) shall only apply to those activities 
        conducted pursuant to a license under this subchapter.
          (2) Intrastate activities.--For any person involved 
        in legal, land-based or State- or tribal-regulated 
        intrastate gambling, the prohibition in subsection (a) 
        shall only apply to those activities conducted pursuant 
        to a license under this subchapter.

Sec. 5390. State and tribal lotteries

  (a) In General.--Notwithstanding any other provision of this 
subchapter, this subchapter shall not apply to Internet 
gambling conducted by any State or tribal lottery authority 
when conducted in accordance with subparagraph (B) or (C) of 
section 5362(10), as clarified by section 5362(10)(E).
  (b) Rule of Construction.--For purposes of the clarification 
made by subparagraph (E) of section 5362(10) to the meaning and 
intent of subparagraphs (B) and (C) of such section, Internet 
gambling described in subsection (a) is hereby expressly 
permitted, and operators of any State or tribal lottery 
authority conducting Internet gambling facilities operating in 
accordance with such subparagraph (B) or (C), as clarified by 
such subparagraph (E), and vendors, suppliers and service 
providers to such State or tribal lottery authority, shall not 
be required to be licensed under this subchapter.
  (c) Applicability of Other Provisions to Lottery Activity.-- 
To clarify existing law, section 1084 of title 18 shall not 
apply to any of the following that occurs in connection with 
any Internet gambling conducted by any State or tribal lottery 
authority when conducted in accordance with subparagraph (B) or 
(C) of section 5362(10), as clarified by section 5362(10)(E):
          (1) Any Internet bet or wager, including any 
        transmission thereof.
          (2) Any transmission of information assisting in the 
        placing of bets or wagers.
          (3) any transmission entitling the recipient to 
        receive money or credit as a result of bets or wagers, 
        or for information assisting in the placing of bets or 
        wagers.
  (d) Authorization of Sponsor.--No licensee may offer services 
relating to any lottery sponsored by a State, tribal, or other 
governmental body without the authorization of the official 
sponsor.

Sec. 5391. Safe harbors

  It shall be a complete defense against any prosecution or 
enforcement action under any Federal or State law against any 
person possessing a valid license under this subchapter that 
the activity is authorized under and has been carried out 
lawfully under the terms of this subchapter.

Sec. 5392. Relation to section 1084 of title 18 and the Unlawful 
                    Internet Gambling Enforcement Act

  Section 1084 of title 18 and subchapter IV of this chapter 
shall not apply to any Internet bet or wager occurring pursuant 
to a license issued in accordance with this subchapter.

Sec. 5393. Cheating and other fraud

  (a) Electronic Cheating Devices Prohibited.--No person 
initiating, receiving, or otherwise making a bet or wager with 
a licensee, or sending, receiving, or inviting information 
assisting with a bet or wager with a licensee, knowingly shall 
use, or assist another in the use of, an electronic, 
electrical, or mechanical device which is designed, 
constructed, or programmed specifically for use in obtaining an 
advantage in any game authorized under this subchapter, where 
such advantage is prohibited or otherwise violates the rules of 
play established by the licensee.
  (b) Additional Offense.--No person initiating, receiving, or 
otherwise making a bet or wager with a licensee, or sending, 
receiving, or inviting information assisting with a bet or 
wager with a licensee, knowingly shall use or possess any 
cheating device with intent to cheat or defraud any licensee or 
other persons placing bets or wagers with such licensee.
  (c) Permanent Injunction.--Upon conviction of a person for 
violation of this section, the court may enter a permanent 
injunction enjoining such person from initiating, receiving, or 
otherwise making bets or wagers or sending, receiving, or 
inviting information assisting in the placing of bets or 
wagers.
  (d) Criminal Penalty.--Whoever violates subsection (a) or (b) 
of this section shall be fined under title 18 or imprisoned for 
not more than 5 years, or both.

           *       *       *       *       *       *       *


                            DISSENTING VIEWS

    In spite of significant bipartisan opposition, the 
Committee majority passed H.R. 2267, ``The Internet Gambling 
Regulation, Consumer Protection, and Enforcement Act,'' to 
establish a federal licensing program under which Internet 
gambling companies may lawfully operate and accept bets or 
wagers from individuals located in the United States. In doing 
so, H.R. 2267 reverses the longstanding national policy against 
gambling by establishing a presumption in favor of legalized 
online betting.
    Internet gambling's characteristics are unique: online 
players can gamble 24 hours a day from home; children may play 
without sufficient age verification; and betting with a credit 
card can undercut a player's perception of the value of cash, 
leading to addiction, bankruptcy and crime. Young people are 
particularly at risk. John Kindt, Professor of Business 
Administration at the University of Illinois says: ``It's 
`click the mouse, lose your house.' It puts gambling at every 
work desk and every school desk and in every living room. It 
would increase problem gambling rates exponentially.''
    By approving this bill, the largest expansion of gambling 
in history, the Committee has taken steps to open casinos in 
every home, dorm room, library, iPod, Blackberry, iPad and 
computer in America. Since this Congress took action in 2006 to 
address the spread of Internet gambling by passing the Unlawful 
Internet Gambling Enforcement Act (UIGEA), offshore gaming 
interests have campaigned to repeal the law, or at least, to 
undermine it. These are large corporate interests that are 
protecting their bottom line at the expanse of addiction and 
destruction to our homes and communities. Supporters of H.R. 
2267 argue that by licensing and taxing online wagering and 
implicitly repealing the Wire Act, the Federal government could 
better prevent fraud, limit compulsive gambling and protect 
minors. At the same time, they argue it would create a new 
multi-billion dollar revenue source for the Federal government.
    It is true that to obtain a license to conduct Internet 
gambling operations under this bill, applicants must 
demonstrate a variety of online safeguards to ensure safe and 
proper use of a licensee's Web site. But recent developments 
have cast doubt on whether the intended protections are viable. 
For example, the bill requires protective mechanisms that 
combat fraud. But the Federal Bureau of Investigation (FBI) has 
identified several ways to cheat at online poker, none of which 
are illegal or banned by the bill. The FBI has also said that 
not only does technology exist to manipulate online poker 
games, but that advanced technology to cheat is not even 
necessary because ``it would only take two or three players 
working in unison to defeat the other players who are not part 
of the team.''\1\
---------------------------------------------------------------------------
    \1\Letter from Shawn Henry, Assistant Director, Cyber Division, 
Federal Bureau of Investigation, to Spencer Bachus, November 13, 2009.
---------------------------------------------------------------------------
    Perhaps even more significant than the potential 
undetectable theft of money from one participant in an online 
peer-to-peer game like poker, the FBI fears that cheaters will 
use online poker rooms to ``virtually wash money.''\2\ It has 
described a simple money laundering scheme involving private 
games with ``mules'' or ciphers. In this scenario, an 
individual could create a private game or tournament (available 
on almost every online poker site) with a number of phony 
players guaranteed to win. In any given hand, the individual 
could raise the pot to the maximum amount allowed and 
subsequently fold before the hand is finished, allowing the 
individual to transfer the money from his account to the mule 
account (potentially several times). In other words, under the 
guise of innocent participation in a friendly poker game with 
friends, an individual could launder limitless sums of money.
---------------------------------------------------------------------------
    \2\Id.
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    Just as there is considerable doubt whether H.R. 2267 will 
prevent cheating or money laundering, there are questions 
whether H.R. 2267's age and location verification mandates will 
prevent minors from gambling online or ensure that bettors only 
bet in jurisdictions that permit gambling. First, the FBI has 
dismissed assertions by online vendors who say they have 
technology solutions to validate the age or location of 
potential players.\3\ Second, a federal district court judge 
has found age and identity verification procedures either 
unavailable or ineffective.\4\ Third, experts in the field of 
online protection and identity verification mechanisms.\5\ And 
fourth, evidence indicates that such safeguards, even when 
implemented, do a poor job of preventing web site access to 
restricted parties such as children.
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    \3\Id.
    \4\See ACLU v. Gonzales, 478 F. Supp. 2d 775 (E.D. Pa. 2007).
    \5\Fagan, Michael. Statement to the House Committee on Financial 
Services. H.R. 2267, Internet Gambling Regulation, Consumer Protection, 
and Enforcement Act, Hearing, July 21, 2010.
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    Even though the bill would inadequately guard against 
cheating, money laundering and underage betting, some have said 
that this bill could raise significant revenues to fund other 
policy priorities. But that claim is specious too. Although it 
is our view that the Federal government should not take 
advantage of the young, the weak and the vulnerable in the name 
of growing government, we learned during the legislative 
hearing on this bill that the estimates of the revenues that 
legalizing Internet gambling would supposedly generate are 
significantly overstated. To raise the revenues that its 
supporters tout ($42 billion over ten years), H.R. 2267 would 
need to require complete federal preemption. The Joint 
Committee on Taxation's most expansive of four different 
estimates--$42 billion--is based on an assumption that ``no 
State or tribal government will be permitted to limit federally 
licensed Internet gambling operators from providing online 
gambling services in their jurisdictions'' In other words, 
legalizing Internet gambling will generate $42 billion only if 
H.R. 2267's opt-out procedure--its principal State-protective 
provision--is eviscerated. The Joint Committee on Taxation 
estimate that is most closely based on the texts of H.R. 2267 
and its companion tax measure, H.R. 4976, indicates that the 
bills will generate just $10 billion in Federal revenue. This 
estimate appears to assume that many States will choose to opt-
out in order to prevent the expansion of gambling on the 
Internet. Ultimately though, given that this bill fails to 
enforce laws against illegal sites, there will be little 
incentive for gaming interests to set up a legal and taxed 
site. In that case, the promised ``revenues'' are likely to be 
illusory.
    Considering that the social and economic harm done to 
America's families and to young people from unlawful Internet 
gambling is well-documented, we ask: is passing new legislation 
to create a Federal right to gamble that has never existed in 
our country's history--and addicting the Federal government to 
Internet gambling taxes for more spending in the process--
really worth it? We urge our colleagues to see H.R. 2267 for 
what it really represents--the largest expansion of gambling 
ever proposed in Congress. We oppose its passage.
                                   Spencer Bachus.
                                   Randy Neugebauer.
                                   J. Gresham Barrett.
                                   Thaddeus G. McCotter.
                                   Michael N. Castle.
                                   Walter B. Jones.
                                   Michele Bachmann.