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Proposed Online Gambling Ban Raises Tough Questions

By Erika Morphy
May 4, 2006 3:29 PM PT

Making yet another attempt to curb online gambling, a House Judiciary subcommittee unanimously approved the Internet Gambling Prohibition Act, sponsored by Reps. Bob Goodlatte (R-Va.) and Rick Boucher (D-Va.)

Proposed Online Gambling Ban Raises Tough Questions

The bill, which expands the ban on interstate gambling to include Internet gambling, criminalizes the acceptance of credit, electronic fund transfers or other payments by gambling operators. It will go to the House Judiciary Committee this month for review.

Online gambling in the United States has a questionable legal status, much of it dictated by individual states. Momentum has been building, however, in favor of a nationwide ban -- or at least closer regulation, especially as the practice grows in popularity.

This particular bill, however, raises questions over whether such a ban can be enforced -- and to what degree the burden of that enforcement might impact other areas of the economy.

Forget About It

"It would be impossible to enforce," said Frank Catania, former Director of New Jersey Gaming Enforcement and managing partner for Catania Consulting.

His view is to allow states to make their own decisions -- which would make any regulations much easier to enforce, he told the E-Commerce Times.

"Gaming has always been a states' rights issue," Catania said. "A state could regulate online gaming, or it could decide to prohibit it or do nothing at all."

If states were allowed to regulate gambling, offshore entities would be more likely to participate in the regulations -- as they are unlikely to adhere to a nationwide ban.

Also, Catania pointed out, states could incorporate individual protections into their regulations, such as predefined gambling limits set by individuals that could not be circumvented later.

Monitoring Transactions ...

Some representatives of the banking community worry the bill would place too heavy a burden on community banks, because they might have to begin monitoring individual transactions, Steve Verdier, senior vice president and director of the Independent Community Bankers of America's Congressional Relations Group, told the E-Commerce Times.

The association is concerned the bill would require banks, credit card companies and electronic payment processors to identify and block suspicious credit card, ACH and check transactions.

... And Connections

It would also place a burden on ISPs, according to Michael Bolcerek, president of the Poker Players Alliance, an advocacy group that counts more than 23,000 poker enthusiasts as members and that claims, not surprisingly, that the majority of Americans do not want to see online gambling criminalized.

"Mandating that ISPs remove or disable access to online gambling sites is censorship of the Internet, plain and simple," Bolcerek told the E-Commerce Times. "Congress rightly criticized China for blocking the free flow of information to its citizens via the Internet, and now Goodlatte's bill deserves similar scrutiny."

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