House Fails to Ban Internet Gambling

A bill to ban “cyber casinos” to curb the proliferation of Internet sites offering casino games and sports betting to everyone with a credit card and a computer failed in a vote by the House late today.

Representatives voted 245-159 against the ban which would have curbed such practices regardless of where a person lived.

A total of about 270 votes was needed for passage of the bill.

“One way to promote the Internet is to make sure that the seamy side of life is dealt with on the Internet,” said the bill’s sponsor, Rep. Robert Goodlatte, R-Va. before the vote. “Just like child pornography has to be dealt with on the Internet, so does unregulated, out-of-control, illegal gambling.”

Critics, including the Justice Department, said the bill would have actually helped the pari-mutuel industry reach bettors who could not otherwise wager. Lobbyists for horse racing, dog racing and jai alai got exemptions inserted in the bill.

House leaders brought the bill to the floor under rules prohibiting amendments, limiting debate to 40 minutes and requiring a two-thirds majority for passage.

Casinos, Sports Leagues Favor Bill

Nearly 700 Internet sites offer online gambling, a business expected to grow from $1.1 billion in 1999 to $3 billion in 2002, according to a recent report for the online gambling industry.

The bill would prohibit anyone who runs a gambling business to place or receive an online wager. Businesses that offer online gambling could be fined at least $20,000 and their principals sent to jail for up to four years.

Goodlatte attempted to address critics’ concerns last week by adding language specifying that the bill is not intended to permit activities that now are illegal.

Other critics said the bill would infringe on states’ rights by prohibiting state lotteries from offering at-home sales of tickets over the Internet.

The commercial casino industry and major sports leagues supported the bill, as did the National Association of Attorneys General and some conservative social groups including the Christian Coalition.

Tom Grey, executive director of the National Coalition Against Legalized Gambling, said his group decided the benefit of cracking down on virtual casinos outweighed the risk of boosting the racing industry.

‘Wasn’t a Royal Flush for Us’

“To use the parlance, this wasn’t a royal flush for us, but it was a winning hand,” Grey said.

Opponents include the conservative Traditional Values Coalition as well as computer industry groups that do not want to see Internet regulation.

The Interactive Gaming Council, which represents Internet betting sites, advocated legalizing and taxing Internet gambling rather than prohibiting it.

“The choice to Congress is simple: They can start down the road of Internet regulation, picking winners and losers in markets and trampling on individual freedoms, or they can leave the Internet as a haven for individual freedom,” the group’s chairman, Sue Schneider, said in a statement earlier today.

The Senate approved similar legislation sponsored by Sen. Jon Kyl, R-Ariz., in November.

Enforcement of the Internet gambling ban would be challenging, because most of the outlets are based outside the United States.

“If you go offshore, the federal government has no authority to close those particular Web sites,” said Rep. Bobby Scott, D-Va., who opposed the bill as ineffective.

Federal prosecutors already have prosecuted some Internet gambling operations using the 1961 Wire Communications Act, which was written to cover sports betting via telephone.

The bill originally contained penalties for individual bettors as well, but they were removed. Internet service providers are exempt from criminal penalties, provided they obey law enforcement directives to cut off customer access to gambling sites.

The Associated Press and ABCNews' Dean Norland contributed to this story.