Internet Gambling  Prohibition Act of 1999  (H.R. 3125)   TALKING POINTS    H.R. 3125, THE INTERNET GAMBLING PROHIBITION ACT Gambling on the Internet has become an extremely lucrative business.  Numerous studies have charted the explosive growth of this industry, both by the increases in gambling websites available, and via industry revenues.  Earlier this year, an FBI study reported growth from $300 million in 1998 to $651 million in 1999.  More recently, Bear, Stearns & Co. Inc. reported that there were then at least 650 Internet gambling websites, and that total revenues for 1999 had been $1.2 billion (an 80% increase from 1998) and would grow to $3 billion by 2002.  Other estimates indicate that it could soon easily become a $10 billion a year industry.  Several new gambling sites appear on the web every day. The negative consequences of online gambling can be as detrimental to the families and communities of addictive gamblers as if a bricks and mortar casino was built right next door.  Online gambling can result in addiction, bankruptcy, divorce, crime, and moral decline just as with traditional forms of gambling, the costs of which must ultimately be borne by society.  According to the National Gambling Impact Study Commission, gambling on the Internet is especially enticing to youth, pathological gamblers, and criminals. There are currently no mechanisms in place to prevent youths -- who make up the largest percentage of Internet users -- from using their parents' credit card numbers to register and set up accounts for use at Internet gambling sites.  In addition, pathological gamblers may become easily addicted to online gambling because of the Internet's easy access, anonymity and instant results.  Dr. Howard J. Shaffer, director of addiction studies at Harvard, likens the Internet to new delivery forms of addictive drugs: "As smoking crack cocaine changed the cocaine experience, I think electronics is going to change the way gambling is experienced."  Finally, Internet gambling can provide a nearly undetectable harbor for criminal enterprises.  The anonymity associated with the Internet makes online gambling more susceptible to crime. Gambling is currently illegal in the United States unless regulated by the States. As such, every state has gambling statutes to determine the type and amount of legal gambling permitted.  With the development of the Internet, however, prohibitions and regulations governing gambling have been turned on their head.  Since 1868, the federal government has enacted federal gambling statutes when a particular type of gambling activity has escaped the ability of states to regulate it.  For over one hundred years, Congress has acted to assist states in enforcing their respective policies on gambling when developments in technology of an interstate nature, such as the Internet, have compromised the effectiveness of state gambling laws. The more than 700 gambling websites from the Caribbean and elsewhere are unlicensed, untaxed, and unregulated by any state, and thus violate all 50 state laws in which they are available.  That is why state attorneys general, pro-family/anti-gambling groups, professional and amateur sports leagues, and the Department of Justice all agree that some federal legislation is needed to clarify federal law that Internet gambling businesses are illegal. Under current federal law, it is unclear that using the Internet to operate a gambling business is illegal.  The closest useful statute is the Wire Act which prohibits gambling over telephone wires.  However, because the Internet does not always travel over telephone wires, the Wire Act, which was written well before the invention of the World Wide Web, has become outdated -- it is not clear that it applies to the Internet at all.  Furthermore, even if it does, it only applies to sports betting and not virtual casino games like blackjack and roulette.   The National Gambling Impact Study Commission recommends to Congress that a total prohibition of gambling on the Internet would provide law enforcement with the additional authority it needs to prosecute dishonest operators.  In addition, a total ban on Internet gambling would prevent improper endorsements by the U.S. government of what are often questionable offshore gambling operations. H.R. 3125, the Internet Gambling Prohibition Act sponsored by Congressman Bob Goodlatte, simply clarifies the state of the law by bringing the current prohibition against wireline interstate gambling up to speed with the development of new technology.  H.R. 3125 is similar to legislation sponsored by Senator Kyl and passed in the Senate by Unanimous Consent last Fall.  H.R. 3125 prohibits gambling on the Internet; there are no exceptions from this blanket prohibition.  Betting on horse and dog racing, and betting on jai alai and by Indian tribes, are permitted only to the extent that they are currently lawful and only on closed-loop subscriber-based systems, not on the open Internet.  H.R. 3125 does not expand the current scope of legally permissible activity. The bill also maintains a hands-off policy toward Internet Service Providers by granting them protection from liability and ensuring that they do not have to police their networks for illegal activity.  It would protect those ISPs whose facilities are used by another person to engage in Internet gambling, provided that the material is transmitted by a person other than the provider and through an automatic process. In addition, the liability protection is contingent on the provider responding expeditiously to a court order from law enforcement providing notice that illegal gambling is occurring on their network by removing or disabling access to the site containing the illegal activity.  This language is similar to the liability provisions for copyright violations included in the Digital Millennium Copyright Act enacted in 1998. As the National Gambling Impact Study Commission has documented, and Senate and House hearings have confirmed, Internet gambling is growing at an explosive rate.  It evades existing anti-gambling laws, endangers children in the home, promotes compulsive gambling among adults, preys on the poor, and facilitates fraud.  H.R. 3125 will put a stop to this harmful activity before it spreads further.