The HR 4411 House hearing (http://thomas.loc.gov/cgi-bin/bdquer...9:HR04411:@@@X
INTERNET GAMBLING PROHIBITION AND ENFORCEMENT ACT -- (House of Representatives - July 11, 2006)
Mr. OXLEY. Mr. Speaker, pursuant to House Resolution 907, I call up the bill (H.R. 4411) to prevent the use of certain payment instruments, credit cards, and fund transfers for unlawful Internet gambling, and for other purposes, and ask for its immediate consideration.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 4411 <snip>
The SPEAKER pro tempore. After 1 hour of debate on the bill, as amended,
it shall be in order to consider the further amendment printed in House Report 109-551, if offered by the gentlewoman from Nevada (Ms. Berkley) or her designee, which shall not be subject to a demand for division of the question, shall be considered read, and shall be debatable for 20 minutes, equally divided and controlled by the proponent and an opponent.
The gentleman from Ohio (Mr. Oxley), the gentlewoman from Oregon (Ms. Hooley), the gentleman from Wisconsin (Mr. Sensenbrenner), and the gentleman from Michigan (Mr. Conyers) each will control 15 minutes.
The Chair recognizes the gentleman from Ohio.
Mr. OXLEY. Mr. Speaker, I yield myself 2 minutes.
Mr. Speaker, I rise today in support of H.R. 4411, the Internet Gambling Prohibition and Enforcement Act. This bill represents the combined efforts of my esteemed colleagues, Chairmen Bob Goodlatte and Jim Leach, who have crafted an effective piece of legislation to finally stop the illegal Internet gambling we have worked against for so many years.
The Goodlatte-Leach bill combines two complementary approaches. First, it cuts off the flow of money to Internet gambling Web sites. These Web sites, almost always located on some far-flung Caribbean island, will no longer be allowed to accept bettors' credit cards, fund transfers, or checks drawn on American banks.
Secondly, H.R. 4411 clarifies that the 45-year-old Wire Act covers illegal Internet gambling. As a former FBI agent, I can attest to the fact that the Wire Act is an effective tool in stopping crime, and this bill will help us make better use of it.
Illegal Internet gambling is bad for a number of important reasons. Experts at the FBI and Justice Department have warned that these sites are often fronts for money laundering, drug trafficking and terrorist financing. Internet gambling sites evade U.S.-based regulations that ensure the integrity of casino games, prevent minors from gambling, and puts in safeguards for problem gamblers.
Because these businesses are located overseas, they provide no tax revenues, provide no U.S. jobs, all the while evading Federal and State law enforcement. Unlike legal gambling here in the United States, no enforcement mechanism exists to ensure that individuals are protected against these overseas Internet gambling sites. And with no age verification, savvy online gambling sites are preying on minors and young adults.
This Internet gambling bill is a culmination of a decade of hard work by Chairmen Goodlatte and Leach. I would also like to commend the efforts of Mr. Bachus, Mr. Wolf, Mr. Pitts, Ms. Hooley, and Mrs. Kelly, just to name a few. With their help, we have passed several versions of this legislation in the House. I remain hopeful that the Senate will be able to do the same and we can once and for all give the banking regulators and the Justice Department the tools they need to stop illegal Internet gambling.
In the meantime, I strongly urge my colleagues to support the Goodlatte-Leach bill.
Mr. Speaker, I reserve the balance of my time.
Ms. HOOLEY. Mr. Speaker, I yield myself as much time as I may consume.
Mr. Speaker, I rise in support of H.R. 4411, the Internet Gambling Prohibition Act.
I would like to thank Mr. Leach and Mr. Goodlatte for their hard work on bringing this bill to the House floor. It certainly has not been an easy task.
I would like to thank Mr. Frank, our ranking member on the Financial Services Committee, for the opportunity to manage this debate. Even though he and I do not see eye to eye on this legislation, I appreciate and respect the fact that we have agreed to disagree, and I welcome a healthy debate on enforcement of the illegal Internet gambling laws.
Internet gambling is a growing problem in the United States, particularly among young people and college students. It is known to destroy families, marriages and entire lives. As so aptly put by University of Illinois Professor John Kindt, ``You just click the mouse and lose your house.''
This legislation makes clear that we are serious about enforcing our Internet gambling laws that are already on the books. It takes a very important step forward, and we have worked very hard on the Financial Services Committee over the last few Congresses to advance this measure.
This bill cuts off the flow of money to Internet gambling Web sites by regulating payment systems. The Department of Treasury and the Federal Reserve will jointly develop policies and procedures for identifying and preventing financial transactions related to illegal Internet gambling. Payment systems will be required to comply with these regulations.
Even when criminal law cannot be enforced, the Federal Government's jurisdiction over financial systems can nevertheless cut off the money sources for these illegal businesses.
I believe we should mean what we say when it comes to Internet gambling. If we are to keep laws on the books that prohibit Internet gambling, then we should take steps to enforce it. And by cutting off the flow of money, we can accomplish just that.
As was previously noted, this bill is supported by 48 of the 50 State attorneys general, by the NCAA, the NBA, the NFL, the MLB and the NHL. It is a good bill and a commonsense approach to a growing problem. I urge my colleagues to end the flow of money to illegal Internet gambling Web sites, and I urge passage of this bill.
Mr. Speaker, I reserve the balance of my time.
The SPEAKER pro tempore. Without objection, the gentleman from Iowa may control the time of the gentleman from Ohio.
There was no objection.
Mr. LEACH. Mr. Speaker, I yield myself 3 1/4 minutes.
Mr. Speaker, for nearly a decade, many in the Congress have sought to deter Internet gambling. But time and again the issue has been stymied, often in ways that reflect imperfectly on this institution. But it cannot be stressed enough that from a macroeconomic perspective, there are no social benefits for Internet gambling, and from a microfamily perspective, enormous harm is frequently inflicted.
John Kindt, a professor of business at the University of Illinois at Urbana-Champaign calls the Internet ``crack cocaine for gamblers. There are no needle marks,'' he says. ``There is no alcohol on the breath. You just click the mouse and lose your house.''
These comments could not be more apropos than for Greg Hogan, Jr., a 19-year old Lehigh University class president and chaplain's assistant from Barberton, Ohio. This pastor's son gambled away $7,500 playing online Texas Hold-'Em, then confessed to robbing a bank to try to recover his losses. His life is ruined.
Never before has it been so easy to lose so much money, so quickly, at such a young age. Internet casinos are proliferating. Soon they will be ubiquitous.
In the next 5 years, if Congress does not act to clarify and enforce the laws banning Internet gambling, and if Internet casinos' business plans come to pass, gamblers will be able to place bets not just from their home computers but also from their cell phones, while they drive from work, or from their BlackBerrys as they wait in line at the movies.
Mr. Speaker, the time has come for Congress to finally deal with the subject matter. The measure before us, H.R. 4411, is supported by the NCAA, all the major professional sports organizations, from the NFL and Major League Baseball to the NBA and NHL, as well as the financial services industry, family groups, religious organizations and 48 of the 50 State attorneys general.
The reason the sports groups support the legislation, as our colleague, Tom Osborne, so thoughtfully noted, is that they are concerned with the integrity of the games.
The reason the religious community has come together is that they are concerned for the unity of the American family. Internet gambling is not a subject touched upon in the Old or New Testament or the Koran or the Bhagavad Gita. But the pastoral function is one of dealing with families in difficulty. And religious leaders of all denominations and faiths are seeing gambling difficulties erode family values.
It will be suggested in this debate that there is no call to rein in activities of individual choice. But it should be clear that in the history of the Western world, whenever gambling has been legalized it has been subject to careful regulation. This is simply not the case with the Internet. Nor is it the case that an individual's misjudgment does not affect society as a whole.
There is nothing in Internet gambling that adds to the GDP or makes America more competitive in the world. Indeed, if an individual cannot repay his or her debt, neighbors will be subject to higher interest rates. Everyone loses if this industry continues its remarkable growth.
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While Congress has failed to act, the illegal Internet gambling industry has boomed. This year, Americans are projected to send more than $6 billion to unregulated, offshore, online casinos, half of the $12 billion that will be bet worldwide on Internet gambling, FBI and Justice Department experts have warned that Internet gambling sites are vulnerable to be used for money laundering, drug trafficking and even terrorist financing. Further, these sites evade rigorous U.S.-based regulations that control gambling by minors and problem gamblers, and ensure the integrity of the games.
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. Unlike in brick-and-mortar casinos in the United States where legal protections for bettors exist and where there is some compensatory social benefit in jobs and tax revenues, Internet gambling sites principally yield only liabilities to America and to Americans.
H.R. 4411 was introduced to provide federal and state governments strong tools to enforce existing gambling prohibitions. It would crack down on illegal gambling by clarifying that the Wire Act covers all forms of interstate gambling and would account for new technologies. Designed to cut the money flow from gamblers to Internet gambling sites, the bill would enhance criminal penalties for gambling businesses settling Internet wagers with financial instruments such as credit cards, checks, or fund transfers. It would also require payment systems to establish procedures for blocking these transactions.
Internet gambling has become as much a part of the college experience as late-night study sessions and rooting for the football team. Researchers have called gambling online addictive. Players attest to becoming obsessed with it. The activity is illegal, but the law is not being forced.
According to a study by the Annenberg Public Policy Center, nearly 10 percent of college students gambled online last year. They play in their dorm rooms, in library lounges, in class. The number of college males who reported gambling online once a week or more quadrupled in the last year alone.
Finally, a note about horseracing. In 1978, Congress passed the Interstate Horseracing Act (IHA) to set forth the rights and responsibilities applicable to interstate wagering on horseracing, to affirm that States have primary responsibility for regulating gambling within their borders, and to prevent States from interfering with the gambling policies of other States. In 2000, Congress amended the IHA to clarify that the statute applied to the transmission of interstate off-track wagers via telephone or other electronic media.
The Executive Branch has taken the position that the 1961 Wire Act overrides the IHA, even though the IHA is a more recent statute, because neither statute expressly exempts IHA transactions from the Wire Act. The horseracing industry vigorously disagrees. H.R. 4411 has been very carefully drafted to maintain the status quo regarding horseracing, preserving the ability of the Executive Branch and the horseracing industry to litigate the proper interpretation of these two statutes. The text of the bill is clear: ``this Act does not change which activates related to horseracing may or may not be allowed under Federal law.'' To the degree this act provides new definitional standards, it bolsters rather than diminishes the Justice Department's latitude.
Bills of this nature are always controversial and subject to intense lobbying by powerful interests. I believe the approach on the table represents the only credible initiative likely to be considered in the foreseeable future. I urge support for this important legislation.
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Mr. Speaker, I reserve the balance of my time.
Ms. HOOLEY. Mr. Speaker, I yield 4 minutes to the gentleman from Massachusetts (Mr. Frank), the ranking member on the Financial Services Committee.
Mr. FRANK of Massachusetts. Mr. Speaker, I strongly disagree with the gentleman from Iowa with whom I often agree. I don't disagree with him entirely. I will stipulate that there is nothing in the Bagavagida about gambling. But other than that, I don't think he got much right.
He says that gambling on the Internet does not add to the GDP or make America competitive. Has it become the role of this Congress to prohibit any activity that an adult wants to engage in voluntarily if it doesn't add to the GDP or make us more competitive?
What kind of social, cultural authoritarianism are we advocating here?
Now, I agree there is a practice around today that causes a lot of problems, damages families, people lose their jobs, they get in debt. They do it to excess. It is called drinking. Are we going to go back to Prohibition? Prohibition didn't work for alcohol; it doesn't work for gambling.
When people abuse a particular practice, the sensible thing is to try to deal with the abuse, not outlaw it.
By the way, this bill allows certain kinds of Internet gambling to stay, so apparently the notion is that those few people who are obsessive and addicted will not take advantage of those forms which are still available to them.
But the fundamental point is this. If an adult in this country, with his or her own money, wants to engage in an activity that harms no one, how dare we prohibit it because it doesn't add to the GDP or it has no macroeconomic benefit. Are we all to take home calculators and, until we have satisfied the gentleman from Iowa that we are being socially useful, we abstain from recreational activities that we choose?
This Congress is well on the way to getting it absolutely backwards. In areas where we need to act together to protect the quality of our life, in the environment, in transportation, in public safety, we abstain; but in those areas where individuals ought to be allowed to make their own choices, we intervene. And that is what this is.
Now, people have said, well, some students abuse it. We should work to try to diminish abuse. But if we were to outlaw for adults everything that college students abuse, we would all just sit home and do nothing.
By the way, credit card abuse among students is a more serious problem, I believe, than gambling. Maybe gambling will catch up. But we have heard many, many stories about young people who have credit cards that they abuse. Do we ban credit cards for them?
But here is the fundamental issue. Shouldn't it be the principle in this government that the burden of proof is on those who want to prohibit adults from their own free choices to show that they are harming other people?
We ought to say that, if you decide with your own money to engage in an activity that harms no one else, you ought to be allowed to do it. And once you say, oh, no, but that doesn't add to the GDP, and that can lead to some problems in families, then this is hardly the only thing you will end up banning.
The fundamental principle of the autonomy of the individual is at stake today.
Now, I have to say, I understand a lot of the conservatives don't like it because there are people on the religious side who don't like it. Some of my liberal friends, I think, are being very inconsistent. We are for allowing a lot of things. I mean, many of us vote to say, You can burn the flag; I wish you wouldn't, but you can. It shouldn't be a crime.
You can look at certain things on television that maybe other people think you shouldn't. You can do other things but you can't gamble. There is a fundamental inconsistency there.
I guess people think gambling is tacky. They don't like it. Well, fine, then don't do it. But don't prohibit other individuals from engaging in it.
People have said, What is the value of gambling? Here is the value. Some human beings enjoy doing it. Shouldn't that be our principle? If individuals like doing something and they harm no one, we will allow them to do it, even if other people disapprove of what they do.
And it is, of course, likely to be ineffective. The best thing that ever happens to illegal gamblers is when you do a measure like this.
I hope the bill is defeated.
Mr. LEACH. Mr. Speaker, I yield 1 minute to the gentleman from Alabama (Mr. Aderholt).
Mr. ADERHOLT. Mr. Speaker, I rise today in support of H.R. 4411, which is the Internet Gambling Prohibition and Enforcement Act. Gambling in any form, especially Internet gambling, is especially dangerous to children. Because these illegal Web sites lack reliable age verification tools, children of any age can access the sites and begin gambling.
For adults, these sites encourage gambling addiction with their ease of access, especially with regard to how easy it is to use credit cards.
I would like to be clear for the record, Mr. Speaker. I oppose the expansion of gambling in all forms. I have been a long-time opponent of gambling. I have cosponsored tough enforcement measures in the past, including increased criminal penalties and support for international anti-money-laundering efforts.
Today's bill includes those measures and takes a strong step to curtail those dangerous sites by cutting off their source of funding. It is an important step toward eradicating this threat and ensuring the safety of our children and our communities.
Mr. Speaker, in closing, let me just say, I encourage my colleagues to support this legislation and to vote against the amendment that would be brought up today that would actually gut the results of this legislation.
Ms. HOOLEY. Mr. Speaker, I yield 2 minutes to the gentleman from Texas (Mr. Paul).
(Mr. PAUL asked and was given permission to revise and extend his remarks.)
Mr. PAUL. Mr. Speaker, I rise in opposition to this legislation. It is not easy to oppose this legislation because it is assumed that proponents of the bill are on the side of the moral high ground. But there is a higher moral high ground in the sense that protecting liberty is more important than passing a bill that regulates something on the Internet.
The Interstate Commerce Clause originally was intended to make sure there were no barriers between interstate trade. In this case, we are putting barriers up.
I want to make the point that prohibition, as a general principle, is a bad principle because it doesn't work. It doesn't solve the problem because it can't decrease the demand. As a matter of fact, the only thing it does is increase the price. And there are some people who see prohibitions as an enticement, and that it actually increases the demand.
But once you make something illegal, whether it is alcohol or whether it is cigarettes or whether it is gambling on the Internet, it doesn't disappear because of this increased demand. All that happens is, it is turned over to the criminal element. So you won't get rid of it.
Sometimes people say that this prohibition that is proposed is designed to protect other interests because we certainly aren't going to get rid of gambling, so we might get rid of one type of gambling, but actually enhance the other.
But one of the basic principles, a basic reason why I strongly oppose this is, I see this as a regulation of the Internet, which is a very, very dangerous precedent to set.
To start with, I can see some things that are much more dangerous than gambling. I happen to personally strongly oppose gambling. I think it is pretty stupid, to tell you the truth.
But what about political ideas? What about religious fanaticism? Are we going to get rid of those? I can think of 1,000 things worse coming from those bad ideas. But who will come down here and say, Just think of the evil of these bad ideas and distorted religions, and therefore we have to regulate the Internet?
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H.R. 4411, the Internet Gambling Prohibition and Enforcement Act, should be rejected by Congress since the Federal Government has no constitutional authority to ban or even discourage any form of gambling.
In addition to being unconstitutional, H.R. 4411 is likely to prove ineffective at ending Internet gambling. Instead, this bill will ensure that gambling is controlled by organized crime. History, from the failed experiment of prohibition to today's futile ``war on drugs,'' shows that the government cannot eliminate demand for something like Internet gambling simply by passing a law. Instead, H.R. 4411 will force those who wish to gamble over the Internet to patronize suppliers willing to flaunt the ban. In many cases, providers of services banned by the government will be members of criminal organizations. Even if organized crime does not operate Internet gambling enterprises their competitors are likely to be controlled by organized crime. After all, since the owners and patrons of Internet gambling cannot rely on the police and courts to enforce contracts and resolve other disputes, they will be forced to rely on members of organized crime to perform those functions. Thus, the profits of Internet gambling will flow into organized crime. Furthermore, outlawing an activity will raise the price vendors are able to charge consumers, thus increasing the profits flowing to organized crime from Internet gambling. It is bitterly ironic that a bill masquerading as an attack on crime will actually increase organized crime's ability to control and profit from Internet gambling.
In conclusion, H.R. 4411 violates the constitutional limits on Federal power. Furthermore, laws such as H.R. 4411 are ineffective in eliminating the demand for vices such as Internet gambling; instead, they ensure that these enterprises will be controlled by organized crime. Therefore I urge my colleagues to reject H.R. 4411, the Internet Gambling Prohibition and Enforcement Act.
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Mr. LEACH. Mr. Chairman, I yield 2 minutes to a great leader of this particular effort, Mr. Bachus from Alabama.
Mr. BACHUS. Mr. Speaker, I thank the chairman, and I would like to respond to the gentleman from Texas and the gentleman from Massachusetts and tell you why we need this bill and we need it desperately.
We have been trying to move this legislation for 5 years, and in the 5 years that we have failed to move it, as many as half a million young teenagers have become compulsive gamblers. Now, the Harvard Medical School, the University of South Florida, and the American Psychiatric Association have all told us that the younger someone is exposed to gambling, the younger they start gambling, the more addictive it becomes. In fact, about three times more addictive.
The University of Connecticut did a recent study, and I am going to introduce it for the RECORD, that says Internet gambling is three times as likely to produce a problem gambler. Seventy-four percent of the young people that they surveyed who said they had gambled on the Internet developed a serious addiction.
Now, what happens when they gamble and they get an addiction? McGill University did a study, and they said that teenagers who gamble on the Internet show increased criminal activity, strained family relationships, and depression. Thirty percent of those who became addicted to gambling on the Internet actually attempted suicide. That is why Mr. Leach talked about the young man who was the class sophomore president at Lehigh University who actually robbed a bank. A 17-year-old who lost a $6,000 bet on the Internet committed suicide. We have got to move against this.
Finally, let me conclude with this: let me tell you what has happened in the past year. According to the University of Pennsylvania, in the last year we have gotten another 150,000 young compulsive gamblers.
It is already illegal. What we are doing is stopping it. You have got the criminals on one side, and you have got young people on the other side; and we must protect the young people from these criminals.
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Mr. Speaker, I rise today in strong support of H.R. 4411, the Goodlatte-Leach Internet Gambling Prohibition and Enforcement Act.
I want to begin by thanking Chairmen Oxley and Sensenbrenner and Congressmen Goodlatte and Leach for bringing H.R. 4411 to the Floor today and for their undying determination to put an end to Internet gambling in the United States. H.R. 4411 would help stop the growing threat that Internet gambling poses to the most vulnerable in our society, kids and problem gamblers.
H.R. 4411 provides strong new enforcement mechanisms to stop the offshore casinos that flagrantly violate existing state and federal laws against Internet gambling. This bill enables our financial regulators to prescribe regulations limiting the acceptance of financial instruments for unlawful Internet gambling. In addition, H.R. 4411 amends the Wire Act of 1961 to expressly prohibit illegal online interstate gambling. H.R. 4411 was reported by both the Financial Services and Judiciary Committees. Similar legislation has passed the
House in the previous two Congresses. Now is the time to cut off illegal Internet gambling once and for all.
We have been discussing this issue for years. It has taken way too long. In the time we've been debating this issue, Internet gambling sites have virtually overrun the Internet. Five years ago, there were less than 50 Internet gambling sites. Today, there are more than two thousand sites that will generate upwards of $5.9 billion this year alone, nearly half of the $12 billion bet worldwide on Internet gambling.
Support for our efforts to stop the money flow to illegal gambling sites have been nearly universal, from family and religious groups to anti-gambling groups, from professional sports to college athletics, from major players in the banking and credit card industries to law enforcement and Internet service providers. Mr. Speaker, it is far easier and far quicker to just list who doesn't support our efforts. That would, of course, be the illegal gambling industry itself. They have launched an all-out effort at obfuscation and mischaracterization in hopes of defeating this bill and perpetuating their noxious activities.
The ability of the Internet to penetrate every home and community has both positive and negative consequences. It can be a valuable source of information and a way to communicate quickly with loved ones. But, the Internet can also override community values and standards. Gambling is an excellent example of this. Gambling is currently illegal in the United States unless it is regulated by the states. With the Internet, however, prohibitions against gambling and regulations governing gambling are turned on their head.
The negative effects of gambling have been widely documented. All too often, gambling results in addiction, bankruptcy, divorce, crime and moral decline. Internet gambling magnifies the destructiveness of gambling by bringing the casino into your home. According to an extensive survey done by the University of Connecticut Health Center, 74 percent of those who have used the Internet to gamble have serious problems with addiction, and many of those have resorted to criminal activities to pay for the habit. We heard testimony at one of our hearings that Internet gambling is proving to be a serious problem for many college students. One student reportedly lost $10,000 on Internet sports gambling over a three-month period.
Imagine if you found out that a casino was being built next door to your house, and that they had invited your children to participate in gambling activities. You would probably think that was unacceptable. But Internet gambling Web sites are actually worse than that. Sitting right on the computer desk in your home or in your child's bedroom is a computer with easy access to more than 2,000 Web sites that offer illegal Internet gambling services.
Worse yet, your kids could use your credit card to gamble on the Internet and run you into bankruptcy--without you even knowing it.
In addition, Internet gambling has been linked to terrorists and organized crime. The FBI and the Department of Justice have testified that Internet gambling serves as a vehicle for money laundering that can be exploited by terrorists. These Internet sites--most of which are operated offshore--represent a serious money laundering vulnerability for our country.
So what would H.R. 4411 do?
H.R. 4411 addresses the problem of Internet gambling in four ways:
First, it clarifies that the Wire Act covers all forms of gambling including Internet gambling and increases the maximum penalty for violations of the Wire Act from two to five years in prison.
Second, and most importantly, it cuts off the flow of money to Internet gambling Web sites by regulating the payments system.
The legislation directs the Treasury Department and the Federal Reserve to jointly develop regulations preventing financial transactions related to illegal Internet gambling.
Third, the legislation authorizes State and Federal law enforcement to seek injunctions against persons who facilitate illegal Internet gambling; and
Fourth, the U.S. government through the Treasury Department is exhorted to advance international cooperation in law enforcement efforts against illegal gambling and related money laundering.
Internet gambling is already illegal under Federal and State law, but most of the more than two thousand Internet gambling sites operate from offshore locations. Currently, these ``virtual casinos'' advertise the ease of opening betting accounts mainly through the use of credit cards. Therefore, they operate beyond the reach of our law. The regulations and anti-money laundering laws that apply to casinos in our country do not apply to these fly-by-night offshore Internet operators. Shutting off the money source is the only way to shut down these illegal Internet gambling Web sites.
In closing, Mr. Speaker, let me just say that a vote for this bill is a vote against illegal Internet gambling. This bill shuts off the money. That is what these people are waiting for, the money. If we shut off the money, we shut off the sites.
My thanks again go to Chairman Oxley, Chairman Sensenbrenner, Congressman Goodlatte and Congressman Leach for their tireless efforts in moving this bill forward and bringing it to the floor today. I urge all of my colleagues to vote in favor of this legisiation.
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DISORDERED GAMBLING AMONG UNIVERSITY-BASED MEDICAL AND DENTAL PATIENTS: A FOCUS ON INTERNET GAMBLING
George T. Ladd and Nancy M. Petry--University of Connecticut Health Center.
The authors evaluated gambling behaviors, including Internet gambling, among patients seeking free or reduced-cost dental or health care. Three hundred eighty-nine patients at university health clinics completed a questionnaire that included the South Oaks Gambling Screen (SOGS; H. R. Lesieur & S. Blume, 1987). All respondents had gambled in their lifetimes, with 70% gambling in the past 2 months. On the basis of SOGS scores, 10.6% were problem gamblers, and 15.4% were pathological gamblers. The most common forms of gambling were lottery, slot machines, and scratch tickets. Internet gambling was reported by 8.1% of participants. Compared to non-Internet gamblers, Internet gamblers were more likely to be younger, non-Caucasian, and have higher SOGS scores. This study is among the first to evaluate the prevalence of Internet gambling and suggests that people who gamble on the Internet are likely to have a gambling problem. Results also illuminate the need to screen patients seeking health care services for gambling problems.
The fourth edition of the Diagnostic and Statistical Manual of Mental Disorders (American Psychiatric Association, 1994) describes pathological gambling as a disorder that involves preoccupation with, tolerance of, and loss of control relating to gambling behaviors. A recent meta-analysis of prevalence rates (Shaffer, Hall, & VanderBilt, 1999) concluded that approximately 1.6% of North American adults may be Level 3 (pathological) gamblers. An additional 3.9% may be Level 2 (problematic) gamblers, bringing the combined percentage of disordered gamblers to more than 5%.
Although prevalence rates in general populations have been described (Shaffer et al. 1999), there is a paucity of studies that have focused on the prevalence of gambling among primary-care patients (Miller, 1996b; Pasternak & Fleming, 1999; Van Es, 2000). As a consequence, health care professionals may not be aware of the impact that gambling behaviors can have on the health of their patients. Health comorbidities found to be associated with pathological gambling include substance abuse, circulatory disease, gastrointestinal distress, sexual dysfunction, anxiety disorders, and depression (Bergh & Kuhlhorn, 1994; Daghestani, 1987b; Lesieur, Blume, & Zoppa, 1986; Miller, 1996a; Pasternak & Fleming, 1999).
This study presents two central opportunities for contribution to the existing body of knowledge about disordered gambling. First, we directed our attention toward gambling behaviors among a subset of the population that seeks free or reduced-cost health care. A second focus of this study was the types of gambling activities in which people engage, with special attention paid to Internet gambling. Many researchers have examined the prevalence of disordered gambling (e.g., Shaffer et al., 1999), but few have presented data on the types of gambling in which individuals participate, and no known published studies have focused on the prevalence of Internet gambling.
Participants for this study were drawn from patients seeking treatment at the University of Connecticut Health Center (UCHC) each year. Of the 389 patients included in this study, 76.5% were from UCHC dental clinics, which serve primarily uninsured patients. The remaining 22.5% of participants were from other UCHC medical clinics. The UCHC is located 8 miles southeast of Hartford, Connecticut, and is approximately 65 miles from two large casinos.
Questionnaires were left in the waiting areas of various UCHC health and dental clinics for 13 months (8/1/99-9/2/00) along with collection boxes. Approximately 2,000 patients were treated in these clinics during the study period. Signs encouraging questionnaire completion were displayed in these general areas. On occasion, a research assistant would approach patients within clinics and ask them to complete a screen. No patients who were verbally asked to complete a questionnaire refused. Nonresponses were probably a result of failure to notice the signs and questionnaires rather than refusal to participate. An overall average return rate of 85.7% across the UCHC clinics was determined on weeks in which the numbers of screens left out and collected were monitored.
The 2-page questionnaire consisted of the South Oaks Gambling Screen (SOGS; Lesieur & Blume, 1987) as well as questions regarding demographic information and gambling activities.
We used the SOGS (Lesieur & Blume, 1987) component of the questionnaires to classify
participants as Level I (score of 0-2), Level 2 (score of 3-4), or Level 3 (score > 5) gamblers (Lesieur & Heineman, 1988; Shaffer et al., 1999).
We present here the types of participants' gambling activities, along with the frequency and intensity of recent gambling behaviors (past year, past 2 months, and past week) by level of disordered gambling. We compared participants who reported experience with Internet gambling and participants who reported no experience with Internet gambling on demographic variables and SOGS scores. We evaluated differences among the three levels of gamblers, as well as between Internet versus non-Internet gamblers, using the chi-square test for categorical data, analysis of variance for continuous data, and Kruskal-Wallis tests for non-normally distributed continuous data.
Response rates and demographic characteristics of the respondent sample
In total, 402 questionnaires were filled out. Thirteen respondents left many SOGS items unanswered and were thus excluded, leaving 389 questionnaires for further analysis.
Continuum of SOGS scores
Of the respondents, 46.8% scored a 0 on the SOGS, indicative of no problematic gambling behaviors. Additional segments of respondents scored 1 (17.0%) and 2 (10.3%) on the SOGS. Therefore, according to the classification system described by Shaffer et al. (1999), 74.0% of respondents qualified as Level 1 gamblers, and 10.6% of the respondents were classified as Level 2 gamblers, with 6.2% scoring a 3 and 4.4% scoring a 4. The final 15.4% of respondents were classified as Level 3 gamblers, with 6.9% scoring between 5 and 9, 5.7% scoring between 10 and 14, and 2.8% scoring between 15 and 20.
Although no statistically significant group differences were found with regard to gender, the three groups of gamblers differed on other demographic characteristics. Specifically, differences among the groups emerged with respect to age, F(2, 382) = 8.58, p <.01; ethnicity, X \2\ (6, N = 374) = 23.01, p <.001; marital status, X \2\(8, N = 384) = 18.80, p <.001; education, X \2\(8, N = 376) = 34.45, p <.001; and yearly income, X \2\(6, N = 374) = 12.89, p <.05. Compared to Level 1 gamblers, Level 2 and 3 gamblers were more likely to be younger, of non-Caucasian ethnicity, not married, and have lower levels of education and income.
All of the respondents reported having gambled in their lifetimes, with 90.0% having gambled within the past year, 70.0% within the past 2 months, and 42.0% within the past week. The most common form of gambling was the lottery, with 89.2% of the total sample having lifetime experience with the lottery. Twenty-five percent of the sample reported weekly or more frequent lottery playing. Slot machines were the next most popular gambling activity, with 81.7% of the sample having lifetime experience, and 6.7% playing slots at least weekly. Scratch tickets were played by 78.7%, with 19.0% of participants playing at least weekly. Card-playing forms of gambling were reported by 70.8%, with 8.7% of participants playing at least weekly. More than half of the participants reported lifetime participation in sports betting (56.9%), bingo (56.0%), and animal betting (52.7%). Lifetime participation in other gambling activities, such as games of skill (40.8%), roulette (37.1%), dice (33.8%), high-risk stocks (23.6%), and video lottery (21.7%) were each reported by only a minority of the total sample.
Of note is that 8.1% (n = 31) of participants reported Internet gambling in their lifetimes, including 3.7% (n = 14) who reported gambling on the Internet at least weekly. Demographic and other characteristics of Internet gamblers compared to non-Internet gamblers are shown in Table 1. Age, F(I, 378) = 17.68, p <.01, and ethnicity, X \2\(3, N = 376) = 17.80, p <.001, were found to differ significantly among participants who reported Internet gambling compared to those who did not. Younger participants were more likely than older participants to have Internet gambling experience. Although non-Caucasian participants represented 15.8% of the total participants, they represented 35.8% of those participants who had experience with Internet gambling.
The comparison of participants with or without Internet gambling experience revealed significant differences in both SOGS scores, F(1, 382) = 40.79, p <.01, and classified gambling levels, X \2\(2, N = 389) = 63.23, p <.001. Only 22% of participants without any Internet gambling experience were Level 2 or 3 gamblers. In contrast, 74% of participants with Internet gambling experience were classified as Level 2 or 3 gamblers.
We examined gambling participation and problems of 389 patients who completed questionnaires at the UCHC medical and dental clinics. When the lifetime rates of 10.6% for Level 2 and 15.4% for Level 3 gamblers are combined, the resulting 26.0% rate of disordered gambling (Levels 2 and 3) in this study far exceeds the 6.7% derived from general population surveys conducted since 1993 (National Gambling Impact Study Commission, 1999; Shaffer et al., 1999).
TABLE I.--DEMOGRAPHIC AND SOUTH OAKS GAMBLING SCREEN (SOGS) SCORING CHARACTERISTICSVariable Without internet gambling experience With internet gambling experience Total sample
N 351 31 389
Gender (female) 56.7 41.9 54.4
Age (M/SD) 43.5/15.8 31.7/13.6 42.8/16.0
No high school diploma 9.3 20.0 9.8
High school diploma 27.0 36.0 27.9
Some college 23.8 8.0 22.6
College diploma 21.5 20.0 21.3
Postcollege 18.3 16.0 18.4
African American 7.7 12.9 8.3
Caucasian 86.3 61.3 84.2
Hispanic 5.4 22.6 6.7
Other 0.6 0.3 0.8
Divorced or separated 15.0 19.4 15.1
Living w/partner 10.4 16.1 10.7
Married or remarried 46.7 29.0 45.6
Single 23.6 29.0 24.0
Widowed 4.3 6.5 4.7
Under $10K 13.7 22.6 14.4
$10-25K 21.7 22.6 21.4
$25,001-50K 24.7 22.6 24.9
Above $50K 39.9 32.2 39.3
SOGS score (M/SD) a 1.8/3.4 7.8/2.0 2.26/4.01
SOGS level a:
Level 1 78.3 25.8 74.0
Level 2 10.5 9.7 10.6
Level 3 11.1 64.5 15.4 a Groups differ,
Note. All values are percentages unless otherwise indicated.
The higher rates of Level 2 and 3 gamblers found in this study may be due to a response bias. Individuals who liked to gamble or who had a problem with gambling may have been more likely to complete the questionnaire. However, considering that 74.0% of the participants were classified as nonproblematic gamblers and that 58.2% scored 0 on the SOGS, the majority of participants who completed the questionnaires had no apparent gambling problems. Another explanation for the higher rates of disordered gambling in this population may be related to the demographics of the sample. People who seek services at UCHC dental clinics have risk factors for disordered gambling identified in other studies of special populations, such as relatively younger age, lower income, and less education (Cunningham-Williams, Cottler, Compton, & Spitznagel, 1998; Feigelman, Wallisch, & Lesieur, 1998; Pasternak & Fleming, 1999; Shaffer et al., 1999; Stinchfield & Winters, 1998; Volberg, 1998; Westphal & Rush, 1996). The prevalence of disordered gambling in this sample of medical and dental patients is similar to rates reported in substance abusing populations (Feigelman et al., 1998; Lesieur et al., 1986; Petry, 2000b; Shaffer et al., 1999).
Because only one other known study reported on the prevalence of Internet gambling, comparisons of the rates of Internet gambling found in this study to other populations are premature. Only Petry and Mallya's (2001) study provides a comparative perspective. Using a methodology similar to
that of the present study, Petry and Mallya examined rates of Internet gambling among UCHC health center employees (n = 907) who, as a group, had an almost identical mean age (42.8) but higher annual income and educational achievement than participants in the present study. Yet Petry and Mallya found a prevalence rate of Internet gambling of just 1.2%, which is a considerable departure from the present study's findings of 8.1%. Because access to the Internet is traditionally correlated with populations that have higher income and educational attainment, the present study's higher rate of Internet gambling was not expected.
The relative difference in Internet gambling rates between the present study and that of Petry and Mallya (2001) may be due to the higher percentage of Level 2 and 3 gamblers found in the present study. Among UCHC employees, Petry and Mallya found a much smaller overall percentage of Level 2-3 gamblers (4.8%) than the present study (26.0%). With the present study's higher overall percentage of problematic gamblers, an associated increase in percentage of Internet gambling may not be surprising. Indeed, 74.2% of Internet gamblers were found to be Level 2 or 3 gamblers, with 64.5% classified as Level 3 gamblers.
Although Internet gambling was the least common gambling activity, the 8.1% (n = 31) of participants who reported experience with Internet gambling remains an important finding. Accessibility and use of Internet gambling opportunities are likely to increase with the explosive growth of the Internet. The University of California, Los Angeles (UCLA) Internet Report (UCLA Center for Communication Policy, 2000) indicated that the number of Americans using the Internet exceeded 100 million by 1999. During each day of the first 3 months of 2000, approximately 55,000 individuals logged on to the Internet for the first time (UCLA Center for Communication Policy, 2000). Thus, an increase in Internet use may foster the development of more Level 2 and 3 gamblers, or attract individuals who already have a gambling problem. Indeed, the availability of Internet gambling may draw individuals who seek out isolated and anonymous contexts for their gambling behaviors.
The high rates of disordered gambling found among UCHC patients illustrate the potential for proactive screening and interventions by health professionals. Health professionals typically attend to a range of patient health and behavior correlates, such as alcohol use, sleep, diet, exercise, and other psychosocial factors. These behaviors and contextual attributes are understood to affect, in complex ways, the health outcomes of patients. Yet attention to gambling as a marker of potential comorbidities is still lacking within health clinic settings. Persons struggling with gambling behaviors are often burdened by health and emotional difficulties (Daghestani, 1987a; Pasternak & Fleming, 1999). These problems include substance abuse, circulatory disease, digestive distress, depression, sexual dysfunction, pervasive anxiety, and risky sexual behaviors (Daghestani, 1987b; Lesieur et al., 1986; Miller, 1996a; Petry, 2000a, 2000b). Screening for disordered gambling among patients may enhance the ability of health professionals to intervene in the physical and emotional health of individuals. Screening strategies are particularly important when dealing with populations in which regular visits to dental or general health clinics may be the exception rather than the norm.
With the expansion of localized and Internet gambling, a rise in disordered gambling may be inevitable as individuals gain easier access to gambling opportunities. The consequences of gambling expansion may continue to negatively affect the health and social contexts of individuals. As interest in treatments for disordered gambling grows (Petry & Armentano, 1999), health professionals should be aware of the signs of disordered gambling and proactively inform patients of the risks involved.
Ms. HOOLEY. Mr. Speaker, I reserve the balance of my time.
Mr. LEACH. Mr. Speaker, I yield 1 minute to the gentleman from Pennsylvania (Mr. Dent), who represents Lehigh University.
Mr. DENT. Mr. Speaker, I rise today in very strong support of H.R. 4411, the Internet Gambling Prohibition and Enforcement Act, for a variety of reasons, not the least of which is that Lehigh University was mentioned. That institution is in my district.
And just to drive the point home, just in today's paper, the father of the young man who was alleged to have robbed a bank to support his gambling habit said that this bill was something that could have helped his son. He said this: ``He was addicted. He gambled 12 hours at a time. He gambled everything he had.'' The father went on to say, ``When he was out of money, he did what most addicts do when they are out of their supply. The Internet is flagrantly recruiting under-21-year-olds to gamble ..... This bill would have definitely helped my son.''
Finally, while Internet gambling is a $12 billion worldwide business, it is not by anyone's definition economic development. The revenue from these enterprises is not job-creating. Most Internet gambling funds are destined for locations that exist offshore.
* [Begin Insert]
Mr. Speaker, I rise today to speak in strong support of H.R. 4411, the Internet Gambling Prohibition and Enforcement Act.
This legislation gives law enforcement the tools it needs to fight Internet gambling, which is already illegal in this country. Much Internet gambling originates from off-shore locations and thus is dependent upon the electronic transfer of money and wagering information between sites in the United States and these off-shore locations. Unfortunately, one of the major tools in this fight, the Wire Act, which is codified at title 18 United States Code Section 1081, was enacted in 1961, well before the establishment of the Internet or other forms of similar electronic communication. H.R. 4411 clarifies in statute that Internet communications made in furtherance of gambling transactions indeed fall within the scope of the Wire Act and are thus prosecutable.
H.R. 4411 also gives law enforcement some additional authority to block these transactions. It requires the Department of the Treasury and the Federal Reserve to promulgate regulations aimed at preventing transfers of funds related to illegal Internet Gambling. It also gives law enforcement the ability to seek injunctions against those individuals who act to facilitate this gambling.
While Internet gambling is a $12 billion worldwide business, it is not, anyone's definition, economic development. The revenue from these enterprises is not job-creating; most Internet gambling funds are destined for locations that exist off-shore. Internet gambling is, instead, wealth transfer--in most cases, from many who can least afford it to very few who don't need the cash. The proliferation of gambling in America--whether it involves playing the slots at a local racetrack, betting on roulette at a tribal casino hundreds of miles from the nearest Indian reservation, or placing wagers on college basketball games with an Internet site headquartered in the Bahamas--has done nothing to make this a healthier, more productive nation. That is why I support this bill.
* [End Insert]
Ms. HOOLEY. Mr. Speaker, I have no further requests for time, and I reserve the balance of my time.
Mr. LEACH. Mr. Speaker, I yield 2 minutes to the distinguished gentleman from Virginia (Mr. Wolf), who has been a phenomenal advocate of this issue.
Mr. WOLF. Mr. Speaker, I thank the gentleman for yielding.
I want to begin by thanking Mr. Leach and Mr. Goodlatte for staying in there when the outside lobbyists were trying to control this institution. And people must know, if you go back and look at history, this institution, this institution, was manipulated by outside lobbyists. So there is a test today whether that outside lobby, outside influence will continue to take place.
With the guilty plea of lobbyist Jack Abramoff and the information revealed about his role in the defeat of the Internet gambling ban a number of years ago, it is time to strengthen the law enforcement tools to crack down on illegal gambling.
With online gambling, people can do it in their bathrobes, as Mr. Leach said. They can do it when they are standing in line. This is a test. Quite frankly, this is a test for this institution about outside influences, ones that all you have to do is read The Washington Post and the New York Times over and over and over to see what they have done. They have manipulated this place.
And today, with Mr. Leach and Mr. Goodlatte and others, you have an opportunity to reverse the manipulation and pass this bill without amendment.
* [Begin Insert]
Mr. Speaker, I rise in strong support of the legislation offered by my colleagues Jim Leach and Bob Goodlatte. I want to take this opportunity to commend them for working together and really sticking with it so that we could have a strong bill on the floor today that takes the strengths of each of their measures to comprehensively address Internet gambling.
As the author of the legislation which established the National Gambling Impact Commission, I have long been concerned about the predatory nature of gambling and the corruption that is often associated with it.
It seems as though every day in the news there is a new scandal related to gambling. Without this important legislation, there is no way to regulate Internet gambling.
Today, gambling is legal in almost every State in the Union and more than 400 tribal casinos operate in over 30 States. Sadly, Internet gambling is a growing problem in America, particularly for our young people.
You may recall that last December, Greg Hogan--a Lehigh University sophomore--made headlines when he robbed a bank in
order to pay his online poker debt of more than $5,000.
According to a PBS NewsHour report last spring, recent studies indicate that more than 70 percent of youth between the ages of 10 and 17 gambled in the past year, up from 45 percent in 1988.
And of those who gamble online, an Annenberg Public Policy Center study released last fall indicates that almost 15 percent of our young people aged 14-22 gamble online at least once a month. While 15 percent may not set off alarm bells, consider that more than 50 percent of those who gamble once a week show signs of problem gambling.
Gambling--and particularly online gambling--is a growing problem around the country. According to a Sports Illustrated article from last summer, more than 1.8 million online poker players gamble each month.
They wager an average of $200 million a day. And the industry generates more than $2.2 billion, that's with a ``B,'' in gross revenue annually.
I am pleased to support the Internet Gambling Prohibition and Enforcement Act that will improve law enforcement tools to address this problem. Additionally, I think we have momentum on our side to address the explosion of gambling.
With the guilty plea of lobbyist Jack Abramoff and the information revealed about his role in the defeat of the Internet gambling ban a number of years ago, it's time to strengthen law enforcement's tools to crack down on illegal Internet gambling.
With online gambling, people can do it in their bathrobes, in their family rooms, in fact they could even do it on their cell phones walking down the street. It's literally available everywhere at any time.
The prevalence of online gambling and its explosive growth is a national disgrace that hurts young people. How will the Congress explain to the American people if it fails to address this issue?
Mr. Speaker, I urge support for this legislation.
* [End Insert]
Ms. HOOLEY. Mr. Speaker, I reserve the balance of my time.
Mr. LEACH. Mr. Speaker, I yield 1 minute to the gentleman from Arizona (Mr. Shadegg).
Mr. SHADEGG. Mr. Speaker, I thank the gentleman for yielding, and I compliment him on this bill. I also compliment the gentleman from Virginia (Mr. Goodlatte) and Chairman Oxley and Chairman Sensenbrenner and my colleague, Mr. Wolf, with whose remarks I associate myself.
This is a huge problem. I have observed in my lifetime many, many, many people whose lives have been destroyed by unregulated gambling. Story after story was brought to me when I worked in the Arizona attorney general's office about people whose lives were destroyed because one member of their family became addicted to gambling.
Now, we have regulated gambling in this Nation, and that is one thing and nobody is trying to ban that by this bill. But Internet gambling is totally unregulated gambling, and it victimizes people and it destroys lives.
It seems to me that the critics of this bill, including those in the paper this morning, say it does not go after every gambling operation in the world. Of course it doesn't. There are regulated gambling organizations which are legitimate and at least have some government oversight.
What this bill goes after is the epidemic of unregulated gambling that is destroying lives that puts a full online casino in every single home in America to corrupt the people there and destroy their lives.
I urge my colleagues to support this bill, and I commend the leaders, including Chairman Sensenbrenner, who have brought it to the floor.
Ms. HOOLEY. Mr. Speaker, I yield myself such time as I may consume.
I just have to clarify a few things that have been said. First of all, this bill is about enforcing the law that is already on the books. This is not about prohibiting gambling. States can regulate their own gambling. They can regulate Internet gambling. This is about enforcing the laws.
We had a hearing in Financial Services where the FBI Director was in front of us and he said this is a significant vehicle for money laundering. GAO reports that Internet gambling can be a significant vehicle for money laundering proceeds because they can move large quantities of money around rapidly to obscure criminal origins. Internet gambling generates over $10 billion in revenues. Nearly 80 percent of those revenues are impossible to account for because illegal gambling sites are located in jurisdictions with no regulation on gambling.
This allows States the prerogative to decide what kind of gambling should be permitted or forbidden within the State borders. Some States say you cannot gamble; other States say you can. The attorneys general of 48 States have said they are in support of this legislation. It will make online gambling impossible for minors. Minors cannot go into brick and mortar facilities right now. It should, in fact, make it inaccessible for minors.
It recognizes the jurisdictional impediments for prosecuting offshore gambling businesses. Financial systems will be required to block money flow to these businesses, cutting off the oxygen for these illegal transactions.
Mr. Speaker, I reserve the balance of my time.
Mr. LEACH. Mr. Speaker, I yield 2 minutes to the distinguished gentleman from Pennsylvania (Mr. Pitts).
Mr. PITTS. Mr. Speaker, I thank the gentleman for yielding, and I want to thank my colleagues, Mr. Goodlatte, Mr. Leach, Mr. Sensenbrenner, for their hard work and leadership on this issue.
Mr. Speaker, it is time that we enforce the law when it comes to Internet gambling.
Dozens of Web sites entice Web surfers to bet online with free software offers. Online sites advertise openly on TV. Stores carry books on how to get rich by gambling online.
The only problem? Online gambling is illegal.
This bill makes that clear and provides mechanisms to effectively enforce the law.
This year Americans will send $5.9 billion to offshore, unregulated online casinos. The Justice Department warns that many of these sites are fronts for money laundering, drug trafficking, and even terrorist financing. And unregulated online gambling also takes a toll in untold numbers of personal lives destroyed.
Gambling online is unique. No casinos, horse tracks, or betting parlors are required. All you need is a computer, credit card, and Internet access. With that, players are able to play 24 hours a day from the privacy of their homes. Minors are easily able to defy age requirements if they wish to play. And the online environment and credit card payment system combine to promote addiction, bankruptcy, and crime.
Currently, online gambling operations avoid Federal and State law enforcement by locating offshore, and this bill addresses this loophole in three ways: first, it clarifies previous law, making it a Federal felony to use wire communications facilities to transmit bets or wagers. Secondly, it cuts off the flow of money to online gambling sites by regulating the payment systems they use to collect the money. And, finally, it authorizes penalties against those who facilitate illegal online gambling.
Simply put, Mr. Speaker, the law is being flouted, and this bill does something about it. I strongly urge its adoption.
Ms. HOOLEY. Mr. Speaker, I yield myself the balance of my time to close.
First of all, in my opening statement there was a person I forgot to thank who has carried this banner in Financial Services for a long time, Mr. Bachus from Alabama. I thank you for all the hard work you have done on this.
In closing, Mr. Speaker, I would like to share some interesting facts from an article written for the New York Times by Matt Schwartz.
Researchers say that Internet gambling is addictive. Players say it is addictive. In fact, the action, the act of placing a bet, and the high that follows has been identified by neurologists as a similar high to doing a line of cocaine. Blood rushes to the face, the hands moisten, and the mouth dries up.
Internet gambling has also dramatically changed the face of addiction. An estimated 1.6 million of the 17 million U.S. college students gambled online last year, mostly on poker. According to a study by the Annenberg Public Policy Center, the number of college males who reported gambling online once or more a week quadrupled in the last year alone. This is a growing addiction.
The stereotypical compulsive gambler is now much more likely to be a teenager or a college student. Before
the rise of online gambling, the typical compulsive gambler was in his thirties or forties and took a decade to run the destructive course. Now online gamblers are running the same course in 18 months or less.
These facts are disturbing and highlight the need for action by this Congress. Again, this bill is a commonsense approach that cuts off the flow of money to Internet gambling Web sites by regulating the payment systems.
And, again, we have to remember these laws are already on the books. What we are trying to do is enforce the laws. The Department of the Treasury and the Federal Reserve will jointly develop policies and procedures for identifying and preventing financial transactions related to illegal Internet gambling. Payment systems will be required to comply with these regulations. Again, States are allowed to regulate gambling within their own States.
I urge my colleagues to end the flow of money to illegal Internet gambling Web sites, and I urge the passage of H.R. 4411.
[From the New York Times, June 11, 2006]
Chapter 2: The Gambler; The Hold-'Em Holdup
(By Mattathias Schwartz)
Greg Hogan Jr. was on tilt. For months now, Hogan, a 19-year-old Lehigh University sophomore, had been on tilt, and he would remain on tilt for weeks to come. Alone at the computer, usually near the end of one of his long online gambling sessions, the thought ``I'm on tilt'' would occur to him. Dude, he'd tell himself, you gotta stop. These thoughts sounded the way a distant fire alarm sounds in the middle of a warm bath. He would ignore them and go back to playing poker. ``The side of me that said, `Just one more hand,' was the side that always won,'' he told me months later. ``I couldn't get away from it, not until all my money was gone.'' In a little more than a year, he had lost $7,500 playing poker online.
``Tilt'' is the poker term for a spell of insanity that often follows a run of bad luck. The tilter goes berserk, blindly betting away whatever capital he has left in an attempt to recoup his losses. Severe tilt can spill over past the poker table, resulting in reputations, careers and marriages being tossed away like so many chips. This is the kind of tilt Hogan had, tilt so indiscriminate that one Friday afternoon this past December, while on his way to see ``The Chronicles of Narnia'' with two of his closest friends, he cast aside the Greg Hogan everyone knew--class president, chaplain's assistant, son of a Baptist minister--and became Greg Hogan, the bank robber.
On Dec. 9, 2005, Hogan went to see ``Narnia'' with Kip Wallen, Lehigh's student-senate president, and Matt Montgomery, Hogan's best friend, in Wallen's black Ford Explorer. Hogan, who was sitting in front, asked Wallen to find a bank so he could cash a check, and Wallen pulled over at a small, oatmeal-colored Wachovia. Inside, Hogan paused at the counter for a moment and then joined the line. He handed the teller a note that said he had a gun, which was a bluff. ``Are you kidding?'' her face seemed to say. He did his best to look as if he weren't. With agonizing slowness, she began assembling the money. Moments later, a thin sheaf of bills appeared in the tray: $2,871. Hogan stuffed it into his backpack, turned around and walked back out to the car.
The movie ended, and the trio returned to campus. Hogan went immediately to Sigma Phi Epsilon, his fraternity, and used some of the stolen money to pay back brothers who had lent him hundreds of dollars. He then joined a few friends at an off-campus pizzeria for dinner. Someone's cellphone rang, with the news that police had stormed the Sig Ep house. No one knew why. Hogan stayed silent. After dinner, his friends dropped him off at orchestra practice. Allentown police officers were waiting for him. They handcuffed him and took him to headquarters, where he confessed almost immediately.
Hogan's first call was to his parents back home in Ohio. They had just finished eating dinner at T.G.I. Friday's. ``He was at the end of himself,'' Greg Hogan Sr. told me. ``He couldn't believe he had done it. Not that he was denying anything, but he felt like he was watching another person's life.''
To wired college students today, Internet gambling is as familiar as beer, late-night pizza and the Saturday night hook-up. Poker--particularly Texas hold 'em--is the game of choice. Freshmen arrive already schooled by ESPN in the legend of Chris Moneymaker, the dough-faced 27-year-old accountant who deposited $40 into his PokerStars.com account and parlayed it into a $2.5 million win at the World Series of Poker in Las Vegas. Throughout the dorms and computer labs and the back rows of 100-level lecture halls you can hear the crisp wsshhp, wsshhp, wsshhp of electronic hands being dealt as more than $2 billion in untaxed revenue is sucked into overseas accounts each year.
Researchers say that Internet poker is addictive. Players say that it's addictive. The federal government says that it's illegal. But colleges have done little to stop its spread on campus. Administrators who would never consider letting Budweiser install taps in dorm rooms have made high-speed Internet access a standard amenity, putting every student with a credit card minutes away from 24-hour high-stakes gambling. Online casinos advertise heavily on sites directed at college students like CollegeHumor.com, where students post pictures of themselves playing online poker during lectures with captions like: ``Gambling while in class. Who doesn't think that wireless Internet is the greatest invention ever?'' Some schools have allowed sites to establish a physical on-campus presence by sponsoring live cash tournaments; the sites partner with fraternities and sports teams, even give away a semester's tuition, all as inducements to convert the casual dorm-lounge poker player to a steady online customer. An unregulated network of offshore businesses has been given unfettered access to students, and the students have been given every possible accommodation to bet and lose to their hearts' content. Never before have the means to lose so much been so available to so many at such a young age.
An estimated 1.6 million of 17 million U.S. college students gambled online last year, mostly on poker. According to a study by the Annenberg Public Policy Center, the number of college males who reported gambling online once a week or more quadrupled in the last year alone. ``The kids really think they can log on and become the next world champion,'' says Jeffrey Derevensky, who studies youth problem gambling at McGill University in Montreal. ``This is an enormous social experiment. We don't really know what's going to happen.''
Greg Hogan is far from the only college student to see the game's role in his life grow from a hobby to a destructive obsession. Researchers from the University of Connecticut Health Center interviewed a random sample of 880 college students and found that 1 out of every 4 of the 160 or so online gamblers in the study fit the clinical definition of a pathological gambler, suggesting that college online-poker addicts may number in the hundreds of thousands. Many, like Lauren Patrizi, a 21-year-old senior at Loyola University in Chicago, have had weeks when they're playing poker during most of their waking hours. Rarely leaving their rooms, they take their laptops with them to bed, fall asleep each night in the middle of a hand and think, talk and dream nothing but poker. By the time Patrizi finally quit, the game seemed to be both the cause of all her problems and her only means of escaping them. ``I kept on playing so I wouldn't have to look at what poker had done to my bank account, my relationships, my life,'' she told me.
Other addicts, like Alex Alkula, a 19-year-old living outside Columbus, Ohio, decide to ``go pro,'' drop out of school and wind up broke and sleeping on their friends' couches. Alkula, who left the Art Institute of Pittsburgh after five months, now makes his living dealing hold 'em in private home games and organizing tournaments in bars. Having overdrawn four bank accounts, Alkula can no longer play online himself. But when he gets home from work at 3 or 4 in the morning, he turns on his computer, clicks on Full Tilt Poker and watches the players' cards flicker on the screen until dawn. ``I can't get away from it,'' he told me. ``And really, I don't want to. I'll keep playing poker even if it means being broke for the rest of my life. I've fallen in love with the game.''
In its outline, Hogan's story closely resembles that of the stereotypical compulsive gambler. Before the rise of online poker, however, such a story typically involved a man in his 30's or 40's and took a decade or more to run its course. Greg Hogan, on the other hand, went from class president to bank robber in 16 months. His fall took place not at the blackjack table or the track but within the familiar privacy of his computer screen, where he was seldom more than a minute away from his next hand of poker. He'd been brought up too well to waste himself in some smoky gambling den and knew too much to play a mere game of chance. He wanted to compete against his peers, to see his superior abilities yield dollars for the first time, a transaction he equated with adulthood. His stubborn faith in his own ability--a trait that had served him so well through his first 19 years--proved to be his undoing.
Today's ruined gamblers are often too young to know any better--too young, in fact, to legally gamble in most U.S. casinos. Until now, these young addicts were ignored by the news media, which swooned over the top of the poker pyramid, the Chris Moneymakers and the ESPN heroes, the guys in the wraparound sunglasses and the cowboy hats who made the hustler's art seem somehow noble and athletic. No one was interested in whose losses keep the poker economy humming, not until a Baptist minister's son robbed a bank.
A minister's eldest boy learns to perform early in life. On Sundays, Greg's mother, Karen, would dress him and his two brothers in matching slacks and blazers and take them and their sister to hear Greg Sr. preach. The congregation looked on as the boys followed Greg Jr's polite, attentive example. Schooled at home through eighth grade, the straw-haired, blue-eyed boy emulated his father's steady gaze, the soft but firm quality in his voice. He saw that others would come to rely on him if he revealed only his strongest side. When Greg Sr. ran
for City Council, Greg Jr. enlisted his playmates to help him campaign door to door. Neighbors began calling Greg ``the General.'' When it came to music, Greg was like a boat on a still pond--one small push from his parents and he'd glide on toward the goal. Karen, a psychiatric nurse, started him on the piano at 5. Greg Sr. worked a second job to help pay for $50-an-hour private music lessons for his daughter and three boys. By 13, Greg had twice played onstage at Carnegie Hall. Music won him a scholarship to the prestigious University School, a day school outside Cleveland, where his classmates noticed his oddly mature ways and dubbed him ``the 30-year-old man.'' By graduation, he'd developed something of an ego. ``Greg will always be a people person,'' wrote his adviser in an evaluation letter. ``Perhaps he should set his sights a little lower and just become president of the United States.''
Hogan, who had palled around with the sons of bank executives at his high school, threw himself into this new environment. Even before his father had said goodbye to head back to Ohio, Greg announced his plan to run for class president. He played his first hands of live hold 'em with real money that night, a way to break the ice with the guys from his hall in the dorm lounge. A few weeks later, guided by one of his roommate's friends, Hogan opened his first online-poker account at PokerStars.com. He chose a screen name that would carry his new school's banner all around the world: geelehigh. He'd met someone from two floors down who had lost $100--a fortune, it seemed--online. He decided to stick to the play-money tables. Within 10 minutes, Hogan was playing his first online hands.
A few days later he met another friend of his roommate's. Hogan claims that he remembers only his nickname, Phys. When he turned 21, Phys told Hogan, he would plunk down $10,000 and become the youngest player ever to win poker's greatest prize--the World Series of Poker No Limit Texas Hold 'Em bracelet. He then showed Hogan where he planned on getting that kind of money. He clicked on the PokerStars icon on Hogan's computer, typed in a user name and password, clicked on ``Cashier.'' And there it was, Phys's ``real money'' balance: more than $160,000. Hogan clucked his tongue. ``Un-be-lievable,'' he said, almost to himself. He knew that the money was indeed real. All Phys had to do was click on the ``Cash Out'' button and wait two weeks, and he'd receive a six-figure check in the mail. Four years' tuition, sitting there like a high score. It was absurd.
The next week, geelehigh used his debit card to make a $75 PokerStars deposit. He received a $25 ``deposit bonus,'' which wouldn't clear until he'd played several hundred hands. The money was real now, but it still felt as ephemeral as it did at the play-money tables: $100 was a digitized chip icon, an oval of black pixels on his computer screen. Green ovals were $25, red ovals $5. All were smaller than a grain of rice. When Hogan clicked on the ``Bet'' or ``Raise'' buttons, the chips made a chik sound and floated across the glowing table before melting into the pot. These tiny digital chips represented money controlled by a corporation in Costa Rica. The ``cards'' themselves were really just bits of data, ``shuffled'' by a random-number generator on a Mohawk Indian reservation in Quebec. The nine players at Hogan's table were scattered all over the world, each sitting alone at his screen, trying to take money from the other eight. Eventually, in chunks of $50, then $100, he took two summers' earnings, money his parents had given him for books and expenses, hundreds of dollars in loans from friends, $2,000 in savings bonds bought in his name (bonds he took from the family safe) and turned it into digital chips: $7,500 in all.
Online, Hogan would play 60 to 100 hands an hour--three times the number of his live games. There was no more shuffling between hands, no more 30-second gaps to chat with his friends or consider quitting. Each hand interlocked with the next. The effect was paralyzing, narcotic. ``Internet poker induces a trancelike state,'' says Derevensky, the McGill professor, who once treated a l7-year-old Canadian boy who lost $30,000, much of it at PokerStars. ``The player loses all track of time, where they are, what they're doing.'' When I spoke with an online hold-'em player from Florida who had lost a whopping $250,000 online, he told me: ``It fried my brain. I would roll out of bed, go to my computer and stay there for 20 hours. One night after I went to sleep, my dad called. I woke up instantly, picked up the phone and said, `I raise.' ''
A raked poker game cannot survive unless some players either overestimate their abilities or are willing to keep playing despite consistent losses. Fish, then, are the chum that keeps the rest of the poker ecosystem alive. Poker message boards monitor which sites are teeming with geelehighs and which have been leached dry. To stay in business, sites must attract fish, hold them for as long as possible and replace them when they go broke. According to Mike Shichtman, a professional gambler who consults for the online site Pacific Poker, there is ``giant concern'' in the industry that the total number of fish may be dwindling. It is, he adds, a trend that can be reversed only by tapping new markets.
In a few weeks, Hogan had run his initial $75 up to $300. Then, in November, came ``the hand that got me hooked.'' Hogan drew a king-high flush and bet all $300. When his opponent called the bet and showed his ace-high flush, Hogan felt an impotent rage that broke on his forehead and coursed through his body. Tilt. He cursed, shut down the program in disgust and vowed never to play online again. Four days later, however, he felt the traces of an urge as visceral as the need to eat.
Hogan was craving ``action,'' the gambler's drug. ``Getting action'' is the act of placing a bet; being ``in action'' is the high that follows, a state of arousal that neurologists have likened to doing a line of cocaine. Blood rushes to the face, the hands moisten, the mouth dries up. Time slows down to a continuous present, an unending series of build-ups and climaxes. The gains and losses begin to feel the same. Action had already appeared intermittently in Hogan's life--when he cheered the Ohio State Buckeyes through the last seconds of overtime, when his father called him with Lehigh's admissions decision in hand. Poker gave him the same rush whenever he wanted it, for hours on end.
Back in Ohio, Hogan's October bank statement arrived with two $50 PSTARS withdrawals. His father called, asked why he'd waste money like that. Greg promised to stop. He played again that day. He had not and would not read any of the half-dozen books that together give a rough grasp of how hard hold-em is to master. He had no idea that many of his opponents were self-styled professionals using a special program called Poker Tracker to analyze betting patterns and seek out fish like geelehigh. There were always some of these pros online, some playing 8 or 12 tables at once to leverage their advantage. They were waiting for him the night Lehigh's football team lost to rival Lafayette, when Hogan, who'd organized a cheering section, felt a little down and once again pushed aside his father's warnings. They followed him home over Thanksgiving weekend in November 2004, where, amid the clutter of his father's small basement office, he watched the World Series of Poker on TV, never changed out of his pajamas and played online for 10 hours a day. He lost $1,500, every penny he'd taken to school with him. Upstairs, the Hogans wondered what was wrong with their son.
``It's just play money, Dad,'' he told his father, who learned the truth when an overdraft notice arrived from Greg's bank. Greg Jr.'s phone rang the moment he returned to Lehigh. It was Greg Sr., who reminded Greg that the $1,500 had come from friends and relatives who didn't give it to him so he could gamble it. Hogan, distraught, e-mailed Phys and begged him to cover the loss. Phys agreed, so long as Greg would stop playing. ``You're a fish,'' he said. ``You need to stop.''
Greg had begun to daydream about poker during student-council meetings, at orchestra practice, whenever he had a free moment. Soon, Phys's $1,500 had melted away. Hogan's parents arranged for him to meet with a Lehigh counselor. He was told that live poker was harmless but to stay away from online. For a time, the counseling worked. Hogan did not gamble during spring semester. But that summer, back at home in Ohio, Hogan was checking up on his friends at Facebook.com when he saw a PartyPoker ad: make a $50 deposit, get a $50 bonus. He'd been coveting a red Jeep and remembered the times he'd run $100 up to $500. Ten $500 sessions, get the Cherokee, don't tilt and quit. And he did win, at first. Then, as always, his opponents began to outmaneuver him. ``I kept going back online, depositing another $50, winning, withdrawing,'' he recalls. ``It happened a few times, but then I wouldn't be withdrawing. And then I'd just keep putting money in 'cause I kept losing.''
In July, at his parents' behest, Hogan attended a few Cleveland-area Gamblers Anonymous meetings, which proved handy when a friend took him to a Canadian casino to play live poker. He found it easy to play a disciplined game under the appraising eyes of older strangers and won $500. The G.A. meetings had taught him to recognize the fish at the table. Except for the one sitting in his seat.
Back at Lehigh that September, Hogan sometimes found himself shoehorning counseling meetings between online-poker sessions. To his friends and professors he was a terrific success, the easygoing leader who organized landscaping projects around the Sig Ep house and hobnobbed with Lehigh's wealthy trustees at dinner parties. But to his parents, his situation was growing desperate. Hogan had reneged on his promise to attend G.A. meetings in Bethlehem. Withdrawals and overdrafts continued to appear on his bank statements. ``I really don't want to do this anymore, but I don't know how to stop,'' Greg told his father. Greg Sr. then made the six-hour drive from Ohio to install a $99 program called GamBlock on his son's computer. Highly regarded among gambling counselors, GamBlock makes it impossible for users to access any Internet casinos. (The company's founder, David Warr, says that half of his customer base, which he will only put in the ``thousands,'' is connected to a college or university.)
Hogan soon found a way to circumvent GamBlock, gambling by night in the library's computer lounges. ``It was funny to see how many other kids were playing,'' he says. ``By this point I didn't really care so much who saw me.'' Greg Sr. realized what was happening and asked the administration to lock poker sites out of the public terminals. He says he was told that nothing could be done. As November approached, the wall Hogan had built between his Lehigh life and his poker life had begun to crack. He would
borrow $100 or $200 from his fraternity brothers and fail to pay them back by his self-imposed deadlines. He would skip classes and meetings for long binges in the fraternity lounge, gambling through the night and catching a few hours' sleep before noon. People he hardly knew were asking him what was the matter. On Oct. 19, when a fellow Sig Ep sent the house an e-mail asking if anyone wanted to try to hit a record Powerball jackpot, Greg sent this reply, a message that went to all 60 of his brothers: ``O what the hell, maybe my bad luck can change??? Please God??''
The end came quickly, a weeklong series of 14-hour binges at the end of November. ``There was very little thinking,'' he told me. ``I'd get up and lose it. Get up, make another deposit, lose it again. As soon as I lost, I had to get more money in my account immediately. My whole body was shaking as I waited for the program to load, I wanted to play so badly.'' On Nov. 30, 2005, he lost the last $150 in his account during a six-hour session in the Sig Ep lounge that ended when a friend told him dinner was ready. ``I was up about $500, and I was like, `I'll play two more hands,'' Hogan says. ``Then one more hand, and one more after that. And in those last three or four hands, I lost it all. All the muscles in my body gave way.'' He fell asleep, completely broke. All his poker accounts were at zero. His checking account had a negative balance. At the Sig Ep winter social, the fraternity treasurer told Hogan he would be kicked out if he failed to come up with $200 in social fees. Having bailed him out twice before, Greg's parents refused to give him the money and were considering pulling him out of Lehigh altogether. Hogan spent the next week wandering around the Sig Ep house in a daze, skipping classes and drinking himself into a stupor each night.
``It was the weirdest thing I've ever experienced in my life,'' he said. ``Like an out-of-body experience. I was watching myself walk around. Watching myself go and eat food. Watching myself take a shower, but not actually doing those things. I remember looking in the mirror, and it was not me I was seeing in the reflection.''