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HR 3125 - - 07/17/2000

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Office of Management and Budget


July 17, 2000

H.R. 3125 - Internet Gambling Prohibition Act of 2000
(Goodlatte (R) Virginia and 34 cosponsors)

The Administration strongly opposes H.R. 3125, which appears to be designed to protect certain forms of Internet gambling that currently are illegal, while potentially opening the floodgates for other forms of illegal gambling. The Administration is especially troubled by the exemptions included in the bill for pari-mutuel wagering on activities such as horse races, dog races, and jai alai. These exemptions could have the effect of allowing individuals to bet on dog and horse racing from their homes, giving children and other vulnerable populations unsupervised, unlimited access to such gambling activities. There is no policy justification for such exemptions.

The version of the bill that the Administration understands will be offered on the floor of the House, apparently intended to resolve concerns over the exemptions, may be more problematic than the current version of the bill. The new version of the bill eliminates the requirements that wagers on horse racing, dog racing and jai alai be "initiated from a State in which [such] betting or wagering . . . is lawful and received in a State in which such betting is lawful." The bill as expected to be offered can be read so that these types of pari-mutuel wagering would only need to be regulated in the State in which the wager is received, allowing a business to be licensed and operated in one State but take wagers from people in any other State, regardless of whether the State in which the bettor is located has authorized such activity. The bill, therefore, would give regulatory and taxing authority to the State in which the bet is received and take all regulatory and taxing authority away from the State in which the bet is initiated.

The Administration is also concerned that H.R. 3125 is not technology-neutral and applies only to Internet gambling. Legislation that is tied to a particular technology may quickly become obsolete and require further amendment. The Administration believes that legislation addressing conduct over the Internet should treat physical activity and cyberactivity in the same way. This objective can be most efficiently accomplished by amending existing gambling laws, as opposed to creating a new technology-specific statutory scheme. The Administration continues to urge Congress to address Internet gambling issues by amending the existing gambling laws, rather than creating new laws that specifically govern the Internet.

The Administration is also concerned that this bill does not require that the pari-mutuel industry adopt programs to protect pathological and problem gamblers such as the self-exclusion programs that have been adopted by casinos. Finally, the Administration is troubled that this bill could interfere with the regulatory scheme set forth in the Indian Gaming Regulatory Act (IGRA). The Administration believes that any Internet gambling legislation should make it clear that it is not intended to repeal or amend the rights or privileges secured by the tribes under IGRA.

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