House Votes Yes On Internet Gambling Ban - InformationWeek

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House Votes Yes On Internet Gambling Ban

The bill would eliminate many forms of Internet gambling and target middlemen such as Internet service providers, banks, and credit card companies that process payments and send money to the offshore Web sites.

The U.S. House of Representatives voted Tuesday to restrict online gambling. In a 317 to 93 vote, the federal lawmakers approved a bill that seeks to eliminate many forms of Internet gambling, targeting Internet service providers and financial intermediaries, such as banks and credit card companies that process payments and send the money to offshore Web sites.

The Unlawful Internet Gambling Enforcement Act could cement a federal law to prohibit the processing of financial transactions related to online gambling, and in some cases force Internet service providers to block access to offshore gambling sites. The bill would make exceptions for state-run lotteries and horse racing.

Joseph Cowley, a 34-year-old real estate broker in Boston, couldn't be happier to hear the news, because he admits it's too easy to log online and get sucked in. Tuesday nights after his kids are in bed, Cowley might log on to an online poker site, for example, for a couple of hours and win or lose between $20 and $40, he said.

The last time was two weeks ago. "Glad it's done," he said. "Let's hope it works. They make it too easy to be frivolous with your money."

When Tom Stover tried his luck at poker at more than a year ago it took about 11 days to lose the $200 in "phone card" tokens he purchased to play online. "I had to buy a phone card," he said. "The credit cards wouldn't work as a payment option."

Quantria Strategies economist Judy Xanthopoulos notes in a study published by the Poker Players Alliance on Tuesday the U.S. government would collect more than $3.3 billion annually in new taxes if regulated. That number based on today's online gambling market.

The report states a variety of methods to collect tax revenue. User fees might apply to individual transactions as they pass through financial intermediaries, such as credit card companies or payment services. The amount that passes from the Internet poker site to a payment service would require a fee.

But online gamblers like Stover typically don't pay to play with a credit card. Most sites get around credit card payments with options by either processing the transaction through bank cards, phone cards, or online money transfer service, such as FireOne Group PLC, NETeller PLC, UseMyBank Services Inc.

VISA USA put in place an audit program designed to verify merchants code Internet gambling transactions properly, company vice president Rhonda Bentz wrote in an e-mail.

"Visa requires Internet gambling merchants to identify their transactions as Internet gambling transactions when they submit these transactions through the Visa system for authorization by the cardholder's bank," Bentz said. "This identification requirement enables our issuing banks to block properly coded Internet gambling transactions."

Although the bill passed the house Tuesday, it needs to clear the Senate, where its fate remains less certain. The bill updates the Wire Act of 1961 that forbids the transmission of betting over telephone lines, making it a felony, and increasing the penalties for convictions to five years from two years in prison, according to the New York Times.

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