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H.R. 556—The Unlawful Internet Gambling Funding Prohibition Act and Other Internet Gambling Proposals

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H.R. 556—The Unlawful Internet Gambling Funding Prohibition Act and Other Internet Gambling Proposals H.R. 556—THE UNLAWFUL INTERNET GAMBLING FUNDING PROHIBITION ACT AND OTHER INTERNET GAMBLING PROPOSALS HEARING BEFORE THE SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER CREDIT OF THE COMMITTEE ON FINANCIAL SERVICES U.S. HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTH CONGRESS FIRST SESSION JULY 24, 2001 Printed for the use of the Committee on Financial Services Serial No. 107–37 ( U.S. GOVERNMENT PRINTING OFFICE 74–492 PS WASHINGTON : 2001 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 VerDate 11-MAY-2000 12:17 Feb 27, 2002 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 74492.TXT HBANK1 PsN: HBANK1 HOUSE COMMITTEE ON FINANCIAL SERVICES MICHAEL G. OXLEY, Ohio, Chairman JAMES A. LEACH, Iowa JOHN J. LAFALCE, New York MARGE ROUKEMA, New Jersey, Vice Chair BARNEY FRANK, Massachusetts DOUG BEREUTER, Nebraska PAUL E. KANJORSKI, Pennsylvania RICHARD H. BAKER, Louisiana MAXINE WATERS, California SPENCER BACHUS, Alabama CAROLYN B. MALONEY, New York MICHAEL N. CASTLE, Delaware LUIS V. GUTIERREZ, Illinois PETER T. KING, New York NYDIA M. VELA´ ZQUEZ, New York EDWARD R. ROYCE, California MELVIN L. WATT, North Carolina FRANK D. LUCAS, Oklahoma GARY L. ACKERMAN, New York ROBERT W. NEY, Ohio KEN BENTSEN, Texas BOB BARR, Georgia JAMES H. MALONEY, Connecticut SUE W. KELLY, New York DARLENE HOOLEY, Oregon RON PAUL, Texas JULIA CARSON, Indiana PAUL E. GILLMOR, Ohio BRAD SHERMAN, California CHRISTOPHER COX, California MAX SANDLIN, Texas DAVE WELDON, Florida GREGORY W. MEEKS, New York JIM RYUN, Kansas BARBARA LEE, California BOB RILEY, Alabama FRANK MASCARA, Pennsylvania STEVEN C. LATOURETTE, Ohio JAY INSLEE, Washington DONALD A. MANZULLO, Illinois JANICE D. SCHAKOWSKY, Illinois WALTER B. JONES, North Carolina DENNIS MOORE, Kansas DOUG OSE, California CHARLES A. GONZALEZ, Texas JUDY BIGGERT, Illinois STEPHANIE TUBBS JONES, Ohio MARK GREEN, Wisconsin MICHAEL E. CAPUANO, Massachusetts PATRICK J. TOOMEY, Pennsylvania HAROLD E. FORD JR., Tennessee CHRISTOPHER SHAYS, Connecticut RUBE´ N HINOJOSA, Texas JOHN B. SHADEGG, Arizona KEN LUCAS, Kentucky VITO FOSSELLA, New York RONNIE SHOWS, Mississippi GARY G. MILLER, California JOSEPH CROWLEY, New York ERIC CANTOR, Virginia WILLIAM LACY CLAY, Missouri FELIX J. GRUCCI, JR., New York STEVE ISRAEL, New York MELISSA A. HART, Pennsylvania MIKE ROSS, Arizona SHELLEY MOORE CAPITO, West Virginia MIKE FERGUSON, New Jersey BERNARD SANDERS, Vermont MIKE ROGERS, Michigan PATRICK J. TIBERI, Ohio Terry Haines, Chief Counsel and Staff Director (II) VerDate 11-MAY-2000 12:17 Feb 27, 2002 Jkt 000000 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 74492.TXT HBANK1 PsN: HBANK1 SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER CREDIT SPENCER BACHUS, Alabama, Chairman DAVE WELDON, Florida, Vice Chairman MAXINE WATERS, California MARGE ROUKEMA, New Jersey CAROLYN B. MALONEY, New York DOUG BEREUTER, Nebraska MELVIN L. WATT, North Carolina RICHARD H. BAKER, Louisiana GARY L. ACKERMAN, New York MICHAEL N. CASTLE, Delaware KEN BENTSEN, Texas EDWARD R. ROYCE, California BRAD SHERMAN, California FRANK D. LUCAS, Oklahoma MAX SANDLIN, Texas BOB BARR, Georgia GREGORY W. MEEKS, New York SUE W. KELLY, New York LUIS V. GUTIERREZ, Illinois PAUL E. GILLMOR, Ohio FRANK MASCARA, Pennsylvania JIM RYUN, Kansas DENNIS MOORE, Kansas BOB RILEY, Alabama CHARLES A. GONZALEZ, Texas STEVEN C. LATOURETTE, Ohio PAUL E. KANJORSKI, Pennsylvania DONALD A. MANZULLO, Illinois JAMES H. MALONEY, Connecticut WALTER B. JONES, North Carolina DARLENE HOOLEY, Oregon JUDY BIGGERT, Illinois JULIA CARSON, Indiana PATRICK J. TOOMEY, Pennsylvania BARBARA LEE, California ERIC CANTOR, Virginia HAROLD E. FORD, JR., Tennessee FELIX J. GRUCCI, JR, New York RUBE´ N HINOJOSA, Texas MELISSA A. HART, Pennsylvania KEN LUCAS, Kentucky SHELLEY MOORE CAPITO, West Virginia RONNIE SHOWS, Mississippi MIKE FERGUSON, New Jersey JOSEPH CROWLEY, New York MIKE ROGERS, Michigan PATRICK J. TIBERI, Ohio (III) VerDate 11-MAY-2000 12:17 Feb 27, 2002 Jkt 000000 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 74492.TXT HBANK1 PsN: HBANK1 VerDate 11-MAY-2000 12:17 Feb 27, 2002 Jkt 000000 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 74492.TXT HBANK1 PsN: HBANK1 C O N T E N T S Page Hearing held on: July 24, 2001 ..................................................................................................... 1 Appendix: July 24, 2001 ..................................................................................................... 39 WITNESSES TUESDAY, JULY 24, 2001 Goodlatte, Hon. Bob, a Member of Congress from the State of Virginia ............ 7 Kyl, Hon. Jon, a U.S. Senator from the State of Arizona .................................... 3 Leach, Hon. James A., a Member of Congress from the State of Iowa ............... 5 Farmer, Michael L., Senior Vice President, Risk Management Operations, Wachovia Bank Card Services ............................................................................ 25 Frederick, Dr. Bob, Chair, NCAA Committee on Sportsmanship and Ethical Conduct ................................................................................................................. 26 Kelly, Timothy A., Ph.D., Executive Director, National Gambling Impact Study Commission ............................................................................................... 32 McGuinn, Edwin J., CEO, eLOT, Inc., Norwalk, CT ............................................ 30 VanNorman, Mark, Executive Director, National Indian Gaming Association .. 28 APPENDIX Prepared statements: Bachus, Hon. Spencer ...................................................................................... 40 Oxley, Hon. Michael G. .................................................................................... 46 Carson, Hon. Julia ............................................................................................ 49 Goodlatte, Hon. Bob ......................................................................................... 51 Leach, Hon. James A. ....................................................................................... 53 Farmer, Michael L. ........................................................................................... 57 Frederick, Dr. Bob ............................................................................................ 59 Kelly, Timothy A. ............................................................................................. 78 McGuinn, Edwin J. ........................................................................................... 69 Stevens, Ernest Jr. ........................................................................................... 62 ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD Bachus, Hon. Spencer: 2000 Nellie Mae Credit Card Study ................................................................ 42 Kelly, Timothy A.: ‘‘Gambling Backlash: Time for a Moratorium on Casino and Lottery Expansion’’ ..................................................................................................... 86 Written response to a question from Hon. Julia Carson ............................... 85 Department of Justice, prepared statement .......................................................... 96 Department of the Treasury, prepared statement ................................................ 101 (V) VerDate 11-MAY-2000 12:17 Feb 27, 2002 Jkt 000000 PO 00000 Frm 00005 Fmt 5904 Sfmt 5904 74492.TXT HBANK1 PsN: HBANK1 VerDate 11-MAY-2000 12:17 Feb 27, 2002 Jkt 000000 PO 00000 Frm 00006 Fmt 5904 Sfmt 5904 74492.TXT HBANK1 PsN: HBANK1 H.R. 556—THE UNLAWFUL INTERNET GAMBLING FUNDING PROHIBITION ACT AND OTHER INTERNET GAMBLING PROPOSALS TUESDAY, JULY 24, 2001 U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER CREDIT, COMMITTEE ON FINANCIAL SERVICES, Washington, DC. The subcommittee met, pursuant to call, at 10:05 a.m., in room 2128, Rayburn House Office Building, Hon. Spencer Bachus, [chairman of the subcommittee], presiding. Present: Chairman Bachus; Representatives Kelly, Ryun, Manzullo, Biggert, Grucci, Capito, Rogers, Tiberi, Waters, C. Maloney of New York, Sherman, Moore, Hooley, Hinojosa, Ken Lucas, Shows, Oxley, LaFalce and Goodlatte. Chairman BACHUS. The Subcommittee on Financial Institutions and Consumer Credit will come to order. Without objection, all Members’ opening statements will be made a part of the record. In order to permit us to hear from our witnesses and engage in a meaningful question-and-answer session, I’m encouraging all Mem- bers to submit their statements for the record. And in that regard, since we have three Members of Congress, I’m going to submit my statement for the record, which will save additional time. I think it is our custom to allow Members of the Senate to go first. Senator Kyl was a distinguished Member of this body. I’ll rec- ognize Mr. LaFalce for an opening statement. I’m sorry. Mr. La- Falce, why don’t you go ahead? Mr. LAFALCE. Thank you very much, Mr. Chairman. I’ve been in- terested in this issue for a long time. As some of you might recall when I was Chairman of the Small Business Committee, I con- ducted a number of hearings on the impact of gambling on the small business communities, and I introduced the first bill in 1994 to create a national commission to study the impact of gambling. My chief co-sponsor was Congressman Frank Wolf. In the next Congress, when the Republicans took a Majority in 1995, Congressman Wolf took
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