The U.S. House of Representatives will vote today on a proposed bill designed to prohibit Internet gambling in the U.S. and prevent financial transactions with foreign Internet gambling sites. The bill combines two measures sponsored by Republican Representatives James Leach of Iowa and Bob Goodlatte of Virginia. The bill would exempt online gambling involving horse racing (pari-mutuel betting) and state lotteries. If approved, the bill will go to the Senate for consideration.
The crux of the bill is a set of provisions designed to prevent the use of credit cards and other financial instruments for online gambling by making it unlawful for financial intermediaries to process payments for foreign Internet gambling businesses. The bill requires financial intermediaries and web service providers to cooperate with American law enforcement agencies to restrict foreign Internet gambling.
Enforcement with financial intermediaries will take at least two forms: (a) on the prevention side, financial intermediaries, such as credit card companies, will have to identify which of their merchants are involved in Internet gambling activities involving U.S. based cardholders. Once they have identified those merchants, the relevant merchant account numbers used to process credit card authorizations will be restricted. This means that a gambling transaction will simply not be authorized. The prohibitions should not affect credit cards issued outside the U.S.; (b) on the deterrence side, credit card issuers will likely be asked or compelled to provide transaction records for the merchants identified as providing Internet gambling services. Transaction records will show the credit card numbers that were used to gamble over the Internet, allowing an investigating authority to then obtain from the credit card issuers, the names and addresses of credit card holders who gambled online. This information will likely be used for prosecution purposes.
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