Sen. Jon Kyl's (R-Arizona) Internet Gambling Prohibition Act was unanimously passed by the Technology, Terrorism, and Government Information subcommittee. The next step is a full Senate Judiciary Committee vote.
Kyl's bill would include the Internet under the existing law prohibiting the use of any wire communication for accepting interstate or foreign wagers, which the Justice Department estimates was a $600 million industry in 1997. Cybercasino operators would face fines up to $20,000 and four years in prison for violating the act, and Net casinos based on Indian reservations would be prohibited.
The bill also includes a controversial provision that could put Net service providers on the hook for illegal sites on their networks.
The prohibition on Net gambling would not apply to "closed-loop," subscription-based gambling services, fantasy sports leagues, overseas sites, state lotteries, powerball, horse racing, or online sports pools--as long as the activity is legal in the states where the online bettor is participating.
"[ISPs] shall not be liable under any federal or state law if, in a reasonably expeditious manner, the provider removes or disables access to the material," the bill states.
In other words, if the law passed and an ISP came across an illegal gaming site, it would have to remove the site or face legal sanctions. Similar provisions in other laws have been criticized by ISPs, which worry they will be forced to police their networks.
Still, proponents of the bill--many of whom sit on the subcommittee that cleared it today--say legislation is necessary to protect consumers.
"There are no effective means to stop children from gambling on the Internet," Sen. Richard Bryan (R-Nevada), who cosponsored the bill, said in a statement. "[This legislation] will prevent unscrupulous Internet sites from ripping off potential gamblers."
However, the legislation would not hinder casinos in Bryan's home state from luring new customers to their brick-and-mortar establishments.
"The bill would not ban hotel-casinos from advertising or offering popular 'how-to' or 'play-only' options on their Web sites," he noted.
Last year the Senate voted 90-10 to add a ban against online gambling onto a spending bill, but the ban didn't clear the full Congress.
Online gaming trade groups have long held that the United States would be better off regulating the industry than banning it, because many sites are based overseas and outside regulators' reach.