GOP standing firm on Web gambling ban

Citing the Obama administration’s recent bust of online poker sites, Republican lawmakers are standing firmly behind the current ban on Internet gambling and regarding Rep. Barney Frank’s (D-Ma.) bill to legalize Web gambling a dead letter.

“Off-shore Internet gambling sites operating in the United States are all illegal and therefore, by definition, are criminal enterprises,” said House Financial Services chairman Spencer Bachus (R-Ala.) in response to the FBI’s seizure of the three largest online poker sites Friday.

{mosads}“For years, I have been warning about the particular dangers illegal Internet gambling poses, especially to our young people, many of whom are becoming addicted to gambling at increasingly early ages,” Bachus said.

Bachus has been one of the strongest opponents of legalizing online gambling; he co-sponsored the 2006 law that specifically outlawed the practice. 

Opponents of Web gambling also argue that the sites serve as hubs for money laundering for drug traffickers and terrorists, allowing them to move vast sums of money quickly while avoiding detection.

Bachus’ predecessor Rep. Barney Frank (D-Mass.) took the opposite stance, helping usher a bill, H.R. 1174, through the committee last year that would legalize online gambling.

Frank has been a harsh critic of the crackdown on online poker and expressed hope the backlash against the administration’s enforcement actions would build momentum for his bill.

But a staff member with knowledge of the situation said no action is likely on Frank’s bill, despite the fact it has drawn support from Republicans such as Rep. John Campbell (Calif.). The aide said that, aside from Frank, there isn’t much appetite for repealing the ban on Internet gambling.

The aide said that Frank’s libertarian line of reasoning shouldn’t apply in this case
because online gambling results in harm to others in addition to the gambler.

Opponents of Frank’s bill say the sites serve as hubs for money laundering for drug traffickers and terrorists. Software engineer Jim Thackston, of Sun Coast Data Solutions,
recently wrote to lawmakers expressing his concerns that online poker
sites can be used by terrorists to launder funds.

“My concern
is that HR 1174, the Internet Gambling Regulation, Consumer Protection,
and Enforcement Act, is effectively an open invitation for the ‘Bank of
Al Qaeda,'” Thackston wrote.

“As HR 1174 moves through the
legislative process, every member of Congress should be made aware of
the undetectable nature of this threat,” he said.

Thackston
said he met with officials from the Department of Homeland Security and
the Florida Department of Law Enforcement last month to demonstrate how
two parties could transfer large amounts of money across virtual poker
tables without leaving any transaction records.

Opponents to Web gambling also argue the Frank bill is not serious about enforcement and licensing,  adopting a laissez faire attitude toward Internet gambling. Frank argued the administration shouldn’t make online poker an enforcement priority given the issues currently facing the nation.

The Obama administration has charged the operators of the seized sites with bank fraud and wire fraud, alleging they manipulated financial institutions into processing payments from bettors and used fraudulent transactions to avoid detection.

The aide said Bachus, Sen. Jon Kyl (R-Ariz.) and other lawmakers first
came up with the idea of using the payment system to curtail illegal
online betting. The aide called the indictments one of the largest
examples of bank fraud and money laundering seen in recent memory.

The aide emphasized that Republican leadership including House Majority Leader Eric Cantor (R-Va.) have supported the ban on Web gambling, noting an attempt to push an online poker bill through the lame-duck Senate in December drew strong opposition from incoming committee chairmen Bachus, Lamar Smith (R-Texas) and Dave Camp (R-Mich.).

The aide also dismissed Frank’s claims that the bill would generate billions in additional revenue for the government, noting that such taxes and lottery programs tend to be very regressive and disproportionately impact the poor.

He pointed out tht Friday’s seizures by the Justice Department will likely pay for themselves, a rarity in such law enforcement actions.