Thank you, Mr. Chairman.
I'd like to express my appreciation for your holding this hearing today. In a few short years, the Internet gambling industry has exploded. According to an Internet gambling committee of the National Association of Attorneys General, there were less than 25 such sites on the Web in the mid-1990s. Today the General Accounting Office estimates there are approximately 1,800 e-gaming Web sites. The GAO projects that such Internet sites could generate an estimated $5 billion in revenues this year. That figure approximates more than half of the year 2002 casino earnings in the State of Nevada.
The most serious threat in the Internet gambling arena is the virtual casinos operating offshore, beyond the reach of U.S. law. One estimate puts the number of foreign jurisdictions authorizing or tolerating Internet gambling at fifty. This includes not just the well-known bank secrecy jurisdictions of the Caribbean but other countries like Australia. The lure of lucrative licensing fees and the possibility of sharing in gambling receipts are proving to be powerful incentives to enter the Internet gambling business. Antigua and Barbuda have reportedly licensed more than 80 Internet gaming websites already, charging a $75,000-$85,000 licensing fee for a sports betting site and $100,000 for a virtual casino. A report prepared for the South African government revealed that Internet gaming revenues could yield up to $140 million in foreign exchange.
While Internet gambling represents a jackpot for such foreign jurisdictions, it is a wheel of misfortune for far too many Americans who, with a click of a computer mouse and a credit card, can have instant, anonymous access to round-the-clock gambling from the privacy of their homes. All of the social hazards associated with problem gambling at brick-and-mortar sites are of equal, if not greater, concern when it comes to on-line gambling.
Furthermore, Internet gambling poses a serious problem to our youth. In the areas in which gambling is legal, strict laws have been enacted to ensure our children are prohibited from participating. In many homes the children are far more computer literate than the parents who possibly would stop a child from placing a bet with their credit card. Since our society has made a conscious decision to keep our children away from this activity, we must take steps to ensure that online casinos do not victimize our children.
In addition to the social problems associated with Internet gambling, U.S. authorities warn that Internet gaming offers a powerful vehicle for laundering funds from illicit sources as well as to evade taxes. A 2000-2001 Financial Action Task Force (FATF) report on money laundering typologies indicates that there is evidence in some FATF jurisdictions that criminals are using the Internet gambling industry to commit crime and to launder the proceeds thereof. The use of credit cards and the placement of sites offshore make locating the relevant parties, gathering the necessary evidence, and prosecuting those parties difficult if not impossible.
I look forward to working with my colleagues to enact a law to stop the threat of illegal internet gambling and to protect our children.