This morning the Committee has the opportunity to hear testimony about Internet gambling. I want to commend Chairman Shelby for calling a hearing on the subject. I also want to welcome Senator Kyl, and commend both him and Senator Johnson for their leadership on this issue
Gambling web sites make possible immediate 24-hour access to the full range of wagering opportunities. Anyone, anywhere, can bet at any hour on sporting events, and on casino games, for example virtual roulette, poker, or black-jack. Bets can be made from every home or office, or, indeed, from any computer or Internet-ready hand-held device.
The GAO estimates that there may be between 1,500 - 1,800 Internet gambling web sites. Virtually all of those sites operate from computer servers located outside the United States, in jurisdictions in which Internet gambling has been legalized. The gambling web site operators expect 2003 revenues of at least $4 billion. 50-70 per cent of that amount is projected to come from wagering by individuals in the United States, despite the fact that none of the states permits Internet gambling, and only one state, Nevada, permits general betting on sporting events at all.
Defenders of Internet gambling assert that it is simply another instance of the Internet's ability to increase personal freedom, and that we should replace out-moded laws to the contrary. They also add, in a familiar refrain, that legalizing Internet gambling could enhance federal or even state revenue.
But the plain fact is that placement of bets, through the Internet, with offshore gambling operators undercuts American gambling regulation. The states decide the extent to which - and the ways in which - gambling is permitted within their respective borders. Federal law is designed to prevent interstate or other attempts to evade or avoid state decisions; for example, the federal appeals court in New York has recently held that the operator of an off-shore sports book who took wagers from U.S. citizens calling from a state in which gambling was illegal had committed a federal crime.
Offshore Internet gambling could not attract U.S. customers without making use of our payments system. Every Internet gambler must use a credit card, fund transfer, or bank instrument to open and fund an account from which to gamble on a web site. The uncertain legal status of Internet gambling - both in terms of potential criminal liability and of the collectibility of gambling debts incurred over the Internet -- has already led some responsible banks and Internet service providers to move away from a connection with Internet gambling web sites. But those commendable private efforts do not amount to an adequate solution to the problem.
The fact that the new ways to attract potential gamblers and facilitate their wagering are clothed in the aura of the "Internet" should not change our ideas of what is lawful or socially responsible. I am prepared to work with the Chairman and other members on legislation to deal comprehensively with this important subject, and I look forward to hearing today's witnesses and to reviewing the statements submitted to the Committee.