2001-12-19
The following is an overview of the legislative activity in Washington as at 19 December 2001.

The first session of the 107th Congress has ended without any Internet gambling prohibition legislation having been passed by the House or Senate -- that's the good news. The bad news, of course, is that a growing group of prohibitionists (Reps. Goodlatte, Leach and Oxley in particular) have once again focused on this issue and are pushing hard for legislation to move early in the second session, which begins in January. Action from the first session (this year) carries over to the second session (next year), at the end of which, the slate is wiped clean for the new Congress.

Here is where things stand:

Two bills of relevance have been introduced. H.R. 556 (Leach) has been the subject of hearings in the House Financial Services Committee, was briefly added to the anti-money-laundering bill reported as part of the terrorism package, but was later stripped. After that, it was reported as a free-standing measure, then subsequently referred to the House Judiciary Committee. Both the Ways and Means and the Energy and Commerce Committees have sought to assert jurisdiction as well -- as of this writing, it remains unclear how those jurisdictional questions will be resolved.

H.R. 3215 (Goodlatte) has been introduced as well. Along with the Leach bill, it was the subject of a hearing in the Judiciary Committee's Crime Subcommittee earlier this year.

There is some cause for concern. The biggest point of concern, in my opinion, is the change in the posture of the Administration. The Clinton Administration opposed the Kyl and Goodlatte bills. The Bush Administration has no such opposition, and lately has been saying things that border on support, although they have yet to endorse any bill.

The other side has seized on the money-laundering issue in a big way, and they seem to have found a new ally in House Financial Services Chairman Mike Oxley. Oxley, a former FBI agent, is swayed heavily by the position of the FBI, and while the FBI is not supposed to take positions on legislation, we are told that they are saying supportive things.

Obviously, the switch from an ISP-based enforcement mechanism to a financial instrument-based enforcement mechanism has changed our dynamics a bit. It has bought us some powerful allies in the financial services industry -- that is a definite upside. The downside is that the financial instrument mechanism is more effective and easier to defend from a public policy standpoint.

One other new development, coming out of the recent Judiciary Committee hearing: those who bring up the question of Internet Gambling Prohibition now also discuss the question of regulation. Frank Catania's testimony before the House Judiciary Committee sparked a pretty extensive debate about the pros and cons of regulation -- that can only help us.

Looking forward to next year, the next crossroads will come when the House Judiciary Committee decides whether or not to mark-up and report the Leach and Goodlatte bills (most likely an amalgam of the two). That will probably happen in February or March. If the bill is reported, then we are looking at a House floor vote in the spring.

Unlike past years, there has been no action in the Senate, with Senator Kyl saying he would wait until after the House acts to introduce a bill. It is unclear what would happen in the Senate if the House passes a bill.