Bill to limit Internet gambling fails in House

WASHINGTON - The much-maligned but fast-growing Internet gambling industry enjoyed a political victory when a bill to ban online casinos failed to gain a sufficient number of votes in the House.

The bill was rejected Monday when supporters rounded up just 245 votes in favor, 25 short of 270 votes necessary for passage. There were 159 votes against. House leaders brought the measure to the floor under rules prohibiting amendments, limiting debate to 40 minutes and requiring a two-thirds majority of those voting for passage.

The bill's sponsor, Rep. Robert Goodlatte, R-Va., said he hoped the House leadership would ''honor the will of the majority'' and bring up the bill for another vote, this time under normal rules requiring only a simple majority for passage.

The Internet gambling industry had invited the government to regulate it, even tax it, while insisting that outright prohibition was unwise and unworkable given the Internet's global reach. But it took an unusual coalition of libertarian lawmakers, pro-gambling Internet entrepreneurs and anti-gambling social groups to block the bill Monday.

''It appears that cooler heads have prevailed here,'' Sue Schneider, chairwoman of the Interactive Gaming Council, said after the vote. ''We have a brand new medium we're dealing with. We don't have the same kind of borders we had before.''

The bill's advocates said their goal was to curb proliferation of Internet sites offering casino games and sports betting to everybody with credit cards and computers, regardless of whether gambling is legal where they live. They said such sites attract compulsive or underage gamblers.

''One way to promote the Internet is to make sure that the seamy side of life is dealt with on the Internet,'' Goodlatte said. ''Just like child pornography has to be dealt with on the Internet, so does unregulated, out-of-control, illegal gambling.''

Critics, including the Justice Department, said the bill actually would help the pari-mutuel industry reach bettors who could not otherwise wager. Lobbyists for horse racing, dog racing and jai alai won an exemption inserted in the bill.

Other critics said the bill would infringe on states' rights by prohibiting state lotteries from offering at-home sales of tickets over the Internet.

Nearly 700 Internet sites offer online gambling, a business expected to grow from $1.1 billion in 1999 to $3 billion in 2002, according to a recent report for the online gambling industry. A recent phone survey of Internet users by the Pew Internet & American Life Project found that 1 million Americans gamble online each day, and that 4.5 million Americans - about 5 percent of those with access to the Internet - have gambled online.

The defeated bill would have prohibited anyone who runs a gambling business from placing or receiving an online wager. Businesses that offered online gambling could be fined at least $20,000 and their principals sent to jail for up to four years.

Goodlatte attempted to address critics' concerns last week by adding language specifying that the bill was not intended to permit activities that now are illegal.

But Rep. John Conyers, D-Mich., said he opposed the bill in part because of ''carveouts for powerful special interests.''

Picking up the theme, Rep. Patrick Kennedy, D-R.I., said the bill gave special treatment to horse racing when it should have been kinder to state lotteries.

''I think we'd all agree that state lotteries are perhaps the best form of gambling we have out there, in that they are giving legitimate dollars to our states,'' Kennedy said.

The commercial casino industry and major sports leagues supported the bill, as did the National Association of Attorneys General and some conservative social groups such as the Christian Coalition. Opponents included the conservative Traditional Values Coalition as well as computer industry groups that do not want to see Internet regulation.

The Senate approved similar legislation sponsored by Sen. Jon Kyl, R-Ariz., in November by a voice vote and without debate. The legislation is intended to update and expand the 1961 Wire Communications Act, which was written to cover sports betting via telephone.

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The bills are S. 692 and H.R. 3125.

On the Net: Goodlatte's office, bill information: http://www.house.gov/goodlatte/netgambling.htm