Frank Introduces Bill in House to Overturn Web Gambling Ban

WASHINGTON, D.C. – As expected, House Financial Services Committee U.S. Rep. Barney Frank (D-Mass.) introduced a bill Wednesday to overturn the three-year-old ban on Internet gambling.

"The government should not interfere with people's liberty unless there is a good reason," Frank said at a press conference.

"This is, I believe, the single biggest example of an intrusion into the principle that people should be free to do things on the Internet. It's clearly the case that gambling is an activity that can be done offline but not online."

The legislation is co-sponsored by lawmakers that include Reps. Peter King (R-N.Y.) and Shelley Berkley (D-Nev.). Frank said he will push the bill through his own committee before the summer break in August, but has yet to speak with other members of the House, Senate or to the White House about the bill.

As reported Monday by, the new legislation would repeal the Bush administration's 2006 ban on U.S. Internet gambling via offshore companies and instead regulate those foreign firms through licenses.  Online sports wagering, however, would still be prohibited under the legislation.

A related bill introduced by Democratic Rep. Jim McDermott of Washington, a member of the Ways and Means Committee, would seek to collect taxes from online gaming operations.  The Wall Street Journal  reports a study from PricewaterhouseCoopers estimates this could result in $48.6 billion annual tax revenue.

In related news, gambling concerns are challenging Minnesota's proposed "blacklist" of gambling sites to be blocked by the state's Internet service providers with a lawsuit against a state official and his agency.

In an issued statement, the Interactive Media Entertainment and Gaming Association asked the U.S. District Court in Minneapolis Wednesday to prevent the state's Department of Public Safety from enforcing the block.
The Alcohol and Gambling Enforcement division of the Minnesota DPS sent letters last week to AT&T, Comcast, Verizon and Internet access companies, ordering that sites on the AGED "blacklist" be blocked.  All 200 sites on the list are related to online gambling.

iMEGA filed a lawsuit against John Willems, director of AGED, to prevent the order from being enforced. In its suit, iMEGA stated that Minnesota lacked the authority to compel the ISPs to block residents access to the sites, and that their actions constituted a violation of free speech rights guaranteed by the First Amendment of the U.S. Constitution.

"It’s our hope that Minnesota will recognize their error and drop their blocking order," said Joe Brennan Jr., iMEGA chairman. "Censoring Internet access for Minnesota residents would establish a troubling precedent of government intrusion into the online world, and we just can’t allow that to happen."

iMEGA also sent letters to each of the ISPs contacted by Minnesota, informing them that the state had erred in its application of a federal law from the 1960s regarding the use of telephone and telegraph wires for the transmission of illegal wagers. The letters went on to say that Minnesota had neither the authority nor the jurisdiction to order the ISPs to block Minnesota residents' access to sites not located within the state.

"Because website operators are not subscribers of yours, have no contracts with you and are not provided facilities by you, you should be aware the MN DPS is attempting to mislead (either intentionally or inadvertently) you into believing that you are bound by federal law to do what the MN DPS asks,” the letter stated. 

iMEGA went on to say that the '60s "Wire Act" does not apply to the website operators, imposes no duty upon ISPS and provides no authority that they comply with the Minnesota DPS request for blocking the gambling sites.

iMEGA has launched several court challenges, at both the state and federal level, in support of the Internet gambling industry. A lawsuit challenging the constitutionality of the Unlawful Internet Gambling Enforcement Act of 1996, a law that prohibits US banks and credit card companies from processing payments between US residents and international online gambling sites, is due to be decided in the 3rd Circuit Court of Appeals this summer. In another suit, iMEGA prevented Kentucky from seizing the rights to 141 domain names, all related to gambling, with a victory this past January in the state’s Court of Appeals. The decision is being appealed by attorneys for Kentucky to the state’s Supreme Court.