[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
RESTORATION OF AMERICA'S WIRE ACT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON CRIME, TERRORISM,
HOMELAND SECURITY, AND INVESTIGATIONS
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
ON
H.R. 707
__________
MARCH 25, 2015
__________
Serial No. 114-19
__________
Printed for the use of the Committee on the Judiciary
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://judiciary.house.gov
___________
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COMMITTEE ON THE JUDICIARY
BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan
Wisconsin JERROLD NADLER, New York
LAMAR S. SMITH, Texas ZOE LOFGREN, California
STEVE CHABOT, Ohio SHEILA JACKSON LEE, Texas
DARRELL E. ISSA, California STEVE COHEN, Tennessee
J. RANDY FORBES, Virginia HENRY C. ``HANK'' JOHNSON, Jr.,
STEVE KING, Iowa Georgia
TRENT FRANKS, Arizona PEDRO R. PIERLUISI, Puerto Rico
LOUIE GOHMERT, Texas JUDY CHU, California
JIM JORDAN, Ohio TED DEUTCH, Florida
TED POE, Texas LUIS V. GUTIERREZ, Illinois
JASON CHAFFETZ, Utah KAREN BASS, California
TOM MARINO, Pennsylvania CEDRIC RICHMOND, Louisiana
TREY GOWDY, South Carolina SUZAN DelBENE, Washington
RAUL LABRADOR, Idaho HAKEEM JEFFRIES, New York
BLAKE FARENTHOLD, Texas DAVID N. CICILLINE, Rhode Island
DOUG COLLINS, Georgia SCOTT PETERS, California
RON DeSANTIS, Florida
MIMI WALTERS, California
KEN BUCK, Colorado
JOHN RATCLIFFE, Texas
DAVE TROTT, Michigan
MIKE BISHOP, Michigan
Shelley Husband, Chief of Staff & General Counsel
Perry Apelbaum, Minority Staff Director & Chief Counsel
------
Subcommittee on Crime, Terrorism, Homeland Security, and Investigations
F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
LOUIE GOHMERT, Texas, Vice-Chairman
STEVE CHABOT, Ohio SHEILA JACKSON LEE, Texas
J. RANDY FORBES, Virginia PEDRO R. PIERLUISI, Puerto Rico
TED POE, Texas JUDY CHU, California
JASON CHAFFETZ, Utah LUIS V. GUTIERREZ, Illinois
TREY GOWDY, South Carolina KAREN BASS, California
RAUL LABRADOR, Idaho CEDRIC RICHMOND, Louisiana
KEN BUCK, Colorado
MIKE BISHOP, Michigan
Caroline Lynch, Chief Counsel
C O N T E N T S
----------
MARCH 25, 2015
Page
THE BILL
H.R. 707, the ``Restoration of America's Wire Act''.............. 2
OPENING STATEMENTS
The Honorable Sheila Jackson Lee, a Representative in Congress
from the State of Texas, and Ranking Member, Subcommittee on
Crime, Terrorism, Homeland Security, and Investigations........ 5
The Honorable Bob Goodlatte, a Representative in Congress from
the State of Virginia, and Chairman, Committee on the Judiciary 6
The Honorable John Conyers, Jr., a Representative in Congress
from the State of Michigan, and Ranking Member, Committee on
the Judiciary.................................................. 7
The Honorable Jason Chaffetz, a Representative in Congress from
the State of Utah, and Member, Subcommittee on Crime,
Terrorism, Homeland Security, and Investigations............... 8
WITNESSES
John Warren Kindt, Professor Emeritus of Business Administration,
University of Illinois
Oral Testimony................................................. 10
Prepared Statement............................................. 13
Les Bernal, National Director, Stop Predatory Gambling (SPG)
Oral Testimony................................................. 25
Prepared Statement............................................. 27
Michael K. Fagan, Adjunct Professor of Law and Counsel-
Consultant, Washington University School of Law
Oral Testimony................................................. 39
Prepared Statement............................................. 41
Andrew Moylan, Executive Director and Senior Fellow, R Street
Institute
Oral Testimony................................................. 67
Prepared Statement............................................. 69
Parry Aftab, Esq., Founder and Executive Director, WiredSafety,
Inc.
Oral Testimony................................................. 81
Prepared Statement............................................. 83
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Material submitted by the Honorable Sheila Jackson Lee, a
Representative in Congress from the State of Texas, and Ranking
Member, Subcommittee on Crime, Terrorism, Homeland Security,
and Investigations............................................. 98
Material submitted by the Honorable Ted Poe, a Representative in
Congress from the State of Texas, and Member, Subcommittee on
Crime, Terrorism, Homeland Security, and Investigations........ 103
Material submitted by the Honorable Sheila Jackson Lee, a
Representative in Congress from the State of Texas, and Ranking
Member, Subcommittee on Crime, Terrorism, Homeland Security,
and Investigations............................................. 114
APPENDIX
Material Submitted for the Hearing Record
Response to Questions for the Record from John Warren Kindt,
Professor Emeritus of Business Administration, University of
Illinois....................................................... 128
Response to Questions for the Record from Les Bernal, National
Director, Stop Predatory Gambling (SPG)........................ 137
Response to Questions for the Record from Michael K. Fagan,
Adjunct Professor of Law and Counsel-Consultant, Washington
University School of Law....................................... 147
Response to Questions for the Record from Andrew Moylan,
Executive Director and Senior Fellow, R Street Institute....... 152
Supplemental Testimony in Response to Questions for the Record
from Parry Aftab, Esq., Founder and Executive Director,
WiredSafety, Inc.........................................158
deg.OFFICIAL HEARING RECORD
Material Submitted for the Hearing Record but not Reprinted
Material submitted by the Honorable Jason Chaffetz, a Representative in
Congress from the State of Utah, and Member, Subcommittee on Crime,
Terrorism, Homeland Security, and Investigations:
http://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=103090
Supplemental Material submitted by John Warren Kindt, Professor
Emeritus of Business Administration, University of Illinois School
of Law:
http://docs.house.gov/meetings/JU/JU08/20150325/103090/HHRG-
114-JU08-Wstate-KindtJ-20150325-SD001.pdf
Additional Supplemental Material submitted by John Warren Kindt,
Professor Emeritus of Business Administration, University of
Illinois School of Law:
http://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=103090
Supplemental Statement submitted by Michael K. Fagan, Adjunct Professor
of Law and Counsel-Consultant, Washington University School of Law:
http://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=103090
Extraneous Material submitted for the Hearing Record:
http://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=103090
RESTORATION OF AMERICA'S WIRE ACT
----------
WEDNESDAY, MARCH 25, 2015
House of Representatives
Subcommittee on Crime, Terrorism,
Homeland Security, and Investigations
Committee on the Judiciary
Washington, DC.
The Subcommittee met, pursuant to call, at 4:56 p.m., in
room 2237, Rayburn Office Building, the Honorable Jason
Chaffetz presiding.
Present: Representatives Chaffetz, Goodlatte, Chabot, Poe,
Buck, Bishop, Jackson Lee, Conyers, and Richmond.
Staff present: (Majority) Allison Halataei, Parliamentarian
& General Counsel; Robert Parmiter, Counsel; Alicia Church,
Clerk; (Minority) Joe Graupensperger, Counsel; Vanessa Chen,
Counsel; and Veronica Eligan, Professional Staff Member.
Mr. Chaffetz. The Committee will come to order. I thank you
for being here, appreciate your patience as we have a hearing
today on H.R. 707, the ``Restoration of America's Wire Act.''
We appreciate your patience and understanding.
We have critical votes that are on the floor of the House.
We will have another set of votes. We do hope to get through
opening statements prior to the next set of votes, but we will
have to recess again. It is the intention of the Committee to
come back into order after this next series of votes.
This is an important issue. It is an important topic. I
happen to be the one who had introduced H.R. 707. I know there
are various thoughts and perspectives on that.
[The bill, H.R. 707, follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
__________
Mr. Chaffetz. In the spirit of timeliness, I am going to
first recognize the Ranking Member, Ms. Jackson Lee, for her
statement.
Ms. Jackson Lee. Mr. Chairman, thank you so very much, and
thank you for your thoughtfulness in introducing a piece of
legislation that will give us the opportunity to review some
very important issues.
Let me also thank the Chairman of the Committee, Mr.
Sensenbrenner, for calling this very timely hearing.
I want to add my appreciation to all of the witnesses for
their patience as we try to do the people's business, and also
for your astuteness on this issue, because obviously that is
the case that we have called you as witnesses because we want
to hear your testimony.
There are 143 million smartphones in operation in America,
and at least 75 percent of all U.S. households have computers.
Again, I want to acknowledge, as I see both the Ranking and
the Chairman in the Committee of the full Committee. Let me
acknowledge our Ranking Member, Mr. Conyers, who is here, and
Mr. Goodlatte, the Chairman of the full Committee, who is here
as well.
Each of these Internet-connected devices is a potential
slot machine or roulette wheel, and every home in America is
potentially a casino. That is why it is critical today that we
address important issues concerning Internet gaming, including
not only statutory interpretation but also questions related to
law enforcement and the appeal of online gaming to minors.
Traditional offline gaming revenues in the United States
total $35 billion annually. As the Internet continues to offer
new possibilities for gaming online, it has been estimated that
the American market for online casinos in total could be worth
as much as $12 billion per year. Gaming is big business, but we
must ensure that our laws governing all forms of gaming reflect
a careful weighing of the related costs and benefits.
Illegal gambling has long been a source of revenue for
organized crime. In 1961, then-Attorney General Robert F.
Kennedy's Justice Department worked with the 87th Congress to
enact a series of laws targeting organized crime operations.
One of these statutes, the Wire Act, was passed to prohibit the
use of interstate telephone and telegraph wagering services
which processed bets that provided substantial revenues for
criminal organizations.
However, the advent of the Internet in the 1990's allowed
greater remote interactions with bettors and expanded the types
of games that could be played from a distance. These evolving
circumstances led to increased focus on the scope of the
prohibitions under the Wire Act.
Prior to 2011, the Department of Justice interpreted the
Wire Act to prohibit wagering of any kind over interstate
telecommunications. In 2011, the Department reexamined the text
and legislative history of the statute and developed its
current position, that the law was meant only to apply to bets
placed on sporting events. Some fear that this change will lead
to the proliferation of non-sports Internet gaming and possible
related harms to our citizens, which all of us are concerned
about.
Others assert that because Americans already spend an
estimated $2.6 billion on illegal offshore gambling websites
per year, the better course is to encourage them instead to
participate in legal, regulated Internet gaming in the states
that allow it. So far Delaware, New Jersey and Nevada have
amended their laws to allow either poker or casino-style gaming
over the Internet, and several other states allow the online
sales of lottery tickets.
We must take seriously the concerns that are raised about
the expansion of Internet gaming, including worries that it may
facilitate money laundering, prey on those who engage in
problem gambling, and allow the participation of minors who
would not be able to gamble in a casino. And I would add that
all of us, no matter what side of the issue you are on, raise
that as a concern.
In fact, the Adolescent Psychiatry Journal's review of
studies concerning Internet gambling and children concluded
that the potential for future problems among youth is high,
especially among a generation of young people who have grown up
with video games, computers, and the Internet.
We also must consider the arguments of those who assert
that online gaming taking place under state regulation would
better prevent those harms than unregulated offshore gaming.
For instance, in 2011, former FBI Director Louis Freeh stated
that these offshore gaming sites are run by shady operators,
often outside the effective reach of U.S. law enforcement, an
environment rife with opportunity to defraud players and
launder money for much more dangerous operations.
There certainly are different perspectives on these
questions, and the Committee will examine all of them as we
evaluate H.R. 707, a bill which would provide that the Wire Act
prohibits non-sports betting as well as betting on sporting
events.
I look forward to the hearing, the insights and opinions of
our witnesses concerning each of these issues, and I believe
that we have gathered individuals with expertise and balance
and a contribution that will help us move forward on a question
that the underlying premise should be how do we serve the
American public.
With that, Mr. Chairman, I yield back.
Mr. Chaffetz. I thank the gentle woman.
I will now recognize the Chairman of the full Committee,
the gentleman from Virginia, Mr. Goodlatte, for 5 minutes.
Mr. Goodlatte. Thank you, Mr. Chairman.
Internet gambling has been an issue of particular interest
to me during my service in Congress. I am personally opposed to
Internet gambling because it is used as a mechanism to launder
money, because it causes bankruptcy and breaks up families, and
because it can even lead to suicide, as it did for a
constituent from my district. I have introduced multiple bills
dealing with Internet gambling in the past, and I am looking
forward to a frank and detailed discussion with our
distinguished witnesses, and the Members of this Subcommittee,
on the topic.
As the Chairman noted, the OLC opinion reinterpreting the
Wire Act caused a dramatic shift in the way the Department of
Justice views the laws proscribing Internet gambling. In the
three-plus years since the opinion was issued, it has led to an
increased push toward the availability of online gambling in
this Nation. Many participants in the gambling industry, from
Indian tribes to state lottery commissions to casino operators,
have been exploring ways to increase their involvement in
remote gaming.
In this environment, we must explore ways to protect the
rights of states to prevent unwanted Internet gambling from
creeping across their borders and into their states. Updating
the Wire Act can be a tool to protect states' rights to
prohibit gambling activity. However, there is also another
states' rights dynamic that we must acknowledge, and that is
what to do about states that want to regulate and permit
Internet gambling within their own borders. Some states have
already legalized online gambling. Thus, any update to the Wire
Act will need to address how to handle both the states that
have already enacted laws allowing online gambling and any
states that would want to do so in the future.
These are tough decisions, and we are having this hearing
today to seek answers to these tough decisions.
While I am sympathetic to the argument that states are
laboratories of democracy, I am also concerned about whether it
is possible to keep this sort of gambling activity from
crossing state lines and thus violating the rights of other
states.
There is a role for Congress to play in upholding states'
rights in this area. Wholly intrastate criminal conduct may
nevertheless have an interstate nexus, or be facilitated
utilizing an instrumentality of interstate commerce such as a
highway, telephone network, or, yes, the Internet. It is
therefore within Congress's purview to legislate this conduct.
The question for the Members of this Committee, then, is
whether Congress should act in this area, and if the approach
taken by H.R. 707 is the appropriate way to do so.
I will be interested in our panel's take on that and many
other questions. How would a state-by-state regulatory approach
to Internet gambling affect the citizens of states who do not
want legalized gambling within their borders? In other words,
how would you ensure that online gambling, if legal in one
state, wouldn't bleed over into a neighboring state where it is
not legal, particularly since the Internet doesn't stop at
state borders? Is geolocation technology sufficient to
determine whether an individual who places a bet is physically
present in a state where it is legal? Should all Internet
gambling be prohibited? What should be done with states that
have already passed laws to permit Internet gambling?
I look forward to discussing all these issues in detail
with our witnesses. This is a complex issue and evokes strong
opinions on all sides. Should we decide to move forward with
legislation to address this issue, we need to do so
deliberately and thoughtfully.
I thank the witnesses for their testimony and yield back
the balance of my time.
Mr. Chaffetz. I thank the Chairman.
I will now recognize the Ranking Member of the Judiciary
Committee, the former Chairman of the Judiciary Committee, Mr.
Conyers, for 5 minutes.
Mr. Conyers. Thank you, Mr. Chairman.
First, I too join in in greeting five witnesses today.
In recent years, I have reviewed the discussion concerning
the intended meaning of the Wire Act and have tried to
determine the best course for public safety. As a result of
legal analysis, I have the following observations which lead me
to oppose legislation to amend the Wire Act to prohibit non-
state gaming.
Three points. I agree with the position of the Department
of Justice based on a 2011 analysis that the Wire Act's
prohibitions are limited to sports betting and not to other
forms of betting facilitated by wire communications, now
including the Internet.
Secondly, while unlawful gaming has long been associated
with harms relating to criminal enterprises, banning online
gaming is not the answer. That is why the Fraternal Order of
Police wrote to myself and Chairman Goodlatte in May of last
year in which they said we cannot ban our way out of this
problem as this would simply drive online gaming further
underground and put more people at risk. Not only does the
black market for Internet gaming include no consumer
protections, it also operates entirely offshore with unlicensed
operators, drastically increasing the threat of identity theft,
fraud, and other criminal acts.
And finally, considering the greater risk of harm from
offshore gambling, the better option is to allow states, if
they choose, to permit online gaming as they see fit, subject
to regulation and monitoring, of course.
So that is why the Department of Justice's interpretation
of the Wire Act and three states--New Jersey, Nevada, and
Delaware--have already permitted online poker or some forms of
online casino-style gaming in compliance with the law. Other
states, including my own, Michigan, now allow online sales of
lottery tickets. States should be allowed to decide this
question for themselves, and we should not take any action that
would overturn such state laws. But I anxiously await our
discussions back and forth today.
I thank the Chairman and yield back the balance of my time.
Mr. Chaffetz. I thank the gentleman.
I will now recognize myself for 5 minutes.
I obviously am in favor of this bill, having introduced it.
I believe it is a states' rights bill, and I think it is
important that states have the ability, such as Utah and
Hawaii, where we have no gaming, to protect ourselves from
something that we would not like to see within our borders.
I personally am opposed to gambling but recognize the right
of others and other states, if they so choose, our neighbors,
good friends in Nevada if they so choose to have at it. But
nevertheless, I do believe that, going back to December 23,
2011, the Wire Act had an interpretation for more than 50
years, and if there is going to be an alteration of such
significance to the law, then that should be done through the
regular congressional process, not simply a 13-page memo issued
by the Office of Legal Counsel within the bowels of the
Department of Justice.
Now, there are a number of people on both sides of this
issue. It is something that people, as Chairman Goodlatte
talked about, are passionate about. I would like to ask
unanimous consent to enter into the record 42 different letters
that we have received by and large in support of restoring
America's Wire Act or are very concerned about the implications
of the OLC's opinion.
These include letters from the African American Mayors
Association, the Southern Baptist Convention; Senator Mark
Warner; the Eagle Forum; the American Family Association; two
letters from the Family Research Council; a letter from the
Concerned Women for America; a letter from Senator Lindsey
Graham, Senator Dianne Feinstein, and Senator Kelly Ayotte;
Attorneys General from 16 states that wrote to us that this is
a problem; the National Association of Attorneys General. We
have letters from Governor Rick Perry, Governor Nikki Haley,
Governor Herbert of Utah, Governor Scott, Senator Reid, Senator
Kyl, Governor Mike Pence; an op-ed by Governor Rick Perry;
another op-ed from Governor Bobby Jindal; another letter from
Senator Dianne Feinstein; a USA Today editorial from November
20, 2013; a New York Times editorial from November 25, 2013; a
cover story on Newsweek of August 22, 2014; former
Representative Spencer Bachus, a Member that was on this
Committee; the Department of Justice; and the Federal Bureau of
Investigation's Criminal Investigations. There are a host of
letters and people who have opined that this is fraught with
problems and challenges.*
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*Note: The submitted material is not included in this printed
record but is on file with the Subcommittee and can be accessed at:
http://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=103090
But truly, we are here not to hear from the Members of
Congress but to hear from our distinguished panel, so let me
introduce them briefly. We will swear you in, and then we will
start with the testimony from our panel. We do appreciate it. I
know some of you have traveled from out of state.
Mr. John Kindt. Did I pronounce that properly?
Mr. Kindt. Yes, sir.
Mr. Chaffetz. Thank you.
Professor Kindt is the Professor Emeritus of Business
Administration at the University of Illinois. He is a well-
published academic author on issues in relationship to
gambling. His academic research and publications contributed to
the enactment of the 1996 U.S. National Gambling Impact Study
Commission and the United States Unlawful Internet Gambling
Enforcement Act of 2006, among other Federal and state
statutes. Professor Kindt received his B.A. degree from William
and Mary, earned his J.D. and MBA from the University of
Georgia, and his LLM at SJD from the University of Virginia.
Mr. Les Bernal is the National Director to Stop Predatory
Gambling Foundation. He has spoken and written extensively
regarding the dangers of casinos and lotteries to the American
public. He has testified before Congress and appeared on
numerous television and radio outlets. Previously, Mr. Bernal
served as the Chief of Staff in the Massachusetts State Senate.
He earned his undergraduate degree from Ithaca College and his
MPA from Suffolk University.
Mr. Michael Fagan is an attorney and adjunct professor at
Washington University School of Law. He is also a special
advisor to the Missouri Office of Homeland Security, as well as
an advisory board member at Speartip LLC, where he is a
consultant on cyber counter-intelligence issues. Previously,
Mr. Fagan served as Assistant U.S. Attorney for the Eastern
District of Missouri for 25 years, where he prosecuted several
high-profile Federal cases involving illegal gambling activity.
He received his Bachelor's degree from Southern Illinois
University and his J.D. from Washington University School of
Law.
We are also pleased to have Mr. Andrew Moylan. He serves as
the Executive Director and Senior Fellow for the R Street
Institute, where he is the organization's lead voice on tax
issues. Prior to joining R Street, he was Vice President of
Government Affairs for the National Taxpayers Union. He
previously served with the Center for Educational Freedom at
the Cato Institute and has written numerous articles for
national publications. He is a graduate of the University of
Michigan and somebody we have seen frequently up here in the
halls of Congress.
And Ms. Parry Aftab--did I pronounce that properly?--is the
Founder and Executive Director for Wired Safety, an
organization that provides information and education to
cyberspace users on a myriad of Internet and interactive
technology safety, privacy, and security issues. In 1999, she
was appointed the head of Online Child Protection Project for
the United States by the United Nations' Educational,
Scientific, and Cultural Organization, a specialized agency
within the United Nations. She received her B.A. degree as
valedictorian at Hunter College and her J.D. degree from the
New York School of Law.
We have a diverse group of people who have come to testify.
Again, we thank you for your time and effort to be here.
It is the tradition of the Committee to have people sworn
in. So if you will please rise and raise your right hand?
Do you solemnly swear that the testimony you are about to
give this Committee shall be the truth, the whole truth, and
nothing but the truth, so help you God?
Thank you. You may be seated.
Let the record reflect that all witnesses answered in the
affirmative.
It is a busy, crowded schedule. I will assure you that your
full testimony will be inserted into the record, but we would
appreciate it if you would keep your verbal comments to 5
minutes or less.
Professor Kindt, we will start with you.
TESTIMONY OF JOHN WARREN KINDT, PROFESSOR EMERITUS OF BUSINESS
ADMINISTRATION, UNIVERSITY OF ILLINOIS
Mr. Kindt. Mr. Chairman, Ranking Member, Members of the
Committee, participants and guests from the U.S. House of
Representatives and the U.S. Senate, thank you for your kind
invitation to testify.
As a University of Illinois professor since 1978, I believe
that a large majority of not only Illinois academic experts but
also other U.S. academics would and should urge President
Barack Obama and Obama Administration colleagues to support the
restoration of the Wire Act.
Internet gambling is an issue of strategic financial
stability and Wall Street regulation. It is not an issue of
electronic poker, daily fantasy sports gambling, and other fun
and games methodologies, which are actually deceptive proposals
to leverage gateways for legalizing various gambling activities
throughout international cyberspace.
Alarmed by gambling, U.S. Senator Paul Simon and House
Judiciary Chair Henry Hyde sponsored the bipartisan U.S.
National Gambling Impact Study Commission. Reporting to
Congress in 1999, the Commission concluded that Internet
gambling was impossible to regulate and that Internet gambling
must continue to be prohibited, including by the Wire Act
initiated by U.S. Attorney General Robert F. Kennedy to combat
organized crime, and via even stronger prosecutorial
enforcement mechanisms.
Accordingly, upon the urging of 49 state Attorney Generals,
the 2006 UIGEA was enacted into law. At the time, there was
concern about a UIGEA fantasy sports loophole, which has since
been dangerously exploited by disreputable organizations and
needs to be closed.
Internet gambling's destabilization of Wall Street and
international financial systems becomes apparent in the
investigative news video, ``The Bet That Blew Up Wall Street,''
which Warren Buffett titled ``financial WMDs'' and which
members are respectfully but strongly urged to watch at the 60
Minutes website or on YouTube under ``Credit Default Swaps.''
Wall Street is dangerously flirting again with trillions in
unregulated derivatives; that is, financial side bets. In this
context, vacuous Internet gambling financials predicated on
gambling activities are in development, and Internet gambling
stocks would cannibalize a series of speculative bubbles, which
can only lead to another Great Recession, or worse.
Killing personal, business, and institutional finances,
Internet gambling is widely known as the ``killer application''
of the Internet. Internet gambling places real-time gambling on
every cell phone, at every school desk, at every work desk, and
in every living room. With ease, people can ``click your phone,
lose your home'' or ``click your mouse, lose your house.''
Internet gambling destabilizes U.S. national security and
the strategic economic base.
Titles of some of the United States International Gambling
Report series produced at the University of Illinois speak
directly to these dangers. Volume I, The Gambling Threat to
Economies and Financial Systems: Internet Gambling. Volume II,
The Gambling Threat to National and Homeland Security: Internet
Gambling. Volume III, The Gambling Threat to World Public Order
and Stability: Internet Gambling. The over 3,700 pages in these
three volumes alone include reprints of 97 original
congressional documents detailing the dangers of Internet
gambling.
Citing the threat to national security, in 2006/2007
Vladimir Putin recriminalized 2,230 electronic gambling
casinos. What do the Russian economists know that still eludes
the Federal Reserve Board and Washington decision-makers?
Internet gambling is big government interstate gambling
promoted and abused by big government.
Like Illinois, the U.S. needs the ``New Untouchables.''
Gambling lobbyists now dominate the economic policies of 28
states, giving away at least $35 to $100 billion to gambling's
insiders since 1990. Illinois is now the most bankrupt state in
the country, with over $110 billion in unfunded liabilities,
including being branded by the SEC in 2013 for pension and
securities fraud, and placing teachers, public employees,
pensions and social programs in extreme jeopardy.
For example, in 1990, 10 casino licenses worth $5 to $10
billion were given away to political insiders in Illinois for
only $25,000 each, including one insider convicted in the
Governor Rodney Blagojevich scandals. The 2011 reinterpretation
of the Wire Act was initiated by Illinois officials.
Similarly, lobbyists callously use the 9/11 tragedy to slip
into Federal law billions of dollars in tax breaks for slot
machine electronic gambling. These breaks should be ferreted
out and eliminated.
Big government gambling cheats consumers. Are the
electronic games and slots fair?
Conclusion: The U.S. should reinstate the ban on Internet
gambling and encourage other countries to emulate the U.S. ban.
Thank you, Mr. Chairman and Members of the Committee. Thank
you.
[The prepared statement of Mr. Kindt follows:]**
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**Note: Supplemental material submitted with this prepared
statement is not included in this printed record but is on file with
the Subcommittee and can be accessed at:
http://docs.house.gov/meetings/JU/JU08/20150325/103090/
HHRG-114-JU08-Wstate-KindtJ-20150325-SD001.pdf
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__________
Mr. Chaffetz. Thank you.
Mr. Bernal, you are recognized for 5 minutes.
TESTIMONY OF LES BERNAL, NATIONAL DIRECTOR,
STOP PREDATORY GAMBLING (SPG)
Mr. Bernal. Hello. My name is Les Bernal, and I am the
National Director of Stop Predatory Gambling. Our focus is
government-sponsored gambling, whether it is casinos, state
lotteries, tribal casinos, or the topic of today's hearing,
which is Internet gambling.
Government-sponsored gambling is playing a major role in
the rising unfairness and inequality in American life, and it
is directly impacting the lives of your constituents in your
district.
Up until about 10 years ago, for me, government-sponsored
gambling was like the paint on the wall. It was just there. I
never questioned it. But when you finally stop to look at it,
you can't avoid the obvious evidence that this public policy is
contributing to the unfairness and inequality in our country,
which has been considered one of the defining issues of our
time by leaders from across the political spectrum.
Banning the practice of states sponsoring Internet
gambling, which the bill before you would do, is part of the
foundation of any serious effort toward reversing this rising
inequality in our country.
One important job of the Federal Government is to ensure
that every state gives every citizen equal protections under
the law. Yet, at this moment in history, state governments
across the United States are blatantly, blatantly cheating and
exploiting their own citizens, infringing on the rights of
millions of Americans through the extreme forms of gambling
they sponsor and market to our communities. Many of these
state-sponsored games, especially electronic gambling machines,
are designed mathematically so users are certain to lose their
money the longer they play. At the same time, these games are
literally designed so citizens can't stop using them. They are
exploiting aspects of human psychology and inducing irrational
behavior.
Citizens, your constituents, aren't demanding these extreme
forms of gambling. No one is pounding the table for this in
your district. In partnership with commercial gambling
operators, states are forcing these gambling games onto the
public. The most recent poll of New Jersey voters found that 57
percent, 57 percent opposed online gambling, and only 32
percent approved. This is after, after their state government
began sponsoring online gambling in 2013.
So if not for the Federal Government, who will step in to
protect the rights of individuals, your constituents, against
these blatantly dishonest practices that are contributing to
inequality and being done by an active predatory state?
People are and should remain free to wager money and to
play games of chance for money. But while citizens have every
right to engage in a financially damaging activity, the
government has no business encouraging them to do it.
In most of your congressional districts, 5 percent of your
district, 5 percent of your district, about 35,000 of your
constituents have been turned upside-down by gambling, most of
which was sponsored by state government. This figure does not
account for the reality that each of these citizens has at
least one or two people close to them whose lives are also
upended because of this public policy.
There is no debate that the financial losses of these
individuals, these people being harmed by this public policy,
they make up the majority of the revenue taken by state-
sponsored casinos and lotteries. Millions of men and women and
their families have sacrificed and hurt so much to provide
these needed revenues to American government. But no one has
ever thanked them for their service. There are no parades with
fluttering American flags in the breeze, no yellow ribbons. Our
country simply renders these people as failures.
Banning state-sponsored Internet gambling also creates more
fairness for the two-thirds of your constituents who almost
never use government-sponsored gambling. Because of this public
policy, they are paying higher taxes for less services. State-
sponsored casinos and lotteries have proven to be a failed
source of government revenue, and they haven't delivered on
their famous promises to fund education, lower taxes, or to pay
for needed public services.
The evidence is clear that state-run gambling operations
add to rather than ease long-term budget problems for states.
Internet gambling sponsored by government will only make it
worse. That is why state-sponsored gambling is the symbol of
anti-reform politicians across the United States, regardless of
party.
``No taxation without representation'' was one of America's
founding principles. After 40 years of state governments using
lotteries and casinos to prey on their own citizens, to extract
as much money as possible, the time has come to add the
principle of ``no taxation by exploitation'' beneath it.
Thank you.
[The prepared statement of Mr. Bernal follows:]
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__________
Mr. Chaffetz. I thank the gentleman.
Mr. Fagan, you are now recognized for 5 minutes.
TESTIMONY OF MICHAEL K. FAGAN, ADJUNCT PROFESSOR OF LAW AND
COUNSEL-CONSULTANT, WASHINGTON UNIVERSITY SCHOOL OF LAW
Mr. Fagan. We need to update and restore the Wire Act, and
particularly to undo the misinterpretation recently given to it
by the Department of Justice's Office of Legal Counsel. The
need for a legislative fix I prefer to set out in the written
testimony submitted to the Subcommittee. It is not greatly
different from the language in H.R. 707 and returns the Act to
its proper scope, with a few less exceptions and a bit more
First Amendment protection.
Also in my written submission is an analysis of how and why
the Office of Legal Counsel's December 2011 strained
interpretation of the Wire Act to preclude its application to
non-sports gambling communications is wrong substantively and
was achieved via a closed legislation-by-fiat process neither
democratic nor sensible given the change it portends for daily
life in the United States.
Indeed, the 50-year understanding that the Wire Act applies
to both sports and non-sports wagering interstate communication
was the understanding that even the gambling industry had
during that largely pre-Internet period, as industry behavior
shows. So when the Office of Legal Counsel's 2011
reinterpretation of the Act became public, many wondered
whether the opinion was either careless or corrupt.
No matter. For present purposes, as a result, it was wrong
both as a matter of law and as a matter of policy. A restored,
repaired Wire Act will help states enforce their gambling laws
whether the state prohibits or authorizes intrastate gambling
activities. This kind of help is just as needed today as in
1961.
Organized crime, both traditional and non-traditional, and
now increasingly transnational, has long exploited and
continues to exploit the evasive opportunities presented by
conducting cross-border gambling operations. By unwisely
cutting in half the utility of the Wire Act as a tool in the
prosecutor's toolbox, the Office of Legal Counsel opened a
window for organized crime and others intent on impoverishing
Americans through illicit, commercially operated gambling
enterprises, whether via the numbers racket, lotteries, bolita
virtual card games, slots, or any of the myriad creative ways
con men and sharp operators use non-sports gambling to generate
revenue from gangs designed to exploit and even addict.
The money laundering utility of gambling enterprises, long
known but hard to investigate in brick-and-mortar settings,
becomes all the more difficult to defeat when Internet-based
gambling moves funds and obfuscates records at the speed of
light. Of even more serious concern, law enforcement and
intelligence analysts have seen online gambling sites, sites
which by their nature are interstate and international in
scope, being used as terrorist financing vehicles, places to
clandestinely store and transmit funds.
Terrorism-related convictions in the United Kingdom of
Tariq ad Daour and two associates who used Internet gambling to
facilitate terrorism conduct and planning a few years ago only
hint at the dozens of classified and non-classified
investigations that U.S., U.K., and Canadian authorities have
made under the exploitation of gambling websites to finance
terrorism.
More recently, terrorists in Afghanistan have been using
illegal gambling sites to move their money as well, reports
Janes Advisory Services. It is no wonder that the Federal
Criminal Investigators Association supports legislation to
return the Wire Act to its original scope and opposes any
carve-out that would weaken its protections and further enable
criminal and terrorist activity. Without a restored Wire Act,
there is not adequate legal framework for law enforcement to
shut down substantial illegal interstate gambling activities.
Relatedly, the present inability to use the Wire Act in
cases of non-sports gambling further denies millions of
Americans the efficient recourse of sentencing-based
restitution when they become victims of fraud or other
gambling-based criminal conduct conducted by illegal cross-
border enterprises.
Those who dream that it's possible to regulate and tax this
supposedly well-monitored interstate system of online gambling
are just that, dreamers. I can tell you with the certainty of a
person who has been there, done that, that there is no way the
Federal Government or any individual or combination of state
governments can expand to the degree necessary to effectively
police and regulate the scale of Internet gambling, multiple
millions of transactions involving billions of lines of code in
malleable, disguisable formats with anonymizing and proxy tools
readily available with easily disguised traditional and
evolving collusive behaviors. For example, Meerkat-type video
streaming over Twitter service will always give collusion teams
a leg up.
Remote access and control of computers in a jurisdiction
where intrastate gambling is allowed will defeat geolocation
and geo-fencing, and it is fairly trivial to leverage the Tor
network to obfuscate the original IP address of a client,
whether it is a laptop, a phone, a tablet, et cetera.
All this means no police force or regulatory body will be
big enough, trained enough, or funded enough to keep criminals
and terrorists from using institutionalized online interstate
gambling to their advantage.
I see my time has run out.
[The prepared statement of Mr. Fagan follows:]
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__________
Mr. Chaffetz. Thank you.
Mr. Moylan, you are now recognized for 5 minutes.
TESTIMONY OF ANDREW MOYLAN, EXECUTIVE DIRECTOR
AND SENIOR FELLOW, R STREET INSTITUTE
Mr. Moylan. Thank you, Mr. Chairman and Madam Ranking
Member, Members of the Subcommittee, for the invitation to
testify today.
My name is Andrew Moylan. I am Executive Director and
Senior Fellow of the R Street Institute. We are a pragmatic,
non-profit, non-partisan think tank that strives for free
markets and limited, effective government, and it is in pursuit
of those goals that I testify before you today regarding
concerns that we have about H.R. 707, the ``Restoring America's
Wire Act,'' and what questions it raises about the appropriate
scope of Federal law.
My testimony today is focused not on the propriety of
gambling per se, as is some of the other witnesses, but instead
on articulating a conception of limited government and
Federalism as it relates to gambling legislation. In such a
Federalist system, states carry most of the responsibility to
exercise powers that are rightfully theirs under the
Constitution, and Federal power is appropriately constrained to
genuinely national or interstate matters.
So while my conservative and Libertarian brethren hold a
wide range of views on the social implications of gambling, we
share a broad consensus that the Federal Government is too
large and too powerful, in no small part due to a decades-long
trend of ever-expanding assertions of power by Congress and a
compliant Judiciary that has validated most of those
assertions, and it is this troubling trend rather than the
activity of gambling itself which motivates my comments today.
Much of my professional work has been devoted to protecting
limited government in the Internet age, including matters on
which I have previously testified to the Judiciary Committee,
like Internet sales tax law.
The Internet is indeed unlimited in its scope, but
government power, even in this modern age, ought to be limited
and respectful of borders, both the tangible geographic borders
that delineate one sovereign state from the next, and the
conceptual borders that delineate truly national interstate
issues from state and local ones, and it is in that vein that I
note potential concerns with the bill before you today.
While ostensibly expanding the 1961 Wire Act such that it
covers all forms of gambling, as opposed to just sports
betting, and specifying the inclusion of Internet transmission
as prohibited, it appears also to go a step further than that;
and also in the plain language of the Wire Act itself and the
closely related Unlawful Internet Gambling Enforcement Act, or
UIGEA. Specifically, its prohibition on all wire or Internet
gambling transmissions, including those conducted over the
Internet, in states that may have chosen to license and
regulate gambling, is at odds with the basic principles of
Federalism and the more narrowly targeted language of the
original Wire Act and UIGEA.
While there are valid policy-based criticisms of each, both
the Wire Act and UIGEA were written to help states in their own
law enforcement pursuits and more carefully circumscribed to
cover only genuinely international or interstate activity, and
they did this by effectively exempting intrastate gambling and
transmissions between entities and states where that behavior
was legal.
By appearing to extend to wholly intrastate conduct, the
Restoring America's Wire Act may well empower the Federal
Government in a way that we think is unwise, and it is
problematic for two reasons. First is that it impedes upon an
area of law that is traditionally reserved for the states, the
general police power to regulate conduct within their own
borders. And second, it potentially establishes a dangerous
precedent in suggesting that mere use of a communication
platform like the Internet subjects all users and all activity
to the reach of the Federal Government no matter its location
or its nature.
So given decades, even centuries of eroding limits on
Commerce Clause power, it is incumbent upon Congress to
exercise restraint in its application, and I think this could
be readily achieved by modifying the language of Restoring
America's Wire Act to more closely resemble that in UIGEA,
which carefully exempted intrastate payments and those between
states with legal gambling. It even went so far as to exempt
so-called intermediate routing from qualifying as intrastate,
since the path of an electronic signal is incidental to the
conduct in question.
There are indeed areas where Congress is properly within
its rights to legislate under the Commerce Clause. In my
written testimony I refer to several examples of Federal bills
that would prevent states from exercising cross-border
authority in such a way as to cannibalize interstate commerce,
the very problem that led to the downfall of the Articles of
Confederation and the drafting of the Constitution.
But there are innumerable instances where the Commerce
Clause is cited as granting Federal authority to regulate
conduct which is entirely intrastate and even non-commercial in
nature. And as written, the Restoring America's Wire Act we
think is a problematic use of Commerce Clause power that
threatens to substitute the judgment of the Federal Government
for that of states, which are the rightful holders of power to
regulate intrastate activity.
And so if limited government is to have any meaning in the
21st century and beyond, we believe that Congress must exercise
restraint in those claims of power and that in its current form
the bill is problematic in that regard.
Thank you.
[The prepared statement of Mr. Moylan follows:]
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__________
Mr. Chaffetz. Thank you.
Ms. Aftab, please, you are now recognized for 5 minutes.
TESTIMONY OF PARRY AFTAB, ESQ., FOUNDER
AND EXECUTIVE DIRECTOR, WIREDSAFETY, INC.
Ms. Aftab. Thank you very much, Mr. Chairman and Ranking
Members of both the Judiciary Committee and the Subcommittee
here.
I don't have a stake in gambling. I have a stake in
protecting people online. The last time I testified before this
Subcommittee was several years ago on radicalization of the
Internet, and that is when I informed you that terrorists were
recruiting our teens online from suburban areas where they were
bored. I have testified before Congress on cyber-bullying,
child sexual exploitation, child pornography, and child
privacy. So my stake in this is to make sure that whatever
happens, our kids and consumers are safer.
So, I agree there are lots of problems. There are
terrorists who are using online gambling, and there is money
laundering going on, and there is malicious code that can be
downloaded, but that is not happening in New Jersey, Delaware,
or Nevada. It is happening currently with all of the offshore
gambling sites, or many of the offshore gambling sites that are
not covered by our laws, that we have been frustrated in trying
to police over the years.
In this case and the reason it is a little different is
once you legalize online gambling with an interstate model, you
now have partners in trying to shut down the illegal sites. So
the providers who are licensed within a state have a stake in
making sure that those who are offshore, those who are not
subject to regulation, will follow what they need to do.
I have looked long and hard at these issues, and I have
surveyed the regulators in Delaware, New Jersey, and Nevada. We
had done a white paper when I testified at the last hearing on
online gambling, and we looked at best practices around the
world. I picked up the phone and I called the top regulators in
each of those states and I said are you keeping kids off? Are
you having problems? What is your experience? Is the
geolocation working properly? And I got very good responses
from them. I was, frankly, a little surprised.
It is not perfect. There were three kids who had gotten on
to online gambling in Nevada, two during the test period. They
had used their parents' account. One had used his older
brother's account. It is a little like when we used to send
somebody into a liquor store to buy beer when we were underage,
and they would come out and nobody broke the law. I think that
we are starting to see some of that here.
We have had a lot of fraud over the years. I have had a lot
of senior citizens who called me who had gotten into gambling
offshore, and everyone was happy to take their money, but they
weren't so happy to give it back.
When we talk about terrorists and money laundering, you
need to recognize that in the three states that are handling
traditional gaming games--and Nevada is just doing poker and
the other two are doing other games in connection with online
gambling--they are very careful to make sure that you don't get
paid your winnings until the right reports are made to the IRS
about those winnings.
Now, I don't know a great deal about financing terrorists
and money laundering, but I don't think a lot of them want to
sign up with the kind of identity controls that are put into
these states and then have to file something with the IRS
before the money goes back to an account that has already been
authenticated.
So I deal with a lot of issues of online crimes and risks
against everyone, and it always comes down to verification and
authentication. And the different hoops that people have to
jump through to prove that they are in the state, that they
have a valid bank account that has been approved under all of
the Federal laws that have to, under the Know Your Customer
rules on making sure that not just the IP address, which is the
old-fashioned way of doing things that has been spoofed over
the years, but that you can't even log on with a remote
technology that lets you get into your computer when you are
home because the technology that is used by the providers in
these three states will block anything that is using remote
access. It will block anything that is a little off, and it is
actually incredibly accurate and is becoming more accurate
because everyone has a stake in knowing where you are.
You will see that there was a recent article about Four
Square and Twitter wanting to know exactly where you are so
they can advertise to you. That is the same technology that is
being used to find out where you are. So whether you are using
your GPS plus an IP and triangulation, whether it is knowing
that you have been trying to get in from other places in the
past, we have seen very good compliance and really the state-
of-the-art issues on authentication and verification of your
location and knowing that you are who you are.
Is it bullet-proof? No. But I think that the lotteries will
be able to learn a great deal from the providers that come from
more of the commercial gaming, and I think that their best
practices will improve.
Thank you.
[The prepared statement of Ms. Aftab follows:]
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__________
Mr. Chaffetz. I thank the gentle woman.
I will now recognize the Chairman of the full Committee,
the gentleman from Virginia, Mr. Goodlatte, for 5 minutes.
Mr. Goodlatte. Thank you, Mr. Chairman.
I am going to go right down the line. I appreciate all your
testimony, and I have a few brief, straightforward questions.
The first one is, what is your position on H.R. 707, the
bill introduced by the gentleman from Utah? Are you in favor of
it? Are you against it? And either way, is there a key issue or
a few issues that would make a difference to you?
So, we will start with you, Professor Kindt.
Mr. Kindt. I would tend to be in favor of this bill, and I
think it should be actually stronger and more extensive. We
need to keep the Internet gambling genie in the bottle. The
U.S. National Gambling Impact Study Commission said keep this--
--
Mr. Goodlatte. I am going to keep you short just because I
have a bunch of questions I want to ask.
Mr. Kindt. Yes, sir.
Mr. Goodlatte. Mr. Bernal?
Mr. Bernal. We support the bill.
Mr. Goodlatte. Mr. Fagan?
Mr. Fagan. I again support the bill. I prefer to see it
worded a little differently, but as a compromise it certainly
is much better than not having a bill.
Mr. Goodlatte. Mr. Moylan?
Mr. Moylan. I would oppose the bill for both Federalism
concerns and also some practical ones, which we can get into.
Mr. Goodlatte. You mentioned some. Is it repairable, or is
it----
Mr. Moylan. I think it is repairable from a Federalism
perspective in the sense that there is a consistent application
of Federal power as it relates to Federalism that relates to
intrastate conduct, legitimately, genuinely intrastate conduct.
When I mention practical concern, my own view--I didn't focus
on gambling in my testimony. It is not my expertise. But my own
view is that gambling, while a problem, is not something that
is likely to bump other priorities from a law enforcement
perspective.
Mr. Goodlatte. Got it.
Ms. Aftab?
Ms. Aftab. I oppose the RAWA. I think that it just puts
kids back into the crosshairs of the risks that we are facing
in gambling.
Mr. Goodlatte. All right. Let me now ask you what your take
is on the argument that states should be allowed to permit
Internet gambling within their own borders, and what about non-
Internet gambling, for example in a brick-and-mortar casino?
Mr. Kindt?
Mr. Kindt. I think all gambling----
Mr. Goodlatte. Should states be allowed to permit gambling
within their own borders on the Internet?
Mr. Kindt. Mr. Chairman, I think all gambling is
economically problematic. You are not creating anything. There
are opportunity costs. There is no product being created,
artificial risk.
With regard to can it be kept within borders, I don't think
technologically that is possible.
Mr. Goodlatte. Mr. Bernal?
Mr. Bernal. We strongly think states should not be
sponsoring Internet gambling at the state level, and anyone who
has any doubt----
Mr. Goodlatte. Do you think the Federal Government should
stop them, or do you think that is the responsibility of each
state?
Mr. Bernal. The Federal Government should step in and stop
state governments from cheating and exploiting their citizens,
yes.
Mr. Goodlatte. Mr. Fagan?
Mr. Fagan. Likewise. As a matter of policy, states should
not have commercial gambling, whether Internet or otherwise. As
a matter of Federal policy, the use of the Internet to gamble
necessarily implicates Federal interests, so states shouldn't
be allowed to do that. But as a matter of constitutional law, a
state can choose to have gambling within its borders and set up
its own intrastate Internet of sorts.
Mr. Goodlatte. Including on the Internet?
Mr. Fagan. Well, if it is on the Internet, it would be
unwise because----
Mr. Goodlatte. Within their state borders, they can do it
on the Internet just like they do in brick and mortars.
Mr. Fagan. They have the right to do that if they can keep
it within their borders.
Mr. Goodlatte. Okay. Mr. Moylan?
Mr. Moylan. I think that states are well within their power
to regulate gambling into or out of existence such as they see
fit. I have my own preferences in that regard, but it is pretty
clear to me that they have the authority to do so, and we have
seen a wide range in states' approaches to that issue that
bears that out.
Mr. Goodlatte. Do you think the Federal Government should
step in and protect a state that does not want Internet
gambling from bleeding into its state, if you will, from states
that do have it on the Internet?
Mr. Moylan. Sure. I think that there is a genuine role to
be played for Congress to address intrastate transmissions, as
we discussed. The original Wire Act was in that vein. It was
attempting to help states enforce their own laws. Their powers
essentially end at their borders, and so they lacked the
ability to enforce these intrastate transmissions, and that is
why they turned to the Federal Government for help.
Mr. Goodlatte. Ms. Aftab?
Ms. Aftab. I think that the Federal role in being able to
set up standards and enforce those standards so that
geolocation is actually working so it is not moving across the
borders is very important.
Mr. Goodlatte. Okay. Let me ask one more question, because
I have a few seconds left. Do you see a difference between
gambling via online poker and sports betting versus playing the
lottery? Mr. Kindt?
Mr. Kindt. Yes. Sports gambling and Internet gambling are
the crack cocaine of creating new addicted gamblers and opening
up vast new areas of----
Mr. Goodlatte. You are more troubled by that than by online
Internet lottery?
Mr. Kindt. I am troubled by lotteries, but I am more
troubled by the sports gambling.
Mr. Goodlatte. Mr. Bernal?
Mr. Bernal. When governments are in the business of
sponsoring gambling, we oppose that practice. Of the ones you
mentioned, online poker, is really a sliver of the whole
business. Those who lobby for this, just let us play poker,
poker is a tiny amount of their business model. It makes people
feel good. People have an association with cards, but that is a
very minor piece of this.
Mr. Goodlatte. Got it.
Mr. Fagan?
Mr. Fagan. All the different types of gambling you suggest,
if permitted online by states, are all subject to being
basically slottified. They will be converted to essentially
slot machine-type addictive behaviors, generating increased
speed of play, people staying online as long as possible to
play, even though they shouldn't do that.
Again, individual states within their borders have the
right----
Mr. Goodlatte. I am out of time, and I want to give Mr.
Moylan and Ms. Aftab, if the Chairman will permit, a chance to
answer.
Mr. Moylan. If I understand your question----
Mr. Goodlatte. Do you see a difference between gambling via
online poker and sports betting versus playing the lottery?
Mr. Moylan. I don't have particularly greater concern as it
relates to the online conduct that you described as opposed to
in-person. I think that wraps it up for you.
Mr. Goodlatte. Ms. Aftab?
Ms. Aftab. And I see the difference between sports betting
but not poker and lottery. Sports betting has always been
handled under the Wire Act. It is addressed. But I think that
lotteries and poker and online slot machines are all in the
same class.
Mr. Goodlatte. Do you think that when we had a telephone as
the only way of communicating, which is what we had when the
Wire Act was written, do you think that it was contemplated--we
knew that people would call up and say I want to put a bet on
certain sports contests. But do you think somebody would call
up on the phone back in 1964 and say put $50 on red and spin
the roulette wheel and tell me whether or not I won?
Ms. Aftab. I think it is like poker.
Mr. Goodlatte. Probably not, right?
Ms. Aftab. I will tell you what all my cards are and I will
win if you believe me.
Mr. Goodlatte. So there is a problem there in the fact that
some are trying to draw a distinction between the two, when
there really isn't that big a distinction.
Ms. Aftab. Well, I think that lotteries--I have been in
states that allow it and----
Mr. Goodlatte. No, I am saying lotteries on one side, but
you have sports betting and you have casino gambling on the
other side.
Ms. Aftab. Yes, and I don't think there is a difference
between casino games only because Congress has already acted
under the Wire Act in connection with the wire and the kinds of
things we are seeing with racketeering. We are talking about
licensed gambling providers here under certain regulation, and
I think it is different.
Mr. Goodlatte. Control within the state borders.
Ms. Aftab. As long as it is within the state borders, and
you can keep it within the state borders.
Mr. Goodlatte. Right. Thank you very much.
Thank you, Mr. Chairman.
Ms. Aftab. And keep kids off.
Mr. Chaffetz. I thank the gentleman.
I now recognize the Ranking Member of the Subcommittee, Ms.
Jackson Lee, for 5 minutes.
Ms. Jackson Lee. Thank you very much, Mr. Chairman.
Again, this is a very important discussion.
Let me go first to Mr. Moylan and ask on the question
dealing with both Federalism and states' rights, the Chairman's
question or theme in his remarks, Mr. Goodlatte, about bleeding
into other states. I know that you are framing your discussion
around the question of states' rights. Some have a system of
online that they have regulated.
How would you answer the question of bleeding into other
states?
Mr. Moylan. It is a good question, and I think that the
answer to it is--and first of all, this is a question that we
face in any number of areas, not just as it relates to
gambling. But states have remedies at their disposal, and there
is Federal law at the disposal of prosecutors today to address
that conduct. If a state chose to ban gambling within its
borders, it could do so on both an institutional level and an
individual level. And on the Federal level, the interstate
transmission of those bets are, by and large, already illegal
under UIGEA and the Wire Act.
So I think that the tools are there to be able to prosecute
that. Whether states choose to do that is, of course, a
separate question. I am sure they are less eager about doing so
with individuals than they are institutional purveyors of it.
But the tools are there, in my estimation.
Ms. Jackson Lee. And why don't you expand a little bit on
general police powers that individual states have and how that
would impact your discussion?
Mr. Moylan. Well, from a sort of broad perspective,
discussing Federalism and the Constitution, police powers are
reserved to the states. There have been many court cases that
have tested this, and it is the reason that we have to assert
what is the nexus under which the Federal Government involves
itself in an issue.
So in this case, the very clear nexus is to the extent that
there are interstate transmissions or issues in-between two
states or international issues. But when we are talking about
intrastate conduct, and to the extent that it is genuinely
intrastate, those are by and large reserved to the states, and
in the absence of reserving those powers to the states, I think
that we worry, the R Street Institute does very much, about
what that implies for the role of the Federal Government and
the size of the Federal Government moving forward.
Ms. Jackson Lee. One of the things is we have all found
ourselves on the side of states' rights at one time or another.
Let me ask a question of Ms. Aftab, and as I do that I will
ask the Chairman to submit into the record a letter from the
National Fraternal Order of Police. I ask unanimous consent to
place this into the record.
Mr. Chaffetz. Without objection, so ordered.
Ms. Jackson Lee. Thank you.
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Ms. Jackson Lee. Ms. Aftab, I have made my point clear, my
concern for children and the ultimate impact. Why don't you
respond to two points, one the question of children who are
making decisions that may not be the best for them and without
good judgment. They are children, and it is no reflection on
how good their parents are. We know technology finds its way
into bedrooms, little bedrooms, and on all of the new devices
that are coming out all the time. Number one.
Number two, how do we respond to the question that an
unregulated process draws a lot of horror stories, particularly
in the money laundering, offshore gambling that no one has
control of, and that may draw innocent persons who desire to
gamble and then find themselves in a worse position, being
involved in unregulated processes?
Ms. Aftab. Thank you very much, Ranking Member. I was a
member of the Internet Safety Technology Task Force. It was
from the Harvard Berkman Center, and we were charged by the
Attorneys General to look at age verification and kids online,
and it was basically to see how we could tell how old somebody
was for the privacy laws that were put in place and
inappropriate content.
What we recognized was you can never identify a kid, but
you can identify an adult. So these technologies require that
you have bank accounts. They require that you show government-
issued identification. They look at these. They go through
databases. A lot of them are using IDology, which is being used
by a lot of the big companies out there and has been providing
information to the FTC and advice to the FTC over the years.
So what you have to do is prove that you are an adult and
prove that you are who you are, and prove that you live where
you are, and all of the databases out there that are collecting
information about us have to agree. If anything doesn't agree,
you are kicked out. If they find that you are using technology
on your computer that allows you to get to it remote, you are
kicked out. If they find that there is any question about what
is going on, you are kicked out.
Ms. Jackson Lee. Are you suggesting, if I might, that other
states would have the ability to use the technology, or are
using the technology?
Ms. Aftab. They are already using it, and it is actually
very good.
Ms. Jackson Lee. And let me conclude by just simply saying
you are suggesting that the offshore operators are not
following----
Ms. Aftab. They are not doing anything. They don't want to
keep kids out. Kids have a lot of money.
Ms. Jackson Lee. Thank you so very much.
Thank you, Mr. Chairman. I yield back.
Mr. Chaffetz. I thank you.
We have some critical votes on the floor. We are dealing
with the budget, and these are multi-trillion-dollar votes. So
the Chair finds that we are going to go into recess. If Members
wish to ask further questions, it is the intention to open this
back up and come back into session here for this hearing within
about 10 minutes of the last vote. So it is probably no sooner
than at least 6:30, but it is Congress, so anything bad can
happen.
So, with that, the Committee will stand in recess.
[Recess.]
Mr. Chaffetz. The Committee will now come to order. With
votes closed on the floor and two Members present, we will
continue, and I am going to recognize myself for 5 minutes.
I would like to kind of go down the line and ask a few
questions and keep this confined. I have a few concerns.
The Attorney General nominee, Loretta Lynch, stated, when
asked a question in her confirmation hearing, she said, ``I am
not aware of any statute or regulation that gives OLC opinions
the force of law,'' OLC being Office of Legal Counsel within
the Department of Justice.
Do you agree that the OLC opinion of December 23rd, 2011,
does not carry the force of law?
We can start with Professor Kindt and go on down the line.
I would appreciate it.
Mr. Kindt. I would concur with that, that it doesn't carry
the force of law. It is simply an interpretation. It could be
read differently by another attorney general.
Mr. Chaffetz. Thank you.
Mr. Bernal. Absolutely, I agree that it doesn't have the
force of law, and I think the best example is they released it
the day before Christmas Eve. That tells you all you need to
know.
Mr. Chaffetz. Mr. Fagan?
Mr. Fagan. It does not have the force of law----
Mr. Chaffetz. Microphone, if you could, please, sir?
Mr. Fagan. Clearly, it does not have the force of law. It
is simply a lawyer's opinion and justifies a decision of non-
prosecution on DOJ's part.
Mr. Chaffetz. Mr. Moylan?
Mr. Moylan. We are going to go four for four. It does not
carry the force of law and it is merely their own
interpretation of it.
Mr. Chaffetz. Do you believe, Mr. Moylan, that the states
and others are taking risks by believing that it does carry the
force of law?
Mr. Moylan. I think states are certainly taking a risk if
they are acting in contravention to stated policy of the
Justice Department. That in and of itself doesn't tell you what
the law is or what courts would say about it, but it certainly
puts them at risk of their own institutions, of their own
individuals facing prosecution under Federal law.
Mr. Chaffetz. Ms. Aftab?
Ms. Aftab. It doesn't carry force of law, but the Federal
courts have ruled in the same way that sporting events and
contests should be read together. So, although it doesn't, some
Federal courts have taken the position that it does.
Mr. Chaffetz. The FBI has issued a couple of letters of
deep concern about the ability to police this. We have this
from attorneys general, we have it from the FBI, we have it
from a number of different law enforcement organizations.
Mr. Moylan, how do you answer their concerns about the
regulation and the policing of these types of online schemes?
Mr. Moylan. Sure. I think it is perfectly fair to have
concerns about whether or not the laws that are on the books
are sufficient to be able to enforce what states' prerogatives
are. I think what my contention is is that the laws that are
necessary to do that are generally on the books; that we have,
by and large, bans certainly as it relates to UIGEA interstate
payment processing. The Wire Act itself obviously deals with a
class that this bill would attempt to change of intrastate
transactions, and states have their own prerogative inside
their borders to establish a law as they see fit. So the
question is really in these cross-border issues.
Mr. Chaffetz. We are getting to the heart of what one of my
deep concerns is. I believe that this bill is a states' rights
issue, that the State of Utah does not want gambling within its
borders. That is our long-held position. We don't have
lotteries. We don't have Indian gaming. We don't have any sort
of gaming whatsoever, and it is na?ve at best to think that you
can suddenly just create these fictitious borders because of
technology and prohibit them coming into the State of Utah.
I mean, you give me a good 16-year-old and in about 5
minutes he can figure out how to spoof this or put some virtual
private network out there. You can sign up for this for a few
bucks, and I don't care if you are 13 years old and live in
Provo, Utah. It is fiction for anybody to believe that they can
just virtually create these borders. We have videos of people
going and doing this for gaming, for lotteries. It is a
serious, serious problem.
Does anybody really believe on this panel, does anybody
really believe that technology can prohibit a 16-year-old from
getting on a VPN or creating some sort of technological way and
really prohibit gaming within the State of Utah? Does anybody
believe that?
Ms. Aftab. I do.
Mr. Chaffetz. Why?
Ms. Aftab. I do. The providers in the three states that we
are looking at prohibit any VPN. If there is a sign that one is
being used on your computer----
Mr. Chaffetz. Really? And who is the VPN police?
Ms. Aftab. The VPN police are the providers who are doing
the geolocation.
Mr. Chaffetz. Really?
Ms. Aftab. Now, I can't talk for the lotteries, and I
looked for the others, and there is always an exception to
things, but this technology is getting a lot better. So that
16-year-old won't be able to spoof them, and they won't be able
to do the rest as long as everyone is doing the best that they
are doing now, which I have seen.
There may be an exception. There is always an exception. I
told you we used to send people in to buy beer for us. But I
think that what we will have is better than what exists now,
which is nothing that will stop them from gambling off the
Caribbean sites and the rest in Utah and in every place else.
Mr. Chaffetz. There are payment plans and other things, but
I think it is foolish at best to assume that this technology is
suddenly going to create this virtual border.
My time has expired. I will now recognize the gentleman
from Texas, Mr. Poe, for 5 minutes.
Mr. Poe. I want to thank the Chairman for allowing
everybody to come back.
I appreciate all of y'all, including the spectators, for
being back here after 7 o'clock tonight. It just shows that
this is important to a lot of people for a lot of reasons.
I will try not to take very long. First, without objection,
I am going to introduce the testimony of Michelle Minton, a
Consumer Policy Fellow at the Competitive Enterprise Institute,
for the record.
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Mr. Poe. I have some questions for all of y'all. That is
plural for ``y'all'' if you are from Texas. [Laughter.]
Let me just try to explain what I am thinking. I think it
is a concern of many Members as well.
The Ranking Member said it best. We are all for states'
rights sometimes, and I try to be for states' rights all the
time. Federalism is an issue that is important to me. In Texas
we have horse racing, we have dog racing, we have state-
sponsored lottery which doesn't raise money for the education
system even though it is supposed to. The reservations have
casinos, and if people want to, they drive as fast as they can
on the weekends to Louisiana where they have a lot of casinos.
By adding Internet gaming in the state, the word
``Internet,'' and I think the debate is over the issue since it
is the Internet, then the government, the Federal Government,
has the authority to regulate it.
So do you agree or disagree, Mr. Moylan?
I have several questions. I will ask all of you the same
question, but I will ask them to him first, and then if we are
out of time, then I will just submit them to you in writing and
you can answer them in writing so we are not here all night.
Do you think that if something is on the Internet,
therefore the Federal Government, under the guise of the
Commerce Clause, can regulate that activity?
Mr. Moylan. Yes. I think that it is a very problematic
construction to say that any activity, any conduct on the
Internet whatsoever is, per se, interstate. It effectively
eviscerates the Commerce Clause as any kind of real limitation
moving forward. We see now what the Internet looks like today.
Think of what it might look like 20 years from now in the way
that it might expand and help people connect in other ways.
So to think that the mere use of the Internet, in and of
itself, justifies Federal intervention, whether or not the
conduct has any other transmission across state lines of a non-
incidental nature, I think is hugely problematic.
Mr. Poe. But isn't that what we are saying with this
legislation, that because it is on the Internet and the
activity may cross state lines, therefore the Federal
Government has the authority to regulate it?
Mr. Moylan. Right, that is essentially what underlies it. I
mention in my written testimony that there are three words in
RAWA itself that make that very clear. When it is adding
basically Internet transmissions into the definition of the
Wire Act, what it does is it says incidentally or otherwise,
and that also makes clear that, for example, what led to that
OLC memo in 2011, the states that were attempting to allow
online sales for their lotteries that have this intermediate
routing of a payment processor that happens to be in another
state, but you have a purchaser and a seller that are in the
same state, that that would constitute interstate for the
purposes of Federal regulations.
So I think that that is a huge problem; and, yes, that is
something that underpins at the heart of this bill.
Mr. Poe. The types of gaming activity that I mentioned
other than Internet gaming, that is a state issue?
Mr. Moylan. By and large, gambling activity is a state
issue, sure.
Mr. Poe. Horse racing and dog racing, casinos, and the
state lottery--I think that covers all of them--aren't those
just state issues?
Mr. Moylan. And there are exemptions that exist in RAWA for
several of those things, which I think puts the lie to the fact
that all gambling is, in and of itself, pernicious, the fact
that we have legislation on the Federal level and at the state
level that exempts these kinds of activities that you
mentioned.
Mr. Poe. I don't think the issue is whether or not the
government should regulate gaming because it is bad. I think we
tried that with prohibition, or demon rum, as my grandmother
used to call it, and we see where that got us. That is what she
called it. So that is a concern to me. It is a concern that the
regulations themselves may cause more crime offshore than what
we have now.
So it is your answer that this is something that if the
State of Texas wants to have intrastate Internet gaming, that
they should be allowed to and the Federal Government shouldn't
prohibit it because other states don't like it in their states?
Mr. Moylan. Yes, I think that is precisely my position,
that states have within their power today to determine their
own fate as it relates to gambling, and they should continue to
have that power. It is a power that is justly reserved to them
under our system as we have it today, and this bill is
problematic in that regard because it would take from them that
ability because of this, as you mentioned, this sort of
treatment of any kind of conduct on the Internet as inherently
interstate.
Mr. Poe [presiding]. I will have the same questions for all
of you, but I will put them in writing so you can submit it in
writing.
I will recognize the Ranking Member, Ms. Jackson Lee, who I
just quoted.
Ms. Jackson Lee. Mr. Richmond, I am willing to yield to you
for a moment--we were almost closing--so that you can raise
your questions, if I might, and then follow him, Mr. Chairman?
He has not asked any questions.
Mr. Poe. I recognize the gentleman from Louisiana, Mr.
Richmond----
Ms. Jackson Lee. Thank you.
Mr. Poe [continuing]. If he wishes to ask questions.
Mr. Richmond. Thank you, Mr. Chairman, and I will make it
short.
I have been a bunch of places on this issue, but as of late
I have a quick concern, and it has probably been answered. But
my question now would be how does this affect my Louisiana
lottery, Mega Ball and all of those, which we as a legislature,
when I was in the legislature, decided to dedicate those funds
to education, to teacher pay? And for a state that is now
facing a $1.6 billion budget deficit, to lose any other revenue
that is helping pay for a free tuition program for college or
for a teacher's education becomes a major concern. So can
someone tell me how it affects the Louisiana lottery?
Mr. Kindt. Let me address that, if I may, Representative.
Going back to Illinois, which was one of the first states to
legalize the lottery, allegedly to help education, we were one
of the first states to get riverboat gambling, then land-based
casinos. We are now putting video lottery terminals everywhere
throughout the state, at convenience stops, at very low tax
rates. They are not being taxed the way other states are being
taxed. And the reason is because, as I indicated in my
testimony, gambling lobbyists are virtually dictating economic
policy in the State of Illinois, and this has had a terrible
effect. I put this in Law Review articles 20 years ago, when we
were discussing this at the Illinois legislature and looking at
what this was going to cause.
I would also indicate that I happen to chair the Faculty
and Staff Benefits Committee at the University of Illinois. We
are seeing widespread reduction on tax on our pensions, on
education, on social services, and a very large component of
that is the gambling issue, not just the lotteries but beyond
the lotteries, of the money that is being misdirected to
gambling interests.
Ms. Aftab. I think the simple answer is, as written, your
lottery goes offline.
Mr. Richmond. Does anybody disagree with the fact that the
lottery will go offline?
Mr. Bernal. I don't disagree with that, but I guess the
policy question is not so much what happens to your lottery but
to the constituents of Louisiana. Is there less inequality and
unfairness in Louisiana if the lottery isn't taking their money
through online venues? Because what the Louisiana lottery is,
or any other lottery that you have in this country, is it is
taking money from the less well-off and giving it to the haves.
So the evidence is overwhelming that it is an incredible wealth
transfer. It is creating inequality in our country, and it is
creating it in your state.
Mr. Richmond. So your position would be because it is
online as opposed to brick and mortar?
Mr. Bernal. It is building on--the Louisiana lottery, part
of the reason you have a deficit, a $1.6 billion deficit, is
things like the lottery was supposed to fill your budget gaps.
But the truth is it has been a failed public policy.
Mr. Richmond. No. Actually, my Republican governor did a
billion dollars in tax breaks with no pay-for.
Mr. Bernal. I understand. [Laughter.]
Understood. But the point is that the lotteries, not just
in your state, sir, but all across this country, have not
produced the revenues that they were promised. What they have
done is they have made everyday people poorer. They have
created an incredible amount of inequality, and they go to the
heart of the financial inequality in our country today.
Gambling is the public voice of government in Louisiana and
every other state.
Mr. Richmond. Well, let me close with this question. I
didn't want to take up all the time, and it was so nice of Ms.
Jackson Lee to yield. But as you go into casinos, brick-and-
mortar casinos, you will see people who obviously are in there
that can't afford, at least in your opinion, can't afford to
lose whatever they are gambling and certainly shouldn't be
sitting at the high-stakes slot.
So what becomes the difference? That they can get up and
go?
Mr. Bernal. From our perspective, lotteries and casinos,
that is all part of an extension of government. Yes,
absolutely. The people playing the slot machines, losing their
paychecks, absolutely, that is contributing to the inequality
and unfairness in your state as well.
Mr. Kindt. If I might add, we have done studies throughout
the years, over the last 20 years, that show that the social
and economic costs to the state are at least three dollars or
more for every one dollar in tax revenues coming into the
lottery and other gambling taxation.
So it is a slow descent, and as I said, in Illinois we are
facing $111 billion in unfunded liabilities plus the same type
of budget deficit that you are talking about in Louisiana, and
a large part of that is because of this gambling.
Mr. Richmond. Thank you.
And thank you, Mr. Chairman. I yield back.
Mr. Poe. The Chair will recognize the gentle lady from
Texas for brief questions.
Ms. Jackson Lee. Thank you very much, Mr. Chairman.
And again, I want to thank the Chairman of this Committee
for working with me on the importance of this hearing, and the
Chairman of the full Committee, and the Ranking Member of the
full Committee as well.
Let me thank the witnesses and offer one or two points that
I think should be the obvious, that we have three very strong
witnesses for this legislation, it appears. I think woven into
your support of it is, of course, your assessment of the, if
you will, ills of gambling and the addiction that occurs in
some individuals and the drastic societal results of its use. I
believe that this Committee, which deals with the law, should
also be concerned about those societal ills.
I hope that as we proceed in reviewing this legislation,
marking it up, we might find common ground on addressing how
our approach should actually be. I think the question that you
have made, Mr. Moylan, for those of us who take special pains
to look at the Constitution and assess the infrastructure
between the Federal Government and state government are
troubled and want to determine how this concern of the societal
ills matches with the very age-old debate on Federal and state
relationships and Federal jurisdiction and states' rights. I
think the point that you have made is that the state can
contain itself, can provide those firewalls against other
states that may not be so inclined. But how do you stop the
states that are inclined from being able to do so?
I will just use an example, Mr. Chairman. When we were
dealing with the question of the bricks and mortar issue with
online purchases versus the issue of bricks and mortar stores,
that was somewhat of a state issue as well, online versus
bricks and mortar, how do you balance the guys who build
buildings and sell goods versus those online. So I think that
is a great concern to me.
And then finally, Ms. Aftab, if I might just get you again
to state for the record--and then I have some letters to put
into the record--state for the record again the process that
you have discerned that protects children and counters or
blocks the offshore criminal activity that is going on
unregulated and that draws many of our citizens to ruin, if you
will, because it is unregulated, it is untested, it is not
secure. So if you would talk about the children, and I will
conclude on that.
Ms. Aftab. There are multiple steps that are brought in to
make sure that you are dealing with an adult, not that it is a
child but that it is an adult. So they go through age
verification, they look at government I.D.s, they look at
public records, they look at private records, and they make
sure all along that everything matches and that you are who you
say you are, and when you say you are living at some place, you
really are at that place.
There is nothing at all that is happening with most of the
rogue operators outside of the United States. They are not
paying on bets. They don't care who you are. Kids have a lot of
babysitting money and birthday money and Christmas money, and
they are using it to gamble, and they are not getting their
money back. I have gotten phone calls and people who have
reached out to us over the years, and there is nothing I can
do.
If we can have licensed providers, they will help police it
because they paid a lot of money for the ability to do so
within the state. They will help identify the outliers and law
enforcement will be able to do something about it. Not all. It
is the Internet, after all. But if you give them things that
are safe, private, and keep the kids off in fair games, and
they don't have malicious code, people would prefer to be there
than in the rogue sites offline.
Ms. Jackson Lee. Again, I thank the witnesses.
Mr. Chairman, I am going to yield back.
Thank you so very much for that explanation on the record.
I would like to submit into the record and ask unanimous
consent for a letter from the National Governors' Association
dated May 9, 2014; a report from the State of New Jersey dated
January 2, 2015, ``New Jersey Internet Gaming One Year
Anniversary: Achievements to Date and Goals for the Future.''
This letter concerns the position of the National Governors'
Association, the previous letter. I ask unanimous consent
again. This letter was dated January 2, 2015. And then a letter
from the Democratic Governors dated March 17, 2015, on the same
issue, the Restoration of America's Wire Act 2015.
Mr. Poe. Without objection, they all will made a part of
the record.
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Mr. Poe. Yield back?
Ms. Jackson Lee. Yield back.
Mr. Poe. Just a couple of other questions. I think I have
made it clear as to my biggest concern, the Federalism issue,
the states having the duty, obligation, and right to determine
gaming as a general rule.
Turning to another question, it is very brief, the criminal
element issue. I am a former judge. I don't like crooks,
outlaws, whatever you want to call them, of any type.
Will this legislation, Ms. Aftab, will this legislation
encourage or discourage or have no effect on the criminal
element, in your opinion?
Ms. Aftab. My opinion, if you outlaw the legal means of
doing this, then the only means out there are the criminal
sites and the criminal operations. So they will go underground,
they will go offshore. The more you put in to try to regulate
what they are doing here without giving them an avenue, the
more likely it is that you are going to be dealing with more
racketeering and criminal elements. We have seen it, we are
going to see more of it, and these days criminals don't just
fall into the type they used to have in Texas when you used to
wear your six shooters. Now we are seeing a lot that are
terrorist activities and raising money, and I think that it is
a great deal of money that can be made and that is being
gambled by people in the United States, and we have an
obligation to our consumers and to our children to ensure that
we are managing what is happening with them and we don't leave
them to, willy nilly, people who don't care about them at all.
Mr. Poe. Are you aware of the fact that the National Order
of Police is opposed to this legislation?
Ms. Aftab. I am not, and I would love to see what it is. I
am not surprised that they are opposed to the legislation in
some areas. It is a very complicated argument. If anyone ever
said the Internet safety charity that has been protecting
people for 20 years is now coming out and saying please
legalize online gambling, my mother would put me out in the
woodshed somewhere. But it is bringing together a lot of
strange bedfellows, and we need to recognize in the end
national security, our kids, money, all of the things that we
need to do can only be done if we take control. Giving up
control to the rest of the world is not what Americans do.
Mr. Poe. I want to thank all the witnesses again for being
here for such a long period of time, and also for your
testimony and expertise, and the spectators as well for showing
your interest.
This Subcommittee is adjourned.
[Whereupon, at 7:23 p.m., the Subcommittee was adjourned.]
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