109th Congress, 2d Session
House Report 109-412 Part 2
109 H. Rpt. 412; Prt 2
UNLAWFUL INTERNET GAMBLING ENFORCEMENT ACT OF 2006 R
EPORT
DATE: May 26, 2006. Committed to the Committee of the Whole House on the State of the Union and
ordered to be printed.
SPONSOR: Mr. Sensenbrenner submitted the following
COMMITTEE: From the Committee on the Judiciary
REPORT
[To accompany H.R. 4411] Retrieve bill tracking report Retrieve full text version
TEXT:
The Committee on the Judiciary, to whom was referred the bill (H.R. 4411) to prevent the use of
certain payment instruments, credit cards, and fund transfers for unlawful Internet gambling, and for other
purposes, having considered the same, report favorably thereon with an amendment and recommend that
the bill as amended do pass.
CONTENTS Page
The Amendment
Purpose and Summary
Background and Need For Legislation
Hearings
Committee Consideration
Vote of the Committee
Committee Oversight Findings
New Budget Authority and Tax Expenditures
Congressional Budget Office Cost Estimate
Performance Goals and Objectives
Constitutional Authority Statement
Section-by-Section Analysis and Discussion
Changes in Existing Law Made by the Bill, as Reported
The Amendment
The amendment is as follows:
SECTION 1. SHORT TITLE.
This Act may be cited as the "Unlawful Internet Gambling Enforcement Act of 2006".

 SEC. 2. PROHIBITION ON ACCEPTANCE OF ANY PAYMENT INSTRUMENT FOR
UNLAWFUL INTERNET GAMBLING.
(a) In General. Chapter 53 of title 31, United States Code, is amended by adding at the end the
following new subchapter:
"SUBCHAPTER IV PROHIBITION ON FUNDING OF UNLAWFUL INTERNET GAMBLING
"Section(s) 5361. Congressional findings and purpose
"(a) Findings. The Congress finds the following:
"(1) Internet gambling is primarily funded through personal use of payment system instruments, credit
cards, and wire transfers.
"(2) The National Gambling Impact Study Commission in 1999 recommended the passage of
legislation to prohibit wire transfers to Internet gambling sites or the banks which represent such sites.
"(3) Internet gambling is a growing cause of debt collection problems for insured depository
institutions and the consumer credit industry.
"(4) New mechanisms for enforcing gambling laws on the Internet are necessary because traditional
law enforcement mechanisms are often inadequate for enforcing gambling prohibitions or regulations on
the Internet, especially where such gambling crosses State or national borders.
"(b) Rule of Construction. No provision of this subchapter shall be construed as altering, limiting, or
extending any Federal or State law or Tribal-State compact prohibiting, permitting, or regulating gambling
within the United States.
"Section(s) 5362. Definitions
"For purposes of this subchapter, the following definitions shall apply:
"(1) Bet or wager. The term 'bet or wager'
"(A) means the staking or risking by any person of something of value upon the outcome of a contest
of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the
person or another person will receive something of value in the event of a certain outcome;
"(B) includes the purchase of a chance or opportunity to win a lottery or other prize (which opportunity
to win is predominantly subject to chance);
"(C) includes any scheme of a type described in section 3702 of title 28;
"(D) includes any instructions or information pertaining to the establishment or movement of funds by
the bettor or customer in, to, or from an account with the business of betting or wagering; and
"(E) does not include
"(i) any activity governed by the securities laws (as that term is defined in section 3(a)(47) of the
Securities Exchange Act of 1934 for the purchase or sale of securities (as that term is defined in section 3(a)
(10) of that Act);
"(ii) any transaction conducted on or subject to the rules of a registered entity or exempt board of trade
under the Commodity Exchange Act;
"(iii) any over-the-counter derivative instrument;
"(iv) any other transaction that
"(I) is excluded or exempt from regulation under the Commodity Exchange Act; or
"(II) is exempt from State gaming or bucket shop laws under section 12(e) of the Commodity
Exchange Act or section 28(a) of the Securities Exchange Act of 1934;
"(v) any contract of indemnity or guarantee;
"(vi) any contract for insurance;

 "(vii) any deposit or other transaction with an insured depository institution; or
"(viii) any participation in a fantasy or simulation sports game, an educational game, or a contest, that
"(I) is not dependent solely on the outcome of any single sporting event or nonparticipant's singular
individual performance in any single sporting event;
"(II) has an outcome that reflects the relative knowledge of the participants, or their skill at physical
reaction or physical manipulation (but not chance), and, in the case of a fantasy or simulation sports game,
has an outcome that is determined predominantly by accumulated statistical results of sporting events,
including any nonparticipant's individual performances in such sporting events; and
"(III) offers a prize or award to a participant that is established in advance of the game or contest and is
not determined by the number of participants or the amount of any fees paid by those participants.
"(2) Business of betting or wagering. The term 'business of betting or wagering' does not include the
activities of a financial transaction provider, or any interactive computer service or telecommunications
service.
"(3) Designated payment system. The term 'designated payment system' means any system utilized by
a financial transaction provider that the Secretary and the Board of Governors of the Federal Reserve
System, in consultation with the Attorney General, jointly determine, by regulation or order, could be
utilized in connection with, or to facilitate, any restricted transaction.
"(4) Financial transaction provider. The term 'financial transaction provider' means a creditor, credit
card issuer, financial institution, operator of a terminal at which an electronic fund transfer may be initiated,
money transmitting business, or international, national, regional, or local payment network utilized to effect
a credit transaction, electronic fund transfer, stored value product transaction, or money transmitting
service, or a participant in such network, or other participant in a designated payment system.
"(5) Internet. The term 'Internet' means the international computer network of interoperable packet
switched data networks.
"(6) Interactive computer service. The term 'interactive computer service' has the same meaning as in
section 230(f) of the Communications Act of 1934.
"(7) Restricted transaction. The term 'restricted transaction' means any transaction or transmittal
involving any credit, funds, instrument, or proceeds described in any paragraph of section 5363 which the
recipient is prohibited from accepting under section 5363.
"(8) Secretary. The term 'Secretary' means the Secretary of the Treasury.
"(9) State. The term 'State' means any State of the United States, the District of Columbia, or any
commonwealth, territory, or other possession of the United States.
"(10) Unlawful internet gambling.
"(A) In general. The term 'unlawful Internet gambling' means to place, receive, or otherwise knowingly
transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet
or wager is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet
or wager is initiated, received, or otherwise made.
"(B) Intrastate transactions. The term 'unlawful Internet gambling' shall not include placing, receiving,
or otherwise transmitting a bet or wager where
"(i) the bet or wager is initiated and received or otherwise made exclusively within a single State;
"(ii) the bet or wager and the method by which the bet or wager is initiated and received or otherwise
made is expressly authorized by and placed in accordance with the laws of such State, and the State law or
regulations include
"(I) age and location verification requirements reasonably designed to block access to minors and
persons located out of such State; and

 "(II) appropriate data security standards to prevent unauthorized access by any person whose age and
current location has not been verified in accordance with such State's law or regulations; and
"(iii) the bet or wager does not violate any provision of the
"(I) Interstate Horseracing Act;
"(II) Professional and Amateur Sports Protection Act;
"(III) Gambling Devices Transportation Act; or
"(IV) Indian Gaming Regulatory Act.
"(C) Intratribal transactions. The term 'unlawful Internet gambling' shall not include placing, receiving,
or otherwise transmitting a bet or wager where
"(i) the bet or wager is initiated and received or otherwise made exclusively
"(I) within the Indian lands of a single Indian tribe (as those terms are defined by the Indian Gaming
Regulatory Act); or
"(II) between the Indian lands of 2 or more Indian tribes to the extent that intertribal gaming is
authorized by the Indian Gaming Regulatory Act;
"(ii) the bet or wager and the method by which the bet or wager is initiated and received or otherwise
made is expressly authorized by and complies with the requirements of
"(I) the applicable tribal ordinance or resolution approved by the Chairman of the National Indian
Gaming Commission; and
"(II) with respect to class III gaming, the applicable Tribal-State Compact;
"(iii) the applicable tribal ordinance or resolution or Tribal-State compact includes
"(I) age and location verification requirements reasonably designed to block access to minors and
persons located out of the applicable Tribal lands; and
"(II) appropriate data security standards to prevent unauthorized access by any person whose age and
current location has not been verified in accordance with the applicable tribal ordinance or resolution or
Tribal-State Compact; and
"(iv) the bet or wager does not violate any provision of the
"(I) Interstate Horseracing Act;
"(II) the Professional and Amateur Sports Protection Act;
"(III) the Gambling Devices Transportation Act; or
"(IV) the Indian Gaming Regulatory Act.
"(D) Interstate horseracing. The term 'unlawful Internet gambling' shall not include placing, receiving,
or otherwise transmitting a bet or wager that is governed by and complies with the Interstate Horseracing
Act of 1978.
"(E) Intermediate routing. The intermediate routing of electronic data shall not determine the location
or locations in which a bet or wager is initiated, received, or otherwise made.
"(11) Other terms.
"(A) Credit; creditor; credit card; and card issuer. The terms 'credit', 'creditor', 'credit card', and 'card
issuer' have the same meanings as in section 103 of the Truth in Lending Act.
"(B) Electronic fund transfer. The term 'electronic fund transfer'
"(i) has the same meaning as in section 903 of the Electronic Fund Transfer Act, except that such term
includes transfers that would otherwise be excluded under section 903(6)(E) of that Act; and

 "(ii) includes any fund transfer covered by Article 4A of the Uniform Commercial Code, as in effect in
any State.
"(C) Financial institution. The term 'financial institution' has the same meaning as in section 903 of the
Electronic Fund Transfer Act, except that such term does not include a casino, sports book, or other
business at or through which bets or wagers may be placed or received.
"(D) Insured depository institution. The term 'insured depository institution'
"(i) has the same meaning as in section 3 of the Federal Deposit Insurance Act; and
"(ii) includes an insured credit union (as defined in section 101 of the Federal Credit Union Act).
"(E) Money transmitting business and money transmitting service. The terms 'money transmitting
business' and 'money transmitting service' have the same meanings as in section 5330(d) (determined
without regard to any regulations prescribed by the Secretary thereunder).
"Section(s) 5363. Prohibition on acceptance of any financial instrument for unlawful Internet gambling
"No person engaged in the business of betting or wagering may knowingly accept, in connection with
the participation of another person in unlawful Internet gambling
"(1) credit, or the proceeds of credit, extended to or on behalf of such other person (including credit
extended through the use of a credit card);
"(2) an electronic fund transfer, or funds transmitted by or through a money transmitting business, or
the proceeds of an electronic fund transfer or money transmitting service, from or on behalf of such other
person;
"(3) any check, draft, or similar instrument which is drawn by or on behalf of such other person and is
drawn on or payable at or through any financial institution; or
"(4) the proceeds of any other form of financial transaction, as the Secretary and the Board of
Governors of the Federal Reserve System may jointly prescribe by regulation, which involves a financial
institution as a payor or financial intermediary on behalf of or for the benefit of such other person.
"Section(s) 5364. Policies and procedures to identify and prevent restricted transactions
"(a) Regulations. Before the end of the 270-day period beginning on the date of the enactment of this
subchapter, the Secretary and the Board of Governors of the Federal Reserve System, in consultation with
the Attorney General, shall prescribe regulations (which the Secretary and the Board jointly determine to be
appropriate) requiring each designated payment system, and all participants therein, to identify and block or
otherwise prevent or prohibit restricted transactions through the establishment of policies and procedures
reasonably designed to identify and block or otherwise prevent or prohibit the acceptance of restricted
transactions in any of the following ways:
"(1) The establishment of policies and procedures that
"(A) allow the payment system and any person involved in the payment system to identify restricted
transactions by means of codes in authorization messages or by other means;
"(B) block restricted transactions identified as a result of the policies and procedures developed
pursuant to subparagraph (A); and
"(C) block transactions that are in violation of section 1084 of title 18.
"(2) The establishment of policies and procedures that prevent or prohibit the acceptance of the
products or services of the payment system in connection with a restricted transaction.
"(b) Requirements for Policies and Procedures. In prescribing regulations under subsection (a), the
Secretary and the Board of Governors of the Federal Reserve System shall
"(1) identify types of policies and procedures, including nonexclusive examples, which would be
deemed, as applicable, to be reasonably designed to identify and block or otherwise prevent or prohibit the
acceptance of the products or services with respect to each type of restricted transaction;

 "(2) to the extent practical, permit any participant in a payment system to choose among alternative
means of identifying and blocking, or otherwise preventing or prohibiting the acceptance of the products or
services of the payment system or participant in connection with, restricted transactions; and
"(3) consider exempting certain restricted transactions or designated payment systems from any
requirement imposed under such regulations, if the Secretary and the Board jointly find that it is not
reasonably practical to identify and block, or otherwise prevent or prohibit the acceptance of, such
transactions.
"(c) Compliance With Payment System Policies and Procedures. A financial transaction provider shall
be considered to be in compliance with the regulations prescribed under subsection (a), if
"(1) such person relies on and complies with the policies and procedures of a designated payment
system of which it is a member or participant to
"(A) identify and block restricted transactions; or
"(B) otherwise prevent or prohibit the acceptance of the products or services of the payment system,
member, or participant in connection with restricted transactions; and
"(2) such policies and procedures of the designated payment system comply with the requirements of
regulations prescribed under subsection (a).
"(d) No Liability for Blocking or Refusing to Honor Restricted Transactions. A person that identifies
and blocks a transaction, prevents or prohibits the acceptance of its products or services in connection with
a transaction, or otherwise refuses to honor a transaction
"(1) that is a restricted transaction;
"(2) that such person reasonably believes to be a restricted transaction; or
"(3) as a designated payment system or a member of a designated payment system in reliance on the
policies and procedures of the payment system, in an effort to comply with regulations prescribed under
subsection (a), shall not be liable to any party for such action.
"(e) Regulatory Enforcement. The requirements of this section shall be enforced exclusively by
"(1) the Federal functional regulators, with respect to the designated payment systems and financial
transaction providers subject to the respective jurisdiction of such regulators under section 505(a) of the
Gramm-Leach-Bliley Act and section 5g of the Commodities Exchange Act; and
"(2) the Federal Trade Commission, with respect to designated payment systems and financial
transaction providers not otherwise subject to the jurisdiction of any Federal functional regulators
(including the Commission) as described in paragraph (1).
"Section(s) 5365. Civil remedies
"(a) Jurisdiction. The district courts of the United States shall have original and exclusive jurisdiction
to prevent and restrain restricted transactions by issuing appropriate orders in accordance with this section,
regardless of whether a prosecution has been initiated under this subchapter.
"(b) Proceedings.
"(1) Institution by federal government.
"(A) In general. The United States, acting through the Attorney General, may institute proceedings
under this section to prevent or restrain a restricted transaction.
"(B) Relief. Upon application of the United States under this paragraph, the district court may enter a
temporary restraining order, a preliminary injunction, or an injunction against any person to prevent or
restrain a restricted transaction, in accordance with rule 65 of the Federal Rules of Civil Procedure.
"(2) Institution by state attorney general.

 "(A) In general. The attorney general (or other appropriate State official) of a State in which a
restricted transaction allegedly has been or will be initiated, received, or otherwise made may institute
proceedings under this section to prevent or restrain the violation or threatened violation.
"(B) Relief. Upon application of the attorney general (or other appropriate State official) of an affected
State under this paragraph, the district court may enter a temporary restraining order, a preliminary
injunction, or an injunction against any person to prevent or restrain a restricted transaction, in accordance
with rule 65 of the Federal Rules of Civil Procedure.
"(3) Indian lands.
"(A) In general. Notwithstanding paragraphs (1) and (2), for a restricted transaction that allegedly has
been or will be initiated, received, or otherwise made on Indian lands (as that term is defined in section 4 of
the Indian Gaming Regulatory Act)
"(i) the United States shall have the enforcement authority provided under paragraph (1); and
"(ii) the enforcement authorities specified in an applicable Tribal-State compact negotiated under
section 11 of the Indian Gaming Regulatory Act (25 U.S.C. 2710) shall be carried out in accordance with
that compact.
"(B) Rule of construction. No provision of this section shall be construed as altering, superseding, or
otherwise affecting the application of the Indian Gaming Regulatory Act.
"(c) Limitation Relating to Interactive Computer Services.
"(1) In general. Relief granted under this section against an interactive computer service shall
"(A) be limited to the removal of, or disabling of access to, an online site violating section 5363, or a
hypertext link to an online site violating such section, that resides on a computer server that such service
controls or operates, except that the limitation in this subparagraph shall not apply if the service is subject
to liability under this section under section 5367;
"(B) be available only after notice to the interactive computer service and an opportunity for the
service to appear are provided;
"(C) not impose any obligation on an interactive computer service to monitor its service or to
affirmatively seek facts indicating activity violating this subchapter;
"(D) specify the interactive computer service to which it applies; and
"(E) specifically identify the location of the online site or hypertext link to be removed or access to
which is to be disabled.
"(2) Coordination with other law. An interactive computer service that does not violate this subchapter
shall not be liable under section 1084(d) of title 18, except that the limitation in this paragraph shall not
apply if an interactive computer service has actual knowledge and control of bets and wagers and
"(A) operates, manages, supervises, or directs an Internet website at which unlawful bets or wagers
may be placed, received, or otherwise made or at which unlawful bets or wagers are offered to be placed,
received, or otherwise made; or
"(B) owns or controls, or is owned or controlled by, any person who operates, manages, supervises, or
directs an Internet website at which unlawful bets or wagers may be placed, received, or otherwise made, or
at which unlawful bets or wagers are offered to be placed, received, or otherwise made.
"(d) Limitation on Injunctions Against Regulated Persons. Notwithstanding any other provision of this
section, and subject to section 5367, no provision of this subchapter shall be construed as authorizing the
Attorney General of the United States, or the attorney general (or other appropriate State official) of any
State to institute proceedings to prevent or restrain a restricted transaction against any financial transaction
provider, to the extent that the person is acting as a financial transaction provider.
"Section(s) 5366. Criminal penalties

 "(a) In General. Whoever violates section 5363 shall be fined under title 18, or imprisoned for not
more than 5 years, or both.
"(b) Permanent Injunction. Upon conviction of a person under this section, the court may enter a
permanent injunction enjoining such person from placing, receiving, or otherwise making bets or wagers or
sending, receiving, or inviting information assisting in the placing of bets or wagers.
"Section(s) 5367. Circumventions prohibited
"Notwithstanding section 5362(2), a financial transaction provider, or any interactive computer service
or telecommunications service, may be liable under this subchapter if such person has actual knowledge
and control of bets and wagers, and
"(1) operates, manages, supervises, or directs an Internet website at which unlawful bets or wagers
may be placed, received, or otherwise made, or at which unlawful bets or wagers are offered to be placed,
received, or otherwise made; or
"(2) owns or controls, or is owned or controlled by, any person who operates, manages, supervises, or
directs an Internet website at which unlawful bets or wagers may be placed, received, or otherwise made, or
at which unlawful bets or wagers are offered to be placed, received, or otherwise made.".
(b) Technical and Conforming Amendment. The table of sections for chapter 53 of title 31, United
States Code, is amended by adding at the end the following:
"Subchapter IV Prohibition on funding of unlawful internet gambling "5361. Congressional findings
and purpose.
"5362. Definitions. "5363. Prohibition on acceptance of any financial instrument for unlawful Internet
gambling.
"5364. Policies and procedures to identify and prevent restricted transactions. "5365. Civil remedies.
"5366. Criminal penalties. "5367. Circumventions prohibited.".
SEC. 4. INTERNET GAMBLING IN OR THROUGH FOREIGN JURISDICTIONS.
(a) In General. In deliberations between the United States Government and any other country on
money laundering, corruption, and crime issues, the United States Government should
(1) encourage cooperation by foreign governments and relevant international fora in identifying
whether Internet gambling operations are being used for money laundering, corruption, or other crimes;
(2) advance policies that promote the cooperation of foreign governments, through information sharing
or other measures, in the enforcement of this Act; and
(3) encourage the Financial Action Task Force on Money Laundering, in its annual report on money
laundering typologies, to study the extent to which Internet gambling operations are being used for money
laundering purposes.
(b) Report Required. The Secretary of the Treasury shall submit an annual report to the Congress on
any deliberations between the United States and other countries on issues relating to Internet gambling.
Purpose and Summary
H.R. 4411, the "Unlawful Internet Gambling Enforcement Act of 2006," prohibits the acceptance of
any bank instrument for unlawful Internet gambling. This legislation does not amend the Wire Act (Pub. L.
No. 87-216). H.R. 4411 prohibits persons engaged in the business of betting or wagering from knowingly
accepting credit, electronic fund transfers, checks, drafts, or similar instruments, or the proceeds of any
other financial transaction in connection with unlawful Internet gambling.
H.R. 4411 does not prohibit any Internet gambling activity that complies with the Interstate
Horseracing Act (Pub. L. No. 95-515). Nor does this legislation cover: (1) intrastate and intratribal
transactions, provided that regulatory requirements are met and data security standards (e.g. age and
location verification, within State or Indian lands); (2) fantasy sports; (3) financial transaction providers,
interactive computer service or telecommunications service.

 H.R. 4411 instructs the Treasury Secretary, in consultation with the Attorney General and Federal
Reserve Board, to promulgate regulations directing banks and other members of the payment system to
adopt policies and practices to identify and prevent restricted internet gambling transactions; and places
enforcement of this section exclusively with the Federal Trade Commission, in a manner provided in
section 5005(a) of the Gramm-Leach-Bliley Act.
The bill also creates a Federal cause of action for the benefit of Federal and State Attorneys General to
prevent and restrain violations of the bill's provisions, including injunctions and temporary restraining
orders under rule 65 of the Federal Rules of Civil Procedure. Furthermore, H.R. 4411 limits relief against
an interactive computer service to removal of, or disabling access to, an online site violating the Act. H.R.
4411 sets a maximum penalty of five years imprisonment under title 18 of the U.S. Code, and a permanent
injunction against activity related to betting or wagering for violations.
Background and Need for the Legislation
Gambling on the Internet has increasingly become an extremely lucrative business. The explosive
growth of this industry has seen an increase both in gambling websites and in industry revenues. Internet
gambling is now estimated to be a $12 billion industry, with approximately $6 billion coming from bettors
based in the United States. It has been reported that there are as many as 2,300 gambling sites.
The booming industry of offshore websites accepting bets and wagers from persons located in the
United States raises a number of social and criminal concerns related to Internet gambling. The Internet's
ease of accessibility and anonymous nature: (1) make it difficult to prevent underage gambling; and (2)
feed on the compulsive behavior of the millions of Americans suffering from gambling addiction.
Worldwide Internet gambling sites offer organized crime groups another avenue to launder the proceeds of
their criminal activity, and assist in the facilitation of crimes.
As a general rule, Congress has found that:
(1) the States should have the primary responsibility for determining what forms of gambling may
legally take place within their borders; and
(2) the Federal government should prevent interference by one State with the gambling policies of
another, and should act to protect identifiable national interests. (Title 15 U.S.C. 57, Sec. 3001.)
Although the separate States generally regulate gambling, the Federal government has in limited
circumstances proscribed certain gambling activities.
In 1961, Congress enacted the "Interstate Wire Communications Act", 18 U.S.C. Section(s) 1084,
(Pub. L. No. 87-216) which prohibits any person who is "engaged in the business of betting or wagering"
from "knowingly using a wire communication facility for the transmission in interstate or foreign
commerce of bets or wagers, or information assisting in the placing of bets or wagers on any sporting event
or contest." The Act also grants State and local law enforcement agencies the power to direct a
communication service provider ("common carrier") to disconnect any persons who are using
communication facilities to transmit gambling information. Violations of this Act can result in
imprisonment for not more than two years, a fine, or both.
Also in 1961, Congress passed the "Travel Act", 18 U.S.C. Section(s) 1952, (Pub. L. No. 87-228),
which makes it illegal to "travel in interstate or foreign commerce or use the mail or any facility in
interstate or foreign commerce, with intent to (1) distribute the proceeds of any unlawful activity; or (2)
commit any crime of violence to further any unlawful activity; or (3) otherwise promote, manage, establish,
carry on, or facilitate the promotion, management, establishment, or carrying on, of any unlawful activity."
An unlawful activity is defined as, among other things, any business involving gambling committed in
violation of State or Federal laws.
In 1970, Congress enacted 18 U.S.C. Section(s) 1955, the "Prohibition of Illegal Gambling Business
Act." This section provides for imprisonment of not more than five years for any person who "conducts,
finances, manages, supervises, directs or owns all or part of an illegal gambling business." An "illegal
gambling business" is defined as a gambling business which is (1) in violation of State law; (2) involves
five or more persons; and (3) has been or remains in substantially continuous operation for a period in
excess of thirty days or has a gross revenue of $2,000 in any single day.

 However, there are specific Federal laws which allow interstate gambling. For example, the "Interstate
Horseracing Act" 15 U.S.C. Section(s) 3001-3007, (Pub. L. No. 95-515) was enacted in 1978, permitting
interstate off-track wagers under certain specified conditions. In 1988, Congress enacted the Indian Gaming
Regulatory Act, 25 U.S.C. Section(s) 2701, ("IGRA") (Pub. L. No. 100-497), allowing casinos to be built
on Indian reservations.
H.R. 4411 was introduced by Representative Leach on November 18, 2005. The bill has 35
cosponsors. The bill was referred to the Committee on Financial Services, and then to the Subcommittee on
Financial Institutions and Consumer Credit. The Full Financial Services Committee held a markup on
March 15, 2006. Mr. Leach offered an amendment in the nature of a substitute, which included both
technical and substantive changes. The bill was reported favorably via voice vote. On April 6, 2006 the bill
was referred sequentially, until May 26, 2006, to the Committee on the Judiciary.
Hearings
The Committee on the Judiciary held no hearings on H.R. 4411, the "Unlawful Internet Gambling
Enforcement Act of 2006."
Committee Consideration
On May 25, 2006, the Committee met in open session and ordered favorably reported the bill H.R.
4411, as amended, by voice vote, a quorum being present.
Vote of the Committee
In compliance with clause 3(b) of rule XIII of the Rules of the House of Representatives, the
Committee notes that there were no recorded votes during the committee consideration of H.R. 4411.
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules of the House of Representatives, the
Committee reports that the findings and recommendations of the Committee, based on oversight activities
under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of Representatives is inapplicable because this
legislation does not provide new budgetary authority or increased tax expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules of the House of Representatives, the
Committee sets forth, with respect to the bill H.R. 4411, the following estimate and comparison prepared
by the Congressional Budget Office pursuant to section 402 of the Congressional Budget Act of 1974.
May 26, 2006.
Hon. F. James Sensenbrenner, Jr., Chairman, Committee on the Judiciary, House of Representatives,
Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has prepared the enclosed cost estimate for H.R.
4411, the Unlawful Internet Gambling Enforcement Act of 2006.
If you wish further details on this estimate, we will be pleased to provide them. The CBO staff contact
is Kathleen Gramp.
Sincerely,
Donald B. Marron, Acting Director.
Enclosure.
H.R. 4411 Unlawful Internet Gambling Enforcement Act of 2006

 Summary: H.R. 4411 would prohibit businesses from accepting credit cards, checks, or other bank
instruments from gamblers who illegally bet over the Internet. It also would direct the Department of
Treasury and the Board of Governors of the Federal Reserve System (the Federal Reserve) to issue
regulations outlining policies and procedures that could be used by financial institutions to identify and
block gambling-related transactions that are transmitted through their payment systems. Compliance with
those prohibitions and regulations would be enforced by various federal agencies as well as state
governments, and violations would be subject to new civil remedies and criminal penalties. Finally, the bill
would require the Secretary of the Treasury to report annually to the Congress on any international
deliberations regarding Internet gambling.
Assuming appropriation of the necessary amounts, CBO estimates that implementing H.R. 4411 would
cost about $2 million over the 2007-2011 period. Enacting the bill would affect direct spending and
revenues, but CBO estimates that the net impact on direct spending and revenues would not be significant
in any year.
H.R. 4411 contains intergovernmental mandates as defined in the Unfunded Mandates Reform Act
(UMRA) and would impose no costs on state, local, or tribal governments.
H.R. 4411 would impose mandates, as defined in UMRA, on financial institution and other financial
transaction providers. Because the cost of the mandates would depend on regulations to be prescribed under
the bill, CBO cannot determine whether the direct cost to comply with those mandates would exceed the
annual threshold established by UMRA for private-sector mandates ($128 million in 2006, adjusted
annually for inflation).
Estimated cost to the Federal Government: The estimated budgetary impact of H.R. 4411 is shown in
the following table. The costs of this legislation fall within budget function 370 (commerce and housing
credit).
By fiscal year, in millions of dollars
2008
2010
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level 1 * * * *
Estimated Outlays 1 * * * *
Note. * = Less than $500,000.
Basis of estimate: For this estimate, CBO assumes that H.R. 4411 will be enacted near the end of fiscal
year 2006 and that funds will be appropriated for the activities authorized by the bill.
Spending subject to appropriation
Based on information from the Department of the Treasury and other affected agencies, CBO estimates
that implementing this bill would cost about $2 million over the 2007-2011 period, assuming appropriation
of the necessary amounts. That estimate primarily reflects the cost of developing regulations to identify and
block financial transactions related to illegal Internet gambling. The cost of preparing annual reports to the
Congress on international deliberations on this issue would not be significant. Spending by the Department
of Justice and the Federal Trade Commission to enforce certain provisions in the bill would likely be
negligible in any given year, CBO estimates.
Direct spending and revenues
Enacting H.R. 4411 would affect direct spending and revenues because of provisions affecting
financial regulatory agencies and criminal penalties. CBO estimates that such effects would not be
significant.
H.R. 4411 would direct financial regulatory agencies to enforce the regulations on illegal Internet
gambling as they apply to financial institutions, including Office of the Comptroller of the Currency
(OCC), Federal Deposit Insurance Corporation (FDIC), the Federal Reserve, the National Credit Union

 Administration (NCUA), and the Office of Thrift Supervision (OTS). Any additional direct spending by
NCUA, OCC, and OTS to implement the bill would have no net budgetary impact because those agencies
charge annual fees to cover all of their administrative expenses. In contrast, the FDIC's sources of income
primarily intragovernmental interest earnings and deposit insurance premiums do not change in tandem
within its annual expenditures; as a result, any added costs would increase direct spending unless and until
the FDIC raised deposit insurance premiums to offset those expenses. Budgetary effects on the Federal
Reserve are recorded as changes in revenues.
According to financial regulatory agency officials, enacting H.R. 4411 would not have a significant
effect on their workload or budgets. For this estimate, CBO assumes that the FDIC would not assess
additional premiums to cover the small costs associated with implementing this bill. Thus, CBO estimates
that enacting this bill would increase direct spending and offsetting receipts of the NCUA, OCC, OTS, and
FDIC by less than $500,000 a year. Based on information from the Federal Reserve, CBO estimates that the
rulemaking and enforcement activities required by H.R. 4411 would reduce revenues by less than $500,000
a year.
Because those prosecuted and convicted under the bill could be subject to criminal penalties, the
federal government might collect additional fines if the bill is enacted. Collections of such fines are
recorded in the budget as revenues, which are deposited in the Crime Victims Fund and spent in subsequent
years. Any additional collections are likely to be negligible because of the small number of cases involved.
Because any increase in direct spending would equal the amount of fines collected (with a lag of one year
or more), the additional direct spending also would be significant.
Estimated impact on state, local, and tribal governments: Although H.R. 4411 would prohibit gambling
businesses from accepting credit card payments and other bank instruments from gamblers who bet
illegally over the Internet, the bill would not create a new intergovernmental mandate as defined in UMRA.
Under current federal and state law, gambling businesses are generally prohibited from accepting bet or
wagers over the Internet. Thus, H.R. 4411 does not contain a new mandate relative to current law and
would impose no costs on state, local, or tribal governments.
Estimated impact on the private sector: H.R. 4411 would impose mandates, as defined in UMRA, on
financial institutions and other financial transaction providers. Because the cost of the mandates would
depend on regulations to be prescribed under the bill, CBO cannot determine whether the direct cost to
comply with those mandates would exceed the annual threshold established by UMRA for private-sector
mandates ($128 million in 2006, adjusted annually for inflation).
The bill would require the Secretary of Treasury and the Board of Governors of the Federal Reserve
System, in consultation with the Attorney General, to prescribe regulations that would require financial
transaction providers to identify and block restricted transactions in connection with unlawful Internet
gambling through the establishment of reasonable policies and procedures. Such requirements would
impose private-sector mandates on certain financial entities. Under the bill, the term "financial transaction
providers" means creditors, credit card issuers, financial institutions, or other payment networks that utilize
a designated payment system. Such systems would be determined by regulation.
The cost for financial transaction providers to comply with those mandates would depend on the
regulations to be prescribed. Information from representatives of the financial services industry indicates
that certain electronic transactions can currently be identified and blocked through the use of a coding
system. If the regulations apply only to those transactions, based on information from industry and
government sources, CBO expects that the cost of the mandates would fall below UMRA's annual
threshold. However, if the regulations also include the requirement for banks to identify and block checks
or other bank instruments used in a restricted transaction, the direct cost to comply with the mandates could
increase significantly and CBO has no basis to estimate whether those costs would be above or below the
annual threshold.
Although section 2 would prohibit gambling businesses from accepting credit card payments and other
bank instruments from gamblers who bet illegally over the Internet, those provisions would not create a
new private-sector mandate, as defined in UMRA. Under current federal and state law, gambling businesses
are generally prohibited from accepting bets or wagers over the Internet. Thus, those provisions do not
contain a new mandate relative to current law.

 Previous estimates: On March 30, 2006, CBO transmitted a cost estimate for H.R. 4411, the Unlawful
Internet Gambling Enforcement Act of 2006, as ordered reported by the House Committee on Financial
Services on March 15, 2006. The two bills are virtually identical and the estimated costs are the same.
Estimate prepared by: Federal Spending: Kathleen Gramp and Melissa Petersen. Federal Revenues:
Barbara Edwards. Impact on State, Local, and Tribal Governments: Sarah Puro. Impact on the Private
Sector: Page Piper/Bach.
Estimate approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis.
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of rule XIII of the Rules of the House of
Representatives, H.R. 4411 is to prevent the use of certain payment instruments, credit cards, and fund
transfers for unlawful Internet gambling, and for other purposes.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House of Representatives, the Committee
finds the authority for this legislation in art. I, Section(s) 8 of the Constitution.
Section-By-Section Analysis and Discussion
The following discussion describes the bill as reported by the Committee on the Judiciary.
Section 1. Short title
This section would provide that this legislation may be cited as the "Unlawful Internet Gambling
Enforcement Act of 2006."
Section 2. Prohibition on acceptance of any payment instrument for unlawful Internet gambling
Subsection (a) adds a new "Subchapter IV Prohibition on Funding of Unlawful Internet Gambling" to
Chapter 53 of Title 31 (Monetary Transactions). The new subchapter will come immediately after
subchapter III, covering money laundering and related financial crimes.
Section 5361. Congressional findings and purpose
(a) Findings. The Congressional findings note that: (1) Internet gambling is primarily funded through
the personal use of payment system instruments, credit cards, and wire transfers; (2) the National Gambling
Impact Study Commission in 1999 recommended the passage of legislation to prohibit wire transfers to
Internet gambling sites or the banks which represent such sites; (3) Internet gambling is a growing cause of
debt collection problems for insured depository institutions and the consumer credit industry; and (4) new
mechanisms for enforcing gambling laws on the Internet are necessary because traditional law enforcement
mechanisms are often inadequate for enforcing gambling prohibitions on the Internet, especially where
such gambling crosses State or national borders.
(b) Rule of Construction. No provision is to be construed as altering, limiting, or extending any Federal
or State law or Tribal-State compact prohibiting, permitting or regulating gambling within the United
States.
Section 5362. Definitions
This defines the term "bet or wager" as the staking or risking by any person of something of value
upon the outcome of a contest of others, a sporting event, or a game subject to chance with the agreement
that the winner will receive something of value in the event of a certain outcome. This subsection clarifies
that 'bet or wager' does not include bona fide business transactions such as securities trading or buying or
selling insurance contracts, or participation in a simulation sports game or educational game.
Defines the term "unlawful Internet gambling" as placing, receiving, or transmitting a bet or wager by
any means which involves the use of the Internet, where such bet or wager is unlawful under any applicable
Federal or State law in the State or Tribal lands in which the bet or wager is initiated, received, or otherwise
made. Clarifies that purely intrastate transactions conducted in accordance with State laws with appropriate
security controls will not be considered unlawful internet gambling. Likewise, transactions solely within

 Tribal lands complying with similar security requirements and the Indian Gaming Regulatory Act will not
be considered unlawful. Section 5362(10)(D) addresses transactions complying with Interstate Horseracing
Act (Pub. L. No. 95-515) (IHA) which will not be considered unlawful, because the IHA only regulates
legal transactions that are lawful in each of the states involved. This section also clarifies that intermediate
routing of data packets does not determine the location in which bets or wagers are made.
Section 5362 also defines the terms "business of betting or wagering," "designated payment system,"
"Internet," and "restricted transaction." Several additional terms are defined by reference to other sections
of the U.S. Code.
Section 5363. Prohibition on acceptance of any financial instrument for unlawful Internet gambling
Prohibits persons engaged in the business of betting or wagering from knowingly accepting credit,
funds, bank instruments, or proceeds of any other form of financial transaction in connection with the
participation of another person in unlawful Internet gambling. This is called a "restricted transaction"
according to the definitions section.
Section 5364. Policies and procedures to identify and prevent restricted transactions
(a) Regulations and (b) Requirements for Policies and procedures. Requires the Secretary of the
Treasury and the Federal Reserve Board, in conjunction with the United States Attorney General, to
prescribe regulations within nine months requiring any payment system to establish policies and procedures
reasonably designed to identify and block restricted transactions, or otherwise prevent restricted
transactions from entering its system, including transactions that are in violation of the Wire Act.
(c) Compliance and (d) Liability. Provides persons operating financial systems with immunity from
civil liability for blocking transactions that they reasonably believe are restricted transactions, or in reliance
on the regulations promulgated by the Treasury Department and Federal Reserve. Though a financial
institution may block additional transactions based on reasonable belief, it has no duty to do so, and may
rely solely on the regulations to fully discharge its obligations.
(e) Enforcement. The Federal functional regulators and the Federal Trade Commission are given the
exclusive authority to enforce this section.
Section 5365. Civil remedies
Authorizes the United States Attorney General and State Attorneys General to pursue civil remedies,
including a preliminary injunction or injunction against any person to prevent or restrain a violation of this
legislation. It clarifies that the bill does not alter, supersede or otherwise affect the Indian Gaming
Regulatory Act; generally limits responsibility of an interactive computer service to the removal or
disabling of access to an online site violating this section, upon proper notice; restricts the ability to bring
injunctive cases against financial transaction provider activities.
Section 5366. Criminal penalties
Authorizes criminal penalties, under title 18 of the U.S. Code, for violating section 5363, including
fines or imprisonment for not more than five years or both. Also authorizes permanently enjoining a person
convicted under this section from engaging in gambling activities.
Section 5367. Circumventions prohibited
Provides that, notwithstanding the safe harbor provided in section 5362(2), a financial intermediary or
interactive computer service or telecommunications service that has actual knowledge and control of bets
and wagers, and operates or is controlled by an entity that operates, an unlawful Internet gambling site can
be held criminally liable under this subchapter.
Section 4. Internet gambling in or through foreign jurisdictions
Section 4(a) provides that, in deliberations between the United States government and any other
country on money laundering, corruption, and crime issues, the United States government should
encourage cooperation by foreign governments in identifying whether Internet gambling operations are
being used for money laundering, corruption, or other crimes, advance policies that promote the
cooperation by foreign governments in the enforcement of this Act, and encourage the Financial Action

 Task Force on Money Laundering to study the extent to which Internet gambling operations are being used
for money laundering. It also requires the Secretary of the Treasury to submit an annual report to Congress
on the deliberations between the United States and other countries on issues relating to Internet gambling.
Subsection (b) requires the Secretary of the Treasury to submit an annual report to Congress on any
deliberations between the United States and other countries on issues relating to Internet Gambling.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of the House of Representatives, changes in
existing law made by the bill, as reported, are shown as follows (new matter is printed in italic and existing
law in which no change is proposed is shown in roman):
TITLE 31, UNITED STATES CODE
* * * * * * * SUBTITLE IV MONEY
* * * * * * * CHAPTER 53 MONETARY TRANSACTIONS
SUBCHAPTER I CREDIT AND MONETARY EXPANSION Sec.
5301.Buying obligations of the United States Government.
*******
Subchapter IV Prohibition on funding of unlawful internet gambling 5361. Congressional findings and
purpose.
5362. Definitions. 5363. Prohibition on acceptance of any financial instrument for unlawful Internet
gambling.
5364. Policies and procedures to identify and prevent restricted transactions. 5365. Civil remedies.
5366. Criminal penalties. 5367. Circumventions prohibited.
*******
SUBCHAPTER IV PROHIBITION ON FUNDING OF UNLAWFUL INTERNET GAMBLING
Section(s) 5361. Congressional findings and purpose
(a) Findings. The Congress finds the following:
(1) Internet gambling is primarily funded through personal use of payment system instruments, credit
cards, and wire transfers.
(2) The National Gambling Impact Study Commission in 1999 recommended the passage of legislation
to prohibit wire transfers to Internet gambling sites or the banks which represent such sites.
(3) Internet gambling is a growing cause of debt collection problems for insured depository institutions
and the consumer credit industry.
(4) New mechanisms for enforcing gambling laws on the Internet are necessary because traditional law
enforcement mechanisms are often inadequate for enforcing gambling prohibitions or regulations on the
Internet, especially where such gambling crosses State or national borders.
(b) Rule of Construction. No provision of this subchapter shall be construed as altering, limiting, or
extending any Federal or State law or Tribal-State compact prohibiting, permitting, or regulating gambling
within the United States.
Section(s) 5362. Definitions
For purposes of this subchapter, the following definitions shall apply:
(1) Bet or wager. The term "bet or wager"

 (A) means the staking or risking by any person of something of value upon the outcome of a contest of
others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person
or another person will receive something of value in the event of a certain outcome;
(B) includes the purchase of a chance or opportunity to win a lottery or other prize (which opportunity
to win is predominantly subject to chance);
(C) includes any scheme of a type described in section 3702 of title 28;
(D) includes any instructions or information pertaining to the establishment or movement of funds by
the bettor or customer in, to, or from an account with the business of betting or wagering; and
(E) does not include
(i) any activity governed by the securities laws (as that term is defined in section 3(a)(47) of the
Securities Exchange Act of 1934 for the purchase or sale of securities (as that term is defined in section 3(a)
(10) of that Act);
(ii) any transaction conducted on or subject to the rules of a registered entity or exempt board of trade
under the Commodity Exchange Act;
(iii) any over-the-counter derivative instrument;
(iv) any other transaction that
(I) is excluded or exempt from regulation under the Commodity Exchange Act; or
(II) is exempt from State gaming or bucket shop laws under section 12(e) of the Commodity Exchange
Act or section 28(a) of the Securities Exchange Act of 1934;
(v) any contract of indemnity or guarantee;
(vi) any contract for insurance;
(vii) any deposit or other transaction with an insured depository institution; or
(viii) any participation in a fantasy or simulation sports game, an educational game, or a contest, that
(I) is not dependent solely on the outcome of any single sporting event or nonparticipant's singular
individual performance in any single sporting event;
(II) has an outcome that reflects the relative knowledge of the participants, or their skill at physical
reaction or physical manipulation (but not chance), and, in the case of a fantasy or simulation sports game,
has an outcome that is determined predominantly by accumulated statistical results of sporting events,
including any nonparticipant's individual performances in such sporting events; and
(III) offers a prize or award to a participant that is established in advance of the game or contest and is
not determined by the number of participants or the amount of any fees paid by those participants.
(2) Business of betting or wagering. The term "business of betting or wagering" does not include the
activities of a financial transaction provider, or any interactive computer service or telecommunications
service.
(3) Designated payment system. The term "designated payment system" means any system utilized by
a financial transaction provider that the Secretary and the Board of Governors of the Federal Reserve
System, in consultation with the Attorney General, jointly determine, by regulation or order, could be
utilized in connection with, or to facilitate, any restricted transaction.
(4) Financial transaction provider. The term "financial transaction provider" means a creditor, credit
card issuer, financial institution, operator of a terminal at which an electronic fund transfer may be initiated,
money transmitting business, or international, national, regional, or local payment network utilized to effect
a credit transaction, electronic fund transfer, stored value product transaction, or money transmitting
service, or a participant in such network, or other participant in a designated payment system.
(5) Internet. The term "Internet" means the international computer network of interoperable packet
switched data networks.

 (6) Interactive computer service. The term "interactive computer service" has the same meaning as in
section 230(f) of the Communications Act of 1934.
(7) Restricted transaction. The term "restricted transaction" means any transaction or transmittal
involving any credit, funds, instrument, or proceeds described in any paragraph of section 5363 which the
recipient is prohibited from accepting under section 5363.
(8) Secretary. The term "Secretary" means the Secretary of the Treasury.
(9) State. The term "State" means any State of the United States, the District of Columbia, or any
commonwealth, territory, or other possession of the United States.
(10) Unlawful internet gambling.
(A) In general. The term "unlawful Internet gambling" means to place, receive, or otherwise knowingly
transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet
or wager is unlawful under any applicable Federal or State law in the State or Tribal lands in which the bet
or wager is initiated, received, or otherwise made.
(B) Intrastate transactions. The term "unlawful Internet gambling" shall not include placing, receiving,
or otherwise transmitting a bet or wager where
(i) the bet or wager is initiated and received or otherwise made exclusively within a single State;
(ii) the bet or wager and the method by which the bet or wager is initiated and received or otherwise
made is expressly authorized by and placed in accordance with the laws of such State, and the State law or
regulations include
(I) age and location verification requirements reasonably designed to block access to minors and
persons located out of such State; and
(II) appropriate data security standards to prevent unauthorized access by any person whose age and
current location has not been verified in accordance with such State's law or regulations; and
(iii) the bet or wager does not violate any provision of the
(I) Interstate Horseracing Act;
(II) Professional and Amateur Sports Protection Act;
(III) Gambling Devices Transportation Act; or
(IV) Indian Gaming Regulatory Act.
(C) Intratribal transactions. The term "unlawful Internet gambling" shall not include placing, receiving,
or otherwise transmitting a bet or wager where
(i) the bet or wager is initiated and received or otherwise made exclusively
(I) within the Indian lands of a single Indian tribe (as those terms are defined by the Indian Gaming
Regulatory Act); or
(II) between the Indian lands of 2 or more Indian tribes to the extent that intertribal gaming is
authorized by the Indian Gaming Regulatory Act;
(ii) the bet or wager and the method by which the bet or wager is initiated and received or otherwise
made is expressly authorized by and complies with the requirements of
(I) the applicable tribal ordinance or resolution approved by the Chairman of the National Indian
Gaming Commission; and
(II) with respect to class III gaming, the applicable Tribal-State Compact;
(iii) the applicable tribal ordinance or resolution or Tribal-State compact includes
(I) age and location verification requirements reasonably designed to block access to minors and
persons located out of the applicable Tribal lands; and

 (II) appropriate data security standards to prevent unauthorized access by any person whose age and
current location has not been verified in accordance with the applicable tribal ordinance or resolution or
Tribal-State Compact; and
(iv) the bet or wager does not violate any provision of the
(I) Interstate Horseracing Act;
(II) the Professional and Amateur Sports Protection Act;
(III) the Gambling Devices Transportation Act; or
(IV) the Indian Gaming Regulatory Act.
(D) Interstate horseracing. The term "unlawful Internet gambling" shall not include placing, receiving,
or otherwise transmitting a bet or wager that is governed by and complies with the Interstate Horseracing
Act of 1978.
(E) Intermediate routing. The intermediate routing of electronic data shall not determine the location or
locations in which a bet or wager is initiated, received, or otherwise made.
(11) Other terms.
(A) Credit; creditor; credit card; and card issuer. The terms "credit", "creditor", "credit card", and "card
issuer" have the same meanings as in section 103 of the Truth in Lending Act.
(B) Electronic fund transfer. The term "electronic fund transfer"
(i) has the same meaning as in section 903 of the Electronic Fund Transfer Act, except that such term
includes transfers that would otherwise be excluded under section 903(6)(E) of that Act; and
(ii) includes any fund transfer covered by Article 4A of the Uniform Commercial Code, as in effect in
any State.
(C) Financial institution. The term "financial institution" has the same meaning as in section 903 of the
Electronic Fund Transfer Act, except that such term does not include a casino, sports book, or other
business at or through which bets or wagers may be placed or received.
(D) Insured depository institution. The term "insured depository institution"
(i) has the same meaning as in section 3 of the Federal Deposit Insurance Act; and
(ii) includes an insured credit union (as defined in section 101 of the Federal Credit Union Act).
(E) Money transmitting business and money transmitting service. The terms "money transmitting
business" and "money transmitting service" have the same meanings as in section 5330(d) (determined
without regard to any regulations prescribed by the Secretary thereunder).
Section(s) 5363. Prohibition on acceptance of any financial instrument for unlawful Internet gambling
No person engaged in the business of betting or wagering may knowingly accept, in connection with
the participation of another person in unlawful Internet gambling
(1) credit, or the proceeds of credit, extended to or on behalf of such other person (including credit
extended through the use of a credit card);
(2) an electronic fund transfer, or funds transmitted by or through a money transmitting business, or the
proceeds of an electronic fund transfer or money transmitting service, from or on behalf of such other
person;
(3) any check, draft, or similar instrument which is drawn by or on behalf of such other person and is
drawn on or payable at or through any financial institution; or
(4) the proceeds of any other form of financial transaction, as the Secretary and the Board of
Governors of the Federal Reserve System may jointly prescribe by regulation, which involves a financial
institution as a payor or financial intermediary on behalf of or for the benefit of such other person.

 Section(s) 5364. Policies and procedures to identify and prevent restricted transactions
(a) Regulations. Before the end of the 270-day period beginning on the date of the enactment of this
subchapter, the Secretary and the Board of Governors of the Federal Reserve System, in consultation with
the Attorney General, shall prescribe regulations (which the Secretary and the Board jointly determine to be
appropriate) requiring each designated payment system, and all participants therein, to identify and block or
otherwise prevent or prohibit restricted transactions through the establishment of policies and procedures
reasonably designed to identify and block or otherwise prevent or prohibit the acceptance of restricted
transactions in any of the following ways:
(1) The establishment of policies and procedures that
(A) allow the payment system and any person involved in the payment system to identify restricted
transactions by means of codes in authorization messages or by other means;
(B) block restricted transactions identified as a result of the policies and procedures developed
pursuant to subparagraph (A); and
(C) block transactions that are in violation of section 1084 of title 18.
(2) The establishment of policies and procedures that prevent or prohibit the acceptance of the products
or services of the payment system in connection with a restricted transaction.
(b) Requirements for Policies and Procedures. In prescribing regulations under subsection (a), the
Secretary and the Board of Governors of the Federal Reserve System shall
(1) identify types of policies and procedures, including nonexclusive examples, which would be
deemed, as applicable, to be reasonably designed to identify and block or otherwise prevent or prohibit the
acceptance of the products or services with respect to each type of restricted transaction;
(2) to the extent practical, permit any participant in a payment system to choose among alternative
means of identifying and blocking, or otherwise preventing or prohibiting the acceptance of the products or
services of the payment system or participant in connection with, restricted transactions; and
(3) consider exempting certain restricted transactions or designated payment systems from any
requirement imposed under such regulations, if the Secretary and the Board jointly find that it is not
reasonably practical to identify and block, or otherwise prevent or prohibit the acceptance of, such
transactions.
(c) Compliance With Payment System Policies and Procedures. A financial transaction provider shall
be considered to be in compliance with the regulations prescribed under subsection (a), if
(1) such person relies on and complies with the policies and procedures of a designated payment
system of which it is a member or participant to
(A) identify and block restricted transactions; or
(B) otherwise prevent or prohibit the acceptance of the products or services of the payment system,
member, or participant in connection with restricted transactions; and
(2) such policies and procedures of the designated payment system comply with the requirements of
regulations prescribed under subsection (a).
(d) No Liability for Blocking or Refusing to Honor Restricted Transactions. A person that identifies
and blocks a transaction, prevents or prohibits the acceptance of its products or services in connection with
a transaction, or otherwise refuses to honor a transaction
(1) that is a restricted transaction;
(2) that such person reasonably believes to be a restricted transaction; or
(3) as a designated payment system or a member of a designated payment system in reliance on the
policies and procedures of the payment system, in an effort to comply with regulations prescribed under
subsection (a), shall not be liable to any party for such action.

 (e) Regulatory Enforcement. The requirements of this section shall be enforced exclusively by
(1) the Federal functional regulators, with respect to the designated payment systems and financial
transaction providers subject to the respective jurisdiction of such regulators under section 505(a) of the
Gramm-Leach-Bliley Act and section 5g of the Commodities Exchange Act; and
(2) the Federal Trade Commission, with respect to designated payment systems and financial
transaction providers not otherwise subject to the jurisdiction of any Federal functional regulators
(including the Commission) as described in paragraph (1).
Section(s) 5365. Civil remedies
(a) Jurisdiction. The district courts of the United States shall have original and exclusive jurisdiction to
prevent and restrain restricted transactions by issuing appropriate orders in accordance with this section,
regardless of whether a prosecution has been initiated under this subchapter.
(b) Proceedings.
(1) Institution by federal government.
(A) In general. The United States, acting through the Attorney General, may institute proceedings
under this section to prevent or restrain a restricted transaction.
(B) Relief. Upon application of the United States under this paragraph, the district court may enter a
temporary restraining order, a preliminary injunction, or an injunction against any person to prevent or
restrain a restricted transaction, in accordance with rule 65 of the Federal Rules of Civil Procedure.
(2) Institution by state attorney general.
(A) In general. The attorney general (or other appropriate State official) of a State in which a restricted
transaction allegedly has been or will be initiated, received, or otherwise made may institute proceedings
under this section to prevent or restrain the violation or threatened violation.
(B) Relief. Upon application of the attorney general (or other appropriate State official) of an affected
State under this paragraph, the district court may enter a temporary restraining order, a preliminary
injunction, or an injunction against any person to prevent or restrain a restricted transaction, in accordance
with rule 65 of the Federal Rules of Civil Procedure.
(3) Indian lands.
(A) In general. Notwithstanding paragraphs (1) and (2), for a restricted transaction that allegedly has
been or will be initiated, received, or otherwise made on Indian lands (as that term is defined in section 4 of
the Indian Gaming Regulatory Act)
(i) the United States shall have the enforcement authority provided under paragraph (1); and
(ii) the enforcement authorities specified in an applicable Tribal-State compact negotiated under
section 11 of the Indian Gaming Regulatory Act (25 U.S.C. 2710) shall be carried out in accordance with
that compact.
(B) Rule of construction. No provision of this section shall be construed as altering, superseding, or
otherwise affecting the application of the Indian Gaming Regulatory Act.
(c) Limitation Relating to Interactive Computer Services.
(1) In general. Relief granted under this section against an interactive computer service shall
(A) be limited to the removal of, or disabling of access to, an online site violating section 5363, or a
hypertext link to an online site violating such section, that resides on a computer server that such service
controls or operates, except that the limitation in this subparagraph shall not apply if the service is subject
to liability under this section under section 5367;
(B) be available only after notice to the interactive computer service and an opportunity for the service
to appear are provided;

 (C) not impose any obligation on an interactive computer service to monitor its service or to
affirmatively seek facts indicating activity violating this subchapter;
(D) specify the interactive computer service to which it applies; and
(E) specifically identify the location of the online site or hypertext link to be removed or access to
which is to be disabled.
(2) Coordination with other law. An interactive computer service that does not violate this subchapter
shall not be liable under section 1084(d) of title 18, except that the limitation in this paragraph shall not
apply if an interactive computer service has actual knowledge and control of bets and wagers and
(A) operates, manages, supervises, or directs an Internet website at which unlawful bets or wagers may
be placed, received, or otherwise made or at which unlawful bets or wagers are offered to be placed,
received, or otherwise made; or
(B) owns or controls, or is owned or controlled by, any person who operates, manages, supervises, or
directs an Internet website at which unlawful bets or wagers may be placed, received, or otherwise made, or
at which unlawful bets or wagers are offered to be placed, received, or otherwise made.
(d) Limitation on Injunctions Against Regulated Persons. Notwithstanding any other provision of this
section, and subject to section 5367, no provision of this subchapter shall be construed as authorizing the
Attorney General of the United States, or the attorney general (or other appropriate State official) of any
State to institute proceedings to prevent or restrain a restricted transaction against any financial transaction
provider, to the extent that the person is acting as a financial transaction provider.
Section(s) 5366. Criminal penalties
(a) In General. Whoever violates section 5363 shall be fined under title 18, or imprisoned for not more
than 5 years, or both.
(b) Permanent Injunction. Upon conviction of a person under this section, the court may enter a
permanent injunction enjoining such person from placing, receiving, or otherwise making bets or wagers or
sending, receiving, or inviting information assisting in the placing of bets or wagers.
Section(s) 5367. Circumventions prohibited
Notwithstanding section 5362(2), a financial transaction provider, or any interactive computer service
or telecommunications service, may be liable under this subchapter if such person has actual knowledge
and control of bets and wagers, and
(1) operates, manages, supervises, or directs an Internet website at which unlawful bets or wagers may
be placed, received, or otherwise made, or at which unlawful bets or wagers are offered to be placed,
received, or otherwise made; or
(2) owns or controls, or is owned or controlled by, any person who operates, manages, supervises, or
directs an Internet website at which unlawful bets or wagers may be placed, received, or otherwise made, or
at which unlawful bets or wagers are offered to be placed, received, or otherwise made.
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