|TITLE VIII—UNLAWFUL INTERNET|
SEC. 801. SHORT TITLE.
This title may be cited as the ‘‘Unlawful Internet Gambling
Enforcement Act of 2006’’.
SEC. 802. 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:
‘‘SUBCHAPTER IV—PROHIBITION ON FUNDING OF UNLAWFUL INTERNET GAMBLING
‘‘§ 5361. Congressional findings and purpose
‘‘(a) FINDINGS.—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
H. R. 4954—70 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.
‘‘§ 5362. Definitions
‘‘In this subchapter:
‘‘(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;
‘‘(viii) participation in any game or contest in which participants do not stake or risk anything of value other than—
‘‘(I) personal efforts of the participants in playing the game or contest or obtaining access to the Internet; or
‘‘(II) points or credits that the sponsor of the game or contest provides to participants free of charge and that can be used or redeemed only for participation in games or contests offered by the sponsor; or
H. R. 4954—71
‘‘(ix) participation in any fantasy or simulation sports game or educational game or contest in which (if the game or contest involves a team or teams) no fantasy or simulation sports team is based on the current membership of an actual team that is a member of an amateur or professional sports organization (as those terms are defined in section 3701 of title 28) and that meets the following conditions:
‘‘(I) All prizes and awards offered to winning participants are established and made known to the participants in advance of the game or contest and their value is not determined by the number of participants or the amount of any fees paid by those participants.
‘‘(II) All winning outcomes reflect the relative knowledge and skill of the participants and are determined predominantly by accumulated statistical results of the performance of individuals (athletes in the case of sports events) in multiple realworld sporting or other events.
‘‘(III) No winning outcome is based—
‘‘(aa) on the score, point-spread, or any performance or performances of any single real-world team or any combination of such teams; or
‘‘(bb) solely on any single performance of an individual athlete in any single real-world sporting or other event.
‘‘(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 meaning given the term in section 230(f) of the Communications Act of 1934 (47 U.S.C. 230(f)).
‘‘(7) RESTRICTED TRANSACTION.—The term ‘restricted transaction’ means any transaction or transmittal involving any
H. R. 4954—72 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’ does 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 s