The Leach Bill: Uncut
By staff


H. R. 556

To prevent the use of certain ban instruments for unlawful Internet gambling, and for other purposes.


FEBRUA Y 12, 2001

Mr. LEACH introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned


To prevent the use of certain ban instruments for unlawful Internet gambling, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,


This Act may be cited as the ‘‘Unlawful Internet Gambling Funding Prohibition Act’’.


The Congress finds as follows:

(1) Internet gambling is primarily funded through personal use of ban instruments, including 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 ban s which represent them.

(3) Internet gambling is a major cause of debt collection problems for insured depository institutions and the consumer credit industry.

(4) Internet gambling conducted through offshore jurisdictions has been identified by United States law enforcement officials as a significant money laundering vulnerability.


(a) IN GENE AL.—No person engaged in a gambling business 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 the other person;

(3) any check , draft, or similar instrument which is drawn by or on behalf of the 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 may prescribe by regulation which involves a financial institution as a pay or financial intermediary on behalf of or for the benefit of the other person.

(b) DEFINITIONS.—For purposes of this Act, the following definitions shall apply:

(1) BETS OR WAGES.—The term ‘‘bets or wagers’’—

(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 predominantly subject to chance, upon an agreement or understanding that the person or another person will receive something of greater value than the amount staked or risked 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; and

(D) does not include—

(i) any bona fide business transaction 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 at a future date of securities (as that term is defined in section

3(a)(10) of such Act);

(ii) any transaction on or subject to the rules of a contract mar et designated pursuant to section 5 of the Commodity Exchange Act;

(iii) any over-the-counter derivative instrument;

(iv) any contract of indemnity or guarantee;

(v) any contract for life, health, or accident insurance; or any participation in a simulation sports game or an educational game or 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 and skill of the participants with such outcome determined predominantly by accumulated statistical results of 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) GAMBLING BUSINESS.—The term ‘‘gambling business’’ means—

(A) a business that is conducted at a gambling establishment;

(B) a business that—

(i) involves—

(I) the placing, receiving, or otherwise making of bets or wagers; or

(II) the offering to engage in the placing, receiving, or otherwise making of bets or wagers;

(ii) involves 1 or more persons who conduct, finance, manage, supervise, direct, or own all or part of such business; and

(iii) has been or remains in substantially continuous operation for a period in excess of 10 days or has a gross revenue of $2,000 or more from such business during any 24-hour period; and

(C) any agent who knowingly solicits for a business described in subparagraph (A) or (B).

(3) INTERNET.—The term ‘‘Internet’’ means the international computer network of interoperable packet switched data networks.

(4)UNLAWFUL INTERNET GAMBLING.—The term ‘‘unlawful Internet gambling’’ means to place, receive, or otherwise ma e 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 in which the bet or wager is initiated, received, or otherwise made.


(A) CREDIT; CREDITOR ; AND CREDIT CAR D.—The terms ‘‘credit’’, ‘‘creditor’’, and ‘‘credit card’’ have the meanings given such terms in section 103 of the Truth in Lending Act. 11

(B) ELECTRONIC FUND TRANSFER .—The term ‘‘electronic fund transfer’’—

(i) has the meaning given such term in section 903 of the Electronic Fund Transfer Act; and

(ii) includes any fund transfer covered by Article 4 of the Uniform Commercial Code, as in effect in any State.

(C) FINANCIAL INSTITUTION.—The term ‘‘financial institution’’ has the meaning given such term in section 903 of the Electronic Fund Transfer Act.

(D) MONEY TRANSMITTING BUSINESS AND MONEY TRANSMITTING SERVICE.—The terms ‘‘money transmitting business’’ and ‘‘money transmitting service’’ have the meanings given such terms in section 5330(d) of title 31, United States Code.

(E) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of the Treasury.


(1) JURISDICTION.—The district courts of the United States shall have original and exclusive jurisdiction to prevent and restrain violations of this section by issuing appropriate orders in accordance with this section, regardless of whether a prosecution has been initiated under this section.



(i) IN GENERAL.—The United States, acting through the Attorney General, may institute proceedings under this subsection to prevent or restrain a violation of this 20 section.

(ii) RELIEF.—Upon application of the United States under this subparagraph, the district court may enter a preliminary injunction or an injunction against any person to prevent or restrain a violation of this section, in accordance with rule 65 of the Federal Rules of Civil Procedure.


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