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Document 34 of 142.

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June 15, 2000, Thursday

SECTION: PREPARED TESTIMONY

LENGTH: 747 words

HEADLINE: STATEMENT OF JOHN D. DINGELL

BEFORE THE HOUSE COMMERCE COMMITTEE SUBCOMMITTEE ON TELECOMMUNICATIONS, TRADE AND CONSUMER PROTECTION

BODY:
Thank you, Mr. Chairman, for recognizing me, and I commend you for holding this important hearing today. I must note at the outset, however, that I have a strong sense of deja vu as we begin this debate about Internet gambling.

Over the past few years this Committee has held numerous hearings on the issue of Internet tax policy. The primary point of contention in those hearings was whether Internet sales should be taxed in the same way as traditional sales in the offline world. This was not an easy question to decide. Some groups argued for a consistent policy; others advocated for special Internet exceptions. In 1998, Congress wisely chose a cautious route, and created a blue- ribbon commission to investigate the matter and report back its recommendations. The commission itself had difficulty reaching a consensus, and just last month Congress once again deferred this question by extending the moratorium for an additional five years.

Now we are faced with a similar policy dilemma: how should we treat online gambling? Should we maintain the same rules that apply in the offline world, or are special Internet exceptions the better answer? After all, some would argue, the Internet is a burgeoning new economy that should not be saddled with old world constraints.

Unfortunately, the bill before us today is a fine example of the schizophrenia underlying Congressional attempts to formulate sound Internet policy. While the legislation is titled the "Internet Gambling Prohibition Act," it could just as well be called the "Internet Gambling Enhancement Act."

The legislation starts out sensibly enough - true to its title - making clear that the existing offline ban on interstate gambling should apply to the Internet. But from there, the bill is literally off to the races, making it perfectly legal to bet across state lines on everything from horses and dogs to jai alai and fantasy sports, so long as the wagering is transacted over the Internet.

Fortune magazine may have chosen the most fitting title for its June 12th article on the subject of H.R. 3125. The headline read, and I quote, "Wanna Bet This Bill Is Really Strange?" The article continues by stating, and I quote again:

"If you need further proof that Congress works in weird ways, here it is. Lawmakers are now considering a bill called the Internet Gambling Prohibition Act. Common sense says that such legislation would, well, prohibit gambling on the Internet. But common sense is as fleeting in Washington as the cherry blossoms. So while the bill would ban some forms of Web gambling - mostly casino-style games of chance - it would encourage others. Because of a little-noticed exception in the fine print, the legislation would actually expand parimutuel betting - wagers placed on the outcome of competitions like horse and dog racing and jai alai."

Frankly, I must agree With this article that the intent of the legislation is baffling. Particularly since the 104th Congress passed a sensible bill, sponsored by Rep. Wolf of Virginia, that created the National Gambling Impact Study Commission. After performing an intensive two-year study, the Commission issued its report. It found that the number of Internet gamblers in the United States had more than doubled in just one year- to 14.5 million people in 1998 - and that the annual revenues from Internet gambling would reach a staggering $2.3 billion by 2001.

The Gambling Commission issued a clear recommendation to the President and Congress that, and I quote, "the federal government should prohibit, without allowing new exemptions ... Internet gambling not already authorized within the United States .... "

Clearly, Internet gambling is a complex issue, and one that should be handled with extreme care by this Committee and the Congress. Statistics show that compulsive gambling is on the rise. Common sense suggests that increasing the ease of access to it, particularly through the Internet, will greatly exacerbate the problem.

Mr. Chairman, I understand the Committee's referral on this legislation is short, but I hope these issues can be deliberated thoroughly and with groat care. The stakes are simply too high to rush this bill in its current form through the Commerce Committee - we are literally gambling with our children's future, and I hope the majority will seek an extension if necessary to process this bill in a fully informed manner.

Thank you, again, for holding this hearing.

END

LOAD-DATE: June 22, 2000

Document 34 of 142.


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