Mar 18 2003

HEARING ON PROPOSALS TO REGULATE ILLEGAL INTERNET GAMBLING
STATEMENT OF SEN. RICHARD SHELBY

The Committee shall come to order. Today, the Committee begins its consideration of the proper response of the federal government to the growing problem of internet gambling. I frame the issue in such a way because I believe that there must be a federal response to this rapidly-growing social problem. As we all know, regulation of gambling has traditionally been a matter of state law. As a conservative Republican, I believe a federal response is appropriate to a social evil only to compliment state or local enforcement. But clearly, internet gambling poses such a problem. Off-shore internet casinos continue to proliferate and illegal internet gambling continues unabated, despite the fact that no state has yet authorized a virtual casino.

The very nature of internet gambling defies regulation at the state or local level. Bets are electronic transactions in which no physical good or commodity need be transferred between the gambler and the casino. Clearly, the casinos themselves are out of the reach of even federal authorities, and can be expected to continue to flaunt U.S. law. The only available means of effective interdiction is through the media by which the gambler and casino interface - namely, through the internet service provider or "ISP" or the payment system provider. This is the approach adopted in legislation that has been introduced in the Senate and the House. Senator Jon Kyl and Representative Jim Leach are the leading proponents of such legislation. Last week, Senator Kyl, who is our first witness today and has led the fight in the Senate against internet gambling , introduced legislation, S.627, that would establish a framework for preventing the use of our payment systems and ISPs to engage in illegal gambling. I am proud to be an original cosponsor of this important legislation. I believe this legislation represents a measured and appropriate response to a demonstrated social evil that grows worse by the day.

I describe internet gambling as an "evil," and I do not use that word lightly. The dangers of gambling are manifest, and that is why gambling is so heavily regulated in every jurisdiction within this country in which it is permitted. The internet makes gambling accessible to those who are most susceptible to the addictive power of gambling: the young. The internet offers ease of access and anonymity. Children are the most computer literate segment of our society and can find these sites with ease. Unfortunately, they are also the most susceptable to gambling's addictive powers. And the overwhelming majority of internet casinos have no meaningful screening mechanism to block children from gambling.

Internet gambling may prove irresistible for the pathological or problem gambler trying to overcome a gambling addiction. For the recovering addict, internet casino make gambling easily accessible in the comfort and privacy of your home. And, in so doing, its removes the impediment of traveling to a casino or track, and shields the problem gambler from the public stigma that may help the addict to refrain. And let us not forget - for 15 million Americans with gambling problems, gambling is every bit as addictive as alcohol or illegal drugs can be. Recovering from a gambling problem is a lifelong struggle and internet access tilts the playing field against the addict. Dr. Howard Schaeffer, Director of Addiction Studies at Harvard Medical School has described the effect of the internet through a disturbing analogy: "as smoking crack cocaine changed the cocaine experience, I think electronics is going to change the way gambling is experienced."

Gambling is not a harmless vice or victimless crime. According to the National Academy of Sciences, "pathological gamblers engage in destructive behaviors: they commit crimes, they run up large debts, they damage relationships with family and friends, and they kill themselves." The fall-out from problem gambling -domestic violence, theft, burglary, foreclosure, bankruptcy and suicides- is as devastating to family and friends as it is to the gambler himself. And unregulated off-shore internet casinos offer an anonymity and portability that make them a logical medium for laundering money.

I look forward hearing the testimony of the witnesses today. I would again like to thank our first witness, our colleague from Arizona, Senator Kyl, for his continued leadership on this issue, and for his presence here today. Our second panel includes the Deputy Assistant Attorney General of the Criminal Division, as well as witnesses representing the views of the various stakeholders in this debate B the gaming and financial services industries and collegiate athletics. I look forward to their testimony on this grave matter. I would also like to thank my colleague Senator Sarbanes, the Ranking Democrat on this Committee, for his continued concern about internet gambling, and for his cooperation in organizing this hearing. Curtailing illegal gambling operations is clearly an issue on which there is bipartisan accord, and I look forward to moving forward to working with my colleagues on both sides of the aisle to move remedial legislation through the Committee as quickly as possible.