Gambling Against The Law

Top lawmakers on the Senate Banking and Finance Committee said they supported a bill that would require credit-card companies and payment services such as PayPal to block money transfers to Internet gambling sites. A similar bill was approved by a House of Representatives committee last week.

Alabama Republican Senator Richard Shelby said that "This legislation represents a measured and appropriate response to a demonstrated social evil that grows worse every day." Maryland Senator Paul Sarbanes, the committee's top Democrat, said on Tuesday he also supported the bill.

Christiansen Capital Advisors, which tracks the gambling industry, estimates online gambling sites will take in roughly $4bn this year, with half of this from US residents. Shelby and other critics say online gambling sites flout local regulations and provide access to children and adults struggling with gambling addiction.

As nearly all of the industry's 1,800 Web sites are based offshore, an outright ban would do little good. Instead, lawmakers seek to prevent gamblers from paying their debts. Many credit-card issuers, stung by disputed charges, have voluntarily blocked online gambling transactions. Card firms now block roughly four out of five online gambling payments, said Richard Fischer, a lawyer who advises the industry.

But one former state regulator said Kyl's approach would encourage gamblers to use forms of payment that could not be blocked as easily. Governments would be better off regulating the industry as the United Kingdom has done, said Frank Catania, a former director of the New Jersey Division of Gaming Enforcement.

"It is my hope that members of this committee will recognise that legalisation and strict regulation, rather than prohibition, could achieve important policy goals," said Catania, now a gambling-industry consultant.

A bill introduced last week in the House would set up a commission to figure out how best to regulate the industry. Congress has tried to outlaw Internet gambling for years, but no bill has passed both chambers due to procedural issues and infighting among casinos, dog tracks and horse tracks.