Bill Targets Online Vice Payments

Michael Hayes
WASHINGTON — In a move that could dramatically impact some adult webmasters, lawmakers have taken a practical approach to curbing Internet vice, sending a bill to President Bush that would ban U.S. banks and credit card companies from processing transactions for online gambling sites. The bill, which many believe will be ineffective in terms of stopping Internet gambling, could have a drastic impact on payment processors.

Senate Majority Leader Bill Frist, R-Tenn., attached language to H.R. 4411, a port security bill that would prohibit credit card companies and other payment forms, such as electronic transfers, from being used to settle online wagers.

The bill also allows law enforcement officials to work with Internet service providers to block access to gambling sites.

Adult entertainment attorney Gregory Piccionelli told XBIZ the law also imposes liability on webmasters who do business with gambling sites.

"Sending traffic to gambling sites can be very problematic under this law," Piccionelli said. "Webmasters who deal in gambling and adult put themselves in multiple target zones."

Many of the companies engaged in online gambling are located in the U.K. and run out of small Caribbean nations. News of the bill triggered a selling spree for gambling stocks traded on the London exchange.

According to Frist, the decision to target the payment processors helps tackle the larger moral issue.

"Gambling is a serious addiction that undermines the family, dashes dreams and frays the fabric of society,” Frist said.

House Majority Leader John Boehner said the new law was a key advance for the Republicans' "American Values Agenda" ahead of the mid-term election.

"I am pleased that House Republicans continue to move substantive legislation upholding strong values that puts the interests of our families and children first,” he said.

Gibraltar-based sites PartyGaming and 888 Holdings said they would suspend their U.S. accounts for the time being.

Ken Weitzner, founder of Eye On Gambling, said the bill doesn’t seem enforceable because companies seeking U.S. business will simply find other ways to circumvent the law.

“This is a Republican initiative to please their religious base," Weitzner said. “It is very possible that a Democratic administration will tax it rather than prohibit it, which would be like leaving the Dark Ages for the 21st century.”

Other critics have said that the U.S. may run into trouble with the World Trade Organization over the bill. The international body ruled last year in favor of Antigua over U.S. restrictions to offshore gambling.