Senators deride online gambling regs

Lawmakers on Wednesday expressed broad agreement that more regulations are needed for online gambling.

A Senate panel on Wednesday derided out-of-date regulations that make it easy for almost anyone to bet money online without proving their identity.

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“Shame on us if we don’t get something done on this because, when I think about the possibility for money laundering, terrorism, drug trafficking and the potential for children to get access to use the Internet as well as people to add to the addiction issue, I hope this is something that we move on very quickly,” said Sen. Kelly Ayotte (R-N.H.).

Users of gaming websites are largely anonymous, which can allow criminals and terrorists to use the sites to hide the sources of their money.

Chuck Canterbury, president of the Fraternal Order of Police, told senators: “Organized crime is using offshore online operations to launder their profits. We also know that terrorist organizations are or could be using the same strategies to launder funds.”

"Congress needs to provide clarity and guidance on these issues," Sen. Dean Heller (R-Nev.) said. "If we do not, this illegal market will continue to grow where millions of consumers are put at risk and criminals can act freely."

The same anonymity that makes online gambling appealing to money launderers can also expose consumers to identity theft and allow children and people who suffer from gambling addictions to easily access the games.

The only real prohibition preventing children from accessing online gambling, the senators were told, was a button users click to verify that they are over 18.

“My kids are pretty sharp; I don’t think it would take them long to get around that at the age of 5 and 8,” Ayotte said.

New laws are needed to make it harder to take advantage of online gambling sites, senators agreed on Tuesday.

Sen. Richard Blumenthal (D-Conn.) said, “I think there’s a clear moral and economic imperative to acting to prevent the abuses and wrongdoing that clearly are inherent, almost inescapable, in this form of gambling, if we fail to take effective countermeasures.”

He also expressed concern that the personal financial information gambling sites have could be easily exposed by security breaches and hackers.

Even with good intentions, he said, “absorbing and accumulating huge amounts of information could potentially be the 'victim' — putting victim in very heavy quotes — of a theft of that data.”

Few regulations govern online gambling, especially since a 2011 Justice Department decision that laws against interstate betting via telecommunications only apply to sports betting, not other games like poker and lotteries.

Since then, states like New Jersey, Delaware and Nevada have decided to legalize online gambling within their borders.

The opinion opened up the “floodgates” to states developing their own online gambling rules, said Heller, the top Republican on the Senate Commerce subcommittee on Consumer Protection, Product Safety and Insurance, and it led to “regulatory uncertainty” across the country.

“Patchwork state and tribal regulations have sparked a regulatory race to the bottom,” he said.

Heller said that he would like to write legislation to rein in the Internet gambling sector, and that Majority Leader Harry Reid (D-Nev.) was supporting the effort.

“I would like to put together a piece of legislation, as does Sen. Reid, but we want broad support,” he said after the hearing. “I don’t want this to be a Sen. Reid and Sen. Heller piece of legislation. I want broad support.”

On Wednesday, he seemed to attract the kind of support he was looking for.

“Congress has an important role to play in overseeing the expansion of online gaming,” said Sen. Claire McCaskill (D-Mo.), the subcommittee chairwoman.

She added that Internet gambling is “inherently an interstate matter.”

The casino industry also cheered signs lawmakers may enact more regulations for online gambling.

“The question is whether Congress will ensure minimum regulatory standards of online poker, protect consumers, exclude bad actors from the American market and provide Native American tribes with an appropriate regulatory framework,” said Geoff Freeman, president of the American Gaming Association, in a statement.

— Updated at 1:54 p.m.