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Net Gambling Bill Fails to Pass

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The House seems to have crapped out on its Internet gambling legislation.

Late Monday night, the House of Representatives rejected the Internet Gambling Prohibition Act. The legislation, which would have banned nearly all forms of Internet gambling, was voted on under suspension on a 245-159 vote, falling short of the two-thirds needed for passage.

The bill, H.R. 3125, was sponsored by Rep. Bob Goodlatte (R-Va.) and had been backed by the FBI, the Christian Coalition, the National Council of Churches, and the National Association of Attorneys General.

“I am pleased that more than 60 percent of my colleagues in the House understand the importance of this vital legislation,” Goodlatte said in a statement late 789bet┬áMonday. “It is of utmost importance that this legislation is passed and signed into law this year. The Internet Gambling Prohibition Act is vital to protect our children and communities from the problems of addiction, crime, bankruptcy, and family difficulties that come from gambling.”

But others in the House warned that the bill could set a dangerous precedent. “While well intentioned, this legislation would create enormous unintentional problems,” said Rep. Christopher Cox (R-Calif.).

Cox went on to criticize the bill as it was written for violating the Internet Non-Discrimination Act by treating Internet gambling differently than conventional forms.

“Regulating commerce on the Internet different from other commerce is a dangerous precedent, and invites significant new regulation of the Internet,” Cox said. “We can do better than this. … we will do better than this.”

Another anti-gambling bill, approved last month by the House Banking Committee, takes a different approach. It tries to bar businesses from knowingly processing credit cards, accepting checks, or conducting any transaction related to illegal Internet gambling.

“We’ve been generally supportive of measures to prohibit gambling in the past, and we will continue to be so in the future,” said Lisa Wright, acting director of the National Council of Churches’ Washington office.

Since the Senate has passed Kyl’s bill and passed its version to the House in February, both chambers would have to reach a compromise proposal and then approve it for the law to take effect.

It’s Boom Time for Net Gambling

For most consumer Net businesses, the last six dot-com-bashing, stock-plummeting months have been nasty, nasty.

But for Net-based casinos, it’s apparently been a boom time — at least according to numbers released Friday by Net filtering firm Websense.

Websense, which compiles lists of specific URLs to block for its hundreds of corporate clients, claims the number of gambling sites has mushroomed 169 percent in the last six months, with the total number of sites now topping 21,000. That, the company says, makes Net gambling the fastest growing industry on the Web, based on raw page growth.

The figures likely won’t come as welcome news to several U.S. lawmakers pushing bills that would ban Net gambling in the United States. Three separate bills working their way through Congress would, if passed, rely on Internet service providers to enforce the ban by blocking access to gambling sites.

As the number of sites explodes, however, the task of blocking them becomes increasingly unrealistic.

“It will be difficult to enforce; we’ve always known that,” U.S. Senator and Net gambling opponent Jon L. Kyl (R-Arizona) told the Wall Street Journal last month. “I think there will be an evolving cat-and-mouse game as sites try to find a way around the law.”

Still, there may be less to the Websense growth numbers than meets the eye.

In the last six months, a number of Net gambling companies have started “franchising” operations, in which they give individual Web surfers the tools to set up their own gaming sites in exchange for a big cut of the sites’ subsequent revenues.

Those new surfer-built sites may look and feel different from each other, and may have different URLs, but they all share the gambling license and Web servers owned by the original Net gambling company.

“If there are 21,000 websites, they’re pointing to a much smaller number of servers,” said Sebastian Sinclair, vice president of Christiansen Capital Advisors, a research firm that focuses on the gambling industry. “A lot of these franchising sites have hundreds of gateways,” but they share a very small number of IP addresses, and those can still easily be blocked by ISPs.

Many gambling sites also buy dozens and dozens of different URLs that all lead back to the same servers, Sinclair said. He estimates that there are fewer than 350 distinct Net gaming companies.

And even though the number of truly distinct gaming sites may be smaller than Websense’s tally, Sinclair says his staff struggles mightily to keep tabs on the industry’s swelling ranks.

“It’s a monumental task,” he said.