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WASHINGTON, July 31 (Reuters) - A Senate committee on Thursday voted to outlaw credit-card payments to Internet casinos, in a move designed to choke the offshore gambling sites that draw billions of dollars from U.S. customers.
The Senate Banking Committee unanimously approved the bill in a brief session with no debate, a marked contrast to the extended, acrimonious debates in the House of Representatives before that body approved a similar bill last month.
Banking Committee Chairman Richard Shelby said online casinos evade the reach of U.S. states that typically have regulated "bricks and mortar" gambling operations, requiring the federal government to step in. Internet casinos encourage pathological gambling and enable children to participate, he said.
"While gambling has always been subject to state regulation and should remain so, there is no way for the states to effectively control the reach of the Internet at this time," Shelby said.
Most Internet gambling is already illegal under U.S. and state laws, but those laws have little power over the 1,800 offshore gambling sites that are expected to take in $2 billion from residents this year.
Lawmakers have instead sought to prevent credit-card companies and payment systems such as PayPal to block money transfers to online gambling sites. Credit-card issuers, stung by disputed charges, now voluntarily block roughly four out of five online gambling payments.
Violators would face fines and up to 5 years in prison, in contrast to the House version that contains no criminal penalties.
The bill would not apply to horse racing, dog racing or other remote-betting operations already approved by states and American Indian tribes.
Casino operator MGM Mirage (nyse: MGG - news - people) had sought to develop an online casino that could check visitors' ages and locations to ensure they complied with state regulations, but recently abandoned the effort, citing an uncertain legal climate.
The Senate Banking Committee unanimously approved the bill in a brief session with no debate, a marked contrast to the extended, acrimonious debates in the House of Representatives before that body approved a similar bill last month.
Banking Committee Chairman Richard Shelby said online casinos evade the reach of U.S. states that typically have regulated "bricks and mortar" gambling operations, requiring the federal government to step in. Internet casinos encourage pathological gambling and enable children to participate, he said.
"While gambling has always been subject to state regulation and should remain so, there is no way for the states to effectively control the reach of the Internet at this time," Shelby said.
Most Internet gambling is already illegal under U.S. and state laws, but those laws have little power over the 1,800 offshore gambling sites that are expected to take in $2 billion from residents this year.
Lawmakers have instead sought to prevent credit-card companies and payment systems such as PayPal to block money transfers to online gambling sites. Credit-card issuers, stung by disputed charges, now voluntarily block roughly four out of five online gambling payments.
Violators would face fines and up to 5 years in prison, in contrast to the House version that contains no criminal penalties.
The bill would not apply to horse racing, dog racing or other remote-betting operations already approved by states and American Indian tribes.
Casino operator MGM Mirage (nyse: MGG - news - people) had sought to develop an online casino that could check visitors' ages and locations to ensure they complied with state regulations, but recently abandoned the effort, citing an uncertain legal climate.