STATEMENT OF

MICHAEL CHERTOFF

ASSISTANT ATTORNEY GENERAL

CRIMINAL DIVISION

UNITED STATES DEPARTMENT OF JUSTICE

BEFORE THE SUBCOMMITTEE ON CRIME

COMMITTEE ON THE JUDICIARY

U.S. HOUSE OF REPRESENTATIVES

November 29, 2001

Mr. Chairman and Members of the Subcommittee, thank you for this opportunity to provide a statement Internet Gambling. The issue before this Subcommittee is one of singular importance, and I commend the Subcommittee for holding a hearing on this issue. I would also like to commend Congressman Goodlatte for his efforts to provide law enforcement with the additional statutory tools it needs to address Internet gambling. His hard work is apparent in the thorough approach he has taken in crafting the bill he has introduced, H.R. 3215.

           Over the past few years, the number of Internet gambling sites has grown dramatically. At the July 24, 2001, hearing before the Subcommittee on Financial Institutions and Credit of the Committee on Financial Services, Representative Kelly stated that Bear Stearns recently estimated the number of Internet gambling websites at 1,200 to 1,400. The types of gambling offered by these websites include sports betting, lotteries, casino style games, and person-to-person betting.

           The Internet and other emerging technologies have made possible types of gambling that were not feasible a few years ago. For example, a United States citizen can now from his or her home participate in an interactive Internet poker game operated by a computer located in Antigua or some other country. Not only have the Internet and other emerging technologies permitted gambling in the home, they have made it anonymous and readily available.

           The growth of Internet gambling can lead to adverse effects, such as fraud or gambling by minors. Additionally, Internet gambling businesses provide potential vehicles for money laundering. Because the Internet allows instantaneous and anonymous communications that are difficult to trace to a particular individual or organization, the medium is attractive to criminals. Individuals wanting to launder illegally-received gains can do so through the operation of or interaction with Internet gambling businesses, which offer their clients virtual anonymity, often exercise little control over money movement through their facilities, and make it difficult to determine which jurisdiction has authority over their activities.

           Most of these gambling businesses are operating offshore in foreign jurisdictions. If these businesses are accepting bets or wagers from customers located in the United States, then these businesses are violating federal law. While the United States can bring indictments against these companies or the individuals operating these companies, the federal government may not be able to bring such individuals or companies to trial in the United States for a variety of reasons.

           The Justice Department believes that it is important to update existing federal law to cover gambling over emerging technologies, such as the Internet and wireless communication media. In that regard, the Department strongly believes that federal law should be technology-neutral. Congressman Goodlatte’s bill, H.R. 3215, would update current law in a technology-neutral manner. We support that approach.

           In conclusion, unlawful Internet gambling continues to be a serious problem. Both Congressman Goodlatte’s bill and H.R. 556 offer useful approaches to combating this problem. While we have some technical and other concerns about both of these bills – which we intend to communicate to you in the near future, following additional interagency consultations – we support their sponsors’ efforts to address gambling on the Internet.