Republican Senator Tom Cotton has filed a Congressional bill that takes aim at US financial institutions processing payments to online gambling sites, as well as looking to crack down on the use of child-friendly imagery in gambling content.
Cotton’s bill, S.3322, argues that Subchapter IV, Chapter 53, Title 31 of the United States Code was designed to prevent the use of “financial instruments” (banks) for funding online gambling.
The subchapter in question refers to the measures passed as part of the Unlawful Internet Gaming Enforcement Act, such as a ban on financial institutions knowingly facilitating payments to and from igaming sites.
Cotton argues that the proliferation of smart devices has increased the availability of casino and lottery websites and movie applications, meaning he feels Congress needs to act to understand the scale of the problem. In addition, he adds, there is a growing number of games featuring cartoon characters, fairy tales and similar content, making real-money games more attractive to children.
As such, S.3322, also known as the Prevention of Deceptive or Child-Targeted Advertising in Violation of the Unlawful Internet Gambling Enforcement Act, aims to have the Secretary of the Treasury and the Federal Trade Commission investigate the issue.
If S.3322 was to pass into law, the Secretary of the Treasury would be tasked with producing a report listing online slots, lotteries, table games and similar products that feature cartoon characters or that feature other child-friendly themes.
This would be accompanied by an assessment of the means by which online casino and lottery sites or apps receive funds from players in contravention of the use of financial instruments for unlawful internet gambling.
This report would also be required to assess the effectiveness of measures taken by the Department of the Treasury and the Federal Reserve System to ensure compliance with Subchapter IV, Chapter 53, Title 31 of the United States Code.
A second report, from the Federal Trade Commission (FTC), would be asked to produce a report detailing the prevalence of targeted and non-targeted advertising for online games that are displayed within mobile applications available in US webstores. Those that use content that may be of particular appeal to children must be flagged as part of this.
Any efforts by operators to deceptively prevent unlawful gambling product as part of non-gambling gameplay, or to feature gambling mechanics as part of products targeted at children must also be highlighted.
The Commission’s efforts to prevent deceptive marketing of in-app purchases, and potential ways to strengthen these controls, should also be outlined in the FTC report.
The scope of the bill is particularly broad, and its references to unlawful internet gambling are unclear, especially as the likes of New Jersey, Pennsylvania, West Virginia and Michigan have legalized online gaming, while many states allow online lottery games.
However, it appears to be the latest attempt to disrupt the expansion of regulated online gambling across the US, despite efforts regularly being defeated or discredited in state and federal courts.
Cotton previously filed a Congressional bill in 2016 to overturn the Department of Justice’s 2011 interpretation of the Wire Act. That opinion ruled that the Act only applied to sports betting, and paved the way for the roll-out of igaming and ilottery across the US.
It has, however, been targeted by anti-igaming advocates such as Las Vegas Sands founder and Republican Party donor Sheldon Adelson. The DoJ, in late 2018, appeared to row back on its 2011 decision by claiming that all forms of gambling were covered by the Wire Act, something Cotton’s 2016 bill had aimed to achive. However, this opinion was set aside by a New Hampshire court.
While the DoJ is appealing that ruling, its chances of victory are seen as remote.