Last night, the U.S. House of Representatives rejected a bill which would have ended the unregulated practice of placing wagers online. H.R. 3125, introduced by Congressman Bob Goodlatte of Virginia, was the product of strained and sometimes divisive negotiations between the original supporters of the ban and many in leadership. In the end, 44 Republicans joined 144 Democrats and one Independent to reject the measure. Under a procedure to bring H.R. 3125 to the floor without amendments, a two-thirds majority would have been required to pass it. The final vote of 245 to 159 fell 25 votes short of the 270 needed.

Many members voiced concern about what were perceived as exemptions for several industries -- such as parimutuals, jai alai, and Indian gambling. Lawmakers were also concerned with what appeared to be an intrusion of the federal government into an industry historically regulated by the states themselves.

"You would have the federal government dictate to Internet service providers what services they can offer," said Rep. Christopher Cox (R-CA) in opposing the legislation. He said it was "well-intentioned," but would "create enormous regulatory problems."

The White House entered into the fray late, offering up its "strong opposition" to H.R. 3125. In a statement, the administration lamented the protection of certain forms of gambling while "opening the floodgates for other forms of illegal gambling."

Although the Senate has passed a similar bill, known as the Kyl bill, it appears unlikely that leadership in the House will make another attempt this year to address the Internet gambling issue, given the complex nature of the issue and the limited legislative time remaining before the November elections.

What happens in November, however, could shape the future of this issue. While Vice President Al Gore was opposed to the Internet gambling ban, Texas Governor George Bush was generally supportive of the measure. It is also important to remember that under normal House procedures, H.R. 3125 would have passed (albeit most likely with amendments). And with the leadership of Congress in 2001 still very much up in the air, the issue appears destined to remain on the radar screen for some time to come.

Simon Gros is Legislative Associate at Kessler and Associates Business Services, inc. He can be reached by email at SGros@kesslerassoc.com