he federal government is turning up the heat on the $12-billion-a-year online gambling industry. In early July, the U.S. House of Representatives overwhelmingly approved legislation (H.R. 4411) that would make it a federal offense to use credit cards or other electronic payment instruments to settle online wagers.

About two weeks later, federal law enforcement arrested David Carruthers, a British national who runs a large Internet wagering company. He was on a layover at Dallas/Fort Worth International Airport en route to Costa Rica from Britain. Carruthers, Chief Executive Officer of BetOnSports, was charged with racketeering for allegedly being part of an illegal gambling enterprise.

In addition, a federal court issued a temporary restraining order that prevents BetOnSports from accepting wagers from customers in the United States. It also requires the company to return money held in the accounts of U.S. customers.

BetOnSports is a public company traded on the London Stock Exchange. Like most online gambling enterprises, the company has large numbers of American customers. But the servers that provide online access to wagering are located outside the United States. BetOnSports' headquarters is in Costa Rica.

Prosecutors allege that Carruthers and others who operate or promote Internet sports books and casinos are engaged in criminal enterprises as defined by the Federal Wire Act of 1961.

Said act has been used to prosecute bookmakers and other gambling enterprises operating on U.S. soil. The legislation that passed the House would update the 45-year-old act to specifically outlaw gambling using new technologies, such as the Internet.

It also would require the Treasury Department and the Federal Reserve Board to establish regulations directing financial institutions to block payments to online gambling companies. It's not the first time Congress has tried to lower the boom on online wagering, and it probably won't be the last.

The House bill, sponsored by Reps. Jim Leach (R-Iowa) and Bob Goodlatte (R-Va.), appears to be stalled in the Senate. Both the U.S. Chamber of Commerce and the Independent Community Bankers of America have urged senators to reject the House bill, arguing it would create an "enforcement nightmare" for the financial services industry.