(FORTUNE Magazine) – If you need further proof that Congress works in weird ways, here it is. Lawmakers are now considering a bill called the Internet Gambling Prohibition Act of 1999. Common sense says that such legislation would, well, prohibit gambling on the Internet. But common sense is as fleeting in Washington as the cherry blossoms. So while the bill would ban some forms of Web gambling--mostly casino-style games of chance--it would encourage others. Because of a little-noticed exception in the fine print, the legislation would actually expand parimutuel betting--wagers placed on the outcome of competitions like horse and dog racing and jai alai.

Right now, if you live in Illinois and want to place an Internet bet on a horserace in another state, the feds say you can't (intrastate, but not interstate, bets of this kind are often legal). The Internet Gambling Prohibition Act of 1999 would not only allow intrastate horserace betting to continue via the Web but would also okay interstate wagering as well. The Justice Department thinks something fishy is going on. "Simply stated," Deputy Assistant Attorney General Kevin DiGregory testified before Congress, "the department does not understand why the parimutuel wagering industry should be allowed to accept bets from people in their homes when other forms of gambling have rightly been prohibited from doing so."

Religious conservatives are predictably outraged by the loophole. But so are many Democrats on the House Judiciary Committee, which recently approved the legislation in a 21-8 vote (seven of the nays came from Democrats). "This expansion of Internet gambling could carry with it potentially devastating results for those Americans who are at risk of gambling addiction or are compulsive gamblers," the Democrats wrote hyperbolically in their dissent.

The exemption was engineered by horseracing lobbyists and then expanded by the dog-racing and jai alai folks. They say the bill merely codifies what's going on now and isn't an expansion. Come again?

--Jeffrey H. Birnbaum