That is an entirely accurate description of what happened, but not sufficiently precise.
The major actor here was Harry Reid, carrying water for the NV gaming interests, who fear “internet gambling” the way that the Devil fears a communion wafer.
Reid set up the legislation, passed it in his usual style, and hand-held the whole thing through Congress. Some of us (then living in NV) that this would come to pass — ie, the gaming servers would be drive off-shore (where we would lose the tax revenue and control) and attempts to shut them down off-shore for people using them on-shore would lead to a WTO or other international complaint.
Reid didn’t listen.
Personally, I am happy to see this end result. It is a nice, expensive lesson for Reid and his gaming backers.
I haven’t been following the case closely at all. I find myself correcting misconceptions about it more often than I care to, however.