Racing & Online Gambling Unlikely Allies ?
Published: Friday, May 27, 2005 Online-Casinos.com
UNLIKELY ALLIES?
Racing and online gambling would make strange bedfellows
CBS Marketwatch carried a thought provoking article this week on draft legislation
that could see moves against Internet gambling extended to horse racing, spurred
by a World Trade Organisation ruling on a dispute between the United States and
Antigua.
The legislation, titled "The Unlawful Internet Gambling
Enforcement Act of 2005," originated in the office of would-be online gambling
nemesis Sen. Jon Kyl and is now making the rounds on Capitol Hill. The CBS article
opines that it could endanger currently legal Internet betting on horse racing,
along with a big chunk of that industry's profits, it if becomes U.S. law.
Like several previous failed bills backed by the Arizona Republican, it would
bar credit card issuers, banks, and other financial institutions from transmitting
money related to online wagering and authorise a wide array of federal and state
law enforcement agencies to go after the offenders.
There's no indication
whether Kyl's latest proposal will be introduced as a Senate Bill this session,
or its prospects for passage by the Senate and House, and approval by President
Bush.
What makes Kyl's latest proposal different from prior failed bills
is that it doesn't carve out an exception for racing. That has given rise to warnings
that the only part of the parimutuel industry that is growing at all - account,
or remote, wagering - could be run right out of business.
Through a spokesman,
Kyl declined to comment on the proposal, a copy of which was sent in draft legislation
form to MarketWatch last week.
At issue is an early April decision by
the WTO that parts of some U.S. gambling statutes, including the Wire Act, violate
the General Agreement on Trade in Services. The trade body also found in favor
of Antigua on a claim that the Interstate Horseracing Act, which permits electronic
wagering between states where it is legal, discriminates against foreign operators.
To comply with the WTO ruling and live up to its trade agreements, the U.S
must amend existing laws, said Anthony Cabot, a lawyer with Lewis and Roca in
Las Vegas, which represents some Internet gambling clients.
"The
new Kyl bill is the most likely vehicle," he said. "It can effectively
shut down any interstate betting that would go through a financial transaction
service provider. And the horseracing industry has been increasingly reliant on
interstate wagers for its viability."
"Account wagering is the
fastest-growing part of the business by a significant margin," said Greg
Avioli, executive vice-president of NTRA, who expects it to hit $3 billion this
year.
"We are paying very close attention to the bill," he
added. "But we are confident that Mr. Kyl and other members of the Senate
do not want to interfere with legal parimutuel betting [and that] whatever legislation
passes will adequately protect racing."
As big a hit as it would
be to track owners like Churchill Downs and Magna Entertainment, passage of the
Kyl proposal in its current form could essentially wipe out operators like Youbet.com
and TVG.
A spokeswoman for TVG, which is owned by Gemstar-TV Guide, said
the company was aware of the draft bill but declined to comment.
"It
is pretty early in the process," she said. "We are waiting to see what
happens."
Churchill declined comment. Neither Youbet.com nor Magna
would return phone calls.
Any attempt to insert a rider that would protect
racing's online action could not only run afoul of the WTO again but would also
bring forth other interests seeking their own exception, noted Sue Schneider,
publisher of Interactive Gaming News.
Indian tribes, lotteries, and other
gambling providers "would all want exceptions," she said. "That
causes stalemate. I think [Kyl] is taking a cleaner approach to see if it makes
any difference."
Schneider said the horseracing industry has been
"in a bit of denial" over the danger, but noted that it can wield considerable
political muscle should it choose to exercise it.
"They are starting
to kind of wake up to some of this a little more," she said.
Still,
Cabot pointed out that big political changes in Washington make derailing a proposal
less of sure thing than in the past.
The Republican Party controls almost
all the levers of power, he said, and is in thrall to a right-wing religious constituency
for which gambling is a moral issue.
"If they want to pass Senator
Kyl's bill, or any version of Senator Kyl's bill," they can," he said
