Racing Keeps Eye on Internet Poker Bill

Legalization of Internet poker could have benefits for pari-mutuel horse racing.

The pari-mutuel industry could end up with some benefits should Congress opt to use legalization of Internet poker to help fund continuation of broad tax cuts agreed upon by Republicans and President Obama.

Democratic Senate Majority Leader Harry Reid of Nevada is advocating legislation that would legalize online poker operated by some casinos and racetracks, though the parameters are subject to speculation. According to online reports, about $5 billion a year in revenue is generated for offshore online gaming operators.

Online poker would be taxed, and revenue used to support government programs. The Obama administration Dec. 7 was working to convince Democrats to support a compromise that would stave off tax increases as of Jan. 1, 2011, and continue unemployment benefits for workers in a still-slumping economy.

The National Thoroughbred Racing Association and its lobbyists have been working in Washington, D.C., on the proposed online poker legislation in case a bill moves forward. Greg Means, co-founder of the Alpine Group, the NTRA's chief lobbying firm, was expected to pass on a trip to the University of Arizona Symposium on Racing and Gaming in Tucson Dec. 8 because of the flurry of activity on Capitol Hill.

The NTRA has said it will support such legislation “if certain changes are made to benefit horse racing,” NTRA president and chief executive officer Alex Waldrop said.

The benefits include, but aren’t limited to, issues the NTRA has been working on for years: clarification of the legality of interstate and online pari-mutuel wagering on horse races; tax exemptions for advance deposit wagering; elimination of the withholding tax; and changes in the reporting requirements for winnings to mirror those of casinos.

“We’ve been working on this for a long time, and we do think there could be some opportunities for racing,” Waldrop said. “(Internet poker) could be a revenue stream that would presumably help pay for some other things (on the federal level).”

The Unlawful Internet Gambling Enforcement Act of 2006 basically bans online betting—with the exception of wagers made on pari-mutuel horse racing—by restricting use of credit for such wagers. Some Democratic lawmakers, however, have called for legalization and taxation of online betting.

In any event, racing industry officials said even though there may be an increased appetite for such a plan, it’s hard to gauge what will occur in Congress.