Online Gambling Bill Has Racing Provisions

A new Internet gambling bill is pro-horse racing, the NTRA said Aug. 7.

Federal legislation that would regulate online poker and games of skill protects pari-mutuel horse racing under the Interstate Horseracing Act and includes various tax breaks sought by the racing industry, the National Thoroughbred Racing Association said Aug. 7.

The Internet Poker and Games of Skill Regulation, Protection, and Enforcement Act, introduced Aug. 6 in the United States Senate by Democrat Robert Menendez of New Jersey, is similar to the Internet Gambling Regulation, Consumer Protection, and Enforcement Act introduced in the House May 6 by U.S. Rep. Barney Frank (D–Mass).

The NTRA said both bills establish a regulatory, licensing, and taxation framework under which other gaming interests may enter the market for online gambling; however, the Menendez bill would only legalize “games of skill” such as poker, and is more narrowly drafted than the Frank bill, which would legalize virtually any type of gaming.

The Menendez bill amends the tax code to scrap the 25% federal withholding tax on pari-mutuel winnings of $5,000 or more, and increases the reportable amount of winnings from $600 to $1,200 — similar to the reportable amount for winnings from slot machines. Basically, the measure incorporates the Pari-mutuel Conformity and Equality Act being pushed by the NTRA and other groups.

“The Menendez bill affirmatively supports our position that the Wire Act — a criminal statute aimed at illegal bookmaking — has no application to activities carried out in accordance with the Interstate Horseracing Act, a civil statute passed expressly to facilitate interstate pari-mutuel wagering on horseracing,” NTRA president and chief executive officer Alex Waldrop said. “This legislation reinforces the protections afforded our industry under the IHA.

“This bill was drafted with input from numerous stakeholder groups, including the NTRA, which will help bolster its chances for passage. The bill is limited to online poker, carries strong consumer protections, respects states’ rights, and ensures that domestic U.S. industries — including the horse racing industry — are allowed to participate fully and with equal opportunity in future Internet gaming markets.

“These elements will garner serious consideration for the bill.”

The NTRA said the Menendez legislation “expressly exempts online pari-mutuel wagering on horse racing as authorized under the IHA from the tax, licensing, and regulatory requirements for entities that wish to enter the market for online gaming on a going-forward basis. The Frank bill makes no reference to online pari-mutuel wagering.

“The express exemption in the Menendez bill protects horseracing from being ‘double-taxed’ and over-regulated.” It also protects those who provide financial transactions protection under the IHA and reaffirms the legality of pari-mutuel wagering, the NTRA said.