All Out

Reaction to the Congressional ban on Internet wagering was swift and severe -- at least from stock market investors who previously were bullish about online poker, sports and horse race betting, and casinos.

On Oct. 2, the first day of trading following the Sept. 30 passage of the Unlawful Internet Gambling Enforcement Act of 2006, shares of numerous publicly traded online gambling firms plunged, with three companies alone accounting for market value losses of $7 billion in the span of a few hours.

Party Gaming, the parent company of PartyPoker.com, the Web site with the largest chunk of the growing online poker business, saw its shares fall by 58%. Sportingbet, operator of one of the world's most successful online betting shops, suffered a 64% decline in share price. Another large betting company, 888 Holdings, lost 25% of its market value.

Industry experts estimate the U.S. accounts for nearly 50% of the Internet gambling market.

Horse racing was spared from the ban, thanks in large part to the lobbying efforts of the National Thoroughbred Racing Association and American Horse Council, which helped convince Congress that Internet wagering on pari-mutuel horse racing is legal under the Interstate Horse Racing Act. The IHA was specifically amended in 2000 to clarify questions about the interstate merging of betting pools and to permit betting by telephone or "other electronic means" in states where that form of wagering is permitted.

When that amendment passed, AHC president Jay Hickey said it "should help the industry in any legislative efforts regarding Internet gambling in the next Congress. The change is an affirmation by Congress that what the industry has been doing under the IHA and state law is authorized."

Ban the Bookies

One month from now, racing will be in the media spotlight when the Breeders' Cup World Championships returns to Churchill Downs. In years past, among the hundreds of officially credentialed individuals roaming the backstretch of the host track were representatives of English bookmaking shops who establish betting lines on the Breeders' Cup races for their customers.

Those bookmakers run perfectly legal operations in the United Kingdom and return a small portion of their overall betting turnover to the horse racing industry there. Many of them also take bets on racing in the United States through a network set up by Philadelphia Park.

No day of American racing piques the interest of European bettors more than the Breeders' Cup, however, since a number of top horses from England, Ireland, and France compete annually. Yet the vast majority of the money handled by bookmakers on those races returns zero revenue to the Breeders' Cup.

Why, then, does the Breeders' Cup permit those bookmakers to roam the grounds of the host track?

A Yen for Gambling

Big racing days in Japan generate betting turnover several times the amount handled on a Breeders' Cup or Triple Crown race card. The influence of Japanese fans was witnessed at Longchamp Oct. 1, after thousands of them traveled to Paris and helped make their home-grown hero, Deep Impact, the prohibitive favorite for the Prix de l'Arc de Tri­omphe Lucien Barriere (Fr-I).

Imagine the interest Japanese fans would have on Breeders' Cup day if Japanese horses participated, and if those fans were able to wager on the races from their homes.

That can't happen today because of a Japanese law that prohibits wagering on races run outside of Japan. That type of protectionism isn't fair to the Japanese racing fan and runs against the growing international spirit of the Japanese horse racing industry.