Horse Racing Safe as Internet Gambling Ban Passes

The United States House of Representatives passed the Internet Gambling Prohibition and Enforcement Act July 11 by a vote of 317-93, but defeated an amendment that would extended the proposed ban on Internet gambling to horse racing and state lotteries by apparently superseding existing federal law.

The legislation, which also modernizes the Wire Act of 1961, attempts to stymie Internet gambling by outlawing use of credit to make bets and mandating criminal penalties. Its primary target is offshore online casinos that take wagers from U.S. residents.

Chances for introduction and passage of an Internet gambling bill by the Senate remain unclear. Republican Sen. Jon Kyl of Arizona has championed similar legislation in his chamber since the late 1990s.

The National Thoroughbred Racing Association and its lobbying firm, The Alpine Group, along with the American Horse Council, have regularly lobbied to protect horse racing's interests, particularly in the area of account wagering. Telephone and Internet betting produce a growing percentage of handle each year.

"We are pleased that Congress has reaffirmed horse racing's ability to continue to conduct Internet wagering under the Interstate Horseracing Act--an existing federal law--as evidenced by the overwhelming vote in favor of (the Internet Gambling Prohibition and Enforcement Act)," NTRA interim chief executive officer Greg Avioli said in a statement released after the House vote.

Much of the debate on the House floor before the vote centered on the pari-mutuel horse racing industry, which under the IHA is permitted to offer account wagering across state lines between states that expressly permit it. Supporters of a defeated amendment proposed by Nevada Rep. Shelley Berkley and Michigan Rep. John Conyers Jr., both Democrats, criticized what they called exemptions or carve-outs for horse racing and state lotteries.

The legislation technically doesn't exempt horse racing, though lawmakers noted pari-mutuel industry officials have repeatedly referred to their "exemption" from the ban, and media reports have cited exemptions or carve-outs for pari-mutuel horse racing. Republican Rep. Bob Goodlatte, the Virginia lawmaker and co-sponsor of the Internet Gambling Prohibition and Enforcement Act, tried to clear up any confusion on the House floor.

"There is no carve-out in this legislation for horse racing and the lottery," Goodlatte said. "This has been misrepresented time and time again. It's the exact argument Jack Abramoff used to defeat this legislation before. The horse racing industry has a separate statute."

Abramoff is the former lobbyist who pleaded guilty to charges related to influence peddling. A few lawmakers during the July 11 floor discussion accused Abramoff of being responsible for the death of earlier versions of the Internet gambling legislation.

Berkley alleged Goodlatte made a deal with the horse racing industry on what she called an "exemption." She claimed "billions of dollars" would continue to leave the country because the proposed act wouldn't do anything to halt online gambling, and indicated she takes offense to the manner in which pari-mutuel horse racing is addressed in the bill.

"There's no getting around the fact the bill allows online betting on racing," said Berkley, who cited a previous release from the National Thoroughbred Racing Association. "It sounds to me like they think they got an exemption in the bill. If we do not adopt this amendment, the entire debate is a farce. The most special, special interest is the (NTRA)."

NTRA officials have said pari-mutuel horse racing already is covered under the IHA, and therefore doesn't require an exemption. The horse racing industry and the U.S. Department of Justice remain at odds in their positions on interstate pari-mutuel wagering, though the federal government has taken no action.

Pari-mutuel Greyhound racing and jai alai aren't covered under the IHA, which was passed in 1978 and amended in 2000 to include provisions for account wagering.

Supporters of the bill sponsored by Goodlatte and Republican Rep. Jim Leach of Iowa repeatedly said horse racing is covered under existing federal statute. Leach said the bill in fact "increases the strength" of the position of the Department of Justice, which has argued pari-mutuel wagering across state lines is illegal under the federal Wire Act.

Other members of Congress believe prohibition is a lost cause and could increase gambling activity. Democratic Rep. Bobby Scott of Virginia said the legislation would merely give offshore gambling enterprises a monopoly; he said one is option would be to "regulate, supervise, and tax" Internet gambling.

Republican Rep. Jon Porter of Virginia said before the final vote that Internet gambling is a "highly complex issue that needs intense review in a bipartisan approach" before any bill is passed.

Just before the final vote on the legislation, lawmakers defeated a motion by Conyers to recommit the bill. Conyers expressed concern the legislation wouldn't stop underage gambling; others argued his motion would make the states turn to the federal government to regulate gambling within their borders.

It was noted during the floor discussion that attorneys general in 48 states support the Internet Gambling Prohibition and Enforcement Act, and that support would disappear if the legislation was altered.