Racing Exemptions Intact as Internet Wagering Bill Passes House Committee

Horse racing interests scored a significant victory in Congress May 25 when the Internet Gambling Prohibition Act that was favorably reported out of the U.S. House of Representatives Judiciary Committee contained exemptions for account wagering on horse racing.

"This is huge for the racing industry," said Greg Avioli, executive vice president of the National Thoroughbred Racing Association and the organization's point man in Washington, D.C., on legislative affairs. "Today, this bill as reported to the House floor has specific language that preserves our industry's ability to conduct account wagering."

The bill, H.R. 4777, introduced by Republican Bob Goodlatte of Virginia, was approved by a 25-11 vote after several amendments were defeated that would have stripped horse racing's exemption, tightened the regulations on account wagering, or allowed dog racing and jai-alai to have a similar exemption.

The Goodlatte amendment contained a compromise reached with the Department of Justice that preserves the status quo on account wagering under the Interstate Horseracing Act. The language also clarifies that the Goodlatte bill is neutral on whether the federal Wire Act, Interstate Horseracing Act, or other federal statute is the rule of law governing Internet wagering on horse racing.

The IHA allows account wagering and Internet wagering on horseracing where permissible by states. Currently, 19 states have made executive decisions or passed state legislation to allow such wagering. The IHA was first passed by Congress in 1978 and later amended in 2000 to specifically authorize Internet or electronic wagering when allowable under state law.

Two previous versions of the bill were stripped of horse racing exemptions when they were reported out of the committee in 2002 and 2003.

Negotiations on the bill's language between the NTRA and the Department of Justice, which has taken the position that interstate wagering and common-pool wagers are a violation of the federal Wire Act, led to a letter of clarification from the DOJ to the Judiciary Committee chairman that solidified support for horse racing.

NTRA officials are confident any action by the DOJ against a licensed pari-mutuel operator in the United States for an alleged violation of the Wire Act would not stand up in court, provided the operator was in compliance with the requirements of the IHA. Nevertheless, Avioli said it may be necessary for the NTRA to seek a legislative initiative clarifying that the Wire Act does not apply to interstate wagering on horse racing.

A Senate bill, sponsored by Arizona Republican Jon Kyl, has not been marked up in committee.