California Ponders Offshore Betting Options

Frustrated with the lack of federal prosecution of illegal offshore gambling operations, the California Horse Racing Board is considering action to curtail the advertising and promotion of such activity by publications and broadcasters.

After a discussion of the issue during its Feb. 16 commission hearing in Arcadia, the board referred the matter to its pari-mutuel operations committee for further study. Blocked by jurisdictional problems from going after the perpetrators, chairman Richard Shapiro suggested that pursuing "aiding and abetting" statutes on the books against illegal gambling may be one method of cutting into their effectiveness. The board believes illegal gaming sites are stealing big customers from the tracks and legal account wagering companies by offering rebates.

Shapiro called illegal betting "a very serious problem that is robbing racing of major revenues" and "is affecting every aspect of the industry." He said the CHRB should work with other racing jurisdictions on steps to minimize it.

A recent NTRA task force concluded that off-shore bookmaking is a law enforcement matter but, according to Craig Fravel, executive vice president for the Del Mar Turf Club, difficulties in successful prosecution mean "it isn't easy to get law enforcement interested."

Charles Champion, chief executive officer and president of Youbet.com, which is licensed in California, agreed that illegal wagering is "prolific." He said there are some 1,650 customers downloading dozens of programs and related information every day from his Web site and never place a bet. He said it's obvious they are wagering with offshore companies. Youbet purchased one offshore company, International Racing Group, last year in an attempt to stem the loss of major clients.

"I think trying law enforcement is futile," he said. "The justice department isn't thrilled about what is going on ... but it has not shown an appetite to go after it."

Champion said the racing industry is "facilitating" the illegal activity and losing customers. "We need to get them back," he said.

"Customer needs are not being satisfied, and those customers are going to go elsewhere to get it," Champion said. "I need the help of the tracks. I need the support of the horsemen, and I need the support of groups like this. We hate to discount our product (by offering rebates), but we need to do it intelligently."

Jerry Moss, who chairs the CHRB pari-mutuel committee, said he believes that those wagering illegally on horseracing know what they are doing but are probably unaware that off-shore rebaters are taking revenue away from racing and providing nothing in return.

"We need to publicize the fact that, when bettors make those wagers, they are hurting California and the horseracing industry," said Moss.

Commissioner John Harris agreed that offshore wagering is hurting the game's economy, but noted that "racing is a blip on the screen" when compared to the dollars such companies take in on other sports betting and Internet poker. He said it is more vital that racing gets "a carve-out" on federal laws making all Internet gambling illegal that are under consideration.