Horse Caucus Wants Pari-Mutuel Industry Protected

The Congressional Horse Caucus, now more than 60 members strong, said it supports efforts to stop illegal Internet gambling but said any proposed legislation must be clarified to protect legal pari-mutuel account wagering and simulcasting.

Draft legislation to ban financial transactions tied to Internet gambling has resurfaced on Capitol Hill. Arizona Sen. Jon Kyl, who proposes the legislation, has sought to ban Internet gambling since the late 1990s.

The pari-mutuel industry has been able to get language included that protects account wagering, but the latest bill doesn't exempt the industry from the ban.

The proposed "Unlawful Internet Gambling Enforcement Act of 2005" says Internet gambling is a "growing cause of debt collection problems for insured depository institutions and the consumer credit industry." It also says Internet gambling "conducted through off-shore jurisdictions has been identified by United States law enforcement officials as a significant money laundering vulnerability."

The bill has resurfaced in part because of a World Trade Organization Appellate Body ruling that upholds the position of the U.S. to protect itself from illegal Internet gambling but also calls into question the fairness of the Interstate Horseracing Act. The WTO appellate body issued the report based on a dispute between the U.S. and Antigua. The U.S. had appealed a WTO ruling last November in which its laws on remote gambling were considered not in conformity with WTO commitments.

The Congressional Horse Caucus, in a May 31 letter to Kyl, said it believes illegal, offshore Internet gambling takes revenue away from "licensed, regulated U.S.-based wagering, including wagering on horse races." The caucus said the draft legislation as written would have the "unintended consequence of block payment processing for account wagers conducted pursuant to the Interstate Horseracing Act, which Congress clearly intended to be legal."

The caucus acknowledged the U.S. Department of Justice position that account wagers violate the federal Wire Act even though Congress amended the IHA in 2000 to clarify that pari-mutuel wagers could be made via telephone or electronic means.

"Ironically, despite the (Department of Justice's) insistence that interstate account wagering violates the Wire Act, the agency has not chosen to prosecute any of a number of companies openly engaging in the process today, so there is no authoritative jurisprudence on the matter," the letter from the caucus said.

The caucus asked Kyl to consider that previous versions of legislation to ban Internet gambling included "clarifications" for pari-mutuel wagering. It said such clarifications--the word exemptions isn't used in the letter--"are obvious steps to implement what has clearly been Congressional intent for several years, and we strongly urge you to include such provisions in your bill."

The Congressional Horse Caucus includes members from the House of Representatives and Senate. It was formed with only a handful of members but has grown along with the political action efforts of the National Thoroughbred Racing Association and American Horse Council in Washington, D.C.

During the 2003-04 election cycle, the NTRA political action committee contributed $465,000 to federal candidates in 33 states. Horse PAC, as it's called, is the horse industry's largest federal PAC.