Internet Gambling Ban Resurfaces on Capitol Hill

The pari-mutuel industry, which has hired legal specialists to deal with the ramifications of a recent World Trade Organization ruling, must now deal with the reincarnation of legislation to effectively ban Internet gambling by making financial transactions illegal.

The effort to ban Internet gambling began on Capitol Hill in the late 1990s but has repeatedly stalled in Congress. The pari-mutuel industry has been able to get language included that protects account wagering, but the latest bill, again being pushed by Arizona Sen. Jon Kyl, doesn't exempt the industry from the ban.

The "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 legislation, which hasn't been introduced but is being circulated in political circles, has resurfaced in part because of a WTO 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 pari-mutuel industry is planning to again make its case that it conducts legal wagering across state and international borders. The IHA of 1978 was amended in 2000 to protect various forms of account wagering, but the U.S. Justice Department has maintained the IHA didn't authorize Internet wagering.

The Unlawful Internet Gambling Enforcement Act of 2005 prohibits acceptance of any financial instrument for unlawful Internet gambling. The bill says unlawful Internet gambling means "to place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable federal or state law in the state in which the bet or wager is initiated, received, or otherwise made."

Previous versions of what has been called "the Kyl bill" also lacked pari-mutuel exemptions when they were introduced. Industry officials in April said they anticipated reintroduction of the Internet gambling bill but weren't sure when lawmakers would tackle it.

The industry, through the efforts of the National Thoroughbred Racing Association and American Horse Council, has successfully protected the transmission of signals across state lines. More than 85% of all wagers on horse racing are now made at locations other than the host track.

Account wagering, either by telephone or computer, is believed to contribute almost one-fifth of the about $15 billion wagered a year on Thoroughbred races.