Sunday July 21,2013 : U.S. HORSE RACING EYES MORE COMPETITION FROM ONLINE GAMBLING
Legalised online gaming in the USA will have an impact on horse racing's monopoly
The legalization of online gambling could have a serious impact on American horse racing, an article in the publication Daily Horse Racing opined over the weekend.
Under a federal exemption to the UIGEA, horse racing has until recently been the only legal form of Internet betting in the United States, and the sport has enjoyed a monopoly of sorts for more than a decade, the publication points out.
But handle overall on U.S. horse racing has long been in decline, and the availability of online betting has served to staunch the bleeding. It is therefore unlikely that additional competition in the marketplace will work to horse racing’s benefit.
“There’s always going to be people pushing [for Internet gambling], and there’s always going to be states looking for money,” said Chris Scherf, the executive vice president of the Thoroughbred Racing Association, a trade group.
“That additional competition is going to have an impact on racing, no question, but it all depends on what types of gambling are legalized.”
The article discusses recent federal legalization measures introduced to Congress along with the de facto legalization of online poker or online gambling in Delaware, Nevada and New Jersey following the switch in Justice Department policy on the Wire Act back in late 2011.
Daily Horse Racing interprets the wording in the King bill (which seeks to federally legalise online gambling) as maintaining the status quo in horse racing as far as the acceptance of interstate wagers by online operators in commingled pools is concerned.
Jay Hickey, the president of the American Horse Council, a Washington D.C. lobbying group for all breeds of horses, said the bill’s language would “finally make it clear that interstate simulcasting is legal,” in reference to concerns raised in the past by the Justice Department that betting over state lines by horse racing is not explicitly legal in current federal law and violates the Federal Wire Act of 1961.
The article is pessimistic on the chances of either the King or Barton legalization bills making it through Congress, citing opposition from committee chairmen to expanded gambling; that leaves the initiative firmly in the hands of individual states, and several are already actively considering legalization.
Online gambling initiatives in Illinois have failed this year following opposition to general provisions that would have allowed slot machines at racetracks, something which created differences between racetracks and horsemen, who feared that racing companies would open Internet gambling sites without providing a cut to boost track prizes for the horsemen.
"That’s a concern that many horsemen’s groups might share, even if the rationale for a cut of the revenue remains debatable," Daily Horse Racing observes, noting that racing firm Churchill Downs Inc., already has extensive Twin Spires.com interests in Internet gambling aside from its horse race account-wagering business.
The company has also applied for Nevada online poker licensing, and last year launched a gambling site, Luckity.com, that uses the pari-mutuel results of horse races to determine the payouts on games that are designed to look like mini-lotteries.
Daily Horse Racing concludes that it is already clear that racing will have more competition in the future for the online gambling dollar, and that for a sport that is currently struggling to maintain its current level of handle, that might be a perilous development.
The sub-text message is perhaps that smart horse racing firms will take cognisance of the inevitability of competition from online gambling, and develop strategies to participate in rather than attempt to delay the process.