6/28/10 – Writing in the US horseracing publication Bloodlines last week, the CEO of the National Thoroughbred Racing Association, Alex Waldrop, revealed that the organisation’s lobbyists have secured the introduction of important federal legalization to protect its $1.3 billion market for advance deposit wagering.
The bill, H.R. 5599, clarifies the relationship between the Wire Act, a 1961 federal criminal statute aimed at illegal bookmaking, the Interstate Horseracing Act (IHA), a civil statue passed in 1978 and amended in 2000 to permit online pari-mutuel wagering on horse races, and the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA), designed to stop the use of credit cards for illegal online gambling… but not the NTRA’s lawful, IHA-governed transactions.
The article underlines once again the conflict between the horseracing business and enforcement officials.
Waldrop claims that it has long been settled that horseracing is authorised to engage in interstate wagering via the IHA and that Congress, in its own words, passed the IHA to “further the horseracing and off-track betting industries in the U.S.”
“But sometimes, Congress’s messages are ignored,” the racing executive writes. “Case in point: the Justice Department, which champions the Wire Act and UIGEA, [but] continues to ignore the clear message that Congress sent when it passed the IHA, amended it in 2000 and exempted it from UIGEA in 2006.”
Waldrop claims that ongoing enforcement activity confuses the clear mandate for the NTRA to conduct interstate wagering under the IHA, and this is making credit card companies “more skittish about accepting wagers from our players – hence, the introduction of H.R. 5599.”
The NTRA exec summarises the proposal as simply re-stating that online wagering on horse racing is legal under the IHA, and that laws like the Wire Act and UIGEA only apply to [other] illegal [online gambling] activities – a reference to the controversial federal legal carve-outs which protect the internet wagering privileges of horseracing, state lotteries and fantasy sports in the United States.
The motivation for HR 5999 appears to be concern that the advent of the UIGEA regulations earlier this month could result in over-blocking.
The UIGEA is designed to stop illegal online wagering transactions with internet gambling companies, and depends on the already overloaded financial institutions to enforce its provisions.
Congress has been repeatedly warned by both banking and political bodies that the imprecise nature of the Act, and the optimistic expectation that financial bodies will be able to differentiate easily between confusing ‘legal’ and ‘illegal’ transactions, could result in over-blocking. There have already been cases of such incidents that have caused disruption to two state lotteries.
Waldrop clearly recognises the importance of online wagering to the horseracing industry, writing: “As players increasingly place their wagers online making account wagering the most important growth area for wagering on horse racing, we have to stay alert to every potential obstacle to keeping that channel as open as possible.”
The NTRA has also approached the IRS to ease the tax withholding requirements on winning pari-mutuel wagers.