Seat at the Table

What do the Thoroughbred industry - including horseplayers - and the Obama administration have in common?  At least one thing.  We both need a stimulus package. 

That's why yesterday's introduction of the Internet Poker and Games of Skill Regulation, Protection and Enforcement Act (S.1597) in the United States Senate by Senator Robert Menendez (D-NJ),  a big revenue-raiser for Obama, is potentially good news for racing as well.  The bill establishes a regulatory, licensing and taxation framework for   gaming interests other than horseracing to enter the market for online betting.  But unlike a similar bill introduced in the House by Rep. Barney Frank (H.R. 2267) earlier this year that would legalize virtually any type of gaming, the Menendez bill would only legalize "games of skill" such as poker.  

Don't listen to the doomsday scenarios from naysayers, some of whom are well intended and care deeply about our game.  This bill will help racing in the long run.  See our statement issued earlier today. 

For starters, we have been dogged for years by the U.S. Department of Justice whose lawyers contend that online pari-mutuel wagering is a violation of the federal criminal law known as the Wire Act, which prohibits gambling across state lines on sporting events via the telephone or other electronic means (i.e. the Internet).  The NTRA and the industry as a whole have long maintained that the Interstate Horseracing Act contains key protections for online pari-mutuel wagering on horseracing and while it is true that DOJ has never prosecuted anyone in the horse industry, the threat of prosecution has understandably had a chilling effect on industry efforts to expand this portal for potential new business.

The Menendez bill addresses the Wire Act issue head on and in a way that meets our needs and those of others entering the I-gaming market. Everyone needs the same issue resolved and there is strength in numbers by the bill having support from the Poker Players Alliance and many others.

The bill not only addresses the Wire Act but also critical tax issues for horse players like withholding and reporting - two areas where horse racing and its players are at a distinct disadvantage against other forms of gaming that have no withholding and much higher reporting levels. The important thing for horseplayers is that they won't automatically have to give Uncle Sam 25 percent of their winnings when they cash a ticket worth at least $5,000 regardless of the odds and they won't have a reportable until their winnings reach $1,200 (at odds of 300-1 or more) - the same level as for slot machine winnings. Said another way, it means more fun and less hassle for our fans.   

Also, the bill recognizes that outside of online pari-mutuel wagering, much of the current gaming activity on the Web is happening in a wholly unregulated environment. The Menendez bill brings consumer protections, fraud protections and guards against problem gambling-things that are currently absent when players go online.  

And the bill will also assist law enforcement officials in controlling unlawful on line gambling.   This includes the prosecution of off shore, on line bookmakers who take in, by some estimates, billions of dollars in wagers on U.S. horseracing  from American citizens without contributing anything to purses or horse racing's expensive infrastructure in this country.

The bill is a long way from passing but the bill has a good chance of becoming law because with so many economic and social welfare issues such as health care reform now on the table, the White House needs new revenue sources and this could be one of them.  It will take constant attention from the NTRA's legislative team to assure that the benefits continue to outweigh any potential competitive threats to racing. 

The good news is this:  through the longstanding efforts of the NTRA and its allies, the Thoroughbred industry (including horseplayers) has a seat at the table and we are being taken very seriously.  Trust me - we will not fold our hand on this one. 

How big a hassle is the IRS window at your racetrack?  Would you be happy to see it go away?