Internet Gambling
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  Racing Industry Gambling On Internet Legislation

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By Andrew Beyer

Wednesday, March 31, 1999; Page D01

After Sen. Jon Kyl (R-Ariz.) championed the Internet Gambling Prohibition Act as a measure that would protect our children, his colleagues ignored concerns about civil liberties and enforcement problems and passed the measure by a vote of 90-10 last year. But as the House became preoccupied by the impeachment of President Clinton, it wasn't able to deal with the issue before the legislative session ended.

It is hard to keep a bad idea down, though, and Kyl last week introduced a new version of the bill. The thoroughbred industry may be relatively unscathed by S. 692, for the bill principally targets the online gambling industry -- Internet sites offering casino-type games and bookmakers accepting wagers on sporting events. They should be banned, the measure's proponents say, because they contribute to gambling addiction and, most important, because children might gain access to them. Kyl invoked the possibility that kids could "wager with Mom's credit card, click the mouse and bet the house."

Of course, most politicians fret very selectively about the evils of gambling. If they really wanted to address abuses in the gambling industry, they could begin in their home states, for most government-sponsored lotteries employ aggressive, in-your-face, get-rich-quick marketing techniques that would shame the most brazen hustler.

If the politicians believe there are special dangers associated with Internet wagering, they should take note of the biggest gambling game in cyberspace: "day trading" of stocks through online brokerage services. Buying shares of Netscape in the hope that the stock will rise in the next six hours is every bit as much a gamble as a hand of blackjack or the daily double at Laurel.

A recent front-page article in The Washington Post concluded, "The rise of day trading has, for many traders, turned the stock market into an invisible nationwide casino . . ."

Legislators have focused on cybercasinos and bookmakers because this is such an easy political fight. Supporters of the Kyl bill are backed by family-values moralists, by college and professional sports establishments and even by the potent casino-gambling lobby, which doesn't want people playing blackjack on their computers instead of going to Las Vegas. Now it has the backing of the thoroughbred racing industry, too.

If the Kyl bill does become law, enforcing it will be practically impossible.

The Internet is a global medium, and most of the online gambling operators are based outside the United States, so there is virtually no way to punish them or shut them down. The 1998 Kyl bill would have subjected bettors to fines or jail terms, but this draconian provision was removed from the latest version. The only effective way to enforce the Kyl bill would be to tell Internet service providers to block access to gambling sites -- an unprecedented government intrusion into the freest communications medium ever devised. It is hard to make the case that while the Internet offers unfettered access to sites run by pornographers and hate groups, the government must step in to protect America from cyber-roulette.

Kyl hadn't focused on the horse industry when he conceived this legislation, but the measure as originally written could have devastated the sport. Under its language, the legality of interstate simulcasting (with tracks linked by computer) was uncertain. The American Horse Council led a campaign to state the industry's case. Kyl was responsive, and Sen. Dianne Feinstein (D-Calif.), whose state has a large horse industry, became an important ally. People who have seen the 1999 version of the Kyl bill are relieved, if not elated, by its language. It clarifies murky area of existing law by permitting interstate betting as long as the wager is legal in the state in which it was received. It allows online horse wagering if it meets certain requirements. David Marshall, president of youbet.com, the pioneer of online horse betting, said his company's method of operation is permissible under the Kyl bill. He added, "The industry as a whole is looking pretty good under the proposed legislation."

Yet some people in racing still say that the American Horse Council made a deal with the devil in supporting the Kyl bill. Stan Bergstein, executive vice president of the Harness Tracks of America, has been the industry's most forceful voice on the issue, and he wrote in a newsletter that the Kyl bill "leaves the sport isolated from the future of telecommunications." Bergstein declared: "In the decade ahead, the blending of the Internet, television and telephone will change the way Americans and all other people live and communicate. . . . American racing . . . will be no part of it."

Perhaps these fears are well founded. Perhaps racing will be able to grow and prosper under the Internet Gambling Prohibition Act. Because there was little chance of blocking the legislation entirely, supporting the Kyl bill was a gamble that the industry had to take.

© Copyright 1998 The Washington Post Company

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