Internet Horse Racing in U.S. May Pave Way for Legal Online Casinos

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By Gene Koprowski

The spectacular success of Woodland Hills, California-based online gambling company Youbet.com -- a publicly traded firm which provides interactive parimutuel betting may pave the way for the legalization of online casino gambling throughout the U.S., experts are telling The Casino Listing.

The company has flourished for years, without government interference, even as the U.S. Department of Justice and U.S. Congress today are seeking to outlaw other Internet gambling ventures, and arrest and extradict the chief executive officers of Internet gambling firms, Sportingbet PLC, and BetOnSports PLC.

YouBet.com executives said that new sections added six years ago to the federal Interstate Horse Racing Act allow state-licensed interstate "interactive" parimutuel betting.

Prosecutors and politicians in the U.S. have, however, argued this year that online sports wagering and online casino gambling violate the Wire Act, an old law designed to prohibit gambling over the phone, across state lines.

Never Been Clear

"It's never really been clear up to and including now, how the 1961 Wire Act applies to the Internet Gambling" said Keith Whyte, the executive director of the National Council on Problem Gambling. "There's a lot of area to make arguments. There's an utter failure of Congress to address this issue. They're relying on a pretty antiquated law to stretch over this."

Given that lack of clarity, and the total acknowledgement that horse race online gambling is legal in the U.S., legislators are starting to step back from the brink of outlawing online casinos.

Earlier, this summer the U.S. House of Representatives passed a bill that would outlaw almost all forms of online gambling. A similar measure is doubtful in the Senate, despite recent behind-the-scenes intrigue by Senate Majority Leader Bill Frist (R-Tenn.) to link the bill to a defense-authorization bill that must pass this year.

Every federal judge does not agree that online gambling is already illegal, and Internet-gambling companies argue the Wire Act just doesn't apply to the Internet, which wasn't created until the late 1960s and wasn't commercialized until the 1990s.

Eight states have prohibited online gambling, but other states nearly daily continue to put forth measures to legalize other forms of gambling.

Christiansen Capital Advisors, a New Gloucester, Maine-based research firm, reports that online gambling is a $12 billion-a-year industry globally, with most of the revenues coming from the U.S., and most of the technology also coming from the U.S.

Uber-conservatives in the Congress, including Republican Rep. Bob Goodlatte, who represents an undesirable, downstate, rural Virginia district, has led the crusade in the Congress against online gambling, arguing that it is immoral, even though there is a lottery in Virginia which funds schools and educational scholarships. Some say that Goodlatte has abandoned his conservative, free market principles to appeal religious zealots who decry gambling, as well as the movies, as bad influences on American youth.

"We don't want the Internet to become the Wild, Wild West," said Goodlatte.

Sincerely,

Mr. Gene Koprowski (M.A., The University of Chicago)
Technology Columnist, Transport Topics, Washington D.C.

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