Veto of a bill that would have allowed account wagering is a blow to horse racing interests

Racing in California has been vetoed from technologically entering the 21st century.

With a stroke of his pen on September 30, California Governor Gray Davis, who once served on the California Horse Racing Board, vetoed legislation that would have legalized telephone-account wagering on horse racing in the state. This is a major setback for racing, for providers of betting services, such as Television Games Network (TVG) and Youbet.com, and for owners and breeders.

Enactment very likely would have brought tens of millions of dollars to horsemen, the tracks, and the state in revenue for its share of the pari-mutuel handle that would have been created through account wagering. That revenue is now lost to other states that take telephone-account wagers from bettors from out of state.

But it is not simply a matter of one state's loss is another state's gain, a zero-sum game. Legalization of telephone-account wagering in California, the country's most populous state, would have led to increases in overall handle, bringing new players into the game and funneling millions of dollars into purses.

Davis vetoed the legislation even though the bill included a provision that would have established a mechanism for backstretch workers to unionize and would have allowed state housing officials to conduct annual inspections of living quarters, both important issues recently in the state. Davis said he would have signed the bill if it only contained the backstretch provision.

When he vetoed the bill, Davis was quoted in the Los Angeles Times as saying, "If this bill contained only the backstretch provisions, I would have signed it. However, I cannot support the provisions lifting the state ban on Internet and telephone wagering. It would expand the scope of gambling by allowing Internet and telephone betting on out-of-state and out-of-country horse races. And it would allow continual betting through commercial betting systems without being limited by the racing season."

Davis went on to say that passage of the bill would have made it easier for children and teenagers to place bets using their parents' Internet accounts. His arguments are both specious and dishonest.

First, while Davis has said he is a strong antigambling proponent, he has accepted large donations from Native American gaming interests during his gubernatorial campaign. He received more than $750,000 in direct contributions from Indian gaming interests in the 1998 gubernatorial campaign. Hollywood Park, then headed by R. D. Hubbard, contributed $75,000.

As governor, Davis has overseen a significant expansion of Indian gaming in the state and of the California state lottery. Yet he finds the request by horse racing interests to allow account wagering-which is legal in nine states-an expansion of gambling that he cannot live with. It is likely that Indian gaming interests, worried that people would stay at home and not travel to their casinos, lobbied the governor about denying account wagering on horse racing.

Racing interests have seen those forces at work against it nationally.

As for Davis's assertion that Internet wagering would allow children to gamble on horse racing, there is no evidence to suggest that would happen. We have never seen a study produced that would indicate that children would be prone to bet on horse racing due to an expansion of in-home wagering.

In fact, without any enabling legislation, children-as well as adults-could gamble on horse racing, roulette, blackjack, or any other casino game through one of the 21,000 offshore Internet casinos already in existence if they wanted to. Legalization of betting on horse racing through the Internet would simply acknowledge that technology is changing and would help funnel money that would normally go offshore to in-state sources, a boon to both tracks and the state coffers.

The Thoroughbred industry in California contributes about $4-billion to the state's gross domestic product annually, according to the California Thoroughbred Breeders Association. The California Legislature recognized the importance of the agricultural industry that supports racing when it overwhelming passed the account-wagering bill-the state Assembly by a vote of 61-6; and the Senate, 38-1.

The sport in the state now must go back to the drawing board. They most likely will have to wait until Davis is out of office before account-wagering legislation is again considered.

Racing interests need to start raising money now to help finance the election campaign of whoever is running against Davis in 2002.