Thoroughbred racing needs to move ahead quickly to take advantage of Internet wagering opportunities

Congress, its collective finger in the dike, thinks it can make Internet gambling go away. It may pass a law to prohibit it, but it cannot stem the inevitable tide. Internet gambling is already significant and will become much bigger each year. Thoroughbred racing must take advantage of interest in Internet wagering and current laws that permit pari-mutuel wagering to be conducted via the Internet, and press ahead on more fronts before other forms of gambling take the lion's share of the action.

Before Congress adjourns for the Fourth of July, the Internet Gambling Prohibition Act is expected to be reintroduced in the House of Representatives.

The bill would prohibit people in the United States from making wagers via the Internet. The prohibition excludes pari-mutuel wagering, which was grandfathered due to the existence of the Interstate Horseracing Act of 1978, which enables legal wagers to be sent electronically interstate.

The newest version of the Internet Gambling Prohibition Act is expected to include language that gambling debts funded from a credit card would not be collectable. That effectively would mean that credit card companies would not do business with Internet gambling companies because they would be left holding the bag.

That may have a chilling effect, but Internet gambling is already a multibillion-dollar business, and people and companies are resourceful enough to figure out ways to work around any obstacles. Offshore Internet companies, beyond the jurisdiction of the United States Congress, are already one step ahead of the laws.

According to Datamonitor, a global strategic market analysis company, on-line gambling companies will generate revenues of $6.6-billion this year and that will increase to $13.6-billion in 2005. Datamonitor indicates that 2.9-million people in the U.S. and Europe already gamble on-line, with that figure to grow to 7.4-million in four years.

The size and potential of the market have not been lost on U.S. gaming companies. That is why the state of Nevada, home of the gambling capital of the world, passed a bill that was signed into law on June 15 by Governor Kenny Guinn that makes Nevada the first state in the nation to legalize Internet wagering.

Before Internet gambling can be transacted by Nevada gaming companies, the state's Gaming Control Board and state Gaming Commission must draft rules to govern the activity. And, of course, a federal law prohibiting Internet gambling that supersedes a state law must not be passed.

All this flurry of recent activity indicates what is at stake.

Pari-mutuel wagering proponents right now hold the upper hand, since pari-mutuel wagering is the only form of Internet gambling that is presently legal in the U.S.

This has not been lost on everyone. There are movements in Thoroughbred racing to take advantage of the current climate to further increase the distribution of racing into homes. Television Games Network in particular is starting to become more aggressive.

In mid-May, TVG-which at the time accepted wagers in only five states-announced it would begin a move to accept wagers in the 35 states in which account wagering is legal. This action was taken because language was added late last year to the Interstate Horseracing Act of 1978 to clarify the act's intent; that is, to allow legal wagers to be sent across state lines.

TVG also recently joined with Youbet.com Inc. to expand their collective reach and enable TVG to become the majority owner of Youbet. The marketing agreement reached between the companies in late May expands Youbet's offerings to 81 tracks in 39 states.

More recently, Gemstar-TV Guide International, the parent company of TVG, signed an agreement with Adelphia Communications Corp., the leading cable operator in Los Angeles and a major cable service provider in South Florida, western New York, Virginia, and New England, that will allow TVG to expand its signal into states that accept account wagering.

Within the racing industry, Fair Grounds launched its interactive betting site this spring, plus Autotote is expanding its services in the U.S. and abroad to accept more wagers via the Internet.

More racing companies should follow the lead. Such tracks as Churchill Downs and Keeneland Race Course, which have strong brand names and operate in a state in which telephone account wagering is already legal, do not offer account wagering. Why not? They should both take off their blinkers, get out of the starting gate, and move into Internet wagering to expand the distribution and total handle on the sport.