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Act would clarify legality of debit card use for account wagering

Posted: Wednesday, June 30, 2010 12:15 PM

by Frank Angst

With financial institutions blocking debit card and credit card transactions to licensed Internet sites that offer pari-mutuel wagering, a pair of Congressmen from top Thoroughbred states will try to take action.

Scott Murphy (D-New York) and Brett Guthrie (R-Kentucky) have introduced The Wire Clarification Act, which aims to clarify the legality of online pari-mutuel wagering through account wagering sites such as Television Games Network, TwinSpires.com, XPressBet.com, and others.

At the beginning of June, financial institutions began blocking transactions to Internet wagering sites to meet the requirements of the Unlawful Internet Gambling Enforcement Act. While pari-mutuel wagering is supposed to be exempt from these requirements, banks have blocked these card transaction attempts as well. Murphy said some credit card companies will no longer process any gaming transactions, even those for legal pari-mutuel wagering in the United States.

Some of these institutions believe that pari-mutuel wagering on out-of-state wagers is prohibited by the Wire Act, an opinion the Department of Justice has maintained although it has never prosecuted a case of interstate wagering on horse racing, as outlined in the Interstate Horse Racing Act.

“Horse racing is at the heart of our local economy. It brings much-needed revenue and is responsible for thousands of local jobs,” Murphy said. “When the Treasury Department and the Fed created new rules governing internet gambling transactions, credit card companies felt that it was no longer safe, under the 1940’s-era WIRE Act, to accept online transactions on pari-mutuel betting, an essential component of the racing economy. Now the rules are hampering and essential stream revenue from flowing to the racing industry.”

According to the Representatives, the domestic horse racing industry represents a $39-billion business with 1.4-million sustained jobs. Lawful wagering via the Internet represents a substantial portion of wagering on horse racing. Lack of clarification of this issue will result in less wagering, reduced purses, economic decline for tracks, breeders, workers and others, and a loss of jobs.

Murphy outlined how the bill would impact New York. He said pari-mutuel Internet wagering on races at Aqueduct, Belmont Park, and Saratoga Race Course totaled roughly $210-million in 2009, which represented approximately $18.5-million of revenue for New York Racing Association. In New York alone, 152,000 individuals participate in the equine industry with a $2.4-billion Gross Domestic Product impact.

Murphy introduced legislation to provide a definitive clarification that the Wire Act (and other similar statutes) is not applicable to Interstate Horse racing Act (IHA) regulated activities. He believes this clarification would relieve credit card companies from the threat of prosecution and assure the credit card industry that it need not block or otherwise prevent legal online pari-mutuel wagering as authorized by the IHA.

Introduced on June 24, the bill will have to go through committee. It has been referred to the House Judiciary Committee, which will assign the bill to a subcommittee.

Frank Angst is a Thoroughbred Times senior staff writer