JayC
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Thanks to Clevfan for catching this one across the street.
http://www.marketwatch.com/news/sto...BEE-431D-9681-2F474A49BD71}&siteid=mktw&dist=
Plan could cripple Net horse betting
By William Spain
5/24/2005
CHICAGO (MarketWatch) -- Draft legislation spurred by a World Trade Organization ruling on a dispute between the United States and Antigua could endanger legal Internet betting on horse racing, along with a big chunk of that industry's profits, it if becomes U.S. law.
The proposal, titled, "The Unlawful Internet Gambling Enforcement Act of 2005," originated in the office of Sen. Jon Kyl and is now making the rounds on Capitol Hill.
Like several previous failed bills backed by the Arizona Republican, it would bar credit card issuers, banks, and other financial institutions from transmitting money related to online wagering and authorize a wide array of federal and state law enforcement agencies to go after the offenders.
There's no indication whether Kyl's latest proposal will be introduced as a Senate Bill this session, or its prospects for passage by the Senate and House, and approval by President Bush.
What makes Kyl's latest proposal different from prior failed bills is that it doesn't carve out an exception for racing. That has given rise to warnings that the only part of the parimutuel industry that is growing at all - account, or remote, wagering - could be run right out of business.
Through a spokesman, Kyl declined to comment on the proposal, a copy of which was sent in draft legislation form to MarketWatch on Monday.
At issue is an early April decision by the WTO that parts of some U.S. gambling statutes, including the Wire Act, violate the General Agreement on Trade in Services. The trade body also found in favor of Antigua on a claim that the Interstate Horseracing Act, which permits electronic wagering between states where it is legal, discriminates against foreign operators.
Antigua is home to numerous online gambling operations that do most of their business with American bettors.
To comply with the WTO ruling and live up to its trade agreements, the U.S must amend existing laws, said Anthony Chabot, a lawyer with Lewis and Roca in Las Vegas, which who represents some Internet gambling clients.
"The new Kyl bill is the most likely vehicle," he said. "It can effectively shut down any interstate betting that would go through a financial transaction service provider. And the horseracing industry has been increasingly reliant on interstate wagers for its viability."
Total wagering on U.S. races fell about half a percentage point last year, to just over $15 billion, according to the National Thoroughbred Racing Association. That number, which has been flat for years, would likely be far smaller had not electronic betting come along in the 1990s.
"Account wagering is the fastest-growing part of the business by a significant margin," said Greg Avioli, executive vice-president of NTRA, who expects it to hit $3 billion this year.
"We are paying very close attention to the bill," he added. "But we are confident that Mr. Kyl and other members of the Senate do not want to interfere with legal parimutuel betting [and that] whatever legislation passes will adequately protect racing."
As big a hit as it would be to track owners like Churchill Downs (CHDN) and Magna Entertainment (MECA), passage of the Kyl proposal in its current form could essentially wipe out operators like Youbet.com (UBET) and TVG.
A spokeswoman for TVG, which is owned by Gemstar-TV Guide (GMST), said the company was aware of the draft bill but declined to comment.
"It is pretty early in the process," she said. "We are waiting to see what happens."
Churchill declined comment. Neither Youbet.com nor Magna would return phone calls.
Any attempt to insert a rider that would protect racing's online action could not only run afoul of the WTO again but would also bring forth other interests seeking their own exception, noted Sue Schneider, publisher of Interactive Gaming News.
Indian tribes, lotteries, and other gambling providers "would all want exceptions," she said. "That causes stalemate. I think [Kyl] is taking a cleaner approach to see if it makes any difference."
Schneider said the horseracing industry has been "in a bit of denial" over the danger, but noted that it can wield considerable political muscle should it choose to exercise it.
"They are starting to kind of wake up to some of this a little more," she said.
Still, Chabot pointed out that big political changes in Washington make derailing a proposal less of sure thing than in the past.
The Republican Party controls almost all the levers of power, he said, and is in thrall to a right-wing religious constituency for which gambling is a moral issue.
"If they want to pass Senator Kyl's bill, or any version of Senator Kyl's bill," they can," he said
http://www.marketwatch.com/news/sto...BEE-431D-9681-2F474A49BD71}&siteid=mktw&dist=
Plan could cripple Net horse betting
By William Spain
5/24/2005
CHICAGO (MarketWatch) -- Draft legislation spurred by a World Trade Organization ruling on a dispute between the United States and Antigua could endanger legal Internet betting on horse racing, along with a big chunk of that industry's profits, it if becomes U.S. law.
The proposal, titled, "The Unlawful Internet Gambling Enforcement Act of 2005," originated in the office of Sen. Jon Kyl and is now making the rounds on Capitol Hill.
Like several previous failed bills backed by the Arizona Republican, it would bar credit card issuers, banks, and other financial institutions from transmitting money related to online wagering and authorize a wide array of federal and state law enforcement agencies to go after the offenders.
There's no indication whether Kyl's latest proposal will be introduced as a Senate Bill this session, or its prospects for passage by the Senate and House, and approval by President Bush.
What makes Kyl's latest proposal different from prior failed bills is that it doesn't carve out an exception for racing. That has given rise to warnings that the only part of the parimutuel industry that is growing at all - account, or remote, wagering - could be run right out of business.
Through a spokesman, Kyl declined to comment on the proposal, a copy of which was sent in draft legislation form to MarketWatch on Monday.
At issue is an early April decision by the WTO that parts of some U.S. gambling statutes, including the Wire Act, violate the General Agreement on Trade in Services. The trade body also found in favor of Antigua on a claim that the Interstate Horseracing Act, which permits electronic wagering between states where it is legal, discriminates against foreign operators.
Antigua is home to numerous online gambling operations that do most of their business with American bettors.
To comply with the WTO ruling and live up to its trade agreements, the U.S must amend existing laws, said Anthony Chabot, a lawyer with Lewis and Roca in Las Vegas, which who represents some Internet gambling clients.
"The new Kyl bill is the most likely vehicle," he said. "It can effectively shut down any interstate betting that would go through a financial transaction service provider. And the horseracing industry has been increasingly reliant on interstate wagers for its viability."
Total wagering on U.S. races fell about half a percentage point last year, to just over $15 billion, according to the National Thoroughbred Racing Association. That number, which has been flat for years, would likely be far smaller had not electronic betting come along in the 1990s.
"Account wagering is the fastest-growing part of the business by a significant margin," said Greg Avioli, executive vice-president of NTRA, who expects it to hit $3 billion this year.
"We are paying very close attention to the bill," he added. "But we are confident that Mr. Kyl and other members of the Senate do not want to interfere with legal parimutuel betting [and that] whatever legislation passes will adequately protect racing."
As big a hit as it would be to track owners like Churchill Downs (CHDN) and Magna Entertainment (MECA), passage of the Kyl proposal in its current form could essentially wipe out operators like Youbet.com (UBET) and TVG.
A spokeswoman for TVG, which is owned by Gemstar-TV Guide (GMST), said the company was aware of the draft bill but declined to comment.
"It is pretty early in the process," she said. "We are waiting to see what happens."
Churchill declined comment. Neither Youbet.com nor Magna would return phone calls.
Any attempt to insert a rider that would protect racing's online action could not only run afoul of the WTO again but would also bring forth other interests seeking their own exception, noted Sue Schneider, publisher of Interactive Gaming News.
Indian tribes, lotteries, and other gambling providers "would all want exceptions," she said. "That causes stalemate. I think [Kyl] is taking a cleaner approach to see if it makes any difference."
Schneider said the horseracing industry has been "in a bit of denial" over the danger, but noted that it can wield considerable political muscle should it choose to exercise it.
"They are starting to kind of wake up to some of this a little more," she said.
Still, Chabot pointed out that big political changes in Washington make derailing a proposal less of sure thing than in the past.
The Republican Party controls almost all the levers of power, he said, and is in thrall to a right-wing religious constituency for which gambling is a moral issue.
"If they want to pass Senator Kyl's bill, or any version of Senator Kyl's bill," they can," he said
