Internet Gaming Law Threatens Horse Racing Industry
By Rich Muny
Monday, June 29th, 2009
Rich Muny
June 29, 2009
When the Unlawful Internet Gambling Enforcement Act (UIGEA) passed in 2006, the horse racing industry was protected with a special exemption. However, it is now clear that this exemption will fail to protect the industry from the harmful effects of the Act.
UIGEA requires blocking of “unlawful” Internet gaming by financial institutions. However, neither the Act nor its regulations define unlawful Internet gaming. No one seems to know what it unlawful and what is not. As a result, banks and credit card companies have been deputized not only to enforce this deeply flawed law, but also to define its scope. Unfortunately, the law penalizes banks severely if they err on the side of processing transactions later determined to be unlawful, while permitting them to block perfectly legal transactions. As a result, banks can be expected to err strongly on the side of caution.
Based on the UIGEA regulation comments banks and pari-mutuels submitted to the government, and on recent media reports, financial institutions are likely to block remote horse racing wagers for a variety of reasons. One reason is that many banks and credit card companies will simply block all online gaming transactions to ensure compliance with the Act. Another reason is that the horse racing exemption requires that financial transactions fully comply with every detail of the Interstate Horse Racing Act (IHA) to be exempt – a determination financial institutions are probably neither equipped nor inclined to make. And, the biggest concern for blocking of these transactions is the Justice Department’s position that all interstate horse race wagering violates the Wire Act (particularly as the DoJ has shown no reluctance in arresting suspected Wire Act violators). The Justice Department’s position on the legality of horse race wagering could also significantly hinder the ability of financial institutions to develop processes to permit processing of these transactions.
To help to rectify these problems and to stand strong for our equine industry, please write to your congressman and ask him or her to support H.R. 2266. H.R. 2266 delays enactment of UIGEA to provide banks with more time to analyze confusing state and federal gaming laws. Please also ask him or her to support H.R. 2267, the Internet Gambling Regulation, Consumer Protection and Enforcement Act. H.R. 2267 provides for sensible regulation of Internet gaming and puts the U.S. in charge of safeguarding its citizens. H.R. 2267 mandates rigorous safeguards against underage participation and protections for those with excessive gaming habits while providing consumer protections. It also clarifies the scope of the Wire Act.
Note: this is an update of an op-ed I authored that was published in the Cincinnati Enquirer and the Kentucky Enquirer on June 17, 2008.