by Bob Carson

Editor’s Note: The USTA website is pleased to present freelance writer Bob Carson and his popular “Outside the Box” features. This monthly series is a menu of outlandish proposals presented with a wink — but the purpose behind them is serious. The views contained in this column are that of the author alone, and do not necessarily represent the opinions or views of the United States Trotting Association.

Bob Carson

Another battle begins.

Watching our duly elected officials duke it out on C-Span is quite entertaining; the legislators are like professional theatrical wrestlers wearing Gucci suits. Politicians strut and preen as they carry out feuds and vendettas. Despite having a sneaking suspicion that the game is rigged, we pick a side and cheer.

Recently, Rep. Jason Chaffetz (R-Utah) stepped into the ring where he reintroduced a piece of legislation that deals with gambling on the internet. The title of his bill is the Restoration of America’s Wire Act (RAWA). Like most people, my first thoughts were what does this mean and how does this affect me?

Should I cheer or boo representative Chaffetz? Would his proposed bill help or hurt my little affliction, harness horse racing? Attempting to decipher this seemingly simple question led to a week of getting sidetracked, confused and ultimately baffled — my normal full circle.

My first line of investigation regarding the seemingly simple question was to call four knowledgeable friends involved in the sport of harness racing and ask directly, “Is RAWA good or bad for our sport?”

The replies were,

“Huh?”
“Is it like cobalt?”
“Speak English.”

Also, one guy swore RAWA was a feed supplement.

Autumn Ryan graphic

This was troubling. These people are knowledgeable in harness racing, yet they had no idea concerning legislation whose passage or failure could drastically and rapidly impact their livelihoods. So to the web I went for additional investigation.

The search was far too close to actual employment for my taste. Investigations (and with Google you can do a lot of investigating) contained clauses like “maybe,” “we will see,” “it depends,” “clearly difficult to comprehend,” and “obvious domino effect.”

The big disrupter of the gambling status quo is, of course, the Internet. Controlling the Internet has proven as elusive as controlling where and when it will rain. But it will rain. Increased online gambling from your digital device would seem to be inevitable, and harness racing needs to look for both shelter and buckets. Who is going to control the money? Will individual states or the federal government have jurisdiction over gambling? Tomorrow, the answer may be different than today.

At this moment (check your watch), individual states are not forbidden from passing legislation superseding federal statutes. So the states have intricate webs of complex codes that may allow horse betting but not permit casino games. Some states have zero gambling. Some states allow you to gamble like a maniac. Fifty states with fifty different stories.

Fifty different entities attempting to regulate gambling on horses gets more complex by the day. The new kid on the traditional state block is online gambling; three states have made it legal: Nevada, New Jersey, and Delaware. California and Pennsylvania have online gaming proposals in the pipeline. Others are watching and plotting. The state of Washington amended its code to make knowingly transmitting or receiving gambling information over the Internet a felony; other states with similar prohibitions merely made it a misdemeanor. Once again, state regulations on online gambling are literally all over the map.

Technology may make state maps irrelevant.

Online gambling is inherently interstate commerce, as we all wager on racetracks in other states and even in other countries. Interstate commerce places regulations in the jurisdiction of the federal (national) government. Once upon a time, states could contain gambling as if they controlled a square mile of coastline. With the ubiquitous nature of the Internet, how do you control one square mile of the ocean? Even if you put a rope floating on the surface, all sorts of activity can occur below.

It is probably a good idea that you skip the following paragraphs. They are confusing. Despite a week of reading and copying articles off the Internet, I remain somewhat befuddled by these efforts to get control of the looming gambling landscape. Below is a chronological list of some significant legislation. Maybe the past can offer a roadmap to our future.

***

In the United States, the fate of online gambling hangs on a wire, The Interstate Wire Act of 1961.

“Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.”

The goal was to prohibit the operation of certain types of betting by using the telephone wires as an enforcement tool. Of course, in 1961, the concept of the Internet was as farfetched as teleportation to planet Centurion 6. So enforcement of Internet gambling via the Wire Act is like using legislation written by Thomas Jefferson to monitor drones.

In the 1990s, sharp and shady operators in the wagering world took note of the strange new digital world. They began doing what they do, circumventing government control and prohibitions for profit.

Seeing scoundrels profiteering, attempts toward harnessing the revolutionary online gambling world began. The Department of Justice and Congress took note of the lost revenue and began an ongoing struggle to create new regulations for online gambling. This has turned out to be as simple as harnessing the tooth fairy.

In 2002, The U.S. 5th Circuit Court of Appeals ruled that the Wire Act applied only to bets on sporting events or contests but not wagers in general. The government returned to the good old Wire Act to curtail offshore gambling by reconsidering the definition of “wire communication facility” saying that it did apply to online gambling, therefore Internet gambling was illegal and operators were at risk for knowingly using a “wire communication facility” to transmit information related to wagering on any sporting event. Of course, some rascals never listen.

In 2003, Antigua, the base for many Internet gambling companies, sued in the World Trade Organization court, challenging the U.S. ban on gambling ads, saying it violated free trade agreements (it would eventually win). The U.S. Department of Justice did not appreciate the effort and sent a letter warning that accepting ads for online gambling could be illegal, so advertising stopped.

In 2006, Internet gambling took a staggering blow when Congress attempted to herd the misbehaving cats. They passed the Unlawful Internet Gambling Enforcement Act (UIGEA) which clarified and expanded on the 2002 Wire Act; but remember, as far as harness racing is concerned, games of skill remain carved-out if the individual state approves.

On the surface, online gambling waters calmed down, but in January 2011 somebody got stung. The feds seize nearly $8 million from processors serving PokerStars, Full Tilt Poker, Ultimate Bet and Absolute Poker and charged 11 individuals with bank fraud, illegal gambling and laundering billions of dollars.

Case closed? Not really, the lure of money via the clouds is irresistible. In 2013, the battle for the wagering dollar ramped up on both the state and the federal level. Nevada (no surprise) legalized online gambling (online poker), and legalized interstate online poker. Legal online gaming goes live in New Jersey and Delaware.

Meanwhile, back at the federal level, New York Republican Congressman Peter King introduces the Internet Gambling Regulation, Consumer Protection Act of 2013. The gambling lobby argues that uniform standards will make it much easier for global casinos to get prepared for online gambling.

Very powerful casino operators, led by Sheldon Adelson, are not big fans of Internet gambling. Gamblers sitting on every front porch pecking away at I-pads would be bad for casino business. This faction believes that somehow the government will be able to contain online gambling so they sponsor e-legislation to keep the cloud away.

This takes us back to where we began, the Restoration of America’s Wire Act recently introduced for the 2015 Congressional session. The bill is HR 717. Sen. Lindsey Graham introduced the Senate version of RAWA.

And just in, Senator Tom Udall (D-NM) and Representative Joe Pitts (R-PA) were the principal sponsors of legislation introduced April 30 (S. 1174 and H.R. 2182). The bill simply repeals the Interstate Horseracing Act of 1978 (IHA), the federal legislation under which pari-mutuel racing has operated and grown over the last four decades. The legislation also repeals racing’s exemption from the prohibitions of the Unlawful Internet Gambling Enforcement Act, which regulates interstate wagering on the Internet.

This is exhausting. I’m getting a headache and my laptop is overheating.

***

We go back to the original question. Is supporting RAWA, gatekeeper of the tenuous status quo, preferable? Or is opening up online gambling good or bad for our corner of the gambling world, harness racing?

Pardon the pun, but it would seem that keeping Internet gambling confined to whips and buggies is not a long range stratagem for success. Internet gambling would seem to be hard to stop. Big players smell money. States and nations see revenue in online gambling. And here is yet another complication of a complex issue, as outside the USA, Internet gambling is already in play. America does not want to miss the gravy train.

It all seems exotic and far removed from daily life — but it is extremely important. Our future depends on these strange initials, the legislators, and the lobbyists behind them. If casinos with racetracks are suddenly devastated by online gambling we have problems. On the other hand, unfettered gambling on the Internet could offer opportunities for harness racing.

As usual, we feel helpless.

But one thing could help — direction from our leadership and lobbyists at both the state and national levels. Opinions about what candidates are in the harness racing corner and who is lurking ready to deliver a knockout punch. A roadmap from some deep thinkers on pending legislation and candidates that will be of value to our sport would be useful.

For example, we return to the bout that led to this column. In the ring this year, wearing the gold tights, shaved heads and heavily tattooed are the “RAWA Rowdies.” In the other corner, wearing the white shorts, headphones and carrying a satchel full of money are the “Open Internet Gambling Exterminators.”

The battle is on. We schleps in the audience who love harness racing need to know who to cheer for.