Legalised Online Gambling Affects Horse Racing Monopoly

Until recently horse racing has been the only legal form of Internet betting in the United States, enjoying a monopoly of sorts for more than a decade, but still, in decline for some time.

With the availability of online betting in the marketplace, it is unlikely it will work to horse racing's benefit as Chris Scherf, the executive vice president of the Thoroughbred Racing Association trade group, noticed:

'There's always going to be people pushing [for Internet gambling], and there's always going to be states looking for money. That additional competition is going to have an impact on racing, no question, but it all depends on what types of gambling are legalized.'

Jay Hickey, the president of the American Horse Council, a Washington D.C. lobbying group for all breeds of horses, said that language in the King's bill (which seeks to federally legalise online gambling) would 'finally make it clear that interstate simulcasting is legal'.

It refers to the concerns raised in the past by the Justice Department that betting over state lines on horse racing is not explicitly legal in the current federal law and violates the Federal Wire Act of 1961.

As the probability of either the King or Barton legalisation bills making it through Congress is not large, that leaves the initiative firmly in the hands of individual states, and several are already actively considering legalisation.

For instance, online gambling initiatives in Illinois have failed this year following opposition to general provisions that would have allowed slot machines at racetracks.

That created differences between racetracks and horsemen, who feared racing companies would open online gambling sites without providing a cut to boost track prizes for them. Many horsemen's groups might share those concerns, even if the rationale for a cut of the revenue remains debatable.

Therefore a racing firm Churchill Downs Inc. already has extensive Twin Spires (.com) interests in Internet gambling aside from its horse race account-wagering business. Last year the company launched a gambling site, Luckity, that uses the pari-mutuel results of horse races to determine the payouts on games designed to look like mini-lotteries.

However, smart horse racing firms will probably take into consideration how inevitable the competition from online gambling is, and develop strategies to do more than attempt to delay the process.

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