Online track-betting officially hit the United States this week, as the first online wagering site based within the US launched a test site. Capital Region Off-Track Betting, a New York-state sanctioned company, will be accepting horse racing wagers from the general public within three weeks.
While lawyers fight battles in the courts over online gambling, off-track betting companies like New York-based Capital OTB may have found a way to circumvent the complications of the gambling regulations of the Interstate Wire Act.
"What this is really is an extension of telephone wagering, just with a longer cord," says Capital OTB president Davis Etkin. "Horse racing is the major exception to all the Internet wagering laws in the United States."
In general, online gambling is stuck in a legal morass. The Interstate Wire Act prohibits the use of phone lines to place bets in other states. But the issue of whether the act applies to the Internet has yet to be resolved. In the meantime, each state has individual laws dealing with placing or receiving wagers, and states in which gambling is illegal are now trying to prevent online wagering.
For example, the recent civil suit Minnesota v. Granite Gate gave the state of Minnesota jurisdiction to prosecute a Nevada company for advertising its online gambling on a Web site it claimed was seen by Minnesota residents.
But horse races are allowed a loophole via the Interstate Horse Racing Act of 1978, a federal precedent which has spawned the proliferation of telephone wagering. "It's kind of a goofy thing," said David Hobson, president of the race information software company Track Data Systems. "The Interstate Horse Racing Act of 1978 basically makes interstate simulcasting of horse racing legal."
Capital OTB will only accept online bets from the seven states where wagering is legal. "We're taking bets from a place where gambling is legal to a place where gambling is legal," said Etkin. "I wouldn't want to go in to a state where it's not sanctioned."
Opponents of online gambling aren't convinced. "Internet gambling presents all kinds of new problems, and one of those problems is ensuring that anyone who is placing bets is legally allowed to do so," said Jim Jacobsen of the Minnesota Attorney General's Office.
To address critics, Capital OTB requires customers to set up an account from which bets are drawn. Wagerers must supply their addresses when they sign up for an account - a move aimed at preventing wagering from coming in from the eight states where horse racing is explicitly outlawed. Even Etkin admits this system is easy to bypass if someone is determined.
Even if other OTB outfits follow Capital online, it's unlikely to speed up the arrival of other forms of gambling. The federal government is quiet on the issue, despite pleas from state prosecutors to take a stand. In the meantime, online casinos have avoided potential prosecution by basing their operations offshore.
Says Hobson, "It's going to be a mess until somebody straightens it out."
