How horse racing avoided new US internet betting law
Thursday, 5 October 2006
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The American horse racing industry paid more than $3m (£1.6m) in political donations, and spent millions of dollars more on entertainment and "education", to ensure its exemption from the new internet betting laws that sealed the destruction of offshore online gambling.
The figures show a sophisticated lobbying effort targeted at specific Congressmen, and have infuriated executives from the UK-listed online gambling companies whose shares have collapsed by more than half in the past three days.
Supporters of online betting expressed their fury, claiming powerful groups within the US had been able to "buy" exemptions.
The internet gambling industry is vowing to learn lessons from the debacle, and promising to fund a new wave of lobbying to exempt certain forms of offshore gambling, or to promote full legalisation and regulation of internet betting in the US.
Americans gambled $6bn online last year, but the legislation passed unexpectedly last Saturday, and due to be signed into law by President George Bush within a fortnight, makes it illegal for financial institutions to process payments to and from gambling websites.
"The horse racing industry is not afraid or ashamed of saying that they were able, for want of a better word, to buy their exemption from the new laws," says Michael Bolcerek, president of the Poker Players Alliance, which has been trying to raise money from online gamblers to fund a similar lobbying effort in Washington.
Offshore gambling firms, such as PartyGaming and others listed in London, have employed Capitol Hill lobbyists for several years, but have been unable to stem the tide of prohibitionist sentiment or to counter the more expensive efforts of other interest groups.
Figures compiled by the Centre for Responsive Politics show how the National Thoroughbred Racing Association and the owners of racehorses and racetracks have funnelled money into mainly Republican campaign coffers as the prohibitionist tide has risen.
Over the past six years, the industry made contributions of $3.02m, all but $0.5m of which went to Republican candidates. Bob Goodlatte, the member of the House of Representatives whose prohibition bill in February gave the campaign to ban internet gambling its successful momentum, is one of the four members of the House of Representatives to have received the most campaign contributions, and the NTRA believes time spent educating Mr Goodlatte was the reason he agreed to exempt horse racing from his bill. He received $16,000 in campaign contributions, according to the figures. There is no suggestion Mr Goodlatte acted improperly in accepting campaign funds.
At a University of Arizona symposium on racing and gaming last year, Greg Avioli, the NTRA's head of legislation, said a ban on internet betting on horse racing was "an over-our-dead-body issue" and would jeopardise too many livelihoods.
He said: "We're fairly confident we have the political strength in Washington to stop that, because this $40bn agribusiness now lives and breathes on that [internet gambling] revenue. So we've got friends in Washington and I don't think they can pass a law over our objection."
Campaign contributions have long acted as a foot in the door in Washington's crowded lobbying scene, whose worst excesses were exposed once again last year with the jailing of Jack Abramoff, one of the most powerful lobbyists, who used $82m of money from Native American casino operators to fund lavish dinners, trips and gifts for top Republicans.
The National Football League, too - worried about corruption of sporting events because of gambling on their outcome - made a ban on internet gambling its top lobbying project this year.
Dan Walsh of the lobbying firm Greenberg Traurig, said the online gambling industry would learn from its setback and return with a new campaign. "I don't believe - I don't think even Congressman Jim Leach [who wrote the legislation] believes - the new regulations will put the internet gambling industry out of business, and, when that becomes clear, I think we can start talking about clarifying the law and regulating the industry."
