Posts Tagged ‘new york horseracing’

Unintended Effects of UIGEA Encroaching Online Revenue for Horseracing Industry

Wednesday, July 7th, 2010

It looks like more than just online casino operators have some “ish” with the U.S. online gambling ban – Unlawful Internet Gambling Enforcement Act – infamously passed under the Bush administration back in 2005 as part of an attachment to a port security bill. Surprisingly enough, it’s the same folks who would seemingly have benefited from the UIGEA, who are now complaining about, well, it’s ineptness.

Here’s a little background: When the UIGEA was passed, it basically banned all forms of online gambling, except for parimutuel horserace wagering and fantasy sports betting. I know, go figure. How are those any different than other forms of gambling? Anyhow, the only problem was that – despite the carve-outs – there were no guidelines on exactly how financial institutions and online payment processors would successfully go about filtering all of the different types of internet wagering transactions, i.e., online casinos, poker rooms, sportsbooks, bingo, skill games etc.

As a result, credit card companies are now erring on the side of caution and blocking most, if not all transactions that come through online betting websites. There simply is no way to confidently identify which transactions are allowed and which are not. Whereas there was more wiggle room for credit card companies during the last four years, now that the UIGEA has gone into effect (as of this year basically), online betting websites are now experiencing a spike in blocked transactions, some of which are apparently “legal”.

And not that U.S. players are not finding ways to gamble at online casinos (because they are), it’s just simply a big fat mess on the regulatory front. Looking back, Congressman Barney Frank’s labeling of the UIGEA as the “stupidest law ever passed” rings even truer today. So, while Barney Frank and others are working to get the UIGEA overturned and new legislation passed to effectively regulate online gambling, other politicians with interests in parimutuel horserace wagering are looking to pass legislation that would clarify the vagueness of the UIGEA.

Introducing House Representatives Scott Murphy (New York Democrat) and Brett Guthrie (Kentucky Republican). Basically representing the two largest horseracing jurisdictions in America, the pair are teaming up to drum support for the “The Wire Clarification Act”, aka House of Representatives 5599. The legislation, if passed, will apparently provide clarification that the Wire Act (the original bill that apparently made internet gambling transactions illegal, despite the fact that the internet didn’t even exist at the time) is not applicable under regulated activities of the Interstate Horseracing Act.

Now, I don’t know about everyone else, but does it seem strange there is no mention of the UIGEA in this bill? I mean, wasn’t the UIGEA supposed to supersede or at least clarify The Wire Act? It’s as if nobody wants to even touch the UIGEA. Why that is, is well, anybody’s guess. Stepping on toes maybe? Or is this a concession to the overall view that the UIGEA is such a messy bill that will eventually become null and void, and so why bother with it? It definitely makes you wonder.

In the meantime, Congressman Murphy from New York says the $210 million brought in from the Aqueduct Racetrack, Belmont Park and Saratoga Race Course last year, contributed $18.5 million to the New York Racing Association, and that the industry itself is now worth $39 billion, with online wagering making up a “substantial portion” of said revenue.

New York Horseracing Industry, NYRA, Awarded $25 Million Loan to Keep Afloat

Sunday, May 30th, 2010

Another Packed House at New York's Aqueduct Horse Racing Track

Another Packed House at New York's Aqueduct Horse Racing Track

As low an approval rating as New York Governor David Patterson has, at least he has the support of the New York Racing Association, which is pretty happy right now. Well, I’d be pretty happy too if somebody gave me a $25 million loan. That’s right folks. Just when you thought the antiquated horseracing industry was about to die off like it rightfully should, the State of New York has stepped in to give the UIGEA another opportunity to engage one of its carveouts.

In case you are wondering how that might work, the UIGEA permits online horserace betting through State-licensed operators. It is one of the three niche carveouts referred to in the UIGEA as not being an “illegal form of online gambling”, although the UIGEA doesn’t go on to define what those illegal forms even are. Go chew on that. One would think that in order for the New York horseracing industry to stay afloat this time around, it will need to start asserting itself in the highly competitive online marketplace. The only thing is that the NYRA has been doing that for several years! Obviously, it’s not working. Can you say “SNAFU”?

Personally, I am ever so interested to hear what excuse the NYRA has this time around. Before the UIGEA, they were crying bloody murder against online casinos, sportsbooks and poker rooms, saying the New York horserace industry was losing business to illegal online gambling websites. Next, they are going to say it’s all because of the internet. Heck, they might even blame it on Starbucks, citing all the caffeine addicted Wifi users as potential bettors. But hold on just a second. They can bet online while drinking their latte in Starbucks, remember?

Apparently, even with protectionist legislation in its favor to thrive online, the New York horseracing industry can’t help but go downhill. Face it Governor Patterson – it’s a dying industry. Have you been to the racetracks, Governor? Yes, you probably have. You wouldn’t know it, but that’s because you are part of the dying generation that is trying to sustain a dying industry. Those two don’t go hand-in-hand. The truth of the matter is that the NYRA has not even said how they will go about keeping the State’s three largest horseracing tracks (Belmont, Saratoga and Aqueduct) from feigning another shutdown, let alone how they intend to pay back $25 million in tax payer dollars.

At this stage, the only semblance of hope for the New York horseracing industry is the installation of new video lottery terminals, which has apparently been dragging on since 2001(no operator has been named to run the terminals. Big surprise, eh?). In fact, it was the delay of these video terminal installations that prompted Governor Patterson’s office to draw up legislation covering the $25 loan. The State of New York was supposed to subsidize the NYRA if the terminals were not installed by April, 2009. Obviously, that hasn’t been happening. So let’s just give the NYRA a $25 million loan to buy some more time, shall we?

NYRA Chairman, Steven Drucker, certainly doesn’t mind. He had this to say in a recent press release: “The board of directors of the New York Racing Association Incorporated along with its management and dedicated employees are grateful for the State Legislature’s approval last evening of a $25 million loan, which guarantees world-class thoroughbred racing at Belmont Park, Saratoga Race Course and Aqueduct Racetrack…We appreciate the dedication and perseverance of Governor David Paterson, Assembly Speaker Sheldon Silver, Senate Conference Leader John Sampson, Senate Racing Committee Chairman Eric Adams and Assembly Racing And Wagering Committee Chairman Gary Pretlow and their respective staff members, which resulted in this legislation.”

Remember those names folks. Come reelection time, it will be very interesting digging through their campaign contributions.