07/11/2006 12:00AM

House approves Internet bet ban; racing exempted


The House of Representatives on Tuesday overwhelmingly passed a bill that seeks to ban most forms of Internet gambling but also includes exemptions for the current simulcasting and online wagering practices of the U.S. horse racing industry.

The bill, which passed by a vote of 317 to 93, with 23 abstentions, is being closely watched within the horse racing industry because of its potential impact on both interstate full-card simulcasting and the fastest-growing segment of parimutuel wagering, online betting. Horse racing lobbyists have worked closely with the bill's sponsors, Rep. Bob Goodlatte, a Republican from Virginia, and Rep. Jim Leach, a Republican from Iowa, to retain language in the bill that would exempt the practices.

The bill would amend the Federal Wire Act to prohibit U.S. financial institutions from processing any deposits or withdrawals with Internet gambling sites. The bill provides for penalties of up to five years in prison for any violation of the act.

The bill will now be sent to the Senate, where Sen. Jon Kyl, a Republican from Arizona, is spearheading the effort to shepherd the legislation through the chamber. Similar legislation has passed in the House for two years running, only to fail to be brought up by the Senate.

The bill's chances in the Senate this year are considered much stronger than in the past because of the association of the convicted lobbyist Jack Abramoff with prior efforts to defeat the bill. Abramoff had successfully lobbied against the bill on two separate occasions in the past five years, on behalf of Indian casino clients who felt their plans for Internet operations would be jeoparized by the ban.

The House bill on Tuesday easily survived an amendment sponsored by Rep. Shelley Berkley, a Democrat of Nevada, and Rep. John Conyers, a Democrat from Michigan, that would have stripped from the bill the language protecting horse racing and the online sale of lottery tickets. Berkley argued that it was hypocritical for supporters of the bill to argue against Internet gambling on one side and support the exemptions on the other.

Berkley said: "I'm absolutely flabbergasted by the righteous indignation being shown" by supporters of the legislation, most of whom argued on Tuesday that online gambling put families and communities in financial and moral peril.

Supporters of the racing exemption, which included the bill's sponsors and numerous other Republicans, countered that interstate and online wagering on horse races are protected under the federal Interstate Horse Racing Act of 1978.

"If someone wants to amend the Interstate Horse Racing Act, let them introduce a bill and this Congress will consider it," said Rep. James Sensenbrenner, a Republican from Wisconsin who is the chairman of the House Judiciary Committee.

Casinos in Nevada and their lobbying group, the American Gaming Association, have consistently opposed Internet gambling bans. If the bill passes, Nevada casinos would find it much harder, if not impossible, to establish on-line casinos that could accept wagers from customers in multiple states.

Berkley's amendment failed by a vote of 297 to 114, with 22 abstentions.

Similar amendments to strip the horse racing exemption are expected in the Senate, according to horse racing lobbyists.

After the amendment failed, Conyers pressed for another amendment to the bill that would require any legal Internet gambling businesses to verify that no minors would be allowed to wager on the sites, a requirement that supporters of the existing bill said was already in the bill. The amendment failed, largely on party lines.

During his comments, Conyers repeated statements he had made previously contending that Joe De Francis, the chief executive officer of the Maryland Jockey Club, had said that horse racing is planning on targeting "underage" gamblers through the internet for the future growth of the industry.

De Francis, reached by phone on Tuesday, sharply disputed he had ever made any such statement.

"That's just preposterous," De Francis said. "It's an utter and complete lie. That's so ridiculous and so absurd that it doesn't even merit a response."