10/12/2006 11:00PM

Racing keeps its head in sand

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NEW YORK - The stated goal of the "Security and Accountability For Every (SAFE) Port Act of 2006" passed by Congress earlier this month is to "improve maritime and cargo security." Most of its 244 pages deal with seagoing minutiae such as "Notice for arrival of Foreign vessels on the Outer Continental Shelf" (Section 109), "Container security standards and procedures" (Section 210), and "Trade and Customs revenue functions" (Section 401).

Then on page 214, the bill suddenly steers away from its innocuous and obscure concerns into uncharted and unrelated waters: Its last 30 pages deal with "Unlawful Internet Gambling Enforcement," criminalizing most online betting and putting the burden of prevention on financial institutions by barring them from facilitating customer transactions.

What, you may ask, does playing poker online have to do with port and cargo security? Absolutely nothing, of course. This did not stop the Senate Majority Leader, Sen. Bill Frist (R.-Tenn.), from attaching the stalled and unpopular Internet Gambling Prohibition Act to the port bill in the middle of the night before Congress adjourned amid a flurry of last-second legislation. Political analysts say the bill passed despite the Internet-gambling tack-on because the package allowed all the legislators to look tough on national security while allowing a few anti-gambling zealots up for re-election to claim victory on the issue.

The bill now awaits an expected presidential signature. Banks will then have 270 days to devise ways to block gambling-related financial transactions.

The underhanded passage of the online gambling ban took the financial markets by surprise, but the reaction was swift. Some foreign-based public companies that offer online poker and sports betting and do most of their business with Americans saw their stock prices plummet by more than 50 percent within a week.

As a practical matter, however, no one really expects the bill to stop online gambling any more than Prohibition stopped Americans from sipping gin. Banks are already complaining that the ban is entirely unenforceable because unless someone is stupid enough to try to transfer money to an account called "Big Illegal Gambling Fund," it is impossible to parse all the $100 and $500 gambling transactions from the millions of electronic money transfers performed each day.

Many online gamblers had already found ways around using mainstream banks and credit-card companies. The last time I funded a poker account, I bought a telephone calling-card from an outfit in Europe that transferred the value of the minutes into a cyber-account in the Caribbean, and I was playing my first hand in less than a minute.

The only people jumping up and down and cheering for this bill appear to be the National Thoroughbred Racing Association, which issued a press release lauding the legislation, and itself, simply because of a provision stating that existing legal forms of online betting - including state lotteries, Indian gaming, and simulcast racing - would not be affected by the ban. For now.

Of course it's good for racing that existing law was not overturned, but it is shortsighted for the industry to applaud any anti-gambling measure and naive to assume that racing will be spared during the next pre-election period of hurried sham bills. You can talk all you want about green spaces and the family farmer and the noble horse, but the truth is that there is absolutely no moral or ethical difference between betting on horse races as opposed to poker hands on your computer.

If the industry really believed it was on the high road here, it would now be heavily promoting legal online wagering on racing, but don't hold your breath. Despite its clear legal authority to conduct such wagering, the racing industry rarely even mentions that such an option is available, instead spending its marketing dollars on the same failed attempts to attract novices by telling them that horses and jockeys are colorful and exciting and everyone should come on out to the old horse park. The only growth on the customer side of the business is coming from simulcasting and account wagering, but no one seems interested in trying to grow the business further this way.

Racing will not benefit from the online gambling ban. Sports and poker bettors will quickly find ways around this dishonest and shoddy piece of legislation and racing will as usual neither promote itself nor offer a better alternative. Given the chaotic conduct of account wagering, where customers still need multiple accounts or forms of Internet and television services just to see and play the races they want, racing is unlikely to capitalize on its temporary exemption from outlaw status.