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May-28-2007,
More Than Meets The Eye? Horse Racing's "Guardian Angels"...By Nelson Lardner

Thoroughbred racing's trade publications barely raised an eyebrow this week after government spokesmen affirmed what had become balefully obvious - that Uncle Sam was taking steps to reverse its previously-established universal trade commitment (set down with the World Trade Organization during the Clinton administration) to provide stateside-market access to foreign purveyors of gaming opportunities.

In the U. S.'s current view, this move will neatly eliminate any immediate concerns about the international legality of the specific exception provided on-line horserace wagering in last fall's lowdown-and-shady passage of the Unlawful Internet Gambling Enforcement Act.

Alex Waldrop, President and CEO of the National Thoroughbred Racing Association, reacted to the announcement as if he'd just sent in two weeks' pay on a gold-plated tip on a ten-length winner. "This is a great day for the pari-mutuel industry," Waldrop affirmed. "As a result of the withdrawl by the United States of its GATS (General Agreement on Trade in Services) commitment, the WTO will no longer play a role in the global debate on U. S. regulation of gambling services over the internet. The NTRA has monitored this case for over two years, and we have argued from the outset that the GATS commitment should be withdrawn. The decision validates our long-held position."

Really, now. That simple, eh? Trust me - the WTO isn't going to suddenly go silent because some big kids with considerable muscle, power and cash have decided that some established international law is no longer convenient for specific monied stateside interests to recognize.

Quick recap, for those who've lived in caves for a good while: little Antigua has spent years providing a comfy home for a number of on-line offshore-gaming establishments which relied largely on USA customers for patronage and sustaining profit margins. In its most prominent WTO case, Antigua held that the U. S. was being inconsistent in its observance of WTO guidelines, especially when it came to differences in treatment between onshore Internet wagering (most-notably on the horses, and state lotteries) and the offshores. The WTO ruled in Antigua's favor, and this week's action was a direct result of that.

Its cashflow problems long-exacerbated by various state lotteries and too many land-based casinos springing up outside of Nevada for competitive comfort, racing industry's extreme distress re the status-quo - wholly understandable, under any standard - was that offshore bookmakers were writing millions of dollars of horse business, and $0% of all pony action held by books was not returned to the tracks and horsemen for maintenance, upkeep, purses, and -- dare we say it? - operating profit. Since the tracks have no direct international authority to drag the offshores to compensation arbitration, they're left to look to Washington for protectionist aid.

They did more than look, of course. The NTRA and associated individuals conducted a sophisticated, sustained lobbying job on key legislators regarding what eventually became the UIGEA. Co-sponsor Bob Goodlatte (R-VA), a hardcore conservative, representing a district in which he will be hard-pressed to lose an election for as long as he may choose to serve, has termed online gambling as "a scourge on our society. It causes innumerable problems." Yet, once blessed with a five-figure contribution and subjected to intense lobbying and education regarding the $40,000,000,000 agribusiness that the thoroughbred industry represents, Goodlatte saw his way clear to adjudge horse-race gambling as somehow representing a lesser form of scourge. And NTRA was not the largest of the moneyflingers . . . on-line horse-bet company YouBet has spread hundreds of thousands more around, to the benefit of various key lawmakers.

The web of influence is widespread. Greg Means, one of the founding partners of the Alpine Group, the venture-capital firm that currently owns Daily Racing Form, has spent many years as a professional lobbyist, and was active in the sustained effort spearheaded by NTRA over the past few years.

Purse money for horse owners and horsemen is a legitimate sticking point, and the British bookmaking model is not a shining example in this instance. Legal British books pay a portion of their revenues to the country's tracks, but it's not enough, and racing for overnight-race purse money in jolly ol' England has long been largely a labor of love and a trophy quest. Most major British races largely benefit from commercial advertising sponsorship, a quirk which is gaining acceptance (the Kentucky Derby presented by Yum Brands, anyone?). The system's broken, and needs fixing.

Racing - decent racing (anything equal or superior to the typical fare served at, say, Delaware Park, or Arlington Park, northwest of Chicago) frequently provides a superior gamble, to people who know the game, the quirks of the various major tracks, and can recognize a value-yielding price when they see it. At its best (Saratoga, Del Mar, Churchill), it also provides a superior social experience at a genteel pace. Top racing attracts torrents of betting support, and is well worth preserving. And while racing deserves a share of what's bet on it offshore, getting it will be infinitely more difficult than wishing for near term deliverance. Meanwhile, very, very powerful people are vitally interested in racing's welfare, and are in positions to do something about it. And if enough interest is expressed, we'll look to explore this further, at MajorWager.com.

05-28-07
Nelson Lardner
MajorWager.com
lardner@majorwager.com



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