For years, horseracing fans could only place their wagers on the races if they were actually at the racetrack. All of that changed, however, with the Interstate Horseracing Act of 1978, which allowed bettors in one state to gamble on horse races across state lines. The Act let to an explosion of horse races being simulcast across the country and when the Act was amended in 2000 to also allow Internet wagering, account wagering became the fastest growing segment of thoroughbred racing. As an example, last month’s Kentucky Derby was a boom for those companies that allow people to place wagers from their television sets or computer screens. TVG, a horseracing network, which takes bets over the phone or through the Internet, processed 6.4 million dollars on Derby Day and Youbet.com processed 4.2 million dollars. Both amounts were records in the industry for a single day of betting.

The seemingly rosy picture for online pari-mutuel wagering isn’t a sure thing, however, given the legislative activity on Capitol Hill regarding online gambling and the World Trade Organization’s finding that US policy on Internet horserace wagering violates fair trade practices.

With regard to Capitol Hill activity, a new bill introduced by Senator Jon Kyle from Arizona, aims to prevent credit card companies and banks from moving funds for illegal online betting. The bill does not include an exemption for the racetracks as have previous bills that also attempted to curb online gambling. Kyle has attempted to introduce legislation to Congress regarding online gambling in the past but all of his previous bills have failed. Other bills introduced by other members of Congress that also attempted to curb the online gambling industry, have failed in the past too. Kyl’s latest bill has one advantage, however, because it does not make an exception for racetrack wagering. By not including an exception for racetrack wagering, the bill is not in conflict with the WTO ruling.

Steve Barham, an associate coordinator of the University of Arizona’s Race Track Industry Program, explained that the WTO found the Interstate Horseracing Act to be problematic because it permits the United States to allow companies – such as TVG, XpressBet, Youbet and others – to do business with U.S. bettors. At the same time, foreign online casinos are not given the same access to those bettors.

“What is the result of that? I’m not sure. But it would seem to me that it’s probably ripe for congressional debate and possibly action,” Barham said. U.S. Trade Representative, Peter F. Allegeier, commenting on the WTO decision, said that the United States “needs to clarify one narrow issue concerning Internet gambling on horse racing”. Greg Avioli, executive vice president of the National Thoroughbred Racing Association, pointed out that “the WTO decision really put a lot of this in the forefront”.

If the United States does end up banning all types of gambling from remote locations, including account wagering on racetracks, a small but growing part of the racing industry will be significantly curtailed. According to the National Thoroughbred Racing Association, of an estimated fifteen billion dollars, approximately one-fifth or three billion dollars will come through account wagering, with more than half bet online.