Senator John Kyle of Arizona has decided to response to the World Trade Organization’s recent decision on the case brought against the U.S. by the tiny nation of Antigua, by introducing his own bill on Internet gambling. Kyl’s bill, titled “The Unlawful Internet Gambling Enforcement Act”, is a response to the WTO’s ruling that U.S. Internet gambling policy is in violation of the General Agreement on Trades in Services. The WTO also sided with Antigua’s claim that the Interstate Horseracing Act, which permits the use of the Internet to place wagers on horseracing between states, discriminates against foreign Internet gambling operators. The Interstate Horseracing Act is thus an exception to the U.S. Government’s general position that Internet gambling is illegal. Senator Kyl’s bill, which proposes to prohibit banks, credit card issuers, and other financial institutions from entering into transactions of any kind that relate to online gambling, would target all forms of Internet gambling and would not create an exception for Interstate horseracing or any other form of Internet gambling. As a result, Kyl’s bill is much cleaner in that it attempts to make Internet gambling illegal across the board. If exceptions were provided for in the bill, not only would it still be in violation of the WTO ruling, but other gambling providers such as Indian tribes and lotteries, would also start clamoring for exceptions. The Internet Gambling Enforcement Act would also authorize a wide array of federal and state law enforcement agencies to go after anyone violating Internet gambling laws.

Kyl’s bill, according to Anthony Chabot, a lawyer with the Las Vegas firm of Lewis and Roca, which represents some Internet gambling clients, would be the most effective way of getting the U.S. to comply with the WTO ruling and live up to its trade agreements. “The new Kyl bill is the most likely vehicle,” he said. “It can effectively shut down any interstate betting that would go through a financial transaction service provider. And the horseracing industry has been increasingly reliant on interstate wagers for its viability.”

According to the National Thoroughbred Racing Association (NTRA), total wagering on U.S. races fell about half a percentage point last year, to just over $15 billion. Had the Internet betting option not been available, total wagering would have been significantly less.

Greg Avioli, executive vice president of NTRA expects Internet wagers for horseracing to hit $3 billion this year. “Account wagering is the fastest-growing part of the business by a significant margin”, Avioli said. “We are paying very close attention to the bill”, he added. “But we are confident that Mr. Kyl and other members of the Senate do not want to interfere with legal pari-mutuel betting and that whatever legislation passes will adequately protect racing.”

There have been other bills on Internet gambling put forth by different state senators that have all failed, but that’s no indication that Kyl’s bill will also fail. For one thing, his bill is a much cleaner approach to the problem because it doesn’t include exceptions for different gambling venues, unlike the previous bills. Also, the Republican Party is very much the dominant party in the government and they exercise tremendous control and power. They, in turn, are influenced by the religious right-wing constituency, which favors anti-gambling legislation.

None-the-less, the horseracing industry is not without its political might and it might start flexing its political muscle soon. Noting that the industry has been “in a bit of denial” over the danger posed by Kyl’s bill, Sue Schneider, publisher of Interactive Gaming News, also pointed out that they could put up a good fight if they choose to do so. “They are starting to wake up to some of this a little more”, Schneider added.