Horse racing no longer has the unique advantage of being the only legal form of online gambling in the United States.

In December 2011, the U. S. Department of Justice issued an opinion that the Unlawful Internet Gambling Enforcement Act of 2006 applied only to wagering on “a sporting event or contest”—to sports betting. Three states have already seized upon the opportunity. Casinos in Delaware and New Jersey are now offering a full complement of online gaming and Nevada has Internet poker. The proviso in each case is that a bet must be placed within the state’s borders, as determined by geo-location software.

In November 2013, Caesars Entertainment spun-off Caesars Acquisition Company (CAC) into a separate company backed by private-equity and hedge-fund billionaires. CAC was launched with the mission to pursue online gambling.

On the opposite side of the push for Internet gambling is Sheldon Adelson, chairman and chief executive of Las Vegas Sands, who is funding the Coalition to Stop Internet Gambling.

More and more revenue-hungry states that currently house brick-and-mortar casinos will almost certainly legalize online gambling. Physical (as opposed to virtual) American-based casinos are apt to see their gaming business cannibalized, as are offshore operations that illegally receive an estimated $3 billion in bets from the United States annually.

Pari-mutuel handle does not appear to be as vulnerable to the expansion of online gambling as does revenue at traditional casinos and offshore operations; convenience wagering on the Internet is nothing new for horse-racing bettors.

Legalized Internet gambling complicates the interpretation of laws and regulations written for the material world. Under the various state policies governing casinos, each facility is capped at a specific number of slot machines or gaming tables. However, in virtual gaming, the number of digital slot machines and tables is meaningless. A critical question for horse racing is whether a state mandate that racing is to receive a designated percentage cut of slot machine play extends beyond a finite number of tangible machines to encompass an infinite number in cyberspace.

Copyright © 2014 Blood-Horse Publications. Used with permission.