This week, Congressmen Scott Murphy (NY-20) and Brett Guthrie (KY-02) introduced The Wire Clarification Act (H.R. 5599) to clarify the legality of online pari-mutuel wagering on horseracing. Recently, the Department of Treasury and Federal Reserve issued new rules under the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006. The new rules have caused confusion in the credit card industry over legal versus illegal Internet gaming transactions. As a result, some credit card companies have said that they will no longer process any gaming transactions, even those for legal pari-mutuel wagering in the United States.
"Horseracing is at the heart of our local economy. It brings much-needed revenue and is responsible for thousands of local jobs," said Rep. Murphy. "When the Treasury Department and the Fed created new rules governing internet gambling transactions, credit card companies felt that it was no longer safe, under the 1940's-era WIRE Act, to accept online transactions on pari-mutuel betting, an essential component of the racing economy. Now the rules are hampering and essential stream revenue from flowing to the racing industry."
In 2009, pari-mutuel internet wagering on races at Aqueduct, Belmont Park, and Saratoga totaled roughly $210 million, which represented approximately $18.5 million of revenue for NYRA. The domestic horseracing industry represents a $39 billion business with 1.4 million sustained jobs. Lawful wagering via the Internet represents a substantial portion of wagering on horseracing. Lack of clarification of this issue will result in less wagering, reduced purses, economic decline for tracks, breeders, workers and others, and a loss of jobs. In New York alone, 152,000 individuals participate in the equine industry with a $2.4 billion GDP impact.
Murphy introduced legislation to provide a definitive clarification that the Wire Act (and other similar statutes) is not applicable to the Interstate Horse racing Act (IHA) regulated activities. This clarification would relieve credit card companies from the constant threat of prosecution -- although the Department of Justice has never prosecuted a case involving the IHA -- and assure the credit card industry that it need not block or otherwise prevent legal online pari-mutuel wagering as authorized by the IHA. Murphy's language would once and for all clarify this confusion and allow our domestic horseracing industry to continue its legal and permissible pari-mutuel activities.