One of the more interesting news stories flowing from the US attempt
to disrupt financial channels to the online gambling industry was
carried by the British newspaper The Independent this week. According
to the newspaper, the American horse racing industry doled out the
big bucks to ensure that it was exempt from the online gambling financial
restrictions that Congress seeks to impose.
Through lobbyists, the American horse racing industry made contributions
to politicians and for education to the tune of $3 million, says The
Independent....and it was much to the chagrin of online gaming companies
in the UK.
The President of the US-based Poker Players Alliance, which does not
have an exemption but would like one expressed his outrage at the
apparent hypocrisy.
Michael Bolcerek said, "The horse racing industry is not
afraid or ashamed of saying that they were able, for want of a better
word, to buy their exemption from the new laws."
The American horse racing industry paid over $3 million in political
donations, and spent millions of dollars more on entertainment and
"education" for politicians, to ensure its exemption from
the new internet betting laws that if signed off by the US President
will make the movement of US gambling cash more difficult.
The figures show a sophisticated lobbying effort targeted at specific
Congressmen, and has infuriated executives from the UK-listed online
gambling companies whose shares have collapsed by more than half in
the past three days as a consequence of the unexpected Congressional
action.
The Internet gambling industry is vowing to learn lessons from the
debacle, and promising to fund a new wave of lobbying to promote its
own carve-outs or the full regulation of internet betting in the US.
The Independent says that offshore gambling firms, such as PartyGaming
and others listed in London, have employed Capitol Hill lobbyists
for several years, but have been unable to stem the tide of prohibitionist
sentiment or to counter the more expensive efforts of other interest
groups.
Figures compiled by the Centre for Responsive Politics show how the
National Thoroughbred Racing Association and the owners of racehorses
and racetracks have funneled money into mainly Republican campaign
coffers as the prohibitionist tide has risen.
Over the past six years, the industry made contributions of $3.02
million, all but $500 000 of which went to Republican candidates.
Bob Goodlatte, the member of the House of Representatives whose prohibition
bill in February gave the campaign to ban internet gambling transactions
its successful momentum, is one of the four members of the House of
Representatives to have received the most campaign contributions,
and the NTRA believes time spent educating Mr Goodlatte was the reason
he agreed to exempt horse racing from his bill. He received $16 000
in campaign contributions, according to the figures. There is no suggestion
Mr Goodlatte acted improperly in accepting campaign funds.
At a University of Arizona symposium on racing and gaming last year,
Greg Avioli, the NTRA's head of legislation, said a ban on internet
betting on horse racing was "an over-our-dead-body issue"
and would jeopardize too many livelihoods.
He said: "We're fairly confident we have the political
strength in Washington to stop that, because this $40 billion agribusiness
now lives and breathes on that [internet gambling] revenue. So we've
got friends in Washington and I don't think they can pass a law over
our objection."
Campaign contributions have long acted as a foot in the door in Washington's
crowded lobbying scene, whose worst excesses were exposed once again
last year with the jailing of Jack Abramoff, one of the most powerful
lobbyists, who used $82 million of money from Native American casino
operators to fund lavish dinners, trips and gifts for top Republicans.
The National Football League, too - worried about corruption of sporting
events because of gambling on their outcome - made a ban on internet
gambling its top lobbying project this year.
Dan Walsh of the lobbying firm Greenberg Traurig, said the online
gambling industry would learn from its setback and return with a new
campaign. "I don't believe - I don't think even Congressman
Jim Leach [who wrote the legislation] believes - the new regulations
will put the internet gambling industry out of business, and, when
that becomes clear, I think we can start talking about clarifying
the law and regulating the industry."