1997 Summary of Activity of the NYS Senate Committee on Racing, Gaming and Wagering

23 September 1997

chaired by

Public Hearings:

The Senate Committee on Racing, Gaming and Wagering sponsored two legislative hearings to examine the role of the internet in the dissemination of gambling information in New York State. The first hearing was held in Albany on March 12, 1997 and the second hearing was held in New York City on March 20, 1997. Both hearings were well attended and contributed a great deal to the committee's understanding of the issues involved in gambling over the internet.

Testimony was received by many individuals who are actively involved in the industry of interactive wagering and by regulators. In addition, public advocacy groups concerned about issues such as problem gambling were represented.

As a brief summary, I would like to highlight certain portions of testimony which were offered at the hearings. Copies of the complete transcript are available upon request from my office in Albany: 518-455-2770.

Sue Schneider - Editor of Rolling Good Times Online and Chairwoman of the Interactive Gaming Association: Testified that as of the date of the hearing, between thirty and forty web sites were available to individuals who would like to engage in online wagering. Other jurisdictions such as Canada and New Zealand are engaged in a public dialogue about internet gambling. It is estimated, by some sources, that internet gambling is already a $10 billion industry.
Attorney General Dennis Vacco - Testified that he is devoting a great deal of effort to the issue of internet gambling through his office and as Chairman of the Consumer Protection Committee of the National Association of Attorneys General. Attorney General Vacco stated that the situs of an online wager is the place where the bettor makes the bet. Therefore, New York State has jurisdiction over the issue and must be able to enforce its own laws. Attorney General Vacco also testified that the Gambling Subcommittee of the NAAG Consumer Protection Committee has issued a report on this issue entitled "Gambling on the Internet".
Davis Etkin - President of Capital District Off-Track Betting Corporation: The Capital District OTB Corporation has approximately 35,000 phone betting account customers. Phone account business represents seven to eight percent of Capital OTB's handle. Phone accounts may only be accessed by persons who have the appropriate password and code name. Internet pari-mutuel wagering represents a way to be creative and innovative and to facilitate growth within the industry.
Steve Molnar - Chief Executive Officer of You!Bet Corporation: The internet explosion offers great possibilities for the pari-mutuel industry. A clear distinction should be drawn between the use of computers to enhance access to legal pari-mutuel wagering and the use of the internet to evade the law. You!Bet corporation is working with the New York Racing Association to develop a product to offer intranet wagering access to NYRA One customers.

As a result of the hearings, the Senate Committee on Racing, Gaming and Wagering has concluded that a distinction may be drawn between online casino style wagering and online pari-mutuel wagering which has been proposed by both the Capital District Off-Track Betting Corporation and the New York Racing Association.

Virtual casino style gambling with corporations located at off-shore locations such as Antigua, Aruba, Bermuda and Grenada should be viewed by New York State as antithical to the stance this state has taken toward gambling. Specifically, New York State, through the Constitution and state law, has taken a very restrictive approach toward gambling. Wagers may only be placed legally in New York if they are through the New York State Lottery, for the benefit of charitable and fraternal organizations who have secured appropriate authorization from local jurisdictions and the New York State Board of Racing and Wagering or at federal and state sanctioned indian gaming casinos. (A determination as to the legality of off-shore style casino gambling on so called "cruises to nowhere" is herein reserved.) For-profit black jack, baraccarat and craps games are not legal wagers in the State of New York and therefore should not be considered differently just because a bet is placed on a computer instead of in a gambling hall.

Pari-mutuel wagering over the internet, however, should be viewed differently. New York State is one of a few states which have legalized phone account wagering. Through legislative approval and oversight provided by the New York State Board of Racing and Wagering, individuals have been able to access account information and place wagers on horses over the phone for the past several years. Online wagering is virtually non-distinguishable from phone wagering. Computers which answer betting phone calls do not distinguish between a call placed over the phone or a call placed over the internet. Furthermore, the same telecommunication lines are used in both transactions, the only difference is whether a person presses numbers on the phone versus numbers on their keyboards.

If New York State takes an active role in regulating and monitoring online pari-mutuel wagering programs, it will be a national leader in the field. Organizations such as the National Thoroughbred Racing Association, who are currently contemplating beginning their own online program, will be able to draw on New York's approach to oversight and control.

Additionally, by taking an active role in the field of online programs, New York will be able to attract new racing fans to an industry which must demonstrate that it has the ability to grow. In the absence of authorizing internet pari-mutuel wagering activities in New York, New York will lose horse betting dollars to other jurisdictions who are committed to exploring this emerging opportunity thereby contributing to the further decline in handle at New York's horse racing tracks.

Consideration of Appointments:

The Senate Committee on Racing, Gaming and Wagering met on Tuesday, May 6, 1997 to consider the nomination of Michael J. Hoblock, Jr. as Chairman of the New York State Racing and Wagering Board. Michael J. Hoblock, Jr. was thereupon considered by the Committee and favorably recommended. The nomination was then forwarded to the Senate Finance Committee.

Legislative action:

Several legislative proposals were forwarded to the Senate Committee on Racing, Gaming and Wagering for consideration during the 1997 session. Below is a summary of the bills which were proposed and the action taken.

Sale of Raffle Tickets --
This bill would limit the regulatory requirements imposed on organizations who wish to conduct raffles as a charitable fundraising event by streamlining the application requirements for fifty-fifty type raffles and eliminating the 5% fee on raffles generating proceeds of less than $20,000. (S.481A/A.5980B) 1997 Veto Memo 31.

Games of Chance --
This bill would allow charitable and not-for-profit organizations to host games of chance or "Las Vegas Nights" at locations other then property owned by the organization. Current law would be changed only with regard to the place where such games may take place; not with regard to the number of times the game may be played, the amount of prizes awarded, nor any other game related change. (S.2638/A.542) 1997 Veto Memo 55.

Participation in Off-Track Betting Corporation --
This bill would remove Jefferson County from the Central Regional Off-Track Betting Corporation and include it in the Western Regional Off-Track Betting Corporation. (S.3722A/A.6510A) Chapter 125 of the Laws of 1997.

Registration of Internet Gambling Companies --
This bill would require all companies offering internet wagering to New York State residents to file an application with the Secretary of the State as a company doing business in New York State. The purpose of this bill is to secure an address and other information from internet wagering companies so that New York State residents may reach them for service of process. (S.4174/A.8044) Passed Senate.

Internet Wagering Companies to Post Bond --
This bill would require internet wagering companies doing business in New York State to post a bond, in an amount to be determined by the Board of Racing and Wagering, to indemnify New York customers from fraudulent practices. (S.4186/A.7818) Passed Senate.

Race Times --
This bill would add a new section to the Racing, Pari-Mutuel Wagering and Breeding Law which will require that thoroughbred race times be kept in one hundredths of a second rather than one fifths of a second. This bill was drafted in response to the Hollie Hughes race for NY-breds, held on March 2nd. To keep up the world class status of credibility with statisticians, editors and fans, speeds should be kept in one hundredths, not one fifths. (S.4188/A.4819) Passed Senate.

Treatment of Purses --
This bill would amend the law to clarify that owners premiums shall not be considered as purse money for thoroughbred racing in New York State. In essence, this bill will ensure that NY-bred horses will not have to amend the races for which they are eligible based on artificially inflated purse winnings. (S.4194/A.7579A) Passed Senate.

Bell Jar Tickets --
This bill would authorize licensees to deduct the cost of the acquisition of bell jar tickets from the net proceeds reported to New York State Board of Racing and Wagering. (S.4240A/A.7547A) Passed Senate.