California Embraces I-gaming

15 August 2001
With the stroke of a pen California Gov. Gray Davis has enabled Californians to take part in the horseracing e-revolution. The Golden State joins a short list of states permitting telephone and Internet account wagering on races when the bill becomes law Jan. 1, 2002.

Davis vetoed a similar bill last year. The current legislation, AB 471, however, addresses some of Davis's concerns, including the protection of minors and a sunset provision of 2008, should the fallout from this bill be more damaging than expected.

Davis released a statement explaining his reasoning. "Two things have changed since I last considered this issue," he said. "First, the federal Interstate Horseracing Act was amended in December 2000, after I vetoed the previous version of this bill. Those amendments expanded the definition of an 'interstate off-track wager' to include wagering via the Internet (15 U.S.C. 3002(3)). The importance of this change in federal law, according to the California Attorney General, is to 'legitimize telephone and Internet off-track wagering in states where it is either specifically authorized or not forbidden.'" (View Gov. Davis's complete statement.)

Money also talks loudly, at least when consideration was given to this issue. As much as $50 million is lost annually when Californians bet with out-of-state and offshore wagering companies. Assemblyman Herb Wesson, a co-sponsor of AB 471, explained that because of this bill, 12 to 13 cents out of every dollar Californians gamble on local races will stay in the state, racking up as much as $20 to $30 million per year. State residents spent about $4 billion on horse races in California last year.

Despite Davis' nixing of last year's bill, Wesson was confident that the governor would sign AB 471 this year. "I know how seriously he looked at this last year with his staff," Wesson said. He called Davis' move "common-sense", especially considering how hard-hit the racing industry has been economically.

"Horse racing has been the sport of kings for hundreds of years," Wesson added. "This will be a shot in the arm for it."

Officials from one company are jubilant following yesterday's announcement that AB 471 would soon become law. "This is a tremendous development as it relates to our operations in California," said Robert Fell,'s chairman and chief executive. "California residents represent the largest constituent of horse racing enthusiasts and handicappers in the U.S., contributing to a substantial portion of the pari-mutuel horse racing market. This development equates to expansive market penetration and revenue growth opportunity for"

Youbet, which has more than 2,500 subscribers in California, faced legal problems in California that resulted in the company paying out $1.3 million in fines, as well as no longer being allowed to accept wagers from Californians through its closed-loop Internet system. The company plans to seek a modification of this judgment so these members can begin betting on the races through Youbet's services.

Click here to view AB 471.