Concern on the Potomac

10 March 2000
The March 9 online gambling hearings in the U.S. House of Representatives have come and gone and now it's time to step back and see how those with an interest at stake react. Here's what Harness Tracks of America had to say.

If horse racing is not concerned about the third House subcommittee hearing on Internet wagering that began yesterday in Washington, it should be. The House version of the Kyl bill--HR 3125, sponsored by Reps. Goodlatte (R-VA) and LoBiondo(R-NJ)--was marked up and ready for full committee consideration, but objections, ominous objections from racing's point of view, were raised and, according to Communications Daily, "persuaded Judiciary Committee ranking Democrat Conyers (D-MI) to persuade subcommittee to hold additional hearing."

Tinkering with the present bill at this stage is a dangerous development. Yesterday's hearing included some interesting observations. Bartlett D. Cleland, director of the Center for Technology Freedom, a "think tank" advocating less intrusive federal government, noted that "many would lead us to believe that every time someone boots up their computer or turns on WebTV that they are ready with credit card in hand and a risky spirit in their heart. In fact, nothing could be further from the truth.

According to the Wall Street Journal, just this last December, only 2 percent of Internet users indicated that they go online at least once a month to gamble. That compares to 6 percent to trade stock, 17 percent to get investment advice, 22 percent to view pornography, 51 percent to read the daily news, 72 percent for research on services or products, or 96 percent to use e-mail."

Cleland then told the committee that while he did not believe unrestricted access to gambling was a healthy prospect he does believe "that this alternative is better than a federal power grab, or better than a government sponsored balkanization of the Internet."

He also said, referring to the "scare story...of children gambling away in darkened rooms" that individuals, not a central government, are best suited to the task of averting this disaster. Cleland said "I have absolutely no doubt as to the good intentions of those who support Internet gaming prohibition legislation, but their attempt will ultimately fail.....The fundamental operating truths of the cyberworld are simply not being recognized...One of the true, as of yet unrealized, promises of the Internet is that geography becomes irrelevant. Unfortunately Congress has continued in trying to end that promise. Passing legislation before a critical analysis of issues...could be disastrous not just in this legislation but in all legislation related to the Internet."

He echoed the views expressed by Al Bergstein of Microsoft to HTA last year--that forcing online service providers to deny service merely forces them to change web addresses, which takes less than a minute--and Cleland emphasized, "This is nothing but an inconvenience to operators. This is not an analog world where you have to pack up and move to a new building."

Mr. Cleland's full testimony was in no way favorable to horse racing, and in fact was dangerous to the industry in other comments regarding its exemptions. But he concluded with an interesting observation that "Internet gambling is the canary in the coal mine. Once politicians regulate it, nothing will stop them from taxing and regulating other activities--merely because they can. If the legislation that you have before you passes, we will know that the prospect of a regulation-free Internet was too great of a threat to those who feel the need to exercise unrestrained federal control."

While Cleland's comments on the futility of Internet prohibition are shared fully by the editor, his arguments--and those of other witnesses yesterday--against racing's exemption, and the fact that Conyers was able to successfully call for another hearing in part because of them, is not a happy development. HTA, at its annual meeting last week, expressed support for HR3125 as it now reads. Yesterday's hearing makes clear the bill is not a fait accompli. The challenges to it should be of deep concern to all in racing.