Dear Senator Kyl...

10 November 1997

Various letters have been sent to Senator Kyl in reference to his Internet Gambling Prohibition bill. Here is one which reflects the view from a state.

Dear Senator Kyl:
I wanted to take this opportunity to contact you in reference to your bill S.474 which would make internet gaming illegal in the United States. I am a New York State Senator and Chairman of the N.Y.S. Senate Committee on Racing, Gaming and Wagering. I have spent a great deal of time examining the issue of internet gaming over the past year and at this time I feel compelled to reach out to you to protect and distinguish legal gaming activities currently in practice in jurisdictions such as New York State from casino-style gambling over the internet. In addition, I would like to share my thoughts with you about the practical difficulties involved in regulating and enforcing internet gaming restrictions.

New York State currently authorizes various forms of wagering and the communication of wagering information through electronic mediums. Specifically, New York law permits phone account pari-mutuel wagering, horse racing simulcasts from within and without the state, and various lottery games. All of these rely on computers for the efficient operation of the game and I fear that S.474 will restrict their application.

If the provisions of S.474 are passed by the Senate, I am confident industries such as horse racing will suffer the greatest. The thoroughbred and harness racing industry in has been experiencing a decline in attendance and handle nationwide over the past decade. Therefore, in an effort to support and promote the racing industry in New York, the state has authorized phone account parimutuel wagering by Off-Track Betting Corporations, the New York Racing Association and horse racing tracks. Phone account wagering has proven to be very successful and New York State has not experienced significant problems with fraud or betting by minors as this betting activity is regulated by the New York State Board of Racing and Wagering. In addition, New York expressly permits the simulcast of in-state races to other states and also allows New York racing organizations to simulcast out-of-state races in New York racing facilities.

The language of S .471 could halt this important practice and will finacially devastate the New York horse racing industry.

Senate bill 474 defines the term "interactive computer" in ~1085(a)(1) as "any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the internet". As drafted, this definition will have an effect on pari-mutuel phone wagering accounts in New York because wagers are placed by a bettbr over the phone by keying in information to a host computer which accepts multiple users on its network. It will also affect horse racing simulcasts because this program relies on a network of computers and satellites for the transmission of information used in wagering.

Another significant change in S.474 which will hurt New York is the deletion of language from the original version of the your legislation allowing states to act to regulate interactive wagering activity. As originally proposed, your bill would have allowed New York to continue its phone account wagering activity and potentially, if New York State saw fit, to regulate pari-mutuel wagering over the internet (as is currently proposed ny New York Capital Region Off-Track Betting Corporation). The deletion of "unless state law expressly permits that activity" from ~1085(b)(1) and ~1085(c)(1), however, effectively removes power from any state to regulate its own wagering activity. This change will be very harmful to the New York state racing industry and is contrary to the historical governance of wagering activities by states.

In addition to prohibiting pari-mutuel phone account wagering, simulcasting and eliminating any opportunity New York may have had to authorize pari-mutuel wagering over the internet, S.474 will effectively restrict the New York State Lottery's ability to link its games together and provide accurate, prompt assessments of gaming under its jurisdiction. Language contained in ~1085(b) (1) provides that "[i]t shall be unlawful for a person to place, receive or otherwise make a bet or wager, via the internet or any other interactive computer service in any state" will eliminate the ability of the Lottery to operate its Quick Draw game, Pick 10, Lotto and many others.

If, however, you and your colleagues should decide to restrict the use of linked computer programs for wagering activities, I urge you to think considerably about the practical difficulties which will be encountered in your effort to eliminate internet wagering activities. Due to the fact that all of the known gambling web sites currently available (approximately 120), are located outside of the United States, halting the activity of providers will be very difficult, if not impossible. Therefore states, I fear, will be left with only the ability to prosecute our resident bettors. Privacy concerns surrounding the invasion of personal communications will undermine consumer confidence in their use of their personal computers and the negative impact will be felt nationwide.

As another concern, in the last section of your bill, you require the establishment of an international agreement to enforce the legal provisions of your bill. I agree with you that such an agreement is essential to the development of effective enforcement of internet gaming laws but I believe that participation will be low and that only countries which have similarly taken steps to outlaw internet wagering within its jurisdiction will be interested in negotiating with the United States. Countries such as Australia, which are actively taking steps to regulate and monitor internet gaming will continue to host web sites and law enforcement officials will be left to prosecute only the small, individual bettor.

I am not an advocate for internet gambling. I believe that this activity could have a strong negative impact on minors and problem gamblers who, in the privacy of tlleir own home, will engage in this potentially harmful activity. However, I am very concerned that if internet gaming activity is legislated against without protecting states rights to regulate its own wagering activity and the opportunity for a thorough public discourse, the wild west of the internet will continue to remain unchecked.

I have enclosed a copy of the two transcripts of hearings held by the Senate Committee on Racing, Gaming and Wagering on the issue of internet gaming, and the Committee's year end summary of activity for your information and review.

Thank you for your consideration of these issues. I look forward to continuing a dialogue with you as issues centering on the internet continue to demand our time and attention.


William J. Larkin, Jr.
Member of Senate