Nebraska Court Outlaws Telephone Betting

As expected, the Nebraska Supreme Court ruled late last month that telephone betting on horse racing is in violation of the state constitution.

The possibility of tracks offering account wagering in Nebraska also looks bleak as a six-plus year process for clarification of state law comes to a close.

Lawyers with Nebraska's attorney general's office and racing industry companies had gotten together for an amicable court case seeking legal clarification of an account wagering system in the state.

Tracks wanted to explore the possibility of allowing punters to bet on horses from the convenience of a telephone. Tracks were given the green light to institute account wagering when the state legislature modified betting laws in 1992.

But lawyers from both sides were skeptical about the legislative initiative and turned to the Supreme Court for a clear answer on the legality of account wagering. The rules of the Supreme Court are such that the justices couldn't hear the case until an account wagering system was up and running.

Officials with Fonner Park, a thoroughbred track in Grand Island, set up an account wagering system for its customers. Knowing the system could be shut down by virtue of a court decision, the track did very little to promote the system.

Account wagering is allowed in 10 states in the United States. In many states where the practice is either banned or in legal flux, the sticking issue is the location of the actual bet.

In Nebraska, the original pari-mutual law, which was drafted in 1934, is specific that bets can only be accepted within the confines of a racetrack.

Hugh Miner Jr., executive vice president of Fonner Park, said even though the Nebraska Legislature approved account wagering in 1992, there was no account wagering for years.

Other states have amended their laws to allow for off-track betting facilities or have been able to amend laws to create an account-wagering bill. It hasn't been as easy in Nebraska.

Despite the assistance from the legislature, the Supreme Court ruled that an account wagering system, which allows bettors to place bets from their telephones, is in clear violation of the constitution.

In order for the state's tracks to institute account wagering, they would need a change in the state's constitution, a proposition that wouldn't be cheap to explore.

Assistant Attorney General Jay Bartel told the court in earlier arguments that when Nebraska voters approved pari-mutuel betting in 1934, the amendment specified that "the wagering which may be allowed ... is limited to wagering that takes place inside the confines of a racetrack." The high court agreed.

"The constitution requires that the instructions to place the wager must originate from within the licensed racetrack enclosure," Judge John Wright said.

Bartel said the decision from the court wasn't much of a surprise considering precedents that had been set with other decisions.

He said that in the early 1990's, Nebraska's tracks tried to offer a tele-betting service that was similar in principle to account wagering. The Supreme Court also shut down that system on the grounds that it violated the constitution.

With the account wagering case, track operators argued that courts in other states have held that since telephone bets are recorded at a track, that technically satisfies the "on-site" requirement. The justices didn't buy into that argument and hinted in their ruling that the only clear and viable option for track owners is to change the constitution.

Mike Lehan, a lawyer for Fonner Park, said neither side was holding any hostility or animosity towards the other. He said he had been holding out for a favorable ruling for the racing industry.

"It was the court's decision, and obviously, we'll abide by that," he said.

He had argued that telephone wagering is no different than someone who calls a friend at the track on a cell phone and tells them to place a bet on their behalf.

Horse tracks are trying to keep their dwindling share of the gambling market as they compete with casino gambling in neighboring states and other forms of wagering such as the state lottery and keno.

Lehan said track operators throughout the state are contemplating the feasibility of amending the constitution as well as trying to expand the gaming options that are available at tracks.

Click here to read the full Nebraska Supreme Court decision.