The picture that is Internet and telephone wagering in New Jersey is starting to clear.
Despite reports published yesterday, what had been reported as an opinion letter by the state's Attorney General John J. Farmer, Jr., was actually legal advice given to the New Jersey Horse Racing Commission.
Farmer, acting as council for the Commission, recommended an end to wagering over the Internet and telephone on New Jersey horse races.
The cease and desist letter sent to various online operators was the end result of a long and detailed process.
Last year the New Jersey legislature passed an account-wagering bill that would have legalized Internet and telephone wagering on horse races. Gov. Christie Todd Whitman vetoed the bill.
Last fall the commission got word from various tracks that bets were being accepted both online and over the telephone on New Jersey-based races.
Mike Vukcevich, Deputy Director of the Commission, said it was easy for the companies to set up shop without the state knowing about it. "Our tracks were doing business to simulcast with other companies," he said. "We knew about those, but other companies were then contracting out to third-party business who were then getting it on the Internet and through the phones."
The Commission quickly sought the advice of the Attorney General, who told them that online and telephone betting had to stop because there was no law making it legal.
Following Farmer's advice, the Commissions then sent out letters to all the tracks and asked for a list of all the companies the tracks were affiliated with, including third parties. The Commission performed background checks to see which companies were in violation of state law.
Those Internet companies, which were offering online wagering, were given the cease and desist orders this week and those offering telephone wagering will soon follow, according to Vukcenrich.
Youbet.com was one of several companies ordered to stop offering New Jersey bets online. Steve Molnar, a vice-president with the company, admitted the move was a surprise considering how progressive the state had been in the past concerning online wagering.
"They almost had their own legislation passed last year," he said. "They have a very good product to offer with it being all year round and the popularity of harness racing."
Another industry representative, who wished to remain nameless, blamed much of the problem on a small sector of the racing industry having a large amount of control.
"My experiences with attorney generals when it comes to this sort of thing-- where there is no actual law on the books--is that they say what a certain group wants to hear," he said. "Right now the only 'legal' places to place bets are at OTB facilities, the tracks themselves or at an Atlantic City casino. The people who control the money in Atlantic City and with the tracks don't want to see those bets being placed somewhere else like the Internet or through a home phone."
While the immediate future of interactive wagering in New Jersey has cleared somewhat with these developments, many predict a change in coming months.
"I don't see a whole lot changing with this posture in the near future," Molnar said. "But someone will push the issue over the edge. They (the state of New Jersey) will realize that they are shooting themselves in the foot."
Vukcevich did say that there were no problems with the first stage of cease and desist orders, which dealt with Internet wagering. He predicted the same type of cooperation from companies who have account wagering systems set up for telephones.
One industry insider predicted an economic change for the state once bets are pulled from the Internet and telephones.
"For some reason the Commission and the tracks still think they generate all these bets from people, who are at the track," he said. "They don't realize how much is being wagered online and over the phone. Once they see the impact of this, it won't take long for them to change their tune."
Vukcevich in the meantime said the Commission, along with others in the horseracing industry, will continue to urge and support any legislative movement that would legalize account wagering. He said that many residents were upset by the move to pull the options offline, but the Commission had no choice.