How A 40-Year-Old Horse Racing Law Can Nudge Sports Betting Forward

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Forty years ago, Congress passed a comprehensive bill for horse racing that could be a model for nationwide sports betting legislation.

The federal law — the Interstate Horseracing Act — even includes a “consent to bet” clause that may cause certain US sports league executives to drool.

Related developments in sports wagering are proceeding at a rapid pace, increasing the chances that Congress will weigh in soon.   

Indeed, in just the last two months, potential sports betting legalization has moved from the US Supreme Court to the Indiana statehouse. The draft bill out of Indiana even mimics the 40 year-old horse racing statute, with a clause allowing sports governing bodies to “restrict or limit wagering” on certain events.  

When the issue returns to Washington, DC — the NBA has already announced plans to lobby Capitol Hill — Congress might not have to entirely reinvent the wheel. There is already a law on the books with potential applicability to future sports gambling regulation.  

Lawmakers can look to Churchill Downs and other racetracks for a clue.

History lesson of the Interstate Horseracing Act

The Interstate Horseracing Act — which was the subject of formal hearings in both the House and the Senate — was enacted in 1978.  The law only applies to bets that cross state lines.  

Congress made a handful of findings in support of its move to legislate at the national level, with one conclusion particularly relevant today:

“Congress finds that the States should have the primary responsibility for determining what forms of gambling may legally take place within their borders,” according to the law.

Congress also stressed how the Interstate Horseracing Act was needed to “ensure States will continue to cooperate with one another in the acceptance of legal interstate wagers.”

A federal judge summed up the purpose of the Interstate Horseracing Act in a recent legal case.

“Congress…sought to support both the horseracing and interstate off-track wagering industries, but to do so in a relatively narrow way that otherwise left states in control of gambling within their borders,” wrote Judge F. Dennis Saylor in 2016.

Only a modicum of creativity is needed to see how such sentiment could translate to expanded legalized sports wagering today.

‘Consent’ to interstate bets

Of the IHA’s nine sections, the portion devoted to the law’s unique “consent” requirement could catch the attention sports league executives interested in different ways to monetize sports betting.

The “consent” clause is three-pronged. In relevant part, here is what it says:

An interstate off-track wager may be accepted by an off-track betting system only if consent is obtained from—

Although not a perfect fit, the three-part consent framework could conceivably be tweaked and apply to sports betting.  

The first two prongs are most easily envisioned in the sports wagering context. The “host racing association” could be a sports league (and its tethered labor union, if applicable). The “host racing commission” could be the government agency with regulatory authority in the state where the sporting event takes place.

The third component is somewhat thorny. There is no analogous “off-track racing commission” already existing in the sports industry. Perhaps it could be some new sub-agency within the Commodity and Futures Trading Commission (CFTC) or the Federal Trade Commission (FTC).

Or, perhaps Nevada — the only full-blown legal and regulated sports gambling market in the United States already in operation — could serve as a nationwide hub for interstate sports bets that fall under a new federal law Congress enacts. A patchwork of state-level commissions could be an option too.     

Are sports leagues still allergic to horse racing?

One barrier to any partial adoption of the Interstate Horseracing Act model in the sports betting context is the long history of sports league executives resisting any connection to horse racing.

“They’re dealing with horses, and we’re dealing with people,” said Major League Baseball’s Arthur Fuss in a February 1977 New York Times article by Steve Cady.

An NFL official agreed four decades ago.

“The problems of racing are not the same as ours,” said league security head Jack Danahy in the same New York Times story. “Their sport is based on gambling. Ours is not.”

Whether sports league officials would still chafe at any nexus to horse racing and the federal law that regulates interstate bets remains an open issue. No current league executive has publicly weighed in on the possibility. Yet. 

Supreme Court vs. Congress

In the current Supreme Court case pitting the NCAA, NBA, NFL, NHL and Major League Baseball against New Jersey, the nine justices must only decide whether the partial federal sports betting ban in the Professional and Amateur Sports Protection Act (PASPA) preempts New Jersey’s desire to partially repeal one of its own sports betting laws. The Supreme Court — under Article III of the Constitution — is limited to deciding “cases” and “controversies” properly before it.

In other words, stakeholders should not rely on the Supreme Court to provide a well-defined blueprint for legalized sports betting in the near future.  

The path forward at the federal level falls to Congress. And that is where the Interstate Horseracing Act could play a role.  

When Congress does end up tackling sports wagering, lawmakers can look back 40 years for a potential template.