State Approves Online Betting On Ponies

From Dan Haar, Hartford Courant:

Connecticut has approved online wagers on horse races, run by the operator of 15 off-track betting locations, ushering in the era of state-sanctioned Internet gambling even as lawmakers debate its broader future.

Sportech Venues, Inc., based in London, England, said Tuesday it’s aiming to launch online betting in April. Wagers would be limited to adult Connecticut residents, for pari-mutuel betting on horse racing only.

Sportech, with its North American headquarters in New Haven, holds the exclusive right to run pari-mutuel betting in Connecticut on horse racing and dog racing at tracks around the world. That right includes bets taken in-person and over the telephone–which is crucial, as the state’s approval of the Internet platform is an extension of the phone operations.

The approval by the state Department of Consumer Protection, which regulates legal gambling, will add a relatively small amount of revenue to the state’s coffers, as the state collects 3.5 percent of all in-state wagers from Sportech–in person at the 15 Winners locations, by telephone and starting soon, online. There is no estimate of the expected amount.

Unlike the hotly debated expansion of legalized poker and other games on the Internet, the online extension for Sportech required no legislation, no public hearings, no vetting by the state Attorney General. It was, as Consumer Protection Commissioner William Rubenstein said, already allowed under state law and his department needed only to approve the systems that will make it happen.

Rubenstein and other state officials portrayed it as far from a broad expansion of Internet gaming, which, they say, would be a major policy shift if and when it happens. And that won’t be in 2013 if Gov. Dannel P. Malloy has his way.

“The governor has no interest in pursuing Internet gambling,” said his spokesman, Andrew Doba.

Still, there can be no denying that when the first Connecticut customer places the first bet on Sportech’s system, legalized internet gambling will be underway in Connecticut.

“It clearly may start people talking about expansion in other areas but horse racing has a separate legal regime,” Rubenstein said.

Foxwoods Resort Casino also has pari-mutuel betting on horse races around the nation and the world, but that’s not regulated by the state because it’s on sovereign Mashantucket Pequout tribal land–and the tribe has no license for telephone betting. But Foxwoods and nearby Mohegan Sun have both made it clear they want in on the action if and when Connecticut does adopt legalized gaming.

The horse-betting business in person, by telephone and online is different because of a federal exemption that allows it. Founded in the ’70s as state-run Off-Track Betting, or OTB, the enterprise was sold to a private firm in the early ’90s, then rebranded in 2009 as Winners, with large locations in New Haven and near Bradley International Airport.

Connecticut’s general fund will receive a small percentage of the wagers, as it does under the existing arrangement in person and by telephone.

Online customers “will be able to see streaming video of the race in real time,” said Jennifer Conning, a spokeswoman for Sportech, in addition to information about each race and replays of previous races.

The company bought the Connecticut betting franchise in 2010, and moved its North American headquarters to New Haven. It does not have direct-to-consumer operations in other states, but it provides gaming systems and support to race tracks such as the Meadowlands in New Jersey, and to off-track companies in other states, Conning said.

The development happens as state lawmakers and federal officials, prompted by tight state budgets, are considering ways to sanction poker and other online games at a time when poker and other games are growing rapidly on the Internet.

It’s clearly in the state’s purview to grant the license to Sportech, said Stephen D. Dargan, D-West Haven, co-chairman of the legislature’s public safety committee, which oversees gaming and the state lottery. That’s because the federal law governing gaming has an exemption specifically allowing online and in-person par-mutuel betting on horse racing, he said.

But Dargan said there may be some confusion about the legality of the state’s move, since Internet gaming is such a contoversial issue. “When I first heard about it,” he said of the Sportech license, “I thought, ‘How the hell are they going to do this without federal approval?'”

States are awaiting a ruling by the U.S. Department of Justice on how and whether they may move forward with Internet gambling, Dargan said. Casinos, including Foxwoods and Mohegan sun, have said they would like to participate in legalized, online ventures, and some states, including New Jersey, are preparing for online sports betting.

“If the feds have some clarification of it, we as a state should look at it,” Dagan said. As for his own support, he added, “I’d look at it. I’m not opposed or totally onboard with any of this.”

“Gambling is one of those issues in the state legislature that’s not conservatives vs. liberals or Democrats vs. Republicans,” Dargan said. As for the Sportech license, “It’s nothing to do with the bigger issue of online gaming via poker or whatever. This is just another vehicle for horse bettors to engage or wager.”