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Sacramento … In a surprise reversal of his policy against expanding gambling, Gov. Gray Davis signed a law yesterday allowing people to bet on California horse races using the telephone or the Internet.
Davis' decision is a major victory for the California horse racing industry,
which has pushed for years to win state approval to expand the pool of gamblers it can reach.
"Advance deposit" wagering -- the process Davis approved yesterday -- is a certain way to do that. Under the bill, which takes effect in January, a person can create an account, put down an advance deposit and then use a phone or the Internet to make bets.
Wagering on horse races is now limited to 34 sites: the race tracks themselves, betting pavilions at state fairs and Indian casinos.
Since he signed a deal with Indian tribes in 1999 allowing them to conduct Nevada-style gambling on their lands, Davis has repeatedly said he opposes any expansion in gambling, which makes his signature yesterday a sharp reversal.
Last year, Davis vetoed a similar bill, saying that "to allow wagering via the Internet and telephone would be a major change in the status quo and, I believe, a significant expansion of gambling in California."
But yesterday, Davis aides were casting the governor's action in a different light. Changes in federal law last December, they said, allow Californians to use the Internet or telephone to place bets in other states where such betting is legal.
"Based on (those) changes in federal law and the opinion of the attorney general's office, the governor does not view this as an expansion of gambling, " said Roger Salazar, a Davis spokesman.
GAMBLING FOES UNHAPPY
Opponents don't see it that way. They say it creates a new form of gambling.
"It's the ultimate expansion of gambling," said Harvey Chinn, California director for the National Coalition Against Gambling Expansion.
"For the first time in this state's history, it's going to be legal to place a wager from a telephone, from a home, from a dormitory room, from an office, from a hotel," Chinn said. "Every phone booth in this state will become a legal place you can engage in (betting on) horse racing."
The bill signed yesterday was introduced by Assembly Speaker Robert Hertzberg, D-Sherman Oaks, in February but contained nothing about telephone or Internet wagering.
LATE AMENDMENT
That changed two months ago, when it was amended to require a series of steps designed to improve working conditions for the grooms, exercise riders and hot-walkers who care for the horses at the track. Although the bill was portrayed as a measure to help those workers, the amendments included authorization for Internet and phone betting on California races.
Representatives of the horse racing industry say the new law will cause no radical changes.
"The impact of the law is, it allows California residents to legally do what some of them were already doing," said Jack Liebau, president of the three tracks in California owned by Magna Entertainment -- Bay Meadows, Golden Gate Fields and Santa Anita.
"Because it's now legal, we will be getting our fair share of that revenue, " Liebau said. "I really don't see it as any great expansion that will happen overnight."
$250 MILLION ESTIMATED LOSS
The horse racing industry estimates it loses $250 million annually in wagers to the more than 1,200 out-of-state gambling sites on the Internet, telephone wagering systems and the 10 other states that already allow Internet or advance deposit wagering.
"We needed some kind of mechanism to help keep the industry alive," said Anthony Gonsalves, lobbyist for the Oak Tree Racing Association.
"For us to be losing that kind of revenue out of state and out of country, it would be very difficult to withstand for very long," Gonsalves said.
The new law could increase revenues for the state, which rakes off a portion of income from horse racing for itself. The state now receives more than $40 million from horse racing, and as the universe of gamblers expands, that amount will probably increase.
Still to be resolved are questions such as who holds the money that is wagered under the new changes, who earns interest on it, how many wagering centers will be created and how wagerers will place secure bets -- whether by phone or Internet or both.
The California Horse Racing Board will decide those issues after a series of public hearings, which will begin this year before the law takes effect next Jan. 1.
Davis' decision is a major victory for the California horse racing industry,
which has pushed for years to win state approval to expand the pool of gamblers it can reach.
"Advance deposit" wagering -- the process Davis approved yesterday -- is a certain way to do that. Under the bill, which takes effect in January, a person can create an account, put down an advance deposit and then use a phone or the Internet to make bets.
Wagering on horse races is now limited to 34 sites: the race tracks themselves, betting pavilions at state fairs and Indian casinos.
Since he signed a deal with Indian tribes in 1999 allowing them to conduct Nevada-style gambling on their lands, Davis has repeatedly said he opposes any expansion in gambling, which makes his signature yesterday a sharp reversal.
Last year, Davis vetoed a similar bill, saying that "to allow wagering via the Internet and telephone would be a major change in the status quo and, I believe, a significant expansion of gambling in California."
But yesterday, Davis aides were casting the governor's action in a different light. Changes in federal law last December, they said, allow Californians to use the Internet or telephone to place bets in other states where such betting is legal.
"Based on (those) changes in federal law and the opinion of the attorney general's office, the governor does not view this as an expansion of gambling, " said Roger Salazar, a Davis spokesman.
GAMBLING FOES UNHAPPY
Opponents don't see it that way. They say it creates a new form of gambling.
"It's the ultimate expansion of gambling," said Harvey Chinn, California director for the National Coalition Against Gambling Expansion.
"For the first time in this state's history, it's going to be legal to place a wager from a telephone, from a home, from a dormitory room, from an office, from a hotel," Chinn said. "Every phone booth in this state will become a legal place you can engage in (betting on) horse racing."
The bill signed yesterday was introduced by Assembly Speaker Robert Hertzberg, D-Sherman Oaks, in February but contained nothing about telephone or Internet wagering.
LATE AMENDMENT
That changed two months ago, when it was amended to require a series of steps designed to improve working conditions for the grooms, exercise riders and hot-walkers who care for the horses at the track. Although the bill was portrayed as a measure to help those workers, the amendments included authorization for Internet and phone betting on California races.
Representatives of the horse racing industry say the new law will cause no radical changes.
"The impact of the law is, it allows California residents to legally do what some of them were already doing," said Jack Liebau, president of the three tracks in California owned by Magna Entertainment -- Bay Meadows, Golden Gate Fields and Santa Anita.
"Because it's now legal, we will be getting our fair share of that revenue, " Liebau said. "I really don't see it as any great expansion that will happen overnight."
$250 MILLION ESTIMATED LOSS
The horse racing industry estimates it loses $250 million annually in wagers to the more than 1,200 out-of-state gambling sites on the Internet, telephone wagering systems and the 10 other states that already allow Internet or advance deposit wagering.
"We needed some kind of mechanism to help keep the industry alive," said Anthony Gonsalves, lobbyist for the Oak Tree Racing Association.
"For us to be losing that kind of revenue out of state and out of country, it would be very difficult to withstand for very long," Gonsalves said.
The new law could increase revenues for the state, which rakes off a portion of income from horse racing for itself. The state now receives more than $40 million from horse racing, and as the universe of gamblers expands, that amount will probably increase.
Still to be resolved are questions such as who holds the money that is wagered under the new changes, who earns interest on it, how many wagering centers will be created and how wagerers will place secure bets -- whether by phone or Internet or both.
The California Horse Racing Board will decide those issues after a series of public hearings, which will begin this year before the law takes effect next Jan. 1.