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Beneath the Pecan Tree
Monday, May 19, 2014 - by Bob Carson

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Editor's Note: The USTA website is pleased to present freelance writer Bob Carson and his popular "Outside the Box" features. This monthly series is a menu of outlandish proposals presented with a wink -- but the purpose behind them is serious. The views contained in this column are that of the author alone, and do not necessarily represent the opinions or views of the United States Trotting Association.

Bob Carson

While sitting at a picnic table at a rest area on I-75 in Valdosta, Ga., I am poised to do some shady business. My table rests beneath the canopy of a pecan tree, which allows me to more easily read my I-pad display. My plan is to wager $100 on harness races from racetracks in Sweden, Canada and Pennsylvania. I call this research; my wife calls it pathetic. Let’s see how I do.

Well, I lost money. This is nothing new, losing money is somewhat of a specialty. The Peach State lost as well. Nary did a farthing, a shilling, a kroner or a penny of my wagers land in the Georgia treasury. Meanwhile, other states, other countries, computer outfits, racetracks, horsemen, unions, governments and mystical entities all took slivers of my wagers. Georgia also missed out on revenue from agriculture, tourism, jobs and countless other axillaries related to the harness racing industry.

Once upon a time, Georgia had the power, the energy and the desire to stop me from squandering my money; today, not so much. Georgia’s prohibition on gambling is of dubious worth. Gambling away my entire fortune, including the double-wide and ten-year-old Mustang convertible GT, would be an easy task.

The Internet changed everything and will continue its relentless and amorphous march into our lives. This may be very good news for harness racing.

 
Autumn Ryan graphic

The Internet and recent government rulings offer harness racing a chance to free our sport from politics and fiefdoms that have impeded our growth. This is not throwing stones; self interest is behind every curtain in every walk of life. Self interest is natural. Ultimately, the Internet may give self interest free reign to take our game to greener pastures.

It is very likely that my actions under the pecan tree committed offenses against multiple jurisdictions: the state of Georgia, the Federal government and perhaps some international treaties. Rumor has it that there are prohibitions floating around with exotic names like The Unlawful Internet Gambling Enforcement Act of 2006, The Treaty of Versailles, The High Wire Act, Kyoto Protocol and maybe The Smoot Harley Tariff.

My lack of understanding of these mysterious rules and entities is overshadowed by my lack of interest. We just look for a race, make sure the takeout is not exorbitant, make our wager and then watch the race. We may not know it, but millions of us are subject to skirting the letters of the gaming laws on our digital devices.

More and more, we don’t care where the race originates, and more and more, regulators will have difficulty finding where the money travels. A few months ago, the gatekeepers admitted as much.

“Prohibition simply does not work,” Geoff Freeman told a House panel on Dec. 10, 2013. The federal government has tried the prohibition approach -- specifically the Unlawful Internet Gambling Enforcement Act of 2006 and the Wire Act -- and through multiple Justice Department crackdowns on offshore operators as well. He noted that many Americans simply ignored the ban, as the country did during Prohibition in the 1920s.

“Last year, before a single state authorized legal online gaming, Americans spent nearly $3 billion on illegal, unregulated offshore gaming sites, nearly 10 percent of the $33 billion worldwide online gaming market,” Freeman said.

Some will try to keep the door closed. Sheldon Adelson, the casino mogul, has launched the Coalition to Stop Internet Gambling. He will butt heads against those with the pro-online gambling position. This will lead to a flurry of head butting because online gambling is now legal in Nevada, Delaware, and New Jersey. A dozen other states have online gambling legislation in the pipeline. It is doubtful that even Adelson’s billions will be able to stop or slow down the race of state governments to corral Internet gambling money.

Keeping control of players and their wagering for taxation and for profit may prove difficult when people decide to place a bet beneath a pecan tree thousands of miles away. One of the ideas is that players must either reside in or be located in the state when they place their bets. Software will act as a sort of ankle bracelet to keep taxes and loyalty to a particular casino under control.

There will be other ways fiefdoms try to keep control. However, containing a product on the Internet has proved difficult; hackers, off-shore outfits, pirated signals, third parties and a host of incredibly savvy Internet entrepreneurs will be at least a constant nuisance, and at worst they will torpedo all efforts to keep the money under control. When data rains down relentlessly from the cloud, eventually it will find a way into the house.

It is not hard to imagine an Internet gambling site popping up in a country like Tuvalu that might decide to offer players online casino games with microscopic takeouts. A tiny takeout will be plenty because the entire Micronesian nation has a population smaller than Red Bank, N.J. Should the American government try to play whack-a-mole, an ever-increasing line of folks in the nations of Nauru, Liechtenstein and Maldives may send out a signal. All they need is a website and a bank. Prepare for the wild west of worldwide wagering. Who is going to be an effective sheriff, and for how long?

Should you accept the premise that eventually, probably much more quickly than we realize, online gambling will be omnipresent, three trends look likely to affect harness racing -- one troubling, and two promising.

On the troubling side, land based racinos, upon which harness racing has become reliant, could take a hit should a significant number of casino players stay home and play from a sofa that offers a better bet from…well…anywhere.

On the promising side, a segment of the online gamblers will look for a good gaming product and not merely a play. We should be that product. Internet gambling could open up opportunities in the U.S. -- notably sports betting -- and harness racing could be a terrific fit.

“It'll be interesting to see how this plays out,” said Laurence DeGaris, associate professor of marketing at the University of Indianapolis and an expert in internet culture. “Slots and roulette are very visceral games, lots of bells and whistles. That doesn't translate online; blackjack and poker have a very human element that's lost online. In online casino gambling, it's about the game more than the bet. And in sports gambling, it's about the bet. That's where I see the huge potential in online gambling.”

A second promising concept for harness racing could be that self interests may find their powers subverted or diluted.

Can you imagine someone like Amazon’s Jeff Bezos building a beautiful, private harness racetrack in Georgia? He makes it great. He may not even need a pari-mutuel license because it is not necessary that anyone wager a dime in the state or on the premises (although states might suddenly see the wisdom and money in allowing wagering). Movie studios have been taking advantage of work-friendly states like North Carolina. They make a product, the film; they monetize the film in other places in other ways.

A private harness race state program may now just need to make a good wagering product. Basically build a studio to present great gambling content. Set up a racing program, a fabulous one, with high purses and pristine racing. Let the cameras roll. Do some advertising, a touch of data mining and the show begins.

The gambling worlds of today and tomorrow will be different. Entrepreneurs have more control and freedom in cyberspace. Legalized Internet gaming offers opportunities. A great product (with much lower takeout). Control over who gets to watch their product via subscriptions and encryption. Ways to present and monetize their harness races free of the obstacles that once stood in the way.

Welcome to the new world.

All things are possible under the pecan tree.


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