The Feds Part II (or, I get to reference “RICO”)

Alex Brown pointed out this Paulick Report guest editorial by U.S. Representative Ed Whitfield (Ky.), who is currently spearheading the Congressional movement to implement federal regulation of the racing industry. Whitfield’s suggestion is to graft regulatory legislation onto the 1978 Interstate Horse Racing Act, to require states to adopt minimum standards, or else forego their right to send simulcast signals across state lines.

 

This seems perfectly permissible given both the Supremacy Clause and the Interstate Commerce Clause of the U.S. Constitution. The reason we have state racing commissions, instead of a centralized governing body, to begin with is due to each individual state’s police power – their ability to regulate local issues that concern public health, welfare, safety, and morals. But the federal government has the authority to override that interest, because the Constitution mandates that federal law is “the supreme law of the land,” and it also gives Congress the power to regulate “commerce between the states.”

 

Horse racing is clearly interstate commerce – actually I think the only sport that isn’t considered “interstate commerce” is baseball, resulting in a famous but ridiculous legal fiction. There is also a (probably weaker) argument that Congress has the power to step in due to the so-called “Dormant Commerce Clause,” which is supposedly implied in the Commerce Clause and basically says that states can’t pass laws that impermissibly burden interstate commerce. In this analysis, the police power mentioned above, in the form of the state’s interest in protecting the public from the moral and safety concerns that accompany gambling, would be balanced against the burden on interstate commerce: does the state’s interest outweigh the fact that various state drug or licensing regulations upset the flow of horse racing commerce from state to state?

 

Most people familiar with racing know that the federal government already regulates racing in a way – through the aforementioned Interstate Horse Racing Act – but the feds have effectively regulated racing long before that. We have the Wire Act of 1961, which prohibits betting over a “wire communication.” This was supposed to stop people from phoning bets to their bookies, as well as the larger gambling rings that surrounded such transactions. We have the Racketeer Influenced and Corrupt Organizations Act (aka “RICO,” the best acronym for a statute ever), which the Department of Justice uses to prosecute illegal gambling activities, usually in connection with organized crime (see: Gambino family). And then we have the Travel Act of 1961, which, like the Wire Act, was intended as a kind of catch-all law. Under the Travel Act it’s illegal to travel or use interstate communications with intent to, basically, do anything illegal, including “any business enterprise involving gambling.”

 

These three acts might seem peripheral, and disconnected from the regulation of racing itself, but think about it: if Trainer travels from State A to State B to take advantage of some loophole in drug testing, with the intent to collaborate with Bookie to throw a race and reap the profits, you can bet your aluminum racing plates Trainer can be prosecuted under the Travel Act. And if it involved telephones, you could add Wire Act charges. And if Bookie was working for Crime Family, throw in RICO charges. And, of course, we would add some Conspiracy charges, simply because the federal government loves them. Is all that feasible? Yes, but it’s rare; I believe I’m correct in stating that a trainer was prosecuted under at least the Wire Act in connection with the Gambino family imbroglio in 2006. (Thanks, Superfecta, for the confirmation and a link to an article that references the trainer)

 

The IHRA itself has had an interesting history since its enactment, the most notable being the 2006 Amendments, which officially legalized internet wagering on horse races. The Department of Justice, opposed to interstate gambling in the first place (they believe it is an impermissible violation of criminal statutes such as the Wire Act), did not mince words in criticizing the Amendments:

 

“As we have noted on several occasions, as a general matter the Department believes that Internet gambling should remain illegal. The Department of Justice is concerned about Internet gambling because of the potential for gambling by minors and compulsive gambling, the potential for fraud and money laundering, and the potential for involvement of organized crime. For example, a recent indictment charged members of the Uvari group, which included associates of the Gambino Organized Crime Family. The Uvari Group established wagering accounts for their customers with off-site gambling business and the customers placed bets on horse races and other sporting events over the internet and the telephone.”

 

I am not, categorically, opposed to federal regulation of horse racing to some extent. I do think Whitfield is bold in his assertion that it can be accomplished without creating a new government agency. If not, then who will handle it? The DOJ? Or will it be handed to the USDA, like the Horse Protection Act? It seems like it would be most effective to at least create a new agency to monitor athlete health and safety in all sports, i.e. steroid or EPO use.

 

Regardless, my main concern is that only one thing is certain if regulatory legislation is grafted onto the Interstate Horse Racing Act: the regulation of Thoroughbred welfare will continue to be entangled with the regulation of gambling, and will continue to be monitored predominately under the light of gambling regulation, just as it’s currently done by the state racing commissions. Yes, the two are intrinsically related: mess with a horse = mess with the race = mess with gambling. But I’m not sure that any argument that you can regulate gambling while simultaneously protecting horse welfare in an effective and thorough way is a tenable position.

 

The regulations Whitfield mentions are commendable goals, don’t get me wrong, but it seems suspiciously as if the bottom line is still “protecting the betting public.” To the extent that states, or these proposed regulations, work to ensure the health and safety of the horse, it is either (1) to prevent incidents and practices that scare away the betting public, or (2) to ensure that the horses run their races free from tampering, chemically or otherwise, to guarantee fair race outcomes, instilling confidence in the betting public. My fear is that, once again, it will be left to good-hearted private organizations to pick up the pieces when horse welfare issues fall outside of the scope of legislation. Hopefully my skepticism is unwarranted, and Whitfield will prove me wrong.

 

My idea? Hand over all the (increasingly messy) gambling regulation to DOJ, and vest legislative authority in new agency that regulates the health and drug use of all athletes. A special branch would govern horse racing and be composed of a drug bureau, a health and safety bureau, and a licensing authority. Needless to say, violations of drug, health, or safety regulations would result in licensing or other penalties. The government should really give it teeth – multiple violations should result in criminal charges. And penalties for violations should be given to all responsible parties, including owners.

 

See, I’m not always pessimistic; I, too, can come up with hopeful, likely implausible solutions.

It’s my right; I’m a law student.