Arkansas Considers Online Betting

A bill recently passed out of committee in Arkansas could allow the southern state become the next to allow Internet and phone betting on horse and greyhound races.

Senate Bill 602 narrowly made it out of the Revenue and Taxation Committee on Wednesday with a 4-3 vote. Following the vote the bill now moves before the full Senate for debate and voting.

If the bill were passed the state would cut its privilege tax on pari-mutuel wagering at Oaklawn Park in Hot Springs and allow wagers to be placed by telephone or the Internet at Oaklawn and Southland Greyhound Park in West Memphis.

The bill was authored by Senator Terry Smith and is co-sponsored by three state representatives and another senator.

Oaklawn General Manager Eric Jackson feels the bill has to be passed in order for his facility to compete with other gambling operations in other states.

The committee vote was close, with Sens. Jim Hill, D-Nashville; Bob Johnson, D-Morrilton; Kevin Smith, D-Stuttgart; and Bill Gwatney, D-Jacksonville, voting for it. Sens. Tim Wooldridge, D-Paragould; Paul Miller, D-Melbourne; and Sharon Trusty, R-Russellville, voted against it. The bill would cut the tax from 2.5 percent to 1 percent of the money wagered, starting next year, on live races at Oaklawn. It would cut the tax from 2 percent to 1 percent on wagers at Oaklawn on races run at other tracks and races run earlier and replayed on a video screen. SB602 would allow Southland and Oaklawn to let patrons deposit money in an account with the tracks and use it to place bets in person, by telephone or other electronic means on races at their tracks and tracks in other states. The prior approval of the Arkansas State Racing Commission would be required for the tracks to conduct such wagering.

Ten other states, including Louisiana, have approved this form of wagering. There's nothing to stop Arkansas from placing bets on races in other states by this means, Jackson told the committee, so revenue that could go to Arkansas tracks is leaving the state.

Jackson was unavailable for comment, but was quoted in the Arkansas Democrat-Gazette on Thursday giving a plea to the committee to consider the state of the industry.

"Racing in Arkansas is in severe distress," Jackson said.

Under the bill, all of the money kept by Oaklawn would be placed in an account that could be used only for purses and construction, debt service on money borrowed for construction or for promotions to encourage patronage and tourism. At least half of the money would have to be used for purses.

The increased purses would raise the interest of tourists, according to Jackson. Oaklawn is looking for a cut in the rate for the first time in 11 years. In 1989 the rate was cut from 6 percent to 2.5 percent, while tracks in surrounding areas are paying a lot less. The rate for tracks in Louisiana and Texas is only 1 percent, Jackson told the committee.

In the October general election Arkansas residents voted down a bill that would have brought riverboat gambling to the state. The state is struggling with trying to compete with its neighbors, such as Louisiana and Mississippi where gambling is legal. Jackson said that in the nine years since those states had begun gambling Oaklawn has lost 500,000 customers. In an effort to keep their purses respectable, Jackson said the track has been forced to trim its season down from 68 race days in 1992 to the 52 this season.

Because of the decline in races, Jackson said the state might actually see an increase in revenue from the cut in taxes. The state has seen a dip in tax money brought in from the track, and if the cut can increase their business, the amount brought in from the track would also go up.

State Revenue Commissioner Tim Leathers said the state has anecdotal evidence that this might be the case, but no verifiable data.

Similarily to the battle the bill faced in committee, it is expected to receive opposition from the entire legislature and from state residents. The defeat in October was the third in nearly six years for legalizing gaming in Arkansas and the move to bring betting to the Internet is likely to face the same amount of scrutiny.

Larry Page of Little Rock, executive director of the Arkansas Faith and Ethics Council, told the Gazette his group is opposed to the move.

"If you pass this bill, pari-mutuel wagering will be lawful in every home in Arkansas with a computer, modem or Internet TV," Page said.

Leo Rainey of Batesville, vice president of Families First Foundation, feels the government shouldn’t help out the tracks.

"Why should we bail out one particular industry, just because horse racing and dog racing are in trouble?" Rainey told the Gazette. "What you’ll be doing is creating a big gambling mecca. This could be a real detriment to the families of Arkansas because a young person with a credit card could bet over the Internet."

No date has been scheduled to bring the bill for debate and vote before the full Arkansas Senate.

Click here to read the proposed Arkansas legislation.