When off-track betting parlors were legalized in New York City at the start of the 1970s, horse racing stepped into a new era. Potentially, horseplayers could wager on races from anywhere in America. Would this help the sport to make new fans, or would simulcasting simply cannibalize live racing?

Many saw simulcasting as racing’s future. But even those who believed in it understood there had to be rules about how simulcasting races, and the right to bet on them, should be managed. By the end of the decade, a collection of diverse interests within the horse racing industry were able to come together and create what is now known as the Interstate Horseracing Act of 1978 (IHA). It might have been the most important piece of legislation for the sport in the past quarter century.

At the start of the off-track betting era, an immediate source of trouble had surfaced when OTB parlors decided to accept wagers on the Kentucky Derby. Churchill Downs followed with litigation, and the simulcasting era had its first battleground.

Michael Shagan, who wound up representing the New York City OTBs, as well as other states interested in pursuing off-track betting parlors during IHA negotiations, said, “In 1976, we finally were allowed to make a presentation to the Racing Advisory Committee of the American Horse Council. We started working on a compromise. It took two years . . . It was contentious.”

Senator James Eastland, a Democrat from Mississippi and chairman of the Judiciary Committee, filed an IHA-related report that stated, in part, “Unregulated interstate off-track wagering could result in a decline in attendance and wagering at racetracks throughout the country . . . This could force the closing of a number of small racetracks and that could, in turn, seriously harm the racing industry . . .”

Stan Bergstein, then executive director of the Harness Tracks of America, recalled, “The Daily Racing Form asked 100 people in racing to predict what effect simulcasting would have 20 years from now. My column said by the year 2000, there would be a new breed of horses - 13 inches high - running across the screens of America.

“The role I played (in putting together the Interstate Horseracing Act) was to make certain harness racetracks – 30-plus of them - were represented and their interests were protected. It was a small role. But I was very aware of how important this legislation was.”

Tony Chamblin, the executive director of the National Horsemen’s Benevolent and Protective Association in the latter 1970s, commented, “I had been to Australia and England and seen the effect of OTB in both places. In Australia, it was already extremely popular. They had a telephone betting network that was very sophisticated, one that grew their handle significantly. So, I was aware of what simulcasting might mean. If you had asked me then about it, I might not have guessed it would amount to 85% of American handle 25 years later. But maybe I would have guessed that. I understood, a lot of us did, that it was going to be a big deal.”

Bergstein said, “I wasn’t necessarily a seer (of the future), but I’d been in TV racing since 1952. Started out in Chicago. I think people who built racetracks in the early 1980s did not foresee the impact of simulcasting. Birmingham, Remington, Canterbury, Prairie Meadows - these places were all overbuilt. They did not see how simulcasting would effect the big picture.”

“At the time, I was head of the Racing Advisory Committee for the American Horse Council,” said Arnold Kirkpatrick. “My part in this was to help generate a consensus among the industry interests.

“Bills fail in Congress - they did then and they do now - because our industry doesn’t know how to adjudicate our own arguments. You can’t take something to the floor of Congress that you haven’t already hashed out yourself.”

Chamblin started out as the lone HBPA representative during negotiations over the Interstate Horseracing Act. He explained, “I was there for all the sessions in Washington, D.C. - for the so-called sausage-making part of that bill. I represented the HBPA; we were the horsemen’s representative at the Thoroughbred level. There were other parties there with their own interests – tracks and OTB were well-represented. The New York OTBs were very concerned they were going to get shut out of taking things like the Kentucky Derby.”

“Everybody was there,” Kirkpatrick said. “Racetracks, horsemen, breeders, off-track betting. On this piece of legislation, we had to have a united front. Believe me, it was not an easy task.”

Kentuckian Ned S. Bonnie was general counsel for the HBPA at the time. “A lawyer is like a fireman,” Bonnie said. “We get called when things get really hot. I was actually working in my office in Louisville when (National HBPA President) Jack DeFee called, and he said I’d better get to Washington. He said we needed to get the language written to protect the horsemen’s interests. I was an eleventh hour guest at the party ... and I wasn’t welcomed by everyone, either.

“The Las Vegas and casino interests sure didn’t want to see us there. Michael Shagan was representing the New York City OTBs. He’s an articulate, smart guy. He didn’t want to see us there, either.”

Chamblin recalled, “It came down to a point where horsemen might not have a voice. No veto rights. I was arguing on behalf of the horsemen. At one point, we were talking about a bill that would not include any protection for the horsemen. We’d have to make our argument on the floor. But the American Horse Council did not want that.”

“The other parties wanted to add ambiguous language, something you could take into a courtroom and argue,” Bonnie explained. “I wanted to keep it as simple and plain as possible.”

“By then, I had already negotiated HBPA contracts in Kentucky, Pennsylvania and Illinois. I was aware of the future of simulcast wagering. Lou Wolfson (the owner of Harbor View Farm), he was a real visionary. He and I and others like us agreed that simulcasting would be the future of horse racing. We said, ‘This is gonna be big.’ It was critical that the horsemen be included.”

Bonnie credited Churchill Downs President Lynn Stone with bringing the horsemen in. According to Bonnie, “He was a major factor in resolving a contentious situation. He wanted to get a deal done. He knew how important this was for everyone.”

Kirkpatrick said, “I am one hundred percent positive that if it had not been for the consensus building of the American Horse Council, we would have never been able to pull it off. It’s the only time I can think of that such a consensus was built. That probably reflects the importance of the bill. Everyone seemed aware of it.”

Chamblin said, “The compromise we came up with said simulcasting could not take place at any racetrack where there was not an agreement with local horsemen.”

The Interstate Horseracing Act also imposed a market area consent provision, a stipulation that required off-track betting facilities to have permission of all racetracks in a 60-mile radius. As it had for horsemen, the IHA had provided racetracks with a source of protection.

“Their lawyers and lobbyists consistently outnumbered ours,” DeFee wrote. “I wish I could say the good news is that we will have learned a valuable lesson from this experience. Only time will answer that.”

“Nobody wanted us there,” Bonnie remembered. “But I’m really glad we were.”

Implications

One measure of the solid construction of the IHA is how well it has weathered legal opposition. “The Interstate Horseracing Act was challenged in court in 1992 by Turfway Park,” explained Doug McSwain, the National HBPA’s current general counsel. He continued, “A lower court agreed with Turfway and stated the law was unconstitutional. We appealed, and that decision was overturned by the Sixth Circuit Court of Appeals.

“That court ruled that horsemen’s concerns are different from those of the track, and the horsemen therefore must have veto power . . .

“The only actual amendment to the law came with the arrival of new technology. To accommodate telephone wagering, a minor amendment was eventually added.”

It is perhaps impossible to tabulate all that the Interstate Horseracing Act of 1978 has meant to horsemen. Financially, it has meant “millions upon millions,” according to Bonnie.

“Ten of millions,” agreed Chamblin. “And counting.”

“I don’t think there has ever been a bill on the federal level that has helped horsemen like this one has. Had it not been for simulcasting, I am sure Thoroughbred racing would be a lot different than it is right now. Back then, horsemen were afraid of OTB - they thought that it would eventually mean that just eight to ten tracks would be in existence. Everyone else would be dead. I think if it wasn’t for simulcasting and casino gaming, we might have just eight to ten tracks going right now.

“Giving (horsemen) veto power was the best protection possible. I think the bill has had a very positive effect for horsemen and the sport in general.”

Bergstein reflected, “Overall, I think the Interstate Horseracing Act has made a major contribution to racing over the years. It has served the racetracks well, and it has served the sport well. The contributions it has made have been positive. I’m glad to have played the small role I did.”

“It’s amazing it has worked as well as it has,” said Shagan, who has been a consultant on legalized pari-mutuel wagering for the past dozen years. “It has provided the framework for the simulcasting industry.”

“Thus far,” McSwain asserted, “the Interstate Horseracing Act has stood the test of time.”

“I think the bill has been a good one for racing,” Kirkpatrick commented. “In one way, it allowed us to move with the future . . . But it is also astounding to me how little we have learned from that experience. If we just get together on some things, there’s no telling how much we can really get done.”

Kirkpatrick continued, “I remember this fellow from the Jockey Club telling me back then that simulcasting was a Pandora’s Box. But the Pandora’s Box is the Interstate Horseracing Act. I think we really got this one right the first time. The legislation allows the participants a say in when and how their product is distributed and how much they are paid for the product . . . God help us if anyone wants to start fooling with it.”

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