1 3 2 [8 6 O p . A tt ’y RACI NG I NTERNE T

– I NTERNE T A CCOUNT B E T T I NG S ERVICE M UST C OMPL Y WI T H M ARYL AN D T ELE PHO NE B E T T I NG L AW TO A CCEPT B E T S ON H ORSE R ACES F R OM M ARYL AN D B E T T ORS

J une 18, 2001

The H onor abl e Mi chael

R

. G or don H ou se of D el ega t es Fol l ow i ng t he r ece i ptof u n s ol i ci t ed s oft w ar e fr om Y oubet

. com, I nc. ( “Y oubet ”) , y ou r eques t ed ouropi ni on conce r ni ng t he l egal i t yof t he on- l i ne w ager i ng s er vi ces offe r ed byt hat company . Y oubetoper at es t he Y oubetN et w or k, an on- l i ne su b sc rip tio n se rv ice th a t e n a b les a su b sc rib e r to p lac e o f f -tra c k b e ts t hr ough t he I nt er neton horse rac es ar ound t he countr yt hr ough t he su b sc rib e r’s p e rso n a l co m p u ter . Y o u a sk e d th a t w e a ss e ss th is s y s t em “i n vi ew of t he s t r i ngentcont r ol s t he l egi s l ature has pl ace d o n o f f -t ra c k b e ttin g in th e S ta te o f M a ryla n d .” W e c o n cl ude t hatfede r al l aw w oul d not bart he oper at i on of th e Y o u b e t N e tw o rk , so lo n g a s th e n e tw o rk is o p e ra ted in compl i ance w i t h al l appl i cabl e st at e l aw s . A M ar y l and cr i m i nal s t atut e bar s t he pl ace m entof w ager s fr om M ar y l and t hr ough t he Y o u b e t N e tw o rk , as th e n e tw o rk is c u rre n tlyd e sig n e d . H o w e v e r, if th a t n e tw o rk w e re to e m p lo ytele p h o n e b e tti n g a c c o u n ts in acc or dance w i t h a r egul at i on of t he M ar y l and R acing Com m i s s i on (“ R a c in g C o m m is s io n ” ), i t w o u ld c o m p ly w ith M a ryla n d la w .
I Backg r ound A . T h e Y ou bet N etw ork Si nce mi d- 1995, Y oubet

. com, I nc. , fo rme r l yk n o wn a s You Bet I nt er nati onal , I nc. , has been e ngaged i n devel opi ng t he Y oubet N etw o rk, “a sec u re, pro p ri etary , clos ed -l o o p , p ri v ate o n li n e n etw o rk w hi ch a s ubs cr i bercan a cce s s vi a hi s or herI nt er nets er vi ce pr ovi der

. ” A nnual R epor t forFi s cal Y earE ndi ng D ece m ber31, 2000 , Fo r m 10

- K, SEC F i l e Numb e r 3 3

- 1 3 7 8 9 LA ( “ 2 0 0 0 Ann u alG en. 132] 133

Currently , the only

serviceoffe red on this networ k involves 1 acc ount wag eringon horse r acing , which beg an in 1998. The compa ny intends ultim ately

to offer a varie ty of on-line sports wag eringand g aming over this networ

k. 2000 Annual Report a t pp. 2, 6. In this opini on, we addre ss only

betting on hor se ra cing

. Ba sed on your experienc e, it appea rs that Youbet ha s adopted the 2 marke ting pr actice s of oth er Interne t companies a nd mailed unsolicited copies of its networ

k softwar e to member s of the public. Youbet is able to providethe simulcasts through an agree ment 3 wi th c e rt a in s ub sidiari e s o f L a db ro keUSA , whic h o pe rate s a ha rn e ss tr a c k, of f- tr a c k b e tti ngfa c ili tie s, and a te le vis ion

ra c ingne tw or

k in Pe nn sylva

nia . 2 00 0 Annua l Rep or

t at pp. 9- 10

. Th e ra c e s ar e simulc a st to t heL a db ro ketr a c k in

we ste rn Pe nn sylva

nia and the n diss e mi nat ed to Youbet subscribers via the ne twork. Yo ub e t pu

rc ha se s h andic a

pp inginf or matio n und e r agreements 4 with other entities. 2000 Annual Repor t at pp. 10, 17. R epor t ”) atp. 7. W hi l e any one w i t h acc es s t o t he Int er netcan vi ew 1 t he Y oubetN et w or k “home page, ” one m us t i ns t al l s peci al s oft w ar e, s ubs cr i be t o t he net w or k, and depos i t funds i nt o a w ager i ng acc ount i n or dert o bet on hor s e ra ces t hr ough t hi s s er vi ce. Y oubetpr ovi des t he s oft w ar e fr ee of

char ge, w hi ch t he s ubs cr i beri ns t al l s on hi s or herper s onal comput eri n or dert o act i vat e the ser vi ce. I d. atp. 6. 2 I n r etur n forpay i ng a m o n thl ys ubs cr i pt i on fee t o Y oubet , t he su b sc rib e r h a s a c c e ss , v ia th a t co m p u ter a n d th e Y o u b e t N e tw o rk , to l i ve s i m ul cas t s of hor s e r ace s at 60 t r acks , as w el l as handi cappi ng 3 i nfo rm at i on con cerni ng races at t ho se t racks and o t hers. Id

. atpp. 4 6- 10. B. A ccou n t

W ag erin g throu gh th e Y

ou bet N etw ork T o b e t o n h o rse ra c e s th r o u g h a tele p h o n e w a g e rin g a c c o u n t, a cus t om er opens an ac countw i t h a s t at e- l i cens ed ac countw ager i ng en ti tyand depos i t s funds i nt o t he ac countfort hatpurpos e. T he cus t om eri ns t r uct s t he ent i t yt o pl ace bet s on par t i cul arr ace s on t he cust om er’ s behalf and to coll ect t he p roceeds of any successful bets

. T he amount i n t he ac counti s adj us t ed as t he cus t om erw i ns orl os es b e ts

. A ccordi ng t o Y ou bet, i t do es not i t sel f accep t bets on t he h orse rac e s that i t si m ulcas t s. R at her, i t charact eri zes i t sel f as a1 3 4 [8 6 O p . A tt ’y

Pari-mutuel wag ering ref ers to a sy stem of wa g eringon horse r ace s 5 in which the be ttors essentially wag er w ith each othe r on the outcomeof the ra ce a nd not ag ainst the entity

conductingthe ra ce. See18 U. S.C. §3002(1 3 ); Annotated Code of Mary land, B usiness Regulation Article, §11-101( l). Youbet itself appare ntly is not licensed nor otherwise a uthorized 6 to a c c e pt b e ts o r p ay

out w inn ing s. L adbroke Racing is a subsidiary of L adbrokeUSA. Seefo otn ote 7 3 , a b o v e . T h e e nti ti e s a c tu a lly li c e n s e d b y Pe nn s ylv an ia

ar e tw o r acing corporation subsidiaries of L adbrokeRacingknown as Washington Trotting Association, Inc. and Mountain L aure l Racing , Inc. SeeYoubet Quar terly Report for thePeriod EndingSeptember 30, 2000, For m 10-Q, at p. 9.Under

Pennsylvania l aw , either theState Horse Ra cing 8 Commis sio n, whichre gulate s th orou ghb re d h or sera c ing , o r t heState Harn es s R ac i n g C o mm i s s i o n , wh i chre gu l at es h arn es s h o rs e r a c i n g, (“Pennsylvania C o mmis s io n s ” ) ma y gra nt p ermission to a “licensed racing corporation” to establish a teleph o n e ac count wag eringsy stem on the condition that all “telepho n e m essage s” to make w ag ers a re r ece ived within th e r a c e tra c k e n c lo s ur e . 4 P. S. § 3 2 5

. 2 1 8 (b )

. In 1 9 8 7 , the Pennsylvania Commissi ons adopted regulations that restricted te lephone wa g e rs to a tol l- fre e lin e that a c c epte d on ly c a lls orig inat in g w ith in Pennsylvania. See 58 Pa. Code §169.3(a) (2) (thoroughbred) ; 58 Pa. Code §187.3(a) (2) (harne ss). Thus, at that time, telephone a ccount wag ering wa s o nly

ava ila bleto i ndivi du a ls who we rephy sic a lly wi thi n (continued...) “fa ci l i t at or ” of pa r i

- m ut uel w ager i ng on hor s e r ace s t hr ough 5 t el ephone w ager i ng acc ount s . 2000 A nnual R epor t at p. 7. I n or der 6 fora Y oubets ubs cr i bert o pl ace bet s t hr ough t he Y oubetN et w or k, Y oubetr equi r es t hatt he s ubs cr i beropen a w ager i ng acc ount w i t h a t el ephone a ccountw ager i ng sy st em know n as t he C al l

- A

- B et Sy stem , w hi ch i s oper at ed bys ubs i di ar i es of Ladbr oke R aci ng ( “Ladbr oke”) t hat ar e l i cens ed and r egul at ed by t he state of Penns y l vani a. See 2000 A nnual R epor t atpp. 7, 9- 10. W hen a 7 s ubs cr i berpl ace s a bet on a hor s e r ace t hr ough t he Y oubetN et w or k, t he s u b s c r i b e r i s s e n d i n g i n s t ru c t i o n s t o t h e Ca l l

- A- Be t S y s t e m. Y oubetand Ladbr oke s pl i t t he “c om m i s s i ons ” ( netof ce r t ai n fee s and expe ns es ) pai d b y Y oubets ubs cr i ber s t hr ough t he C al l

- A

- B et S y s te m . I

d. U nderPenns y l vani a l aw , L adbr ok e m ayopen a tele p h o n e w a g e rin g a c c o u n t f o r an y o n e lo c a ted in a sta te w h e re p a rim u tu e l w a g e rin g is a u th o riz e d

. T h u s, in c o n ju n c tio n w ith 8G en. 132] 135

(...continued) 8 Pe nn sylva

nia . In late 19 95 , th e Pe nn sylva nia Commis sio ns repe a le d th e se restric ti o n s . 2 5 Pa

. B u ll

. 5 9 7 7 , 5 9 7 8

. A s a r e s u lt , L a d

b r o k e c ano ffe r te leph on e a c c ount w a g e ri ngto p e rs on s o uts idePe nn sylva nia , s ub jec t to the re strictions of fede ral law

. SeePart I Iof this opinion. Th e c omp any ’s websit e indic ate s th at it wi ll n ot a c c ept a c c ounts 9 from 11 states, Puerto Rico, and the Virg in I slands. In addition, it warns that the re may be re stric tio ns on a c c ount wa g e ri ng in oth e r st ate s. < www.youbet.com>, F AQ (June 12, 2001). L a d b ro k e , Y o u b e t o f

f e rs te lep h o n e w a g e rin g a c c o u n ts th ro u g h its netw ork t o sub scr i bers l ocated t hroug ho ut the U nit ed S t at es. 9 S ub scr i be rs t o the Y ou bet N et w ork can cho ose from ho rs e r ace s t hatar e s i m ul cas tfr om vari o u s rac e t r acks t hr oughout t he c o u n try . In o rd e r to p lac e a b e t, th e su b sc rib e r f ill s o u t an e lec tro n ic w ager i ng t i cketbym ak i ng s el ect i ons fr om var i ous m enus on t he comput ers cr een. T he w ageri s t hen t r ans m i t t ed el ectr oni cal l y byt he Y oubetN et w or k t o t he C al l

- A

- B et Sy s t em. T he C al l

- A

- B etSy s t em acc ept s t he bet , debi t s t he cus t om er ’ s w ager i ng acc ount , and s ends an el ectr oni c conf

i r m at i on t o t he su b s cr i bert hr ough t he Y oubet N et w or k. A ccor di ng t o Y oubet , t hi s ent i r e pr oces s can t ake l es s t han t hr ee s econds

. 2000 A nnual R epor t at p. 7. A ft er t he ra ce i s r un, t he sy stem m ak es ra p id ad d it ion al ad ju s tm en ts t o the c u stom er’s w a g e ri n g a c c o u n t to re f le c t w in n in g s a n d lo s s e s . Id

. Y oubetas s er ts t hat“t he conve ni ence and i m m edi acy[of gambl i ng] i s gr eat l yenhanc ed byal l ow i ng t hes e act ivi t i es t o t ake p lac e in f

a m ili a r l o c a tio n s s u c h a s th e h o m e o r o f f ice a s o p p o se d to t he h ors e t rack, off

-track bett i ng l ocati on s or ot her si m ulcas t venues . ” 2000 A nnual R epor t atp. 3. I n addi t i on, t he Y oubet N et w or k offe r s as m anyas 3 0 l i ve r ace s perhour , “t hus aff or di ng subscri bers m ore opp ortun i t i es t han are avail able vi a otherm et ho ds. O n li ne t echnol ogyal s o al l ow s t he exe cut i on of w ager s t o happen m u c h f a ste r th a n in p e rso n o r o v e r th e p h o n e .. . an d w in s a re in sta n tly c re d ite d to th e b e tto r’ s a c c o u n t an d a v a ila b le to b e w a g e re d a g a in .” Id

. C . L ega l

Q u esti on s Con cerning the Y ou bet N etw ork T he o p e r a t i o n o f

t h e You b e t Net wor k h a s r a i s e d q u e s t i ons conce r ni ng i t s l egal i t y s i nce i t s i ncept i on. I n O ct ober1999, t he Los A n g eles P o li ce D ep artm en t exe cu ted a s e a rch w arran t atY o u b et’s1 3 6 [8 6 O p . A tt ’y

Th e c ivi l c omp la int

a lle g e d that You

be t w a s e ng a g ingin “un fair 10 competition” and “ false a dvertising .” People v. Y oubet.co m, Inc. , Ca se No . B C22 30 65 (C a l Su

pe r.Ct.) . T hec a

us e of a c tio n w a s p re mis e d, in part, upon Yoube t’s solicitation of California c ustomers notwithstanding a C alifornia law prohibi ting “betting on hor se ra ces outside a n inclosure wher e the c onduct of horserac ing is lice nsed by the B oard.” See California B usiness and Profe ssions Code, §19595. Youbetalso agree d to make pay ments to the State and various 11 charitable org anizations tot aling $1.3 milli on and to re -locate its “wag ertransmitting equipment”to another state . 2000 Annual Report at pp. 12- 13, 19, F- 26. headqua r t er s in L os A ngel es . N o cr i m i nal char ges w er e fi l ed, but th e L o s A n g e les D istric t A tt o r n e y ’s O f f ice late r b ro u g h t a c iv il a c tio n a lleg in g th a t Y o u b e t’s o p e ra ti o n s v io late d C a lifo rn ia gambl i ng l aw s . T hat cas e w as ul t i m at el y s et t l ed w i t h t he entr yof 10 a s t i pul at ed j udgm ent , i ncl udi ng i nj unct i ve r el i ef, w i t hout any admi s s i on of l iabili tybyY oubet

. H ow ever , Y oubetagr eed t o bar s ubs cr i ber s i n C al i for ni a fr om pl aci ng b ets t hr ough i t s net w or k. 11 2000 A n n u al R epor t atpp. 12- 13, 19, F- 26. M or e r ece nt l y , t he Y oubetN et w or k al s o has s t opped ac cept i ng w ager s fr om N ew J er s eyr es i dent s , b ase d on advi ce of t he N ew J er s eyA t t or ney G ener al

. 2000 A nnual R epor t atp. 13. I n a r ece nt pr os pectus , Y oubetacknow l edged t o pr os pect i ve i nvesto rs th at i t oper at es i n an ar ea thatm ays ubj ecti t t o ci vi l and cr i m i nal pr os ecut i on:

Y o u b et. co m b eli ev es t h at it s ac ti v it ies are i n c o mp l i a n c e wi t h a l l a p p l i c a b l e g a mi n g l a ws a n d re g u la tio n s a s c u rr e n tly a p p l ie d

. ... H o w ev er, be ca u se th ere is l it tl e c lear statutory and ca s e l aw aut ho r i t y , t hi s concl us i on i s not fr ee f r om doubt

. . . . T hus , i t i s po ssible that Y oubet

. com m ay be al l eged t o be i n vi ol at i on of an a ppl i cabl e statut e bas ed on an i nt erpr et at i on of t he st atut e t hatdi ffe r s fr om Y o u b e t.co m ’s.... S u c h a lleg a tio n s co u ld re su lt i n ei t herci vi l or cr i m i nal pr ocee di ngs br ought b yg o v e rn m e n ta l o r p ri v a te litig a n ts

.... A m endment 1 t o For m S- 3 R egi s t r at i on St at ement (July 3 1, 2000) a t p p . 4 -5

.G en. 132] 137

The prosc riptions of the Wire Act apply only to a per son eng ag ed 12 in the “business” of betting

. Sagansky v . United States , 358 F.2d 195, 200 ( 1 Ci r . 1 9 6 6 )

. Anin d iv id u a l b e tt o r wh o is n o t i nth e “ b u s in e s s ” of st betting is not subject to prose cution under this sec tion. See U nited States v. Baborian , 528 F. Supp. 324 (D.R.I . 1981). T he l egali t y of t he operat i on of t he Y ou bet N et w ork in M a r y l a n d mu s t b e a s s e s s e d i n l i g h t o f S t a t e a n d f

e d e r a l l a ws g o v e rn in g g a m b lin g a n d in ter sta te b e tti n g o n h o rse ra c e s. W e b e g in wi t h f e d e r a l l a w.

II

F ederal L aw A . T he W i r e A ct Feder al l aw has l ong pr ohi bi t ed i nt er s t at e gam bl i ng, i ncl udi ng th e tr a n s m is s io n o f

b e ts o n h o rs e ra c e s . See 18 U

. S. C

. §1084. T hat s t atut e, w hi ch w as enac t ed i n 1961 and i s comm onl yknow n as “t he W i r e A ct , ” makes i t a cr i m e for a per s on “enga ged i n t he bus i nes s of b e tti n g o r w a g e rin g ” to u se a “ w ire c o m m u n ica tio n f a c ili ty” to t r ans m i t i n i nt er s t at e comm er ce: ( 1) a bet ; ( 2) “i nfor m at i on as s i s t i ng i n t he pl aci ng of bet s or w ager s ”; or( 3) “a w i r e comm uni cat i on t hat ent i t l es t he r eci pi ent t o r ece i ve m oney or cr edi t as a r es ul t of bet s or w ager s. ” 18 U

. S. C

. §1084( a)

. T he W i r e A ctcont ai ns an 12 exempt i on fort he “tr ans m i s s i on of i nf or m at i on as s i s t i ng i n t he p lacing o f b ets o r w ag ers o n a sp o rt ing ev en t .

. . fro m a S tat e w h ere bet t i ng on t hats por t i ng eventi s . . . l egal into a St at e i n w hi ch s uch be t t i n g i s l e g a l

. ” 1 8 U. S. C. § 1 0 8 4 ( b ) ( e mph a s i s a d d e d )

. Th at exempt i on, how ever , does not encompas s t he i nt er s t at e tr ans m i s s i on o f b e t s , a s ma yo c c u r i n a t e l e p h o n e a c c o u n t b e t t i n g s y s t e m. T he pr ohi bi t i on in the W i r e A cti s nece s s ar i l yqual i fi ed by anot herfede r al s t atut e )t he I nt er s t at e H or s er aci ng A ctof 1978. 15 U

. S. C

. §3001 et

s eq. Fr om i t s i ncept i on, t hats t atut e has aut hor i zed in ter sta te o f

f -tra c k w a g e rs in c e rta in c irc u m sta n c e s a n d , a s re c e n tly a m e n d e d , ex p licitlyin c lu d e s inte rsta te a c c o u n t w a g e rin g w ith in its p u rv ie w . O ne of t h e c o mmon ma x i ms o f s t a t u t o r yc o n s t r u c t i o n i s t hat t w o st atut es t hataddr es s t he s ame subj ectar e t o be cons t r ued h a rm o n io u slyto th e e x ten t p o ss ib le. If tw o p ro v isio n s a p p e a r to1 3 8 [8 6 O p . A tt ’y

L eg islation introduce d in Congres s i n 1997, and ag ain in 1999, 13 would have dir ectly addre ssed i nterstate acc ount betting through a ser vice like the Y o ub et Network. Those proposa ls would have a dded a ne w § 1 0 85 to the fede ral c riminal code to c omplement §1084. S eeS.692 (106 Congr ess). This n ew p rovision would have ba nned Interne t th g ambl ing , b ut w ou ld h avea lso c arv e d o ut an e xpre ss e xcepti on fo r b e ts placed o n horse r ace s by means of a

“close d-loop subscriber based se rv ic e ” wh e n s uc h wageri ngis l awf ul i n th e state s in

wh ic h th e be t is ini tiat e d an d i n wh i c h i t i s r e c e i v e d an d wh e n th e r e c i p i e nt o f th e b e t is subject to ce rtain re gulatory standards in the statein which it is located. That propose d leg islation t hus expl icitly addre ssed some of the le g al qu e sti on s r a ise d b y

se rv ic e s li ketheYo ub e t Ne tw or k. Ho we ve r, thebil l faile d to pa ss t

heCon gre ss. c o n f lic t, a la te r- e n a c te d a n d m o re s p e c if ic s t a t u te p re v a ils

. See S in g e r, Sut her l and St at ut or y C ons t r uct i on § 5 1

. 0 2 at pp

. 1 8 6 -94 (6 th e d . 2 0 0 0 ). See a l

so S ter lin g S u

ffo lk R a c e c o u rs e , L td . v. B u rr ilville R aci ng A s s oci at i on , 989 F. 2d 1266, 1272- 73 ( 1s t C i r . 1993) (co n stru ing the “ tr an sm issi o n o f in fo rm ati o n ” e x em p ti o n in the W ir e A ct t o b e c o n sist en t w ith the In terst ate H o rserac ing A ct). B . T he I nters tate H

ors er acing A ct

of 1978 C ongr es s enac t ed t he I nt er s t at e H or s er aci ng A ct( “A ct ”) expr es s l y“t o r egul at e i nt er s t at e comm er ce w i t h r es pect t o w ager i ng on hor s er aci ng, i n or dert o fur t her t he hor s er aci ng and l egal off- t r ack b e tti n g in d u strie s in th e U n ited S tate s.” 1 5 U .S .C . § 3 0 0 1 (b ). W h ile t he A ctdoes not expl i ci t l yaddr es s i nt er s t at e ac countbet t i ng on hor s e r ace s t hr ough t he I nt er net , i t w ould ap peart o appl yt o a 13 s er vi ce s uch as t hatoffe r ed byt he Y oubetN et w or k. A bas i c pr emi s e of the A cti s t hat“t he St at es s houl d have the pr i m ar yr es pons i bi l i t yfordet er m i ni ng w hatfor m s of gambl i ng m ay leg a llytak e p lac e w ith in th e ir b o r d e rs,” a n d th a t th e f e d e ra l ro le is t o pr eventi nt er fer ence byone s t at e w i t h t he ga m b li n g pol i ci es of anot hers t at e. 15 U

. S. C

. §300 1 (a)(1)- ( 2)

. T o t hi s end, t he A ct g en era l l ypr ohi bi t s i nt er s t at e off

- t r ack w ager s . 15 U

. S. C

. §3003. H ow ever , i t per m i t s s uch w ager s w hen author i zed byt he l aw s of t he per t i nents t at es , and w hen cert ai n condi t i ons ar e s at i s fi ed. T he In ter sta te H o rse ra c in g A c t th u s “ g iv e s th e S tate s a lim ited p o w e r to pr eempt t he gen er al fede r al pr ohi bi t i on of i nt er s t at e off

- t r ack w ager i ng. ” K en tuck

y D ivision , H

or s em en’ s B enev ol ent

& Protect i ve A ss’n , Inc

. v. T

u rfw a y P a rk R a cing A ss’n , I

nc . , 20 F. 3d 1406, 1415 (6 C ir

. 1 9 9 4 ). thG en. 132] 139

SeePub.L . 106-553, §629, 114 Stat. 2762, 2762A-256. 14 “ Of f- tr a c k b e tti ngsy ste m” is d e fi ne d a s “ any gro up wh ic h is in 15 the business of accepting wag ers on horse race s at locations other tha n the pla c e wh e rethe ho rs e ra c e is r un , whic h b us ine ss i s c on du c te d b y theState or license d or otherw ise permitted by State law.” 18 U .S.C. §3002(7). F ir s t, b yv ir tu e o f

its d e f in itio n o f “ in te rs ta te o f

f -t ra c k w a g e r,” th e A c t p e rm its a n in te r s ta te o f f -tra c k b e tti n g sy ste m to a c c e p t a w ageronl yi f t he w ageri s “l aw ful i n eac h St at e i nvol ved” – i

. e. , t he s t at e i n w hi ch t he r ace i s r un, t he s t at e fr om w hi ch t he beti s pl ace d, a n d th e sta te in w h ich th e b e t is re c e iv e d

. In p a rticu lar , the sta tu te d e f in e s “ in ter sta te o f

f -tra c k w a g e r” a s: [A ] l egal w ag er pl ace d or acc ept ed i n one St at e wi t h r e s p e c t t o t h e o u t c o me o f a hor s er ace t aki ng pl ace i n anot herSt at e and i ncludes pa ri -m utuelw ag ers , w h e re la w fu l in each Stat e i nvol ved, pl aced or tr ans m i t t ed by an i ndi vi duali n o n e S t at e vi a t el ephone or o th e r e lec tro n ic m e d ia a n d a c c e p tedb y a n offt r ack be t t i ng s

ys t em in t he s am e oranot her S ta te, as w e ll a s th e c o m b in a tio n o f a ny p a rim utuelw ag eri ng po ols

. 15 U

. S. C

. §3002( 3) ( emphasi s added)

. I n des cr i bi ng t he s i gni fi canc e of t he i t al i ci zed l anguage , w hi ch w as added bya r ece ntamendm ent to th e A c t, o n e o f

its c o n g re ss io n a l p ro p o n e n ts n o ted th a t it 14 r equi r es t hatan i nt er s t at e off

- t r ack w ag er m us t “meet t he re q u ir em ents , i f any , est abli shed b yt he legi sl at ure or appropri ate r egul at or ybodyi n t he s t at e w her e t he per s on or i gi nat i ng t he w ager r es i des

. ” 146 C ong. R ec. H 11271 ( O ct ober26, 20 0 0 ) ( r emar ks of R epr es ent at i ve R oger s )

. T hi s su g ges t s t hata w agerpl ace d fr om M ar y l and t h r o u g h a t e l e p h o n e b e t t i n g a c c o u n t i s l a wfu l u n d e r t he A c t o n ly if

it is , a t th e v e ry le a s t, la w f u l in M a ryla n d

. I n addi t i on, t he A ctr equi r es t hatt he off

- t r ack bet t i ng s y s t em 15 obt ai n cer t ai n appr oval s . I n par t i cul ar , i t m us t obt ai n t he cons entof: (1 ) th e ra c in g a ss o c iatio n th a t o p e ra tes th e tra c k w h e re th e ra c e is r un; ( 2) t he r aci ng comm i s s i on t hathas j ur i s di ct i on overt he t r ack w her e t he r ace i s r un; and ( 3) t he r aci ng comm i s s i on for t he j ur i s di ct i on i n w hi ch t he off

- t r ack be t t i ng s y s t em i s locat ed. 15 U

. S. C

. §3004( a)

. For t he r aci ng asso ci at i on’ s cons entt o be eff ect i ve, t he as s oci at i on m us t have a w ri t t en agr eement w i t h t he1 4 0 [8 6 O p . A tt ’y

We note that, while the Act’s definition of “interstate o ff -t rack 16 wa g e r”no w c onte mpl ate s th e po ssibil ity of more tha

n oneof f- tr a c k s tate ( i.e. , the states whe re a

bet orig inates and whereit is accepted), the provisions in the Act conc erningapprovals of the local r acingcommission and of tra cks within a ce rtain pr o x imity of the off

-trac k betting of

fice a pp e ar t o c on c e rn on ly

on e of f- tr a c k s tate . Wh iletheAc t is no t e nti re ly clea r, it appea rs that those provisions relate to the state in which thewag er is acc epted – i.e. , in the caseof the Yoube t Network, Pennsylvania. Th e statut e prov ide s: 17 (1) In addition to [approval by the host track, host racingcommission, and off-tra ck racing c omm iss ion ], any

of f- tr a c k b e tti ngof

fi c e sh a ll obtain the approval of – (A ) all c ur

re ntly op e ratin gtr a c ks wi thi n 60 miles of such off

-trac k betting of

fice ; and (B ) if ther e are no currently operating trac ks within 60 mi les then the closest operating trac k in an adjoiningState. 15 U.S.C. § 30 04 (b )( 1) . T his c on se nt re qu ir e me nt i s f ur the r q ua lif ie d if the o f f

- tra c k b e tt in g o f

f ic e is lo c ate d in a s tate w it h at le a s t 2 5 0 d ay s of “on-tra ck parimutuel horsera cing ” a year . 15 U.S.C. §3004(b)(2). “Of f trac k betting office ” is defined a s “anylocation within an offtrac k State at which off- trac k wag ers are a ccepted.” 15 U.S.C. §3002(8). “Curre ntly

operat i n g trac ks” is define d as “racingassociations conductingparimutuel horse rac ing at the same time of da y (af ternoon ag ainst after

noon; nighttime ag ainst nighttime) a s the rac i n gassociation conductingthe horserac ing which i s the s ubject of the interstate off -trac k (continued...) or gani zat i on t hatr epr es ent s a maj or i t yof t he hor s e ow ner s and t r ai ner s w ho r ace hor s es at th e t r ack w her e t he r ace i s r un t hat gover ns t he t er m s and condi t i ons under w hi ch t he r aci ng as s oci at i on m aygive i t s cons ent

. 15 U

. S. C

. §3004( a) ( 1)

. B eca us e t he aut hor i zat ion i s condi t i oned on t he cons entof t he l ocal r aci ng comm i s s i ons i n t w o s t at es – i.e

. , t he s t at e w her e t he ra ce i s r un and t he s t at e w h er e t he beti s acc ept ed – t he i nt er s t at e off

- t r ack be t t i ng sy st em i s pres um ablycon si st ent w i t h the law a n d p oli cyof those st at es. 16 Fi nal l y , an off- t r ack bet t i ng offi ce m us t obt ai n t he appr oval of cur r ent l yoper at i ng t r ack s w i t hi n a ce r t ai n pr oxi m i t yof t he off i ce. 1 5 U .S .C . § 3 0 0 4 (b ). T h is re q u ire m e n t is a p p a re n tlyd e sig n e d to 17G en. 132] 141

(...continued) 17 wag er.” Ind e e d, thi s p ro vis ion

wa s a dd e d to theAc t in

orde r t o r e sp on d to 18 conce rns that interstate of f-tra ck bettingwould adver sely impact smaller trac ks by draw ing patrons to the off- trac k alternative. SeeDunn, Kentucky Division, Horseme n’s B enevolent &ProtectiveAssociation, Inc. v. Turfw ay Park R acing Association, Inc.: Controll ing the Sta kes of Kentucky Horseracing , 2 2 N

. K y . L

. Re v . 4 0 5 , 4 0 9

- 1 1 (1995) (summarizing leg islative history of Interstate H orser acing Act). The law does not provide, howe ver, f or any reme dy to a “c urre ntly

operating tra ck” in the event its approval is not obt ained. See15 U. S.C. §§ 30 05 , 3 00 6; see als o Sterling Suffolk Rac ing Asso c ia tio n v
. B u rrilville Racing Association, 989 F.2d 1266, 1268- 72 (1 Cir. 1993). st Be tting o n h o rs e rac es in Mary land was not a

crime at common 19 (continued...) pr ot ectt he i nte r es t s of t r acks t hatw oul d be compet i ng fort he i nter estof the bett ors. 18
T hus , a w agerpl ace d overt he Y oubetN et w or k byan in d iv id u a l in M a ry lan d w o u ld h a v e to c o m p ly w ith M a ry lan d law in or dert o come w i t hi n t he author i zat i on fori nt er s t at e off -t rack b e tti n g , n o w e n c o m p a ss in g tele p h o n e a c c o u n t b e tti n g , p ro v id e d in t he I nt er s t at e H o rseraci ng A ct

. O t her w i s e, t he s y s t em w oul d be at o d d s w ith th e c o n g re ss io n a l p o licye x p re ss e d in th e I n te r s ta te H or s er aci ng A ct t hat“t he Feder al gover nm ents houl d pr event in te rf e re n c e b yo n e S ta te w ith th e g a m b lin g p o lic ie s o f a n o th e r....” 1 5 U .S .C . § 3 0 0 1 (2 ).

III M aryl and L aw A . Crim in al Proh ibit i on A ga in st

F orw arding W

ag ers Subj ectt o a mul t i t ude of e xcep ti ons , M ar y l and cr i m i nal l aw pr ohi bi t s var i ous for m s of gambl i ng, as w el l as conductt hat f a c ilita te s g a m b lin g . See A nnot at ed C ode of M ary l and, A r t i cl e 27, § § 2 3 6

- 2 6 4 C

. I n p a r t i c u l a r , i t i s u n l a w f u l t o “ f o r w a r d a n y m o n e y, b e t, w a g e r, th in g o r c o n sid e ra tio n o f v a lu e to b e b e t u p o n th e re su lt of an yrace. . . ” A rt i cl e 27 , §2 40

. A viol at i on of th at st at ute i s a 191 4 2 [8 6 O p . A tt ’y

(...continued) 19 law. In 1890, the G en eral Assembly enac ted the pre dece ssor of §240, which prohibited betting on a horse r ace , except within the grounds of a rac e cour se. Chapter

206, L aws of Ma

ryland 1890. In 1920, the Gene ral Assembly cre ated the Ra cingCommi ssion and authorized it to license the ra c e c ours e s at wh ic h dif

fe re nt fo rm s of le g a l be tti ng on ho rs e ra c e s c ou ld occur . Chapter 273, L aws of Mary land 1920. See generally Greenfeld v. Maryland Jockey

Club , 190 Md. 96, 103-4, 57 A.2d 335 (1948)

. Severa l state attorne y s g eneral haveconclude d that state criminal 20 laws conc erningg ambling prohibit a person from using the Interne t from within a state to participate i n g ambling activities, even if those activities areleg al in the jurisdiction in which the computer providingthe servic e is located. See19 98 Ind . O AG No . 8 , 1 99 8 WL 39 18 37 (e ve n le g a l f

or ms of g ambling must haveapproval of s t at e regulatory ag ency to be conducte d over Interne t); 80 Ops. Cal. Atty . Gen. 98 , 1 9 9 7 WL206243 (per son may

not place a bet by telephone from California even to a place wh e r e th e b e t w o u ld b e le g a l) ; K an . Att y . G e n . O p . N o . 9 6

- 3 1 , 1 9 9 6 WL 156795 (per son who g am

b le s from computer

in Kansas may

be prose cuted in that state); Fla. AGO 95-70, 1995 WL 698073 (ac knowledgi n g that Int ern et g ambling is illeg al in Florida , but rec ommending f ederal resolution g iven natureof Interne t). m isd e m e a n o r, p u n ish a b le b yim p ris o n m e n t f o r a p e rio d o f

six m ont hs t o o n e y earand a f i ne i n t he amount of $200 t o $1000. N ot hi ng i n t he s t atut e exc ept s a betpl ace d over t he I nt er netoran onl i ne s er vi ce. T hus , t he w ager i ng s er vi ces pr ovi ded byt he Y oubet

20 N et w ork app ear t o co m e w i t hin t he p roscr i pti on of § 2 4 0, un l ess t hos e s er vi ces compri s e one of t he for m s of w ager i ng on hor s e r ace s p e rm itte d b y th e M a ryla n d H o rs e R a c in g A c t. See A nnot at ed C ode of M ar y l and, B us i nes s R egul at i on A r t i cl e (“B R ”), §11- 801 et s eq . T he M ary l and H or s e R aci ng A ctaut hor i zes cer t ai n for m s of w ager i ng and, i n eff

ect , cr eat es a number of exc ept i ons t o t he g e n e ra l p ro h ib iti o n o f

g a m b lin g o n h o rse ra c e s. F irst, th a t sta tu te per m i t s par i

- m ut uel bet t i ng ata M ar y l and r ace t r ack l i cens ed by , and oper at ed under t he j ur i s di ct i on of, t he R aci ng C om m i s sion

. Such bet t i ng m ayt ake pl ace on: ( 1) l i ve r ace s hel d att hatt r ack ( B R §11- 801) ; ( 2) r ace s s i m ul cas t fr om anot herM ar y l and t r ack ( B R §11- 8 1 1 ); and ( 3) r ace s s i m ul cas t fr om an out

- of- s t at e t r ack ( B R §11- 8 0 4 ). In a d d iti o n , the M a ry lan d H o r s e R a c in g A c t p e rm its p a rim u tu e l b e tti n g a t an a u th o riz e d sa tellite s im u lca st b e tti n g f a c ili ty ( “SSB ”) on: ( 1) r ace s condu cted li ve ata M ar y l and t r ack a nd t henG en. 132] 143

The Ta sk Forc e Report a lso re v i ewed the experienc e of 21 Conne c tic ut w ith“ Te le tr a c k”(a the ate r in Conn e c tic ut wh e rebe ts c ou ld be plac ed on live rac es run at Ne w York race trac ks) and the e xperie nce of Ne w Yo rk

and Conne c tic ut w ithof

f- tr a c k b e tti ngpa

rl or s, c omm on ly ref err ed to as “ OTB s.” Task F orceReport at pp. 9-13. sim u lca st to th e S S B ; an d (2 ) ra c e s s im u lca st f ro m a n o u t-o f

-sta te t r ack t o a M ar y l and t r ack and t hen r e- s i m ul cas t t o t he SSB

. B R §11- 804; B R §11- 815 et

s eq. Fi nal l y , t he G ener al A s s embl y has al s o aut hor i zed the R aci ng C o m m ission to p erm it“telep h o n e b ett ing ” a t “an ytr ac k w h ere ra c in g is a u th o ri z e d .” B R § 1 1 -8 0 5

. T h e o n ly e x c e p tio n to th e c rim in a l p ro h ib iti o n o f g a m b lin g in M ary l and t hat w ou l d p erm i t an indi vidual t o place a bet on a h orse ra c e w ith o u t g o in g to a lice n se d tra c k o r an a p p ro v e d S S B f a c ili tyis th e p ro v isio n th a t au th o riz e s “ tele p h o n e b e tti n g ” in c e r tain ci r cumst ance s . I n e s s e n c e , th e w ager i ng s er vi ces offe r ed t hr ough t he Y oubet N et w or k ar e s i m pl yan enha nced f or m of t el ephone a ccount bet t i ng. T he l egal i t y of t hos e s er vi ces under M ar y l and l aw depends o n w h e th e r t h e a c c o u n t w a g e rin g is c o n d u c ted in c o m p lian c e w ith M ar y l and’ s t el ephone be t t i ng l aw and t he r egul at i on adopt ed byt he R a c in g C o m m is s io n u n d e r t h a t la w . B . Mar

yland “T

elephone B etting” L aw A lt h ough t he Legi s l atur e pr ovi ded s t atut or yaut hor i t yfor t el ephone a ccountbet t i ng i n M ar y l and dur i ng t he 1980' s, t he reg u lat o ryfra m e w o rk g o v ern ing su ch a sy stem is of a m u ch m o re re c e n t v in ta g e . T he g enesi s of t he M ary l and t el eph o n e b e tti ng st at ute w as a 1 9 8 2 re p o rt b ya S ta te ta s k f o rc e . See M ar y l and Task For ce t o St udy O ff-T rack W ageri ng , Int eri m R epo rt(February24 , 19 82 ) ( “T ask For ce Report ”). A ft ers ur vey i ng s ever al al t er nat i ve t ypes of “w ager i ng i n abs ence [of t he l i ve r ace ] , ” t he T as k For ce r ecomm ended thatenabl i ng l egi s l at i on be e n a c t e d t o a l l o w t e l e phone w ager i ng i n M ar y l and. I d. a t p . 1 5 . T h e p u r p o se o f th is 21 r ecomm endat i on w as “t o expand r aci ng’ s fan ba s e and i ncr eas e t he i n d u s t r y’ s t o t a l h a n d l e w i t h o u t e x c e s s i v e n e w c o s t s t o t h e i n d u s t r y, w hi l e pos s i bl yr es ul t ing i n new r evenue s t o t he St at e. ” I d. a t p . 7

.1 4 4 [8 6 O p . A tt ’y

The statute wa s rec odified without substantive chang e as pa rt of 22 c od e re vis ion

and c ur re ntly re a ds : ( a )

. . . th e Co mmiss io nma y a uth o riz e te leph on e be tti ngat any tr a c k whe rera c ingis authorized. BR §11-805. SeeCha

pte r 4 , § 2, L aws of

Mary land 19 92 , Re vis or ’s No te at p. 492. In 1987, under the authority of this statute, the Racing 23 Commi ssion proposed , but ultim ately did not adopt, regulations that would have pe rmitted inter-track be tting

. See72 Opinions of the Attorney Gene ral 307 (1987) ( co ncludingthat statute provided a uthority for suc h regulations). The Ge neral Assembly ex p re s sly

authorized inter-tra ck betting by

st atut e the followingyear . SeeChapter 7, L aws of Ma ryland 1988, now codified as BR §11-811. The S tudy Commi ssion was orig inally cre ated in 1997 as pa

rt of 24 an uncodified portion of a bill that amende d the Mary land HorseRacing Act; it w as subsequently continued in exist enceunder theauthority of an executive orde r. Chapter 750, §4, L aws of Ma

ryland 1997; E x ec ut ive Orde r 01.01.1998.15, 25:15 Md. Reg . 1175 (June 19, 1998). I n 1984, t he G ener al A s s embl yaut hor i zed the R aci ng C om m i s s i on t o “es t abl i s h a s y s t em of be t t i ng by t el ephone on r ace s atany tr ack l i cens ed [byt he R aci ng C om m i s s i on]

. ” C hapt er753, L a w s o f M a ryla n d 1 9 8 4 , now codi f i ed as B R §11- 805. T hat pr ovi s i on r emai ns vi r t ual l y unchange d. T he s t atut e does not defi ne 22 “t el ephone be tt i ng. ” H ow ever , w hen t he ena bl i ng l egi s l at i on w as befor e t he Legi s l atur e, one of i t s s pons or s t es t i fi ed t hat“t el ephone bet t i ng” had a var i et yof for m s i ncl udi ng “ca l l

- i ns , ” ca bl e t el evi s i on, or a combi nat i on of t hos e m edi a. Sum m ar y of Test i m onyatH ear i ng befor e Senat e Fi nance C om m i t t ee on Februar y29, 1984, L egi s l at i ve F ile f o r S e n a te B ill 1 0 2 0 (1 9 8 4 ). T he R aci n g C om m i s s i on di d noti m m edi at el yexer ci s e t he a u th o ritya c c o rd e d b yth e tele p h o n e b e tti n g sta tu te. D u rin g th e late 23 1990' s , t he pos s i bl e benef i t s t o t he l ocal hor s e r aci ng i ndus t r yfr om a s y s t em of t el ep h one ac countbet t i ng i n M ar y l and w er e di s cus s ed i n t wo r e p o r t s o f t h e Commi s s i o n t o Stu d y W a y s t o I mpr o v e t he Fi nanci al V i abi l i t yof t he H or s e R aci ng I ndus t r y( “t he St udy C om m i s s i on”)

. I n a 1997 re por t , t he St udyC om m i s s i on s ur vey ed 24 var i ous fo rm s of “i nt er act i ve w ager i ng, ” w hi ch i t defi ned as “aG en. 132] 145

Th e r e gu l at i o nw a s i n i t i a l l y a d o p t e d o nane m e rg e n c y

b a s i s, 25 e ff e c tiv e Septe mbe r 1 , 2 00 0, and late r adopt ed on

a pe rm ane nt b a sis , eff ective January

8, 2001. See27:19 Md. Reg. 1720 ( September 22, 2000); 27:26 Md. Reg. 2357 ( Dec ember 29, 2000). Under the regulation, a trac k is a ccorded exclusive right to open 26 acc ounts for individuals who reside within 35 mil es of the tr ack. COMAR 09.10.04.24R. m et hod of pl aci ng bet s on hor s e r ace s fr om a r emot e l ocat i on ( e .g ., a hom e) t h r o u g h t h e u s e o f t e l e c o mmun i c a t i o n t e c h n o l o g y . ” That r epor t concl uded t hati nt er act i ve w ager i ng coul d i ncr eas e w ager i ng p o o l s a n d t h u s “ w o u l d b e n e f i t t r a c k s a n d h o r s e m e n a n d , i n d i r e c t l y, t he restof the ho rs e raci ng i nd ust ryi n the Sta te,” b u t co uld al so e n ta il “ s o c ia l c o s ts ” in m a k in g g a m b lin g so re a d ily a v a ila b le

. R epo rt of C om m is s i on t o St udy W ays t o I m pr ove t he Fi nanci alV

i abi l i t y of H orse R a c ing Ind ust ry ( N ovember 1997) atpp. 41- 45

. A s ubs equent r epor t of t he St udy C om m i s s i on i dent i fi ed t elephone acc ount w ager i ng as “the mostcr i t i cal s our ce of i ncr ement al r e v e n u e ” to th e M a ryla n d h o rs e ra c in g in d u s tr y . Re p o r tof C om m is s ion t o St udy W ays t o I m pr ove the Fi nanci alV

i abi l i t y of H ors e Rac i ngI

nd us t ry (M arc h 1999) atp. 15. I n t hatr epor t , t he St udyC om m i s s i on s ugges t ed t hat act i ve bet t or s i n M ar y l and al r eady had t el ephone be t t i ng acc ount s i n ot her s t at es and s t r ongl yur ged t he R aci ng C om m iss i on t o enac t r egul at i ons i m pl ement i ng t el ephone a c c o u n t w a g e ri n g . Id

. a t p p . 1 5 -1 6

. D ur i ng i t s next s es s i on, t he L egi s l atur e adopt ed t he s ent i m ent of t he 1999 r epor t of t he St udyC om m i s s i on. A n uncodi fi ed s ect i on of t he R aci ng A ctof 2000 dec l ar ed that“i t i s t h e intent of t he G ener al A s s embl yt hatt el ephone a ccountbet t i ng as aut h o r i zed under §11- 805 of t he B us i nes s R egul at i on A r t i cl e, be i m pl ement ed i n t he S t at e i n t he y ear 2000.

. . . ” C hapt er 309, §9, L aw s of M ar y l and 2 0 0 0

. I n an appar ent r es pons e t o t hi s l egi s l at i ve mandat e, t he R aci ng C om m i s s i on adopt ed a r egul at i on t hataut hor i zes t el ephone a ccount b e t t i n g a n d s e t s f

o r t h p r o c e d u r e s f

o r i t s o p e r a t i o n . CO M AR 09. 10. 04. 24. U ndert hatr egul at or ys cheme, onl ya St at e- l i cens ed

25 tra c k m a ya p p lyto th e R a c in g C o m m iss io n f o r pe rm iss io n to o p e ra te a t e l e p h o n e a c c o u n t b e t t i n g s y s t e m i n M a r y l a n d

. CO M AR 26 09. 10. 04. 24A (3) , B ( 1)

. H ow ever , t he t r ack maycont r actw i t h one or m or e ent i t i es t o conduct t el ephone acc ount bet t i ng on i t s behal f. C O M A R 09. 10. 04. 24V

. U ndert he r egul at i on, bet s m aybe ac cept ed1 4 6 [8 6 O p . A tt ’y

To op e n a

n a c c ount, an in div idu a l mu st p ro vid e thetr a c k w ith 27 c e rt a in ba sic ide nti fy

ing inf or matio n an d d epo sit

fu nd s into t hea c c ount. CO MA R 09 .1 0. 04 .2 4D , F . Adepo sit int o a n a c c ount by

me ans of a debit or cr edit card m ay n o tbe used f or bettingpurposes until noon of the followingday . COMAR 09.10.04.24E. Be ts and other f ees a re c harg ed ag ainst the ac count; any

winnings a

re c redited to the a ccount. COMAR 09 .1 0. 04 .2 4K , L (2 ). Th e tr a c k mus t prov idean a c c ount a c tiv ity repo rt to eac h acc ount holder on a quarterly basis. COMAR 09.10.04.24M(1). An acc ount may

not be opene d for a

nyone under

the ag e of 18. COMAR 09 .1 0. 04 .2 4H . A c c ounts may beop e ne d for res ide nts of oth e r s tate s, if permitted by

federal a nd state law. COMAR 09.10.04.24C(2). Of c ourse, a

person located in another statewould also be subjec t 28 to any applicablelaw of that state. t hr ough a t el ephone a ccountbet t i ng s y s t em onl yon r ace s t hatt he t r a c k i s a u t h o r i z e d t o c o n d u c t ( e i t h e r l i v e o r s i mu l c a s t )

. CO M AR 0 9 .1 0 .0 4 .2 4 B (3 ). T he r egul at i on pr ovi des var i ous pr ocedur es and gui del i nes for t he cr eat i on, m ai nt enanc e, and audi t of w ager i ng acc ount s . T he 27 r egul at i on al s o pr es cr i bes t he al l ocat i on among t he t r acks and ot her r aci ng i ndus t r y p art i ci pant s of “ne t bet t i ng r evenue ” der i ved fr om te le p h o n e a c c o u n t b e ttin g . C O M A R 0 9 .1 0 .0 4 .2 4 S -W

. T h e M ar y l and t el ephone be t t i ng s t atut e cl ear l ycont empl at es t hatt el ephone acc ount s w i l l be est abl i s hed, and bet s w i l l be pl ace d, “a t anyt r ack w her e r aci ng i s aut hor i zed [ byt he R aci ng C om m i s s i on] ”– i

. e. , at a M ary l and racet rack. T he o bv i ou s purpose i s t o ens ur e t hat t el ephone acc ount bet t i ng i n M ar y l and t akes pl ace undert he aus pi ces of an ent i t y r egul at ed byt he R aci ng C om m i s s i on. On l y i f a b e t t i n g a c c o u n ti s e s t a b l i s h e d wi t h s u c h a n e n t i t ywo u l d BR §11- 805 and C O M A R 09. 10. 04. 24 aut hor i ze the t ran sm i s s i on of a betbyt el ephone. O therw i s e, A r t i cl e 27, §240 w oul d appl yand 28 p ro h ib it t h e tra n sm iss io n o f a b e t o r f

u n d s to b e b e t. A s w e under s t and i t , the tel ephone w ager i ng acc ount of a Y o u b e t su b sc rib e r lo c a ted in M a ry lan d w o u ld n o t b e su b jec t to r egul at i on byt he R aci ng C om m i s s i on underY oubet ’ s cur r ent oper at i on. A ccor di ngl y , nei t hert he M ar y l and t elep hone bet t i ng sta tu te , n o r th e r e g u la ti o n a d o p te d b y th e R a c in g C o m m is s io n , w o u ld exce pt t he curr enti ncarnat i on of t he Y oubetN et w o rk fro m t he c ri m in a l p ro h ib itio n in A rt ic le 2 7 , § 2 4 0

.G en. 132] 147 IV C oncl usi on B et s m ade o n hor s e r ace s t r ans m i t t ed t hr ough t he Y oubet N et w or k ar e, i n r eal i t y , m ade t hr ough a t el ephone w ager i ng acc ount s y s t em i n Penns y l vani a. I n our opi ni on , A rt i cl e 27, §240 bar s t he pl ace m entof w ager s fr om M ar y l and t hr ough t he Y oubetN et w or k, as i t i s cur r ent l ydes i gned. H ow ever , i f t hatnet w or k w er e t o empl oy tele p h o n e b e tti n g a c c o u n ts in a c cordan ce w i th the r egu l at i o n re c e n tly a d o p t e d b yt h e Ra c i n g Co mm i s s i o n , i t wo u l d c o mp l ywi t h S t a t e l a w. C om pl i anc e w it h St at e l aw i s al s o nece s s ar yt o come w i t hi n t he expr es s s anct i on of i nt er s t at e off -t rack bet t i ng undert he fe der al I nt er s t at e H or s er aci ng A ct

. I n s hor t , par t i ci pat i on i n t he Y oubet N e tw o rk , o r o th e r sim ilar s y ste m s, c o u ld b e p e rm iss ib le, b u t o n lyif th e tele p h o n e a c c o u n t b e tti n g th ro u g h th e n e tw o rk is c o n d u c ted in compl i ance w i t h t he M ar y l and t el ephone be t t i ng s t atut e and re g u la tio n . J. Jo sep h C u rran , Jr. A t t or ney G ener al B r uce C. Spi zl er A s s is t antAt t o r n e

y G ener al R o b e rt N . M c D o n a ld C hi ef C ouns el O pi ni ons and A dvi ce