132 [86 Op. Att’y

RACING

INTERNET – INTERNET ACCOUNT BETTING SERVICE MUST

COMPLY WITH MARYLAND TELEPHONE BETTING LAW TO

ACCEPT BETS ON HORSE RACES FROM MARYLAND BETTORS

June 18, 2001

The Honorable Michael R. Gordon

House of Delegates 

Following the receipt of unsolicited software from

Youbet.com, Inc. (“Youbet”), you requested our opinion concerning

the legality of the on-line wagering services offered by that

company. Youbet operates the Youbet Network, an on-line

subscription service that enables a subscriber to place off-track bets

through the Internet on horse races around the country through the

subscriber’s personal computer. You asked that we assess this

system “in view of the stringent controls the legislature has placed

on off-track betting in the State of Maryland.”

We conclude that federal law would not bar the operation of

the Youbet Network, so long as the network is operated in

compliance with all applicable state laws. A Maryland criminal

statute bars the placement of wagers from Maryland through the

Youbet Network, as the network is currently designed. However, if

that network were to employ telephone betting accounts in

accordance with a regulation of the Maryland Racing Commission

(“Racing Commission”), it would comply with Maryland law. 

I

Background

A. The Youbet Network

Since mid-1995, Youbet.com, Inc., formerly known as You Bet

International, Inc., has been engaged in developing the Youbet

Network, “a secure, proprietary, closed-loop, private online network

which a subscriber can access via his or her Internet service

provider.” Annual Report for Fiscal Year Ending December 31,

2000, Form 10-K, SEC File Number 33-13789LA (“2000 Annual
Gen. 132] 133

 Currently, the only service offered on this network involves 1

account wagering on horse racing, which began in 1998. The company

intends ultimately to offer a variety of on-line sports wagering and gaming

over this network. 2000 Annual Report at pp. 2, 6. In this opinion, we

address only betting on horse racing. 

Based on your experience, it appears that Youbet has adopted the 2

marketing practices of other Internet companies and mailed unsolicited

copies of its network software to members of the public.

 Youbet is able to provide the simulcasts through an agreement 3

with certain subsidiaries of Ladbroke USA, which operates a harness

track, off-track betting facilities, and a television racing network in

Pennsylvania. 2000 Annual Report at pp. 9-10. The races are simulcast

to the Ladbroke track in western Pennsylvania and then disseminated to

Youbet subscribers via the network.

 Youbet purchases handicapping information under agreements 4

with other entities. 2000 Annual Report at pp. 10, 17. 

Report”) at p. 7. While anyone with access to the Internet can view 1

the Youbet Network “home page,” one must install special software,

subscribe to the network, and deposit funds into a wagering account

in order to bet on horse races through this service. Youbet provides

the software free of charge, which the subscriber installs on his or

her personal computer in order to activate the service. Id. at p. 6. 2

In return for paying a monthly subscription fee to Youbet, the

subscriber has access, via that computer and the Youbet Network, to

live simulcasts of horse races at 60 tracks, as well as handicapping 3

information concerning races at those tracks and others. Id. at pp. 4

6-10.

B. Account Wagering through the Youbet Network

To bet on horse races through a telephone wagering account,

a customer opens an account with a state-licensed account wagering

entity and deposits funds into the account for that purpose. The

customer instructs the entity to place bets on particular races on the

customer’s behalf and to collect the proceeds of any successful bets.

The amount in the account is adjusted as the customer wins or loses

bets. 

According to Youbet, it does not itself accept bets on the horse

races that it simulcasts. Rather, it characterizes itself as a
134 [86 Op. Att’y

 Pari-mutuel wagering refers to a system of wagering on horse races

5

in which the bettors essentially wager with each other on the outcome of

the race and not against the entity conducting the race. See 18 U.S.C.

§3002(13); Annotated Code of Maryland, Business Regulation Article,

§11-101(l).

 Youbet itself apparently is not licensed nor otherwise authorized 6

to accept bets or pay out winnings.

Ladbroke Racing is a subsidiary of Ladbroke USA. See footnote 7

3, above. The entities actually licensed by Pennsylvania are two racing

corporation subsidiaries of Ladbroke Racing known as Washington

Trotting Association, Inc. and Mountain Laurel Racing, Inc. See Youbet

Quarterly Report for the Period Ending September 30, 2000, Form 10-Q,

at p. 9. 

 Under Pennsylvania law, either the State Horse Racing 8

Commission, which regulates thoroughbred horse racing, or the State

Harness Racing Commission, which regulates harness horse racing,

(“Pennsylvania Commissions”) may grant permission to a “licensed racing

corporation” to establish a telephone account wagering system on the

condition that all “telephone messages” to make wagers are received

within the race track enclosure. 4 P.S. §325.218(b). In 1987, the

Pennsylvania Commissions adopted regulations that restricted telephone

wagers to a toll-free line that accepted only calls originating within

Pennsylvania. See 58 Pa. Code §169.3(a)(2) (thoroughbred); 58 Pa. Code

§187.3(a)(2) (harness). Thus, at that time, telephone account wagering

was only available to individuals who were physically within

(continued...)

“facilitator” of pari-mutuel wagering on horse races through 5

telephone wagering accounts. 2000 Annual Report at p. 7. In order 6

for a Youbet subscriber to place bets through the Youbet Network,

Youbet requires that the subscriber open a wagering account with a

telephone account wagering system known as the Call-A-Bet

System, which is operated by subsidiaries of Ladbroke Racing

(“Ladbroke”) that are licensed and regulated by the state of

Pennsylvania. See 2000 Annual Report at pp. 7, 9-10. When a 7

subscriber places a bet on a horse race through the Youbet Network,

the subscriber is sending instructions to the Call-A-Bet System.

Youbet and Ladbroke split the “commissions” (net of certain fees

and expenses) paid by Youbet subscribers through the Call-A-Bet

System. Id. Under Pennsylvania law, Ladbroke may open a

telephone wagering account for anyone located in a state where parimutuel wagering is authorized. Thus, in conjunction with 8
Gen. 132] 135

 (...continued) 8

Pennsylvania. In late 1995, the Pennsylvania Commissions repealed these

restrictions. 25 Pa. Bull. 5977, 5978. As a result, Ladbroke can offer

telephone account wagering to persons outside Pennsylvania, subject to

the restrictions of federal law. See Part II of this opinion. 

 The company’s website indicates that it will not accept accounts 9

from 11 states, Puerto Rico, and the Virgin Islands. In addition, it warns

that there may be restrictions on account wagering in other states.

<www.youbet.com>, FAQ (June 12, 2001). 

Ladbroke, Youbet offers telephone wagering accounts through its

network to subscribers located throughout the United States. 

9

Subscribers to the Youbet Network can choose from horse

races that are simulcast from various race tracks throughout the

country. In order to place a bet, the subscriber fills out an electronic

wagering ticket by making selections from various menus on the

computer screen. The wager is then transmitted electronically by the

Youbet Network to the Call-A-Bet System. The Call-A-Bet System

accepts the bet, debits the customer’s wagering account, and sends

an electronic confirmation to the subscriber through the Youbet

Network. According to Youbet, this entire process can take less than

three seconds. 2000 Annual Report at p. 7. After the race is run, the

system makes rapid additional adjustments to the customer’s

wagering account to reflect winnings and losses. Id. 

Youbet asserts that “the convenience and immediacy [of

gambling] is greatly enhanced by allowing these activities to take

place in familiar locations such as the home or office as opposed to

the horse track, off-track betting locations or other simulcast

venues.” 2000 Annual Report at p. 3. In addition, the Youbet

Network offers as many as 30 live races per hour, “thus affording

subscribers more opportunities than are available via other methods.

Online technology also allows the execution of wagers to happen

much faster than in person or over the phone... and wins are instantly

credited to the bettor’s account and available to be wagered again.”

Id. 

C. Legal Questions Concerning the Youbet Network

The operation of the Youbet Network has raised questions

concerning its legality since its inception. In October 1999, the Los

Angeles Police Department executed a search warrant at Youbet’s
136 [86 Op. Att’y

 The civil complaint alleged that Youbet was engaging in “unfair 10

competition” and “false advertising.” People v. Youbet.com, Inc., Case

No. BC223065 (Cal Super.Ct.). The cause of action was premised, in

part, upon Youbet’s solicitation of California customers notwithstanding

a California law prohibiting “betting on horse races outside an inclosure

where the conduct of horse racing is licensed by the Board.” See

California Business and Professions Code, §19595. 

 Youbet also agreed to make payments to the State and various 11

charitable organizations totaling $1.3 million and to re-locate its “wagertransmitting equipment” to another state. 2000 Annual Report at pp. 12-

13, 19, F-26.

headquarters in Los Angeles. No criminal charges were filed, but

the Los Angeles District Attorney’s Office later brought a civil

action alleging that Youbet’s operations violated California

gambling laws. That case was ultimately settled with the entry of 10

a stipulated judgment, including injunctive relief, without any

admission of liability by Youbet. However, Youbet agreed to bar

subscribers in California from placing bets through its network.11

2000 Annual Report at pp. 12-13, 19, F-26. More recently, the

Youbet Network also has stopped accepting wagers from New

Jersey residents, based on advice of the New Jersey Attorney

General. 2000 Annual Report at p. 13.

In a recent prospectus, Youbet acknowledged to prospective

investors that it operates in an area that may subject it to civil and

criminal prosecution:

Youbet.com believes that its activities are

in compliance with all applicable gaming laws

and regulations as currently applied. ...

However, because there is little clear statutory

and case law authority, this conclusion is not

free from doubt .... Thus, it is possible that

Youbet.com may be alleged to be in violation

of an applicable statute based on an

interpretation of the statute that differs from

Youbet.com’s....Such allegations could result

in either civil or criminal proceedings brought

by governmental or private litigants....

Amendment 1 to Form S-3 Registration Statement (July 31, 2000)

at pp. 4-5. 
Gen. 132] 137

 The proscriptions of the Wire Act apply only to a person engaged 12

in the “business” of betting. Sagansky v. United States, 358 F.2d 195, 200

(1 Cir. 1966). An individual bettor who is not in the “business” of st

betting is not subject to prosecution under this section. See United States

v. Baborian, 528 F. Supp. 324 (D.R.I. 1981).

The legality of the operation of the Youbet Network in

Maryland must be assessed in light of State and federal laws

governing gambling and interstate betting on horse races. We begin

with federal law.

 II

Federal Law

A. The Wire Act

Federal law has long prohibited interstate gambling, including

the transmission of bets on horse races. See 18 U.S.C. §1084. That

statute, which was enacted in 1961 and is commonly known as “the

Wire Act,” makes it a crime for a person “engaged in the business of

betting or wagering” to use a “wire communication facility” to

transmit in interstate commerce: (1) a bet; (2) “information assisting

in the placing of bets or wagers”; or (3) “a wire communication that

entitles the recipient to receive money or credit as a result of bets or

wagers.” 18 U.S.C. §1084(a). The Wire Act contains an 12

exemption for the “transmission of information assisting in the

placing of bets or wagers on a sporting event ... from a State where

betting on that sporting event is ... legal into a State in which such

betting is legal.” 18 U.S.C. §1084(b) (emphasis added). That

exemption, however, does not encompass the interstate transmission

of bets, as may occur in a telephone account betting system.

The prohibition in the Wire Act is necessarily qualified by

another federal statute ) the Interstate Horseracing Act of 1978. 15

U.S.C. §3001 et seq. From its inception, that statute has authorized

interstate off-track wagers in certain circumstances and, as recently

amended, explicitly includes interstate account wagering within its

purview. 

One of the common maxims of statutory construction is that

two statutes that address the same subject are to be construed

harmoniously to the extent possible. If two provisions appear to
138 [86 Op. Att’y

 Legislation introduced in Congress in 1997, and again in 1999, 13

would have directly addressed interstate account betting through a service

like the Youbet Network. Those proposals would have added a new

§1085 to the federal criminal code to complement §1084. See S.692

(106 Congress). This new provision would have banned Internet

th

gambling, but would have also carved out an express exception for bets

placed on horse races by means of a “closed-loop subscriber based

service” when such wagering is lawful in the states in which the bet is

initiated and in which it is received and when the recipient of the bet is

subject to certain regulatory standards in the state in which it is located.

That proposed legislation thus explicitly addressed some of the legal

questions raised by services like the Youbet Network. However, the bill

failed to pass the Congress.

conflict, a later-enacted and more specific statute prevails. See

Singer, Sutherland Statutory Construction §51.02 at pp. 186-94 (6th

ed. 2000). See also Sterling Suffolk Racecourse, Ltd. v. Burrilville

Racing Association, 989 F.2d 1266, 1272-73 (1st Cir. 1993)

(construing the “transmission of information” exemption in the Wire

Act to be consistent with the Interstate Horseracing Act).

B. The Interstate Horseracing Act of 1978

Congress enacted the Interstate Horseracing Act (“Act”)

expressly “to regulate interstate commerce with respect to wagering

on horseracing, in order to further the horseracing and legal off-track

betting industries in the United States.” 15 U.S.C. §3001(b). While

the Act does not explicitly address interstate account betting on

horse races through the Internet, it would appear to apply to a 13

service such as that offered by the Youbet Network.

A basic premise of the Act is that “the States should have the

primary responsibility for determining what forms of gambling may

legally take place within their borders,” and that the federal role is

to prevent interference by one state with the gambling policies of

another state. 15 U.S.C. §3001(a)(1)-(2). To this end, the Act

generally prohibits interstate off-track wagers. 15 U.S.C. §3003.

However, it permits such wagers when authorized by the laws of the

pertinent states, and when certain conditions are satisfied. The

Interstate Horseracing Act thus “gives the States a limited power to

preempt the general federal prohibition of interstate off-track

wagering.” Kentucky Division, Horsemen’s Benevolent & Protective

Ass’n, Inc. v. Turfway Park Racing Ass’n, Inc., 20 F.3d 1406, 1415

(6 Cir. 1994). th
Gen. 132] 139

See Pub.L. 106-553, §629, 114 Stat. 2762, 2762A-256. 14

 “Off-track betting system” is defined as “any group which is in 15

the business of accepting wagers on horse races at locations other than the

place where the horse race is run, which business is conducted by the State

or licensed or otherwise permitted by State law.” 18 U.S.C. §3002(7).

First, by virtue of its definition of “interstate off-track wager,”

the Act permits an interstate off-track betting system to accept a

wager only if the wager is “lawful in each State involved” – i.e., the

state in which the race is run, the state from which the bet is placed,

and the state in which the bet is received. In particular, the statute

defines “interstate off-track wager” as: 

[A] legal wager placed or accepted in one

State with respect to the outcome of a

horserace taking place in another State and

includes pari-mutuel wagers, where lawful in

each State involved, placed or transmitted by

an individual in one State via telephone or

other electronic media and accepted by an offtrack betting system in the same or another

State, as well as the combination of any parimutuel wagering pools. 

15 U.S.C. §3002(3) (emphasis added). In describing the significance

of the italicized language, which was added by a recent amendment

to the Act, one of its congressional proponents noted that it 14

requires that an interstate off-track wager must “meet the

requirements, if any, established by the legislature or appropriate

regulatory body in the state where the person originating the wager

resides.” 146 Cong. Rec. H11271 (October 26, 2000) (remarks of

Representative Rogers). This suggests that a wager placed from

Maryland through a telephone betting account is lawful under the

Act only if it is, at the very least, lawful in Maryland. 

In addition, the Act requires that the off-track betting system15

obtain certain approvals. In particular, it must obtain the consent of:

(1) the racing association that operates the track where the race is

run; (2) the racing commission that has jurisdiction over the track

where the race is run; and (3) the racing commission for the

jurisdiction in which the off-track betting system is located. 15

U.S.C. §3004(a). For the racing association’s consent to be

effective, the association must have a written agreement with the
140 [86 Op. Att’y

We note that, while the Act’s definition of “interstate off-track 16

wager” now contemplates the possibility of more than one off-track state

(i.e., the states where a bet originates and where it is accepted), the

provisions in the Act concerning approvals ofthe local racing commission

and of tracks within a certain proximity of the off-track betting office

appear to concern only one off-track state. While the Act is not entirely

clear, it appears that those provisions relate to the state in which the wager

is accepted – i.e., in the case of the Youbet Network, Pennsylvania.

 The statute provides: 17

(1) In addition to [approval by the host track,

host racing commission, and off-track racing

commission], any off-track betting office shall

obtain the approval of – 

(A) all currently operating tracks within

60 miles of such off-track betting office; and

(B) if there are no currently operating

tracks within 60 miles then the closest operating

track in an adjoining State.

15 U.S.C. §3004(b)(1). This consent requirement is further qualified if

the off-track betting office is located in a state with at least 250 days of

“on-track parimutuel horseracing” a year. 15 U.S.C. §3004(b)(2). 

“Off track betting office” is defined as “any location within an offtrack State at which off-track wagers are accepted.” 15 U.S.C. §3002(8).

“Currently operating tracks” is defined as “racing associations

conducting parimutuel horseracing at the same time of day (afternoon

against afternoon; nighttime against nighttime) as the racing association

conducting the horseracing which is the subject of the interstate off-track

(continued...)

organization that represents a majority of the horse owners and

trainers who race horses at the track where the race is run that

governs the terms and conditions under which the racing association

may give its consent. 15 U.S.C. §3004(a)(1). Because the

authorization is conditioned on the consent of the local racing

commissions in two states – i.e., the state where the race is run and

the state where the bet is accepted – the interstate off-track betting

system is presumably consistent with the law and policy of those

states.16

Finally, an off-track betting office must obtain the approval of

currently operating tracks within a certain proximity of the office.

15 U.S.C. §3004(b). This requirement is apparently designed to 17
Gen. 132] 141

 (...continued) 17

wager.”

 Indeed, this provision was added to the Act in order to respond to 18

concerns that interstate off-track betting would adversely impact smaller

tracks bydrawing patrons to the off-track alternative. See Dunn, Kentucky

Division, Horsemen’s Benevolent & Protective Association, Inc. v.

Turfway Park Racing Association, Inc.: Controlling the Stakes of

Kentucky Horseracing, 22 N. Ky. L. Rev. 405, 409-11 (1995)

(summarizing legislative history of Interstate Horseracing Act). The law

does not provide, however, for any remedy to a “currently operating track”

in the event its approval is not obtained. See 15 U.S.C. §§3005, 3006; see

also Sterling Suffolk Racing Association v. Burrilville Racing Association,

989 F.2d 1266, 1268-72 (1 Cir. 1993). st

 Betting on horse races in Maryland was not a crime at common 19

(continued...)

protect the interests of tracks that would be competing for the

interest of the bettors.18

Thus, a wager placed over the Youbet Network by an

individual in Maryland would have to comply with Maryland law in

order to come within the authorization for interstate off-track

betting, now encompassing telephone account betting, provided in

the Interstate Horseracing Act. Otherwise, the system would be at

odds with the congressional policy expressed in the Interstate

Horseracing Act that “the Federal government should prevent

interference by one State with the gambling policies of another....”

15 U.S.C. §3001(2). 

III

Maryland Law

A. Criminal Prohibition Against Forwarding Wagers

Subject to a multitude of exceptions, Maryland criminal law

prohibits various forms of gambling, as well as conduct that

facilitates gambling. See Annotated Code of Maryland, Article 27,

§§236-264C. In particular, it is unlawful to “forward any money,

bet, wager, thing or consideration of value to be bet upon the result

of any race...” Article 27, §240. A violation of that statute is a 19
142 [86 Op. Att’y

 (...continued) 19

law. In 1890, the General Assembly enacted the predecessor of §240,

which prohibited betting on a horse race, except within the grounds of a

race course. Chapter 206, Laws of Maryland 1890. In 1920, the General

Assembly created the Racing Commission and authorized it to license the

race courses at which different forms of legal betting on horse races could

occur. Chapter 273, Laws of Maryland 1920. See generally Greenfeld v.

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

Several state attorneys general have concluded that state criminal 20

laws concerning gambling prohibit a person from using the Internet from

within a state to participate in gambling activities, even if those activities

are legal in the jurisdiction in which the computer providing the service

is located. See 1998 Ind. OAG No. 8, 1998 WL 391837 (even legal forms

of gambling must have approval of state regulatory agency to be

conducted over Internet); 80 Ops. Cal. Atty. Gen. 98, 1997 WL 206243

(person may not place a bet by telephone from California even to a place

where the bet would be legal); Kan. Atty. Gen. Op. No. 96-31, 1996 WL

156795 (person who gambles from computer in Kansas may be prosecuted

in that state); Fla. AGO 95-70, 1995 WL 698073 (acknowledging that

Internet gambling is illegal in Florida, but recommending federal

resolution given nature of Internet).

misdemeanor, punishable by imprisonment for a period of six

months to one year and a fine in the amount of $200 to $1000.

Nothing in the statute excepts a bet placed over the Internet or an online service. Thus, the wagering services provided by the Youbet 20

Network appear to come within the proscription of §240, unless

those services comprise one of the forms of wagering on horse races

permitted by the Maryland Horse Racing Act. See Annotated Code

of Maryland, Business Regulation Article (“BR”), §11-801 et seq.

The Maryland Horse Racing Act authorizes certain forms of

wagering and, in effect, creates a number of exceptions to the

general prohibition of gambling on horse races. First, that statute

permits pari-mutuel betting at a Maryland racetrack licensed by, and

operated under the jurisdiction of, the Racing Commission. Such

betting may take place on: (1) live races held at that track (BR §11-

801); (2) races simulcast from another Maryland track (BR §11-

811); and (3) races simulcast from an out-of-state track (BR §11-

804).

In addition, the Maryland Horse Racing Act permits parimutuel betting at an authorized satellite simulcast betting facility

(“SSB”) on: (1) races conducted live at a Maryland track and then
Gen. 132] 143

 The Task Force Report also reviewed the experience of 21

Connecticut with “Teletrack” (a theater in Connecticut where bets could

be placed on live races run at New York racetracks) and the experience of

New York and Connecticut with off-track betting parlors, commonly

referred to as “OTBs.” Task Force Report at pp. 9-13.

simulcast to the SSB; and (2) races simulcast from an out-of-state

track to a Maryland track and then re-simulcast to the SSB. BR §11-

804; BR §11-815 et seq. 

Finally, the General Assembly has also authorized the Racing

Commission to permit “telephone betting” at “any track where

racing is authorized.” BR §11-805. 

 The only exception to the criminal prohibition of gambling in

Maryland that would permit an individual to place a bet on a horse

race without going to a licensed track or an approved SSB facility is

the provision that authorizes “telephone betting” in certain

circumstances. In essence, the wagering services offered through the

Youbet Network are simply an enhanced form of telephone account

betting. The legality of those services under Maryland law depends

on whether the account wagering is conducted in compliance with

Maryland’s telephone betting law and the regulation adopted by the

Racing Commission under that law. 

B. Maryland “Telephone Betting” Law

Although the Legislature provided statutory authority for

telephone account betting in Maryland during the 1980's, the

regulatory framework governing such a system is of a much more

recent vintage. 

The genesis of the Maryland telephone betting statute was a

1982 report by a State task force. See Maryland Task Force to Study

Off-Track Wagering, Interim Report (February 24, 1982) (“Task

Force Report”). After surveying several alternative types of

“wagering in absence [of the live race],” the Task Force

recommended that enabling legislation be enacted to allow telephone

wagering in Maryland. Id. at p. 15. The purpose of this 21

recommendation was “to expand racing’s fan base and increase the

industry’s total handle without excessive new costs to the industry,

while possibly resulting in new revenues to the State.” Id. at p. 7. 
144 [86 Op. Att’y

 The statute was recodified without substantive change as part of 22

code revision and currently reads: 

(a) ...the Commission may authorize

telephone betting at any track where racing is

authorized.

BR §11-805. See Chapter 4, §2, Laws of Maryland 1992, Revisor’s Note

at p. 492.

 In 1987, under the authority of this statute, the Racing 23

Commission proposed, but ultimately did not adopt, regulations that

would have permitted inter-track betting. See 72 Opinions of the Attorney

General 307 (1987) (concluding that statute provided authority for such

regulations). The General Assembly expressly authorized inter-track

betting by statute the following year. See Chapter 7, Laws of Maryland

1988, now codified as BR §11-811.

 The Study Commission was originally created in 1997 as part of 24

an uncodified portion of a bill that amended the Maryland Horse Racing

Act; it was subsequently continued in existence under the authority of an

executive order. Chapter 750, §4, Laws of Maryland 1997; Executive

Order 01.01.1998.15, 25:15 Md. Reg. 1175 (June 19, 1998).

In 1984, the General Assembly authorized the Racing

Commission to “establish a system of betting by telephone on races

at any track licensed [by the Racing Commission].” Chapter 753,

Laws of Maryland 1984, now codified as BR §11-805. That

provision remains virtually unchanged. The statute does not define 22

“telephone betting.” However, when the enabling legislation was

before the Legislature, one of its sponsors testified that “telephone

betting” had a variety of forms including “call-ins,” cable television,

or a combination of those media. Summary of Testimony at Hearing

before Senate Finance Committee on February 29, 1984, Legislative

File for Senate Bill 1020 (1984). 

The Racing Commission did not immediately exercise the

authority accorded by the telephone betting statute. During the late 23

1990's, the possible benefits to the local horse racing industry from

a system of telephone account betting in Maryland were discussed

in two reports of the Commission to Study Ways to Improve the

Financial Viability of the Horse Racing Industry (“the Study

Commission”). In a 1997 report, the Study Commission surveyed 24

various forms of “interactive wagering,” which it defined as “a
Gen. 132] 145

The regulation was initially adopted on an emergency basis, 25

effective September 1, 2000, and later adopted on a permanent basis,

effective January 8, 2001. See 27:19 Md. Reg. 1720 (September 22, 2000);

27:26 Md. Reg. 2357 (December 29, 2000).

 Under the regulation, a track is accorded exclusive right to open 26

accounts for individuals who reside within 35 miles of the track. COMAR

09.10.04.24R. 

method of placing bets on horse races from a remote location (e.g.,

a home) through the use of telecommunication technology.” That

report concluded that interactive wagering could increase wagering

pools and thus “would benefit tracks and horsemen and, indirectly,

the rest of the horse racing industry in the State,” but could also

entail “social costs” in making gambling so readily available. Report

of Commission to Study Ways to Improve the Financial Viability of

Horse Racing Industry (November 1997) at pp. 41-45. A

subsequent report of the Study Commission identified telephone

account wagering as “the most critical source of incremental

revenue” to the Maryland horse racing industry. Report of

Commission to Study Ways to Improve the Financial Viability of

Horse Racing Industry (March 1999) at p. 15. In that report, the

Study Commission suggested that active bettors in Maryland already

had telephone betting accounts in other states and strongly urged the

Racing Commission to enact regulations implementing telephone

account wagering. Id. at pp. 15-16. 

During its next session, the Legislature adopted the sentiment

of the 1999 report of the Study Commission. An uncodified section

of the Racing Act of 2000 declared that “it is the intent of the

General Assembly that telephone account betting as authorized

under §11-805 of the Business Regulation Article, be implemented

in the State in the year 2000....” Chapter 309, §9, Laws of Maryland

2000. 

In an apparent response to this legislative mandate, the Racing

Commission adopted a regulation that authorizes telephone account

betting and sets forth procedures for its operation. COMAR

09.10.04.24. Under that regulatory scheme, only a State-licensed 25

track may apply to the Racing Commission for permission to operate

a telephone account betting system in Maryland. COMAR 26

09.10.04.24A(3), B(1). However, the track may contract with one

or more entities to conduct telephone account betting on its behalf.

COMAR 09.10.04.24V. Under the regulation, bets may be accepted
146 [86 Op. Att’y

 To open an account, an individual must provide the track with 27

certain basic identifying information and deposit funds into the account.

COMAR 09.10.04.24D, F. A deposit into an account by means of a debit

or credit card may not be used for betting purposes until noon of the

following day. COMAR 09.10.04.24E. Bets and other fees are charged

against the account; any winnings are credited to the account. COMAR

09.10.04.24K, L(2). The track must provide an account activity report to

each account holder on a quarterly basis. COMAR 09.10.04.24M(1). An

account may not be opened for anyone under the age of 18. COMAR

09.10.04.24H. Accounts may be opened for residents of other states, if

permitted by federal and state law. COMAR 09.10.04.24C(2). 

 Of course, a person located in another state would also be subject

28

to any applicable law of that state.

through a telephone account betting system only on races that the

track is authorized to conduct (either live or simulcast). COMAR

09.10.04.24B(3). 

The regulation provides various procedures and guidelines for

the creation, maintenance, and audit of wagering accounts. The 27

regulation also prescribes the allocation among the tracks and other

racing industry participants of “net betting revenue” derived from

telephone account betting. COMAR 09.10.04.24S-W. 

 

The Maryland telephone betting statute clearly contemplates

that telephone accounts will be established, and bets will be placed,

“at any track where racing is authorized [by the Racing

Commission]”– i.e., at a Maryland racetrack. The obvious purpose

is to ensure that telephone account betting in Maryland takes place

under the auspices of an entity regulated by the Racing Commission.

Only if a betting account is established with such an entity would BR

§11-805 and COMAR 09.10.04.24 authorize the transmission of a

bet by telephone. Otherwise, Article 27, §240 would apply and 28

prohibit the transmission of a bet or funds to be bet.

As we understand it, the telephone wagering account of a

Youbet subscriber located in Maryland would not be subject to

regulation by the Racing Commission under Youbet’s current

operation. Accordingly, neither the Maryland telephone betting

statute, nor the regulation adopted by the Racing Commission, would

except the current incarnation of the Youbet Network from the

criminal prohibition in Article 27, §240. 
Gen. 132] 147

IV

Conclusion

Bets made on horse races transmitted through the Youbet

Network are, in reality, made through a telephone wagering account

system in Pennsylvania. In our opinion, Article 27, §240 bars the

placement of wagers from Maryland through the Youbet Network,

as it is currently designed. However, if that network were to employ

telephone betting accounts in accordance with the regulation recently

adopted by the Racing Commission, it would comply with State law.

Compliance with State law is also necessary to come within the

express sanction of interstate off-track betting under the federal

Interstate Horseracing Act. In short, participation in the Youbet

Network, or other similar systems, could be permissible, but only if

the telephone account betting through the network is conducted in

compliance with the Maryland telephone betting statute and

regulation. 

J. Joseph Curran, Jr.

Attorney General

Bruce C. Spizler

Assistant Attorney General

Robert N. McDonald

Chief Counsel

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