Interstate Horse Racing Act of 1978 Explained

LawbookThe Interstate Horse Racing Act of 1978, or IHRA, is one of the US gambling laws that govern nationwide horse racing betting, off-track betting venues (OTBs), and domestic online horse betting in America.

The law isn’t particularly long or convoluted (see below), and it doesn’t apply to individual bettors, online horse racing betting, and virtual horse race betting services provided by legal online horse race betting sites. Still, if you’ve ever wondered why online horse betting is so ubiquitous while other forms of gambling are much less readily available over the Internet domestically, our brief IHRA guide should answer those questions. We’ll also explain other aspects of the law, like pari-mutuel wagering and simulcast betting.

Historically, horse racing was the first sport to offer legal online betting in the US, and it is – fittingly – a real gambling trailblazer in many ways. Saddle up to learn more!

What Does The Interstate Horse Racing Act Do?

The Interstate Horse Racing Act was originally designed to standardize the practice of off-track betting (OTB) in the United States, and it was introduced in the US Senate back in 1978 as SB 1185.

Before the law was passed, off-track betting locations had been prominent fixtures in both New York (where they originated) and in Nevada (which, as the mecca of gambling, ironically has no actual horse tracks of its own). OTBs, without a federal framework, were causing issues in NY in particular, as the small retail outlets were cropping up statewide, reducing the gate at actual horse tracks in the state. So, while wagering was up substantially, tracks themselves were making less money.

The solution was the IHRA, which was enshrined in 15 USC Ch. 57 and mandated that OTBs had to disburse their earnings between themselves, the tracks, horse owners, and the states in which they operate. Further, any OTB would require explicit approval from any track within 60 miles of its retail location, or the nearest track if outside of 60 miles (even extending into neighboring states). Individual state laws can levy different taxes and “house takes” on OTBs, and they can also determine for themselves whether to participate in the interstate horse race betting industry altogether.

To date, 41 states have OTBs, including domestic off-track betting online. However, in all 50 states, you can bet on horses online by using overseas racebooks that operate outside of US legal jurisdiction. The IHRA does not ban or criminalize these international betting sites – or participating US bettors – in any way.

What Is Pari-Mutuel Betting?

Pari-mutuel wagering is one of the oldest forms of gambling. That said, it is not actually considered “gambling” in the same way that casino games and sports bets are. The market is covered by its own set of horse betting laws separate and distinct from these other industries, which is largely thanks to the pastime’s pari-mutuel status.

The pari-mutuel definition is, simply, “pool-based betting.” The word itself comes from the French and translates to “mutual betting.” Instead of being house-banked – which is the metric US law uses to define typical gambling – the pari-mutuel system is communal, and racebooks neither bank bets nor carry any risk.

Parimutuel betting allows people to place bets on a series of odds offered by a racebook at a horse track or OTB venue. As money comes in on various bets, the odds will change. But this is the main point: These odds are never final or locked in until all bets are in and further wagering is closed.

At this point, the book takes its cut off the top, divvies up the wagers per their requisite bets (WPS, exotics, boxed bets, multi-race “pick” bets, and so on), and assigns summary payouts. In other words, when you bet on horses using the pari-mutuel system, you only know what your payout will be after betting has been suspended.

The only non-parimutuel kind of wager offered by horse racing online betting sites are futures, which work the same way as sports betting futures and are house banked. You will not find these at domestic horse tracks, OTBs, or Internet-based services operating within US borders.

What Are OTBs?

“OTB” is short for off-track betting. Off-track betting is a phenomenon by which horseplayers can bet on the ponies without being at any actual racetracks. Additionally, OTBs – via simulcast wagering (i.e. betting on live televised races) – allow bettors to wager on races occurring in other states.

Thus, someone in Florida can bet on the Kentucky Derby using an OTB, and whenever their off-track betting results come in, they’re paid immediately. OTBs, in addition to simulcast wagering, allow gamblers access to most US-based horse races, no matter where they are in the country.

When it comes to legal online horse betting, USA gamblers can use domestic sites to handle their US-centric bets, or they can use reputable offshore racebooks that offer all the same US races and other contests from all the most famous horse racing tracks and markets around the world.

With daily races from the US, Canada, Mexico, England, Ireland, the Middle East, Japan, and Australia (among others), the most avid equine enthusiasts get way more bang for their buck when gambling with international books.

Does The Interstate Horse Racing Act Legalize Online Horse Betting?

Yes, but not explicitly. Because the Interstate Horse Racing Act of 1978 was made law before the Internet was a commercial consumer commodity, it legalizes interstate online horseplaying the same way that the Interstate Wire Act of 1961 forbids interstate sports betting.

That is, the Internet has been viewed as a logical extension of the spirit of these laws. In other words, because the Interstate Horse Racing Act meaning was rooted in remote betting via media terminals, once the Internet was established as the evolution of that media distribution, the IHRA de facto applied to online wagering.

Nevertheless, states themselves had to allow for horse betting of this sort, and to date, 41 have done so. For the online international horse betting market – and the legal ability American citizens have to wager with these operators – the IHRA has no say one way or another. As such, international racebooks (i.e. international off-track betting sites) remain legal for US residents to enjoy nationwide (excepting WA, which bars all online betting).

Which States Have Online Horse Betting?

Horse race betting online is legal in 49 of 50 states, with only Washington having laws banning all forms of online gambling. However, racebooks operating outside of US jurisdiction – like those bookmakers listed here – will accept WA members.

That said, though we’ve never heard of a single resident in Washington being fined or arrested for betting the ponies online, we recommend following all local gambling laws.

When it comes to how to bet on horses online with domestic OTBs, residents of 41 states are free to use these services, though they offer limited perks and markets compared to the best online horse betting sites operating overseas. The only states that bar access to US-based racebooks are the following, all of which can safely use offshore solutions:

  • Alaska
  • Georgia
  • Hawaii
  • Mississippi
  • North Carolina
  • South Carolina
  • Utah
  • Washington DC

Why Isn’t Horse Racing Betting Governed By The Wire Act?

The Interstate Wire Act of 1961 is a federal betting law that explicitly deals with traditional house-banked sports betting. While the DOJ has frequently attempted to reframe the Wire Act to apply it to casino gambling as well, it has never been applied to horse betting, as the industry is governed by its own set of laws in the form of the IHRA.

Put another way, horse racing betting is not governed by the Wire Act because it does not constitute sports betting. Due to its pari-mutuel nature, it is a wholly different kind of gambling (as is greyhound racing and jai-alai, both of which use the parimutuel model).

How Does The Interstate Horse Racing Act Affect US Online Betting?

On the surface, the Interstate Horseracing Act didn’t give much precedence to other gambling markets in terms of online casinos and sports betting. For the most part, online gambling was not supported en masse until the Professional and Amature Sports Protection Act (PASPA) overturn of 2018. Why horse racing laws were not used as a framework for other gambling markets is a mystery, but it speaks to the legal distinctions that have always existed for parimutuel betting.

However, now that online sports betting is a reality in the US – and because more states are flirting with legalizing online casinos, too – there is a strong likelihood that lawmakers will point to the stability that long-term online horseplaying has offered.

All that said, please remember that the IHRA merely legalizes OTBs, interstate horse betting, and online horse racing betting. It does not have anything to do with laws in individual states. For example, California horse laws are governed entirely by CA legislation, while horse laws in Illinois fall exclusively under the purview of the IL government. States must agree to be a part of any interstate wagering initiative.

In terms of the international horse racing market and the respected offshore sites that offer action to US horseplayers, the IHRA has no measurable effect. The law takes a hands-off approach regarding its overseas competition, and that will likely always be the case.  

Is The Interstate Horse Racing Act Enforced?

Absolutely, and very strictly. However, it’s important for bettors to realize that the IHRA – like any federal gambling law – does not penalize horseplayers for betting in any way, whether they do so at a licensed operator or a shady black market bookie (which, for the record, we strongly advise against, as these clowns will run off with your cash faster than Secretariat at the Belmont).

The IHRA applies only to racebook operators, horse tracks, and OTBs. Still, as a consumer, it is beneficial to understand all horse betting laws so you can be confident that the wagers you place – online or off – are going to be honored by your operator of choice.

Pending Horse Racing Legislation

In many states that do not allow horse racing or horse betting, proposals for legalization are frequently put forth. For example, the Georgia Horse Racing Coalition is actively trying to get horse betting authorized in the state, and signs are positive that the group will succeed sooner than later.

At the federal level, HR 1754 was introduced in March 2019 and has been referred to the Subcommittee on Consumer Protection and Commerce. This bill, called the Horseracing Integrity Act of 2019, has to do with formally regulating “uniform anti-doping and medication control programs to be developed and enforced by an independent Horseracing Anti-Doping and Medication Control Authority.”

How far this bill will get is anyone’s guess, and given the fact that the horse racing industry is already policed at the state level for these same issues, the federal law could be viewed as redundant or unnecessary.

Interstate Horse Racing Laws Documentation And Resources