Extracted from: Internet Gambling in Nevada: Overview of Federal Law Affecting Assembly Bill 466, Courtesy of Liebert Publishing, Gambling Law Review
In December 2000, Congress, in spite of the Justice Department’s strong opposition, amended the Interstate Horseracing Act of 1978  and specifically expanded the definition of “interstate off-track wager” to include pari-mutuel wagers transmitted between states by way of telephone or other electronic media, as follows:
The term ‘interstate off-track wager’ means 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 off-track betting system in the same or another State, as well as the combination of any pari-mutuel wagering pools; 
The plain language of the revised statute would appear to permit interstate pari-mutuel wagering over the telephone or other modes of electronic communication, including the Internet, so long as such wagering is legal in both states. The legislative history of the amendment seems to support this conclusion.
Specifically, Congressman Frank R. Wolf (R-VA) expressed the following concern: Mr. Speaker, . . ., this conference report contains a provision that deeply troubles me. I want Members of this body to be aware that section 629 . . . would legalize interstate pari-mutuel gambling over the Internet. Under the current interpretation of the Interstate Horse Racing Act in 1978, this type of gambling is illegal, although the Justice Department has not taken steps to enforce it. This provision would codify legality of placing wagers over the telephone or other electronic media like the Internet. 
In his statement that accompanied the signing of H. R. 4942, former President Clinton acknowledged the Justice Department’s objection to the amendment as follows:
Section 629 of the Act amends the Interstate Horseracing Act of 1978 to include within the definition of the term ‘interstate off-track wager,’ parimutuel wagers on horseraces that are placed or transmitted from individuals in one State via the telephone or other electronic media and accepted by an off-track betting system in the same or another State. The Department of Justice, however, does not view this provision as codifying the legality of common pool wagering and interstate account wagering even where such wagering is legal in the various States involved for horseracing, nor does the Department view the provision as repealing or amending existing criminal statutes that may be applicable to such activity, in particular, sections 1084, 1952 and 1955 of Title 18, United States Code. .