In a case that has kicked around in the judicial system for nearly eight years, a Kentucky Circuit Court ruled this week that historical horse racing machines are indeed a form of pari-mutuel betting and thereby legal in the Bluegrass State.
Though applicable only in Kentucky, the court’s determination could provide the impetus for legal consideration in other states that have been wrestling with the legality of these machines that have shown the ability to bolster struggling racetracks.
The Kentucky case began in 2010 when the Kentucky Horse Racing Commission, Kentucky Department of Revenue, and racetracks asked for a determination that historical racing regulations adopted by the horse racing commission were indeed valid and that the devices didn’t violate state gambling laws. The state Supreme Court eventually weighed in and kicked the decision back to the Franklin Circuit Court for further review on whether or not to give the KHRC authority to regulate the increasingly popular activity.
What is Historical Racing?
Historical racing terminals have been around since 2002, but only recently have caught on with tracks and customers. These games look pretty much like a slot machines, sometimes feature a horse-based theme and a few extra buttons. They use previously run horse races to generate winning numbers and combinations to determine if the pull gets paid.
These replays of races from around the world, conceal the names of the horses, dates and locations of the races. Sometimes limited past performances may be available, but the player does not truly handicap the replays. As with a slot machine, results are random, generated by matching the numbers or symbols on the reels to the order of finish in the horse race, often visible in a screen within a screen on the terminal.
The video below gives a glimpse of how these machines look and operate.
Boon to Struggling Tracks
Historical racing proponents characterize the machines as offering a game of skill rather than chance. In 2006, the Wyoming Supreme Court ruled that “a slot machine that attempts to mimic traditional pari-mutuel betting” is still a slot machine.”
The Kentucky court’s ruling has said it doesn’t really matter, so long as the payouts are part of a pari-mutuel betting pool, with winning players taking from losing players instead of playing against the house. This is good news for the state’s horse racing industry.
In September, Churchill Downs opened a $65 million, 85,000-square-foot historical racing facility called Derby City. It employs 250 full- and part-time workers and will, eventually be home to 900 historical racing terminals. In the southern portion of the state, Kentucky Downs, just a short drive from Nashville conducts, is one of the sport’s most lucrative meets thanks to profits generated by its historical racing machines. It only conducts just five days of live racing each September, but the terminals operate year round.
In Virginia, the shuttered Colonial Downs race track is expected to reopen in 2019 after lawmakers passed legislation in April specifically allowing historical racing machines to be regulated by the state’s racing commission.
Growing National Issue
Earlier in October, the National Council of Legislators from Gaming States, announced that historical horse racing would be front and center on the agenda for their upcoming Winter Meeting in New Orleans.
“As states look to both support their pari-mutuel industries and expand their gaming options, they are examining whether historical horse racing is a viable option – from both an economic and legal perspective,” NCLGS President and Ohio Sen. William Coley said.
The group expects some 200 gaming policy writers and elected officials to attend, as several states are currently trying to determine how they intend to move forward with historical racing machines as part of their legal and regulated gaming landscape.
The Illinois Racing Board is awaiting staff reports to help them determine if the machines can legally come under their their jurisdiction as a pari-mutuel endeavor rather than being a “house-banked” game that could be seen as casino gambling.
The IRB is seeking to authorize the machines at Hawthorne Race Course and Arlington Park near Chicago, and at Fairmont Park downstate near St. Louis, as part of their governance of the pari-mutuel industry without any change to state gambling laws and without explicit permission of state gaming regulators.
Idaho is putting the matter to voters on Nov. 6, with a question on the ballot to decide whether or not state law should be amended to allow the historical racing machines at its tracks and off-track betting venues. The machines had been allowed for several years before 2016, when state lawmakers reversed their legality.