Kentucky judge rules historical horse racing is legal as Idaho votes on Prop 1
A new court ruling in Kentucky may give hope to advocates of historical horse racing in Idaho, amid debate over whether the machines are legal in the Gem State.
Historical horse racing features devices with slot-machine-like displays that replay old horse races and allow people to bet on their results. The horse racing industry has embraced them as a way to keep tracks open and improve race purses.
Like Idaho, Kentucky bans slot machines and other electronic gambling. It does allow forms of pari-mutuel wagering, where players bet against each other rather than against the house. On Oct. 24, a Kentucky circuit court judge ruled that the machines are pari-mutuel betting and thus allowed under Kentucky law.
No two states’ gambling laws are identical. But if it stands, the ruling will add to the small list of court cases addressing historical racing in parts of the U.S. The courts have not always found in favor of the machines — however, with help from state legislatures, the industry has gradually expanded their use.
Idaho’s Legislature has not been as friendly. Lawmakers legalized the betting machines for two years, then banned them again in 2015 over concerns they were unconstitutional. The state Attorney General’s Office has raised questions about the legality of Proposition 1, this fall’s statewide vote on whether to again allow historical horse racing. A Jan. 12 AG’s opinion on the ballot measure concluded it may take a lawsuit to decide whether the machines are constitutional.
In Kentucky
The Kentucky court case has been ongoing since 2010 and examined historical horse racing as it functions through one manufacturer, Exacta Systems. State officials and various racing organizations asked a judge to confirm several questions, including that historical racing follows a pari-mutuel gambling model and is legal.
The case soon drew another party, The Family Foundation of Kentucky, which is critical of gambling and intervened to argue the machines are illegal. While the case went through various arguments and at least one appeal, Kentucky lawmakers amended state law to specifically allow historical horse racing.
Judge Thomas Wingate in last week’s ruling called the foundation’s arguments “noble, moral and altruistic.” But, he wrote, the machines meet Kentucky’s definition of pari-mutuel betting:
“(1) The Exacta System is a system of or method of wagering that has been approved by the Commission. (2) In the Exacta System, patrons are wagering among themselves and not against the Association. (3) In the Exacta System, wagers are placed in one or more designated wagering pools. (4) In the Exacta System, the net pool is returned to winning patrons.”
Debate over how the wagering works
The ruling was welcome news at Kentucky Downs, a racetrack that Idaho Prop 1 advocates have cited as an example of how historical racing revitalizes the industry.
“Obviously we are very pleased with the court’s well-reasoned and detailed ruling,” Kentucky Downs President Corey Johnsen said in a news release after the ruling. “... In the world of horse racing, Kentucky often sets the pace. This is an important ruling for the future of pari-mutuel wagering on historical horse racing. I’m sure other states are watching this situation closely, and the ruling is really great news.”
The Family Foundation plans to appeal, Executive Director Kent Ostrander told the Statesman in a phone interview Friday. He said the ruling relies on a mistaken assumption: that one large betting pool that gamblers dip into at different points in time is the same as, say, a Pick 3 game where bettors are all in the same pool at one time.
“When a person is sitting at their machine, a race has been selected for them, it’s their own race and then they push their button at their own moment in time,” Ostrander said. “Who were they wagering against? Nobody. What this is is serial solo wagering.”
The analysis by the Idaho AG’s Office quoted similar concerns from attorneys general in Nebraska and Maryland.
“In traditional pari-mutuel wagering, only the same type of bets on the same race or series of races are pooled together. By contrast, with instant racing, wagers on completely different races are pooled together based only on the various types of ‘wins’ available to the players,” the Maryland Attorney General’s Office wrote in 2009. “... This may be pooled betting, but it is not pari-mutuel betting as contemplated in the Maryland Horse Racing Act.”
In other states, and in Idaho
Judge Wingate’s ruling also noted the Kentucky Legislature’s action on historical racing. And in other states, legislative support has often been the key to allowing horse tracks to use the machines.
In Wyoming, for example, the state Supreme Court deemed historical racing illegal in May 2006. “[W]e are not dealing with a new technology here, we are dealing with a slot machine that attempts to mimic traditional pari-mutuel wagering,” the court’s ruling then stated. “Although it may be a good try, we are not so easily beguiled.”
That put the machines off-limits for several years. In 2013, Wyoming lawmakers legalized historical racing and the machines returned. The machines must function as a game of skill, not chance, Wyoming Public Radio reported in 2015.
Oregon followed a similar path. Its Court of Appeals upheld a lower court’s rejection of the machines in 2009, and the state attorney general also decided they were illegal at one point, the Oregonian reported. The Oregon Legislature voted in 2013 to allow the machines at a Portland racetrack, the Associated Press reported, and they are now allowed at other commercial tracks in the state, the Oregon Racing Commission confirmed to the Statesman.
In Oregon’s case, the appeals court’s decision wasn’t based on any question of pari-mutuel gambling. Rather, state law at the time only let the Racing Commission approve gambling on live horse races.
Things worked out differently in Texas. There, the state Racing Commission sought to allow historical racing but found itself in a showdown with conservative lawmakers who threatened the commission’s funding. Commissioners ceded to lawmakers in 2016 and voted 5-4 to end the experiment, the Fort Worth Star-Telegram reported.
Historical horse racing is also allowed in Arkansas and, most recently, Virginia and Nebraska. Virginia lawmakers voted to legalize the historical racing earlier this year. People will be able to start using the machines as soon as March 2019, when racetrack Colonial Downs reopens in March 2019, the Richmond Times-Dispatch reported.
Nebraska’s Racing Commission just Monday approved installing historical horse racing machines at a horse track in Grand Island, a little ways west of Lincoln, the Omaha World-Herald reported. That newspaper also noted the Kentucky ruling and quoted commission chairman Dennis Lee: “They meet the statutory definition of pari-mutuel wagering.”
Idaho’s horse racing industry is confident the same is true here. PariMax, the company whose machines will be used in Nebraska, also provided the machines installed at Les Bois Park’s Turf Club at the Ada County fairgrounds. Idaho’s constitution permits pari-mutuel betting, and it forbids “casino gambling” and “any electronic or electromechanical imitation or simulation” of such gambling.
Asked about the Kentucky court case and Idaho’s laws, Save Idaho Horse Racing spokesman Todd Dvorak said the PariMax machines have never been challenged in court in other states. He repeated that they follow the pari-mutuel betting model — one reason Les Bois’ owners do not believe they need a constitutional amendment.
“That is fundamentally different than games of chance like slot machines, which operate with a random number generator and award winners solely on chance,” Dvorak wrote in an email Wednesday. “Furthermore, the Parimax HHR machine reproduces an actual horse race; it is not a simulation or imitation, and there are no forms of casino gambling that resemble a horse race.”
This story was originally published November 1, 2018 at 6:30 AM.