Kentucky, Virginia Leading The Way With Historical Horse Racing

Political pros and cons to terminals 'looking just like slot machines'
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The word “billion” came up regularly at the National Council of Legislators from Gaming States (NCLGS) summer meeting in Chicago this week. After all, commercial and tribal casinos were discussed in various panels, along with the rise of online casino gaming, mobile sports betting, eSports, and state lotteries.

But in the event’s final panel on Tuesday afternoon, it was pointed put that the “b” word also applies to a gambling activity called Historical Horse Racing. To this end, Kentuckians wagered a mind-boggling $2.2 billion in fiscal year 2020 on handicapping the outcomes of past races.

So why has this gambling mostly flown under the radar? Many of the other states that have opened the door to such betting — Wyoming, New Hampshire, Alabama, Louisiana, and Oregon among them — are small in terms of population. And only in Kentucky has the action been so intense.

But as of 2019, Virginia has offered HHR wagering, and lawmakers in states like Arizona and Michigan are considering it too, Katherine Paisley, an attorney for historical horse racing company Exacta Systems, told the NCLGS audience.

Paisley added that in the 20 years since “instant racing” was first approved in Arkansas, the product has evolved into one that “looks like anything you might see on a traditional casino floor, with flashing lights, noises, and wheels.”

But that evolution has come at a price: Many critics in and out of the Kentucky Legislature insist on calling the historical horse racing terminals “slot machines” precisely because of the visual similarities.

And last fall, the Kentucky State Supreme Court distinguished instant racing from parimutuel wagering, threatening the fate of the sector until February, when lawmakers made the required legal revisions to keep the machines in business.

Terminals help Virginia track reopen

Legislators looking into the sector will have to carefully review their state gambling laws to figure out if there could be legal roadblocks before permitting HHR terminals. While gamblers have the option of clicking a button to “handicap” each race offering traditional racing program information, such as past performances and pre-race odds (with the names of the horses and jockeys removed so as not to reveal the specific race), many customers simply metaphorically “spin the wheel” and wait two minutes to see if their randomly chosen horse has won.

Connecticut State Rep. Kevin Ryan, who moderated the panel, asked if HHR products are “a means of survival” for a struggling industry. That has been the case in Kentucky, where the boost in purse revenue from the alternative gambling has been credited with keeping more than one racetrack afloat — in spite of increased competition from tracks in Pennsylvania and West Virginia, which get countless millions from on-premises slot machines.

“This allows the [horse racing] industry to thrive, as you’re seeing the dollars translate into purses,” Paisley said.

In Virginia, a law permitting HHR terminals was part of a deal to reopen the Colonial Downs racetrack, six years after it had closed.

Colonial Downs executive John Marshall, a member of the NCLGS panel, said that HHR revenue has played a large role in the track being able to offer purses of $500,000 per day for about two dozen days of racing, making the track appealing to horsemen. The state’s terminals are featured in six locations that have the feel of small casinos, with about 100 to 200 machines at each site.

‘Hell yes,’ machines have ‘been a wild success’

“It’s been a wild success,” Marshall said, adding in response to the “survival” question, “Three or four years ago, we could not even compete. So I’d not only say ‘yes,’ but ‘hell yes.'”

But not all horse racing and gaming executives are so enthusiastic.

Matt Cullen, the senior vice president for iGaming at Parx Casino and Racetrack near Philadelphia and also a panelist, said that he and his team “haven’t even contemplated historical horse racing machines” for that site.

Paisley noted that Colonial Downs’ initial success with HHR games will be tested when Virginia’s first casinos open their doors as soon as 2023. But Marshall said a program to donate $100,000 per year to host communities and fire, police, and EMS groups in those areas is making patrons loyal to their Rosie’s Gaming brand.

Photo: Tony Centoze/The Leaf Chronicle

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