In Kentucky, Franklin County Circuit Judge Thomas Wingate recently ruled historical racing machines made by Exacta Systems do resemble Las Vegas-style slot machines but that’s “merely for entertainment purposes” and the games do comply with state law. In a 22-page opinion, Wingate wrote, “The Exacta machines are structured to operate in accordance with the parimutuel system of wagering. Furthermore, the legislature has determined that historical racing machines are not gambling devices as long as they comport with parimutuel wagering.”
Under Kentucky’s definition of parimutuel betting, players bet against each other as opposed to the house; wagers are placed in a pool; and the net pool is awarded to winning players.
Historical racing machine opponents claimed the games remove the “mutuality” from “parimutuel.” Family Foundation Executive Director Kent Ostrander said, “When a patron is sitting at his own distinct historical horseracing machine, with his own distinct randomly selected race or races, pushing the button at his own distinct nano-second moment of time, the question is: ‘Who is he wagering with, among, against?’ No one can point to a single other person with whom he is ‘parimutuelly’ wagering.” He also noted Kentucky potentially is losing millions in tax revenue by allowing historical racing machines to be considered parimutuel betting.
Ostrander added, “I expected to win. I believe we’re right according to the law, but there have been a lot of unusual things in this case, so I wasn’t startled by the fact that the judge decided to go the other direction.” But he added, “Not one legislator has voted to change the law and not one citizen has voted to expand gambling, yet, an unelected Racing Commission and one judge has sided with racetracks and ruled that these new-fangled, slot-like machines are parimutuel and compliant with the law.”
Praising the ruling, Churchill Downs President Kevin Flanery said, “Instant-racing machines benefit the horseracing industry by creating larger purses and boosting sales and breeding operations across the state.”
Exacta Systems President Jeremy Stein added, “The Exacta system and games underwent extensive scrutiny through the course of several years of exhaustive discovery and a multi-day trial where every aspect of the wagering system was explored in great detail. The finding of the Court was clear and unambiguous, and should settle the question once and for all that the Exacta Historic Horse Racing system and games are parimutuel wagers on the outcome of horse races.”
Franklin-based Kentucky Downs President Corey stated, “In the world of horseracing, Kentucky often sets the pace. This is an important ruling for the future of parimutuel wagering on historical horse racing. I’m sure other states are watching this situation closely, and the ruling is really great news.”
The case dates back to 2010, when Kentucky Horse Racing Commission, Kentucky Department of Revenue and several racetracks filed a case in Franklin County Circuit Court regarding the legality of horseracing regulations and the Exacta machines. Wingate initially ruled in favor of the Exacta machines and the state’s gaming regulations, but the Family Foundation appealed. The Kentucky Court of Appeals then vacated Wingate’s ruling and remanded the case for further testimony. A discretionary review by the Kentucky Supreme Court also called for additional discovery but upheld the validity of the regulations.
The latest ruling came nine months after the new trial was held. Ostrander said, “After an initial analysis of the ruling, we have no choice but to appeal. We thank the court for its diligence over the last eight years, but we are convinced the opinion overlooks several critical elements of what it means to have parimutuel wagering—specifically, wagering among the patrons.”
Also in Kentucky, the state Horse Racing Commission narrowly voted to delay awarding a license for a harness racetrack and casino in Oak Grove. Applicants included Kentucky Downs; a partnership of Churchill Downs and Keeneland; and Caesars Entertainment, owner of Players Bluegrass Downs in Paducah.
All three indicated they’d hold short harness meets at the Oak Grove racino, and offer 300-1,500 historical horseracing machines. Churchill and Keeneland officials said their respective facilities would cost $150 million and include a track, grandstand, outdoor amphitheater, 125-room hotel and gaming. Caesars officials proposed a $140 million facility, without a hotel. Kentucky Downs officials said their $45 million plan would include a 125-room hotel.
Regarding handle, Caesars estimated $1.7 billion annually, compared to $230 million from Kentucky Downs. The Churchill Downs-Keeneland partnership estimated handle around $700 million.
Kentucky Downs officials asked commissioners to consider the impact the large Oak Grove casino would have on its existing operation 40 miles away, in operation since 2012 and the highest-grossing casino operation among the four in Kentucky. Speaking on behalf of Kentucky Downs, Racing Resource Group Consultant Tom Aronson said, “There is going to be much cannibalization.”
All three proposals included contributions to support purses at both Standardbred and Thoroughbred tracks in the state.
