In a unanimous decision that reversed a lower court decision, the Kentucky Supreme Court recently ruled that some historical horseracing machines do not meet the standard for parimutuel wagering. Writing for the court, Justice Laurance B. VanMeter said the Encore machine, the particular historical racing system under review, “does not create a wagering pool among patrons such that they are wagering among themselves as required for parimutuel wagering.”
VanMeter stated it would be wrong to suggest “that the random generation of multiple historical horseraces with patrons placing wagers on different races qualifies as parimutuel wagering. To be clear, parimutuel wagering requires that patrons generate the pools based on wagering on the same discrete, finite events.”
The ruling is the result of a long-running dispute between racing interests and the Family Foundation, a conservative anti-expanded-gambling group. Following the court’s ruling, Family Foundation spokesman Martin Cothran stated, “The time for flouting the law is over. This decision reaffirms that words have meaning and that even the state’s most powerful industry can’t turn the plain language of the law upside-down for its own economic benefit.” Cothran said the group has called on racetracks to shut down their historical horseracing parlors “until it can be demonstratively shown that their activities are legal.”
In response to the court’s ruling, Governor Andy Beshear said, “Historical horseracing is an important part of Kentucky’s economy that supports jobs and contributes over $21 million to the state budget. We are working with various partners to find a path forward. If it’s going to take a legislative change, we need to make the legislative change. We’ve now had this in the commonwealth for several years. We have not seen the ills that people claim would come from it.”
State Senate Majority Floor Leader Damon Thayer commented the court’s ruling was “wrong” and “irresponsible,” and would “deal a death blow to Kentucky’s horse industry if not remedied.” State Rep. Adam Koenig, chair of the House Committee on Licensing, Occupations and Administrative Regulations said if needed, he would sponsor legislation to clarify that historical horseracing is legal. “I’m assuming we would need some legislation to clean it up,” Koenig said.
In a statement, the Kentucky Horse Racing Commission said it was weighing its options and “will take action as soon as we come to an appropriate resolution.”
The machines were approved by the Kentucky legislature in 2010 and were first installed at racetracks in September 2011. Since then, more than $8.6 billion has been wagered, with most of the money returned to bettors in the form of winnings. In the most recent fiscal year, bettors wagered more than $2 billion, generating more than $15 million for the general fund and $156 million for the tracks, plus more than $16 million for the horseracing industry.
Prior to Covid-19 closures, nearly 3,000 machines were operating statewide. Today about 1,740 are active. The Encore games are in use at the Keeneland/Red Mile racino, Kentucky Downs and Ellis Park.
Despite the state Supreme Court’s ruling, Churchill Downs is moving ahead with its sixth historical horseracing venue, Newport Racing & Gaming, featuring 500 machines. Spokeswoman Tonya Abeln said, “Since the ruling addressed a gaming system called the Exacta/Encore system, which Churchill Downs does not use at any of our historical racing machine properties in Kentucky, the ruling did not impact our plans to open the Newport facility.”
Abeln added, the venue “will work within our legal rights and in coordination with Kentucky legislators to ensure the ongoing legal operation of our HRM facilities in Kentucky so that we can continue to provide critical funding for the equine industry and support the citizens in the Commonwealth of Kentucky. We appreciate Kentucky Governor Andy Beshear’s support of the industry in his statement regarding historical horseracing.”
The only forms of legal gambling in Kentucky are parimutuel wagering on racing and charitable gambling such as bingo and the lottery. Casino gambling and slot machines are prohibited under the state constitution.
