A Day at the Track: Historic Racing Loses Battle in Wyoming

Alison Zeitlin, KLJ Staff Editor[1]

The Wyoming Attorney General recently issued an opinion that forced historic racing, a form of wagering on horse races already run, to shut down throughout the state.[2] The opinion focused primarily on the legality of the “bonus rounds” in the games.[3] Like Kentucky, most forms of gambling are not allowed in Wyoming,[4] but in both states, pari-mutuel wagering is an exception to this general rule.[5]

Historic racing in Wyoming has been authorized since 2013 when the state legislature amended the definition of “pari-mutuel event” to allow the pari-mutuel commission to authorize wagering on events that have occurred in the past.[6] In his recent opinion, the attorney general recognized four distinct elements that must be met for the Commission to authorize wagering on historical events: (1) the wager is based on a pari-mutuel event (specifically horse racing), (2) the pari-mutuel event has “previously occurred,” (3) the player uses an “electronic system or device that affords an opportunity for the exercise of skill or judgment,” and (4) the outcome of the wager is “not completely controlled by chance alone.”[7]

Although the attorney general concluded that the initial game on the historical racing machines meets the four elements set out above, he stated that the bonus rounds do not meet all of the elements and, consequently, are illegal.[8] His opinion indicates that the bonus rounds must be eliminated in order to keep the games legal, “Combining one historic pari-mutuel event with a series of non-pari-mutuel ‘bonus round’ events does not make the game themes lawful.”[9]

The attorney general’s opinion has the potential to significantly impact the state’s gaming industry. The owners of Wyoming Downs, a horse racing track that maintains historical racing game machines, are concerned that employee layoffs are inevitable, and that the live horse racing industry in the state will be crushed by the loss of historic racing.[10] Furthermore, the state stands to lose “the flow of millions of tax dollars.”[11]  Even off-track betting companies are becoming worried, especially those who rely heavily on historic racing for revenue.[12]

Kentuckians, whether involved in the horse racing industry or not, may be concerned after hearing about this decision. Much like Wyoming, historic racing has been a boost to the state’s economy. Particularly, the new gambling parlor at Red Mile in Lexington has not only created more jobs in the area, but has also created over $75,000 in tax revenue in the first three weeks of its operation.[13] Luckily for Kentucky, this new revenue is probably safe from an attack of this type. Although Kentucky historic racing appears to involve “bonus rounds,”[14] it is unlikely that the bonus rounds can be criticized on the same basis as those in Wyoming. The regulation in regards to historic racing in the state does not include language such as “skill or judgment” or “chance” like the relevant Wyoming statutes.[15] For now, Kentuckians can rest easy, knowing that historical racing isn’t going away anytime soon.

[1] J.D. expected May 2017.

[2] Janet Patton, Instant Racing Shut Down in Wyoming; Bonus Rounds not Parimutuel, AG says, Lexington Herald-Leader, Oct. 5, 2015, http://www.kentucky.com/2015/10/05/4072621/instant-racing-shut-down-in-wyoming.html.

[3] Id. The “bonus rounds” are the series of games that occur after a player wins the initial historic racing game on the Instant Racing ® machines.

[4] Wyo. Stat. Ann. § 6-7-102 (LEXIS through 2015 Legis. Sess.), Ky. Const. § 226.

[5] Ky. Rev. Stat. Ann. § 436.480 (LEXIS through 2015 Reg. Sess.) (stating that the anti-gambling statutes do not apply to pari-mutuel wagering); Wyo. Stat. Ann. § 11-25-101 (LEXIS through 2015 Legis. Sess.) (creating the Wyoming pari-mutuel commission).

[6] Wyo. Stat. Ann. § 11-25-102 (LEXIS through 2015 Legis. Sess.).

[7] Memorandum from Wyo. Attorney Gen. Peter K. Michael to Exec. Dir. of the Wyo. Pari-Mutuel Comm’n Charles E. Moore (Sept. 23, 2015) (on file with author, also available at http://trib.com/ag-opinion-on-historic-horse-racing-terminals/pdf_7ceea36a-7a1e-59dc-8e3b-b60c49678328.html) [hereinafter Memo from Attorney Gen.]; see also Wyo. Stat. Ann. § 11-25-102 (LEXIS through 2015 Legis. Sess.).

[8] Memo from Attorney Gen. (stating that the bonus rounds are “based upon total chance”).

[9]  Id.

[10] Frank Angst, Wyoming to Shut Down Historical Racing Games, Blood-Horse.com, Oct. 6, 2015, http://www.bloodhorse.com/horse-racing/articles/94954/wyoming-to-shut-down-historical-racing-games.

[11] Id.

[12] Blaine McCartney, Horse Racing Groups Reel from Shutdown, Wyoming Tribune Eagle, Oct. 6, 2015, http://www.wyomingnews.com/articles/2015/10/07/news/01top_10-07-15.txt#.Vh1AX9bMVK5. Wyoming Horse Racing LLC, a licensed off-track betting company, gains 92% of its revenues from historic racing.

[13] Janet Patton, More Than $5 Million Gambled on Red Mile Machines in Less Than 3 Weeks, Lexington Herald-Leader, Oct. 5, 2015, http://www.kentucky.com/2015/10/05/4072319_more-than-5-million-gambled-on.html?rh=1.

[14] Instant Racing, Red Mile, http://redmileky.com/instantracing/ (last visited Oct. 12, 2015).

[15] See 810 Ky. Admin. Regs. 1:011 (LEXIS through Sept. 2015).