John M. Lockwood, Esq. is an attorney affiliated with Rutledge, Ecenia, & Purnell, P.A. in Tallahassee, Florida. He concentrates his practice primarily on advising clients on laws and regulations affecting the pari-mutuel, cardroom, and slot machine wagering industry. He can be reached at jlockwood@reuphlaw.com.
On April 16, 2009, Kentucky State Senator Damon Thayer requested the opinion of Kentucky Attorney General Jack Conway concerning the legality of operating Instant Racing machines in Kentucky to assist the horse industry.
Instant Racing machines utilize recorded pari-mutuel events, currently greyhound and thoroughbred races, upon which patrons place wagers through a terminal that is virtually identical to a self-service wagering terminal. The machine uses a random number generator to select races from a grouping of stored pari-mutuel races located in a main server. The patron inserts money and makes a selection of potential finishers, just like making a bet on a live race, based upon certain handicapping data that is provided via performance charts. The patron is not provided information concerning the race venue, date of race, name of horse or dog, or the jockey or trainer if applicable. Once the patron submits the wager via the terminal, the race is shown and the result is displayed. Payouts are determined by the wagers contributed to the pari-mutuel wagering pools.
Instant Racing machines have been successful at Oaklawn Park in Hot Springs, Arkansas where such machines have helped boost purses and attract larger fields. Unfortunately, Instant Racing machines have not garnered a significant following outside of the state. In 2006, the Wyoming Supreme Court declared that Instant Racing machines were illegal slot machines that “attempted” to mimic traditional pari-mutuel wagering. In Oregon, an administrative law judge ruled that Instant Racing machines were pari-mutuel devices and could be installed at Portland Meadows. This decision was subsequently overturned by the Oregon Racing Commission and is currently being reviewed by the Oregon Court of Appeals. In addition, the Maryland Attorney General issued an opinion stating that Instant Racing machines were not permitted in Maryland because they did not constitute pari-mutuel wagering devices. However, the Alabama Attorney General has twice opined that Instant Racing machines were pari-mutuel devices that could lawfully be operated at state greyhound tracks.
So what does this mean for Kentucky and its horse racing industry? The Kentucky Attorney General will likely be faced with a delicate legal analysis focusing upon a comparison of traditional pari-mutuel wagering and slot machine devices. Based upon the Alabama opinions, there is precedent to conclude that such devices are, in fact, pari-mutuel wagering devices that may be operated just like self-service totalisator terminals. Of course, the state legislature could always allow the Kentucky Horse Racing Commission to authorize and regulate Instant Racing machines if the Attorney General concludes that such devices are not presently authorized pursuant to existing pari-mutuel wagering laws.
The final order of the Oregon Racing Commission is on file with the author and the Thoroughbred Brief.
2 responses so far ↓
Picksburg Phil // April 28, 2009 at 6:16 pm |
A little off the topic, but Betfair said that they want to include the USA in exchange betting. What would it take for this type of peer-to-peer betting to be legal in the US? Would it be a state’s rights issue or a Federal issue?
Thoroughbred Brief // April 29, 2009 at 6:43 am |
Phil, here’s a brief answer from John Lockwood:
The regulation of exchange betting (or peer betting) would most likely be a federal/state mix just like wagering on horse races. You have the IHA which governs the dissemination of interstate thoroughbred wagers. In addition, most states set parameters on the conduct of such wagers within their state. With regards to exchange betting, there will necessarily be some gray area with regards to the Unlawful Internet Gambling Enforcement Act. In addition, individual states possess sufficient police power to reject exchange betting altogether.