Kentucky Racing Officials Want State Supreme Court to Reconsider HHR Ruling

Posted on: October 7, 2020, 11:59h. 

Last updated on: October 8, 2020, 08:23h.

Steve Bittenbender Read More
Expertise: Legislation, Sports Betting, Horse Racing.

The Kentucky Horse Racing Commission wants the state’s Supreme Court to give it more time to draft a request for a rehearing regarding the legality of historical horse racing machines (also knows as HHR) at race tracks.

Kentucky HHR
Kentucky Downs is one of six venues in the state offering historical horse racing. But a ruling by the state Supreme Court last month puts the future of the machines in jeopardy. (Image: Kentucky Downs)

The regulatory agency filed its motion last Friday, asking for a two-week extension. State law gives parties in court cases 20 days to submit a request for a rehearing. On Sept. 24, the court issued a unanimous opinion, saying the KHRC, which oversees pari-mutuel racing, can’t on its own approve a new method of pari-mutuel betting without the explicit approval of state lawmakers.

Historical horse racing machines have the look and feel of slot machines. But when a bettor pulls the lever, it’s the outcome of a previously run race or combination of races that determines if the wager is a winner.

Last month’s ruling not only puts the future of HHR in question, it could also significantly impact the future of live horse racing in the state. The tracks have used HHR to bolster purses and develop a year-round racing circuit that can compete with other states across the country.

More than $8.5 billion has been wagered through HHR machines, and the state’s tracks have been in an aggressive growth mode in the past year. Two new gaming venues opened in recent weeks, and plans for two more were announced just days before the Supreme Court’s ruling.

Because of this lawsuit’s extremely voluminous history; its presentation of especially complex questions; and its potentially widespread impact upon Kentucky’s signature industry, it would be exceedingly difficult for the KHRC to craft and submit a satisfactory Petition for Rehearing within the 20-day time period,” the commission stated in its motion.

On Wednesday, Keeneland filed a similar motion expressing its intent to seek a rehearing and a two-week extension, too.

Judges Review Pari-Mutuel Law

The machines have been in operation in Kentucky since 2011, and the issue has been in the courts for even longer.

The Family Foundation of Kentucky has pushed the litigation, questioning if the machines abide by Kentucky’s laws on pari-mutuel wagering.

Until last month, the racing industry and KHRC had been successful in defending the machines. But after hearing oral arguments in August, the seven judges determined the HHR machines did not meet all facets of the state’s pari-mutuel law.

“To be clear, pari-mutuel wagering requires that patrons generate the pools based on wagering on the same discrete, finite events,” Justice Laurance VanMeter wrote in the opinion.

In addition, the justices raised concerns that the tracks put up an “initial seed pool” to cover winnings, which they said leads to the tracks creating the pool and not the bettors.

The lawsuit focused on machines developed by Exacta Systems, which are in use at HHR parlors operated by Ellis Park, Keeneland/The Red Mile, and Kentucky Downs. Churchill Downs uses other systems for its HHR parlors. But the Supreme Court’s opinion could even affect Churchill’s three venues, as the case now goes back to the district court level.

Company Says Kentucky HHR Fix in the Works

The day after the Supreme Court issued its opinion, Exacta Systems said it plans to introduce a new HHR system that it claims will comply with the judges’ opinion.

Exacta Systems President Jeremy Stein said he was disappointed with the ruling. However, he added that the ruling also brought “certainty” to how the industry must operate in the state.

Stein added that the company has been working for months on an “alternate HHR system” for the very contingency that happened last week.

After reading opposing legal briefs and hearing the questions asked at oral arguments, we wanted to have an alternative system in place that addressed the objections raised by opposing counsel and the various Justices, as a contingency in the case of a negative ruling,” Stein said.

The company plans to present the new system to the KHRC in the near future.

Martin Cothran, a spokesman for the Family Foundation, expressed skepticism at the announcement, and said the KHRC needs to be more than “a rubber stamp” for racing interests.

“Now we’re supposed to believe that after a long and expensive legal battle, they’re just going to take the backs off these things, turn a few screws and fuse a few circuits, and everything is going to be OK,” Cothran said in a statement. “Does anyone really believe this?”