A 2021 state law legalizing historical horse racing machines is unconstitutional, the Louisiana Supreme Court decided last month in a ruling that critics said will disrupt a key source of revenue for the horse racing industry.
The high court on March 21 upheld a district court ruling concluding that historical horse racing is not a form of pari-mutuel wagering, which is legal under Louisiana law. Residents of five parishes who challenged the constitutionality of Act 437 argued that parishes where historical horse racing has been allowed at off-track betting facilities are required to authorize such wagering by getting voters’ approval.
The defendants, including Churchill Downs Louisiana Horseracing Co. and Boyd Racing LLC, disagreed, describing historical horse racing, which features slot machine-like terminals, as simply a new technology but not a new form of gambling.
Historical horse racing is a gaming system that employs an algorithm based on the results of tens of thousands of past horse races. Gamblers place bets on the outcome of those races, but they don’t know the names of horses, jockeys or the location where the race occurred. They also don’t know when the race in question took place, but gamblers can place bets on the finishing positions of the horses using historical performance statistics.
The slot machine then projects the final moments of the race to show the outcome of the race.
The justices viewed this gaming system, which was first introduced in Arkansas in the year 2000, as distinct from betting on live horse races.
“The off-track wagering law never authorized this form of gaming, which was not even invented when off-track wagering was enacted,” the court’s opinion states. “Based on our de novo review of the evidence, Act 437 authorizes a new form of gaming not authorized in Louisiana before Oct. 15, 1996.”
The state constitution gives the state Legislature the authority to define gambling but also states that local elections are required to introduce new forms of gaming that were not approved prior to Oct. 15, 1996.
In a statement emailed to the Louisiana Record, the Churchill Downs Inc. expressed disappointment with the court’s finding, saying the revenues that result from historical horse racing have helped to reinvigorate the horse racing industry in Louisiana.
“As a result of this law, we made investments to bolster the horse racing industry, foster job creation and support local communities,” the statement says. “This recent court ruling directly and adversely negates this progress.”
The impact of the high court’s opinion will have immediate effects on the thoroughbred industry in the state, according to Churchill Downs.
“These include an approximately 25% reduction in purses at Fair Grounds (Race Course & Slots in New Orleans), which diminishes a key economic driver for horsemen who depend on competitive purses to support their operations, including the employment of their teams of people who care for the horses,” the statement says.
Other services that support thoroughbred racing, such as breeding farms, hay farms, the Quarter Horse industry and veterinarians, will also sustain economic damage as a result of the ruling, according to Churchill Downs.
In addition, tax revenues generated by this type of gaming that support parish governments and law enforcement will feel the brunt of the decision, according to the statement.
“This ruling places at risk an entire horse racing ecosystem that relies on historical horse racing revenue,” Churchill Downs said in its statement.