At the end of the 1990s, Eric Jackson, general manager of Oaklawn Park racetrack in Arkansas, conceived the idea of historical race wagering (also called “instant racing”) and presented it to Ted Mudge, president of the American Totalisator Company, known today as AmTote International. The idea was then presented to experts at a racing industry gathering in February 1998 and the project gained momentum thereafter.
Historical or instant racing can be defined as a form of electronic gambling where punters place wagers on horse races selected from a video archive of historic races. Bets are placed on machines resembling slot machines or video lottery terminals, but the outcome of each game is pre-determined by the results of previously run races. The results are unknown to punters, since the screen does not show information on horses’ or jockeys’ names, or where the race was run etc. Punters can also place a bet, skip watching the race, and go straight to the outcome.
Betting handle on US horse races decreased from US$18.4bn in 2001 to US$12.8bn in 2011 so both the industry and lawmakers were looking for new sources of revenue. In 2012 the trend was finally reversed, with handle up 3.1% YoY thanks to the growth of Advanced Deposit Wagering (ADW) and the introduction of historical racing in states like Kentucky and Arkansas.
There was a period of two and a half years in Wyoming when the machines were legal. Their impact on handle can be seen on the graph below. It is evident that historical racing does help in overall handle trend, since after historical racing had been discontinued handle dropped again significantly from US$24.8m in 2005 to US$11.6m in 2006. The machines were legalised again in 2013.
Out of those six states that have legalised historical racing machines, there is opposition to the current legislation in two of them – Idaho and Kentucky.
In Idaho there is a bill that has already passed the Senate that aims to repeal the law by summer 2015. Lawmakers claim that instant racing machines are too similar in appearance to slot machines and VLTs, and are considered a game of chance. Issues also arise from the fact that a punter can skip the whole race and see the results a few moments after placing a bet. Ranchers, horse breeders and jockeys claim that repealing the law would mean the end of the racing industry in the state.
Even though Kentucky legalised instant racing back in 2010, legal challenges have been dragging out to the present day. In December 2010 a Circuit Court judge sustained the legality of instant racing, but the Court of Appeals sent the issue back to the Circuit Court after an opposing group intervened. Kentucky racetracks and the Governor’s administration responded by filing a motion to the Kentucky Supreme Court to review the Court of Appeals’ decision. In January 2013 the Supreme Court agreed to review the case. The issue has not yet been resolved.
Nevertheless, instant racing proved very popular in Kentucky, reversing the trend of decline in overall handle. Part of its popularity comes from high payouts, as the tracks keep only 8.1% of bets on average. In the four months to the end of 2011, instant racing accounted for US$29m in historical racing handle, while total handle amounted to US$464m. In 2012 the handle from betting on historical racing at two tracks was US$198m, while total racing handle grew 19.2% YoY to US$553m. In 2013 the historical racing handle reached US$318m, while total racing handle peaked at US$660m (+19.3% YoY).