The Illinois Racing Board (IRB) is going to develop regulations that will permit racetracks to offer historical horse racing in the state.
The decision came at the IRB’s regular monthly meeting on July 26. Commissioner Thomas McCauley submitted a report to the group.
Audio of the meeting is available on the IRB website. The agenda discussion of historic horse racing begins at 18:40.
The report determined that historical horse racing qualifies as pari-mutuel wagering under Illinois state law. As such, racetracks don’t need to wait for further legislation to implement it.
Historical horse racing is a form of gambling on video terminals. The games allow bettors to wager on replays of horse races that have already been run. The bettor does not know the real names of the horses. However, they do get some statistical information on each horse’s previous form.
McCauley explained the impetus to introduce the new game:
“The Illinois horse racing industry is in a desperate economic condition. It is not hyperbolic to say that its viability is in doubt. Two of five tracks have closed in the last few years.”
Legal challenges on the horizon
The video terminals bear a superficial resemblance to video gaming terminals (VGT) or slot machines. This similarity means that the new form of gambling may face legal challenge despite the IRB’s unanimous vote to accept the conclusions of McCauley’s report.
The Chicago Tribune notes that a former IRB attorney, Katherine Laurent declared in a 2014 memo that “historical horse racing is not legal because it’s not “live” racing, as required by state law.”
The Trib also quotes Anita Bedell, executive director of Illinois Church Action on Alcohol and Addiction Problems:
“This should go through the legislature. These are basically slot machines.”
On the other side of the debate, the IRB’s former executive director Mark Alaina and former IRB chairman and attorney, William Berry both said that they believe the IRB has the authority to introduce historical horse racing without further recourse to the legislature.
Supporters point to Kentucky, which has similar laws to Illinois. It is also where historical horse racing was introduced without further changes in the law.
Historical horse racing faces strong competition
While Illinois may not be in the forefront of states that have liberalized gambling, it has authorized VGTs.
Since the new law was passed in 2012 the number of VGTs in Illinois has reached almost 24,000, and may reach as high as 28,000 by the end of this fiscal year. In 2017, Illinois reported VGT revenues of $1.2 billion.
The risk for the IRB is that the new historical horse racing terminals cannibalize existing income rather than generate new revenues.
In marketing terms, the IRB is introducing the new terminals for all the wrong reasons.
It isn’t responding to consumer demand, it is introducing them because their tangential relationship to horse racing means they are the only type of gambling machines which the IRB thinks it can legally authorize.
As McCauley pointed out during the meeting, the IRB is hamstrung because of Illinois gaming laws. What the IRB really wants is a revision of the laws that would allow them to offer racetrack gambling that can compete directly with casinos.
There is hope for progress in Illinois gambling legislation
The current legislative session isn’t going to see a vote on expanding state-regulated gambling. The next session may well address the issue though.
In May of last year, the state Senate passed a bill that would have allowed online gambling and daily fantasy sports (DFS). In the current session, there was a last-ditch effort to revive the measures. Rep. Robert Rita, the chair of the House Gaming Subcommittee tabled amendments that would have allowed online gambling DFS and sports betting.
Most recently, there have been moves to get sports betting on the agenda with the possibility that hearings would be held in July. July is virtually over, and there has been no movement yet.
The looming elections in November mean that the chances of passing new legislation are slim.
Nevertheless, there is support in both House and Senate for some form of legislation particularly with regard to sports betting.
What happens next?
The IRB meeting agreed that staff:
“be directed to draft suggested rules to be considered by the board, whereby organization licensees could lawfully and permissibly conduct historical horse racing.”
When those rules are eventually set, both by the IRB and the governor’s staff need to approve them before submitting them to the state legislature’s Joint Committee on Administrative Rules.
Historical horse racing will then be available to punters at the state’s racetracks. Whether it will be enough to rescue Illinois’ horse racing industry is debatable.
Perhaps the best hope is that state gambling legislation makes it through the legislature next year.