Latest news with #HHR
Yahoo
30-06-2025
- Business
- Yahoo
'We're Encouraged': Louisiana Commission Schedules Meeting With Fair Grounds Race Dates On Agenda
'We're Encouraged': Louisiana Commission Schedules Meeting With Fair Grounds Race Dates On Agenda originally appeared on Paulick Report. Late on Monday, June 16, the Louisiana State Racing Commission issued a notice scheduling a meeting for Tuesday, June 24. The agenda includes a line item for the Churchill Downs, Inc.-owned Fair Grounds entitled: "Racing Calendar for the 2025-2026 Thoroughbred meet." According to several sources, a "productive" meeting discussing the potential for a 2025-2026 race meet at the New Orleans, La., racetrack took place between horsemen and CDI officials on Monday. Ed Fenasci, executive director of the Louisiana Horsemen's Benevolent and Protective Association, said: "Nothing to announce yet, but we're encouraged by our discussions thus far and look forward to the best meet we can have." Advertisement The uncertainty surrounding the 2025-2026 meet began when CDI CEO Bill Carstanjen wrote to the Louisiana State Racing Commission on June 9 stating the company's intention to surrender its racing license to run a live meet at Fair Grounds in 2025-'26. Carstanjen also said the company expected to surrender its slots and video poker license. The move by CDI came after the state Supreme Court ruled legislatively approved historical horse racing (HHR) at Fair Grounds OTBs was unconstitutional and required approval in local referendums. An attorney for CDI told the racing commission at an emergency meeting in May that the situation was "dire" because of the loss of revenue from HHR wagering, and that a Fair Grounds meet would not be held this year without some form of legislative assistance. Last Thursday, in the waning hours of the 2025 regular session which ended June 12, state legislators in Louisiana advanced a bill designed to prevent CDI from shuttering the Fair Grounds facility and ending live horse racing. The amendment to Senate Bill 195 designates New Orleans track as an "historic site," and states that "demolition, structural alteration, sale or cessation of racing operations" can only occur with legislative approval. This story was originally reported by Paulick Report on Jun 16, 2025, where it first appeared.
Yahoo
14-05-2025
- Business
- Yahoo
Situation 'Dire': Fair Grounds May Not Run 2025-'26 Race Meet Without Legislative Help
The future of Fair Grounds Race Course & Slots is 'dire,' an attorney for owner Churchill Downs, Inc. told the Louisiana State Racing Commission on Tuesday, and if economic circumstances do not improve the 2025-'26 meet at the New Orleans track will not take attorney, Ozair Shariff, read from a statement at the emergency meeting, held at the racing commission office in New Orleans, citing the loss of revenue from historical horse racing machines at Fair Grounds and the track's off-track betting facilities. In March, the Louisiana Supreme Court ruled a 2021 state law authorizing HHR machines without local referendums was unconstitutional. Fair Grounds racing operations alone lose 'millions annually,' Shariff told commissioners, but revenue from the track's slot machines offset the losses, allowing the property to break even. 'Fair Grounds' overall profitability is dependent on revenue generated from its OTB network, specifically video poker and historical racing – until last week,' Shariff said, referring to the cessation of HHR wagering after the Supreme Court decision went into effect. 'The elimination of 46 percent of the OTB revenue and an even more significant 74 percent of OTB EBITDA does not allow Fair Grounds to cover its required $9 million average annual maintenance operating capital.'Faced with this reality, operating under the current status quo is no longer an option," Shariff Louisiana legislature is in session until June 12, and Shariff said CDI is 'actively engaged in numerous discussions with key legislators in an attempt to solve this very dire problem. While these talks have slowed, Fair Grounds remains committed to maintaining an open dialogue and finding a path towards long-term viability before the end of the session.'The future success of the Fair Grounds is something we must confront together, or else the state's entire horse racing and breeding ecosystem, and the thousands of jobs that it supports, is at risk,' Shariff said. 'At this time, the Fair Grounds is unable and unwilling to commit to the 2025-2026 race dates assigned at last month's meeting, and as detailed in the HBPA's most recent submission, which were approved without application by the Fair Grounds. If a solution is found that ensures the Fair Grounds' long-term economic viability, then the Fair Grounds will commit to racing in the fall.' Shariff was immediately rebuked by Louie Roussel III, a prominent New Orleans businessman and horse owner who once owned the Fair Grounds and spoke to the commission, he said, on behalf of Gov. Jeff Landry.'Churchill Downs got along pretty good before they had HHR machines, didn't they?' said Roussel. 'They didn't complain about their profitability. They sent two individuals to meet with the president of the Louisiana Senate, Mr. Cameron Henry, asking for a subsidy for the Fair Grounds for the upcoming season. They presented no evidence of any loss of funds.'Do not let them come here and poor mouth you,' Roussel told the commissioners, adding that CDI had revenue of $2.8 billion in 2024 and $427 million in net profit. "Does this sound like someone who is poor mouthing? It's laughable. Do not allow these people to do this. … If they tell you they don't want to race, fine them $50,000 or $100,000 a day for every day they don't race.' Roussel said Bill Carstanjen, CEO of Churchill Downs Inc., threatened to 'padlock the track' if they didn't get their way.'I urge you to do what is right for the horsemen, the breeders, and, more importantly, the citizens of the state and the citizens of New Orleans to stand up to Churchill Downs and not allow them to dictate to you what you have to do. This should be a partnership: the track and the commission to help racing be better, not the way they present it.'Gov. Landry has told me to tell them, take out your HHR machines, replace them with the video poker machines you had, and start the process, the legislative process if you want HHR machines,' Roussel said. 'There will be no state subsidy for this racetrack. None.' Commissioners voted to approve a Nov. 20-April 9 meet for 2025-'26, even though Fair Grounds has not asked for dates. Under state law, any licensed track awarded dates must run those dates – barring severe economic problems – or face economic consequences, racing commission chairman Edward J. Koehl Jr. said. 'You have to show financial distress,' Koehl told Shariff."We are not accepting the race dates," Shariff said the commission would hold another meeting on June 15 once the legislative session ends.
Yahoo
10-03-2025
- Business
- Yahoo
Lottery chief: Profit estimates from slots bill have gone up
Mar. 10—The state's top lottery official is raising his bet on how much revenue slot machines could raise based on the overflow crowds at the opening weekend of the latest charity casino complex. Lottery Commission Executive Director Charles McIntyre said while the kickoff of The Nash casino at the Pheasant Lane Mall was supposed to be a "soft opening," there were lines of gamblers waiting to play the historical horse racing machines there. McIntyre said his team would produce a revised revenue estimate for a bill legalizing slot machines later this week. Another charity casino opened Monday night in Rochester, bringing to 3,500 the number of historical horse racing (HHR) machines in New Hampshire. Offered in states where traditional slot machines are illegal, HHR machines are similar to the traditional slots except that they use random archived thoroughbred races to generate results. A state-hired consultant has concluded the market could thrive with 6,000 machines across the state. Among 10 year-round charity casinos in the state, McIntyre said the average HHR machine is generating $280 in profit each day. "The standard in the industry is that if you are over $250 per machine, you add (to the market), if you are below that level, then you subtract," McIntyre said. The House Ways and Means Committee took testimony Monday on the House bill (HB 728) that would give charity casino owners just under three years to convert all their HHR machines to regular slot machines. State Sen. Timothy Lang, R-Sanbornton, has a competing bill (SB 83) the state Senate will debate Thursday which would allow the casino operators to decide when they wish to convert to slots. McIntyre said studies have shown Nashua was the ideal location for a charity casino since it was likely to attract the most business from gamblers coming north from Middlesex and Essex counties in Massachusetts. McIntyre said the Encore Harbor Place casino in Everett, Mass., is difficult to get to and Foxwoods in Ledyard, Connecticut, is nearly a three-hour drive away. Last month, Gov. Kelly Ayotte attached a slot machine proposal to help finance her two-year state budget to the budget trailer bill. (See related story.) Ayotte's plan would raise an estimated $117 million a year for the state, increasing the state's take from 25% of the gross from HHR machines to 45% of the gross from slots. The House bill would raise the state's share to 30% while Lang's bill would retain a 25% share for the state. McIntyre said the 25% share is the lowest of the other New England states that have casinos. Former Rep. Patrick Abrami, R-Stratham, said casino operators currently pay 12% to 18% more in operating expenses with HRH than they would with slot machines. That's because the nation's thoroughbred racetracks charge those leasing the machines for each randomly selected horse race, he said. Abrami said converting to slots would also create more money to support programs that help addicted gamblers. The lottery commission currently has to set aside $150,000 a year for such programs. Rep. Susan Almy, D-Lebanon, agreed the state needs to do more to help those who can't control their gambling fixation. "We are just depending on addicts to run our state and I find that extremely offensive," Almy said. klandrigan@
Yahoo
10-02-2025
- Business
- Yahoo
Will California ever approve Historical Horse Racing machines to help save the sport?
California horse racing, now in danger of shutting down, could have put itself on solid footing more than a decade ago when it explored the idea of adding electronic machines that allow gamblers to bet on replays of horse races at its tracks. The facilities, individually, were in favor of installing the devices known as Historical Horse Racing (HHR) machines. The Native American tribes, which control non-pari-mutuel gambling in the state, were willing to become partners. All that was needed was consensus within the California horse racing industry. Louis Cella, Chuck Winner and Scott Daruty went to Sacramento to solve the problem. 'We … lobbied them and we were very close to coming to a resolution on HHR in California,' said Cella, whose family owns Oaklawn Park in Arkansas and were the first to install HHR-like machines. 'But then you had the conflicting views from the Northern tracks and the Southern tracks and the management in between couldn't agree on anything. It became moot. It could not be solved. 'It got so far that the Native American tribes were saying, 'If you can solve that problem, we'll play that game and let you go.' We were going to save racing in California. But then special interests took over. … I don't see how that's getting resolved.' Cella could not remember the exact year the meeting took place. Winner, who was on the California Horse Racing Board (CHRB) between 2012-2019, died on March 24, 2022. Santa Anita owner The Stronach Group (TSG), for which Daruty works as a senior executive, denied a Times request for an interview. Outside the room was Steve Keech, who worked for TSG at the time and now works in technology at the Horseracing Integrity and Safety Authority (HISA). 'When they came outside, they said, 'So and so wants another couple points [of the profits],'" Keech recalled. "… The game doesn't work where it's an infinite amount of money. You keep cutting it up and just about everybody wanted that one more point. Read more: Inside California horse racing's complex problems that could hurt the sport nationwide '[Northern California and Southern California] couldn't agree on anything, [especially with separate simulcasting regulatory groups running the north and south]. It was all, who wants this piece or that piece [of the money]? [The tribes] were willing to play because they were going to get a piece.' The Northern versus Southern issue has been resolved, with Northern tracks closing. But the question remains whether California can approve the use of HHR machines to help save the sport. Most in the industry agree that if California doesn't get HHR or some other form of supplemental income to boost purses, racing in the state will not continue much longer. Santa Anita is having a good start to its current meeting with mutuel handle up. The track says attendance is up, but Santa Anita is notorious for its inaccuracy in this area. 'CHRB long ago stopped providing attendance numbers in the annual report that were provided by racetracks because those numbers were and still are highly inflated for publicity purposes,' the CHRB stated in a September email to commissioners and executives. But the Santa Anita mutuel handle appears to be up, benefiting from simulcast money that was originally supposed to go to Northern California. The track just announced an increase in purses of about 20%. California racing has some of the lowest purses in the country for tracks the size of Santa Anita and Del Mar. Horsemen find racing elsewhere so much easier and more cost efficient. Kentucky has heavily subsidized racing purses because of its use of Historical Horse Racing machines. New York has casino gambling backing its purses. Oaklawn remains one of the most successful tracks in the country and it is tied to a casino. Survival rests on getting owners to bring their horses to California to run for competitive purses. Higher purses attract more horses, which means larger fields, which leads to more money being bet, all of which brings more money for everyone in racing. The maiden races at Churchill Downs in Kentucky pay twice what they do in California. While many East and Midwest tracks run stakes approaching $1 million, California stakes are usually run at the bare authorized minimum of $300,000 for Grade 1s, $200,000 for Grade 2s and $100,000 for Grade 3s. In 1986, the Santa Anita Handicap was a $1-million race. This year it is being run for $300,000. Read more: Former Santa Anita employee's lawsuit alleges lying amid horse deaths The urgency is well known within the community. There are four point people tasked with finding that solution — Aidan Butler, chief executive of 1/ST Racing, which owns Santa Anita; Josh Rubinstein, chief operating officer at Del Mar; Bill Nader, chief executive of the Thoroughbred Owners of California; and Keith Brackpool, a former CHRB chairman and TSG executive, who is working as a consultant. While there are occasional discussions among the leaders, there are no set meetings or information shared with the public. Butler, Nader and Rubinstein, who did return messages from The Times, all declined to speak about specifics or their efforts. TSG denied a Times request to talk to Brackpool and he did not respond to a phone message. The principals involved in the HHR effort have all been asked to sign non-disclosure agreements, people with knowledge of the talks told The Times. The Tribal Nation's control of California gaming is well established both legally and culturally. In 1988, Congress passed the Indian Gaming Regulatory Act and ceded all authority over gaming on tribal lands to the states in which they reside. California, in turn, passed laws that allowed only five types of gambling. There are Indian casinos, which are allowed to have Las Vegas-style table games (except roulette) and slot machines; card clubs; charitable gambling (church bingo); the state lottery; and pari-mutuel wagering connected to horse racing. In 2000, voters passed Proposition 1A, which exclusively gave the right to use slot machines to the tribes. In 2004, a state ballot initiative that would have allowed the expansion of non-tribal gambling was defeated 84% to 16%. Read more: Attempt to revive horse racing in Northern California ends, affecting the sport around the state So, it seems that the law is on the side of the tribes. But racing interests say that HHR is not a game of chance but skill and is connected to a pari-mutuel hub. The problem is that everything about HHR screams slot machine. Multiple people with knowledge of the situation told The Times there has been no formal contact between the tribes and racing interests to find common ground. 'We are very concerned about possible efforts to bring Historical Horse Racing gaming machines to California,' said James Siva, chairman of the California Nations Indian Gaming Assn. 'These machines would seem to violate tribal exclusivity as they operate as de facto slot machines. While these machines have features that are cosmetically different from slot machines on both the back and front ends, for players the difference is imperceptible. 'In the past few years, the attorneys general in the states of Oregon and Arizona quelled efforts in their respective states to install these machines at non-tribal gaming facilities. We will be discussing the issue and looking at options as this matter continues to evolve.' Some on the edges of finding an HHR machines solution not authorized to discuss it publicly say there are between four and six plans. Conversations with more than a dozen people with knowledge of the process painted a picture of the problems faced and decisions being made in regard to HHR. Most people interviewed did not want their name used for fear of upsetting the strategy. Here is a sampling of courses of action that have been or will be considered: — Negotiate with the tribes for a split in income from the machines. The machines would be located on track and be open seven days a week. This is the most seamless solution to the HHR dilemma. But it can't happen without conversations with the tribes. Read more: Golden Gate Fields comes to a close as California racing struggles to exist — Roll out a few machines, maybe 40, after approval of the CHRB but with no agreement with the tribes. The thinking was this few number of machines would not be threatening to the tribes. It was then determined that the tribes are likely to sue the track regardless of the number of machines involved. So, this plan was placed on the back burner. — Roll out a lot of machines, perhaps as many as 1,000, get ready for litigation and make a fair amount of money while things work their way through the courts. — Hold tight for now but seek redress from the Legislature. In short, change the law so that HHR would be allowed on racetrack grounds. This now becomes a battle of the lobbyists and the tribes don't lose often. It could be a negotiating point. HHR is not believed to be a serious concern of the tribes as the amount of money, in the grand scheme, is not that much. The tribes have opposed any form of gambling it doesn't control for fear of the 'slippery slope' of adding more gambling it does not control. But the tribes may be willing to allow HHR if they can gain concessions in the Legislature on internet gambling, which remains their No. 1 concern. — The tracks negotiate with just a single tribe, not the consortium of all of them, to allow HHR on their property. A representative of the tribes told The Times that no individual tribal entity could negotiate on their own. But … there are 109 tribes in California and 76 California Indian gaming casinos (and five mini-casinos). Total revenue is $9 billion. This could set up infighting in the tribal community that could strengthen the tracks' position, only because there is not an enormous amount of money at stake. Again, if the tribes were to get something in return, such as concessions on internet wagering, the equation could change. This may eventually end up in the wheelhouse of Rob Bonta, the California attorney general. His office, when contacted by The Times, referred the question about HHR to the CHRB, which is in favor of HHR. But it is unclear whether the attorney general endorses that position or simply was declining to discuss it publicly. The specter of HHR in California has been there for a while. But it exploded when CHRB chairman Greg Ferraro told the New York Times in November that HHR machines would be in California tracks shortly and that the CHRB would approve it. 'I guess the cat is out of the bag,' one CHRB commissioner told The Times. But Ferraro's comments seemed premature as months passed without HHR machines appearing on the CHRB agenda. Beneath all the politics, how quickly tracks can use HHR machines likely hinges on whether they are considered games of chance or skill. If it is skill, and proved to be a pari-mutuel product, then the path to success is much easier. If it is shown to be a game of chance, such as slot machines, then it would be nearly impossible to use the machines without tribal cooperation. The Times played the 1/ST Racing HHR machine, powered by PariMAX, and the Churchill Downs product under the name Exacta. Representatives of both products were willing to exhibit their products at the Global Symposium in Tucson, but declined to publicly discuss the machines. There is little doubt that the machines are designed to provide fast action with a payout that is clearly better than horse racing. Takeout on horse racing gambling — the fee immediately withheld from any winnings — is usually in the mid to late teens but can exceed 20%. The average take on a slot machine is 82% to 95%. People familiar with California horsemen's sentiments told The Times that they probably would accept an 8% takeout, with at least one point (of 100) going to breeding, at least two or three for purses and the remainder split between the track and the tribes. Kentucky has about an 8% takeout, which is far superior to what bettors get if playing the horses. Playing the HHR machines is identical to the experience of playing a slot machine. You can play as fast or slow as you want and your eyes are transfixed on the middle of the machine where you see the traditional symbols of cherries, dollar signs and jackpot payoffs. You can hit another button and get minimal handicapping information that, essentially, is worthless to someone who really wants to play horse racing. If you pull the handle, or push the button, the wheels spin until the result of traditional slot symbols is final. Then at the top of the machine, you get about the last second or two of the race. No more. There is an option to view the full race, but few use it. 'We just discovered that people don't want to watch the race, they just want the action and that the race slows things down,' said a vendor representative who said they could not be quoted on any issue. Read more: Raging Torrent beats Kentucky Derby winner Mystik Dan on opening day at Santa Anita HISA's Keech helped develop the first HHR machines and his name is on the original patent. 'When you go to play a slot machine, it's like going to a movie, there's a particular experience you're looking for,' Keech said. 'As a player, what you want in the experience is not watching horse racing. Sorry, it's not. But it's a way for horse racing to monetize historic content. 'It's OK for movies to do that, it's OK for singers to do that, it's OK for all these other industries to do that, so why is everyone wigged out that horse racing wants to monetize its content. … I have some disagreements with some of the designs of things, but no, it is 100% not a slot machine. If you look at a slot math model and then look at an HHR math model, they aren't even close.' If you wondered how HHR can crank out as many races as it can and still build a mutuel pool, it's because of a model that you aren't just playing people in the same room as you, but all over the country. Santa Anita believes it has the infrastructure ready to go. In late November, the track rolled out the machines and plugged them in on the third-floor grandstand. At the time, Butler said the machines were at the track since at least 2019 when he joined the company. HHR experts looked at pictures of the machines and verified they are very old models. Butler was angry that word of the machines had leaked and when The Times inquired about them, he ordered the machines to be shut off and put back in storage. If Santa Anita were to add machines, they would probably be newer models produced by the company that owns the track. Unless an agreement can be reached with the tribes, the use of HHR machines in California is likely to be decided by the courts. And perhaps the question of whether HHR is a game of skill or chance will favor horse racing, despite some obvious challenges. 'You know the old saying, 'If it walks like a duck and quacks like a duck?'" said Marc Guilfoil, HISA's director of state racing commission relations. "Well, we call those swimming chickens.' Get the best, most interesting and strangest stories of the day from the L.A. sports scene and beyond from our newsletter The Sports Report. This story originally appeared in Los Angeles Times.
Los Angeles Times
10-02-2025
- Business
- Los Angeles Times
Will California ever approve Historical Horse Racing machines to help save the sport?
California horse racing, now in danger of shutting down, could have put itself on solid footing more than a decade ago when it explored the idea of adding electronic machines that allow gamblers to bet on replays of horse races at its tracks. The facilities, individually, were in favor of installing the devices known as Historical Horse Racing (HHR) machines. The Native American tribes, which control non-pari-mutuel gambling in the state, were willing to become partners. All that was needed was consensus within the California horse racing industry. Louis Cella, Chuck Winner and Scott Daruty went to Sacramento to solve the problem. 'We … lobbied them and we were very close to coming to a resolution on HHR in California,' said Cella, whose family owns Oaklawn Park in Arkansas and were the first to install HHR-like machines. 'But then you had the conflicting views from the Northern tracks and the Southern tracks and the management in between couldn't agree on anything. It became moot. It could not be solved. 'It got so far that the Native American tribes were saying, 'If you can solve that problem, we'll play that game and let you go.' We were going to save racing in California. But then special interests took over. … I don't see how that's getting resolved.' Cella could not remember the exact year the meeting took place. Winner, who was on the California Horse Racing Board (CHRB) between 2012-2019, died on March 24, 2022. Santa Anita owner The Stronach Group (TSG), for which Daruty works as a senior executive, denied a Times request for an interview. Outside the room was Steve Keech, who worked for TSG at the time and now works in technology at the Horseracing Integrity and Safety Authority (HISA). 'When they came outside, they said, 'So and so wants another couple points [of the profits],'' Keech recalled. '… The game doesn't work where it's an infinite amount of money. You keep cutting it up and just about everybody wanted that one more point. '[Northern California and Southern California] couldn't agree on anything, [especially with separate simulcasting regulatory groups running the north and south]. It was all, who wants this piece or that piece [of the money]? [The tribes] were willing to play because they were going to get a piece.' The Northern versus Southern issue has been resolved, with Northern tracks closing. But the question remains whether California can approve the use of HHR machines to help save the sport. Most in the industry agree that if California doesn't get HHR or some other form of supplemental income to boost purses, racing in the state will not continue much longer. Santa Anita is having a good start to its current meeting with mutuel handle up. The track says attendance is up, but Santa Anita is notorious for its inaccuracy in this area. 'CHRB long ago stopped providing attendance numbers in the annual report that were provided by racetracks because those numbers were and still are highly inflated for publicity purposes,' the CHRB stated in a September email to commissioners and executives. But the Santa Anita mutuel handle appears to be up, benefiting from simulcast money that was originally supposed to go to Northern California. The track just announced an increase in purses of about 20%. California racing has some of the lowest purses in the country for tracks the size of Santa Anita and Del Mar. Horsemen find racing elsewhere so much easier and more cost efficient. Kentucky has heavily subsidized racing purses because of its use of Historical Horse Racing machines. New York has casino gambling backing its purses. Oaklawn remains one of the most successful tracks in the country and it is tied to a casino. Survival rests on getting owners to bring their horses to California to run for competitive purses. Higher purses attract more horses, which means larger fields, which leads to more money being bet, all of which brings more money for everyone in racing. The maiden races at Churchill Downs in Kentucky pay twice what they do in California. While many East and Midwest tracks run stakes approaching $1 million, California stakes are usually run at the bare authorized minimum of $300,000 for Grade 1s, $200,000 for Grade 2s and $100,000 for Grade 3s. In 1986, the Santa Anita Handicap was a $1-million race. This year it is being run for $300,000. The urgency is well known within the community. There are four point people tasked with finding that solution — Aidan Butler, chief executive of 1/ST Racing, which owns Santa Anita; Josh Rubinstein, chief operating officer at Del Mar; Bill Nader, chief executive of the Thoroughbred Owners of California; and Keith Brackpool, a former CHRB chairman and TSG executive, who is working as a consultant. While there are occasional discussions among the leaders, there are no set meetings or information shared with the public. Butler, Nader and Rubinstein, who did return messages from The Times, all declined to speak about specifics or their efforts. TSG denied a Times request to talk to Brackpool and he did not respond to a phone message. The principals involved in the HHR effort have all been asked to sign non-disclosure agreements, people with knowledge of the talks told The Times. The Tribal Nation's control of California gaming is well established both legally and culturally. In 1988, Congress passed the Indian Gaming Regulatory Act and ceded all authority over gaming on tribal lands to the states in which they reside. California, in turn, passed laws that allowed only five types of gambling. There are Indian casinos, which are allowed to have Las Vegas-style table games (except roulette) and slot machines; card clubs; charitable gambling (church bingo); the state lottery; and pari-mutuel wagering connected to horse racing. In 2000, voters passed Proposition 1A, which exclusively gave the right to use slot machines to the tribes. In 2004, a state ballot initiative that would have allowed the expansion of non-tribal gambling was defeated 84% to 16%. So, it seems that the law is on the side of the tribes. But racing interests say that HHR is not a game of chance but skill and is connected to a pari-mutuel hub. The problem is that everything about HHR screams slot machine. Multiple people with knowledge of the situation told The Times there has been no formal contact between the tribes and racing interests to find common ground. 'We are very concerned about possible efforts to bring Historical Horse Racing gaming machines to California,' said James Siva, chairman of the California Nations Indian Gaming Assn. 'These machines would seem to violate tribal exclusivity as they operate as de facto slot machines. While these machines have features that are cosmetically different from slot machines on both the back and front ends, for players the difference is imperceptible. 'In the past few years, the attorneys general in the states of Oregon and Arizona quelled efforts in their respective states to install these machines at non-tribal gaming facilities. We will be discussing the issue and looking at options as this matter continues to evolve.' Some on the edges of finding an HHR machines solution not authorized to discuss it publicly say there are between four and six plans. Conversations with more than a dozen people with knowledge of the process painted a picture of the problems faced and decisions being made in regard to HHR. Most people interviewed did not want their name used for fear of upsetting the strategy. Here is a sampling of courses of action that have been or will be considered: — Negotiate with the tribes for a split in income from the machines. The machines would be located on track and be open seven days a week. This is the most seamless solution to the HHR dilemma. But it can't happen without conversations with the tribes. — Roll out a few machines, maybe 40, after approval of the CHRB but with no agreement with the tribes. The thinking was this few number of machines would not be threatening to the tribes. It was then determined that the tribes are likely to sue the track regardless of the number of machines involved. So, this plan was placed on the back burner. — Roll out a lot of machines, perhaps as many as 1,000, get ready for litigation and make a fair amount of money while things work their way through the courts. — Hold tight for now but seek redress from the Legislature. In short, change the law so that HHR would be allowed on racetrack grounds. This now becomes a battle of the lobbyists and the tribes don't lose often. It could be a negotiating point. HHR is not believed to be a serious concern of the tribes as the amount of money, in the grand scheme, is not that much. The tribes have opposed any form of gambling it doesn't control for fear of the 'slippery slope' of adding more gambling it does not control. But the tribes may be willing to allow HHR if they can gain concessions in the Legislature on internet gambling, which remains their No. 1 concern. — The tracks negotiate with just a single tribe, not the consortium of all of them, to allow HHR on their property. A representative of the tribes told The Times that no individual tribal entity could negotiate on their own. But … there are 109 tribes in California and 76 California Indian gaming casinos (and five mini-casinos). Total revenue is $9 billion. This could set up infighting in the tribal community that could strengthen the tracks' position, only because there is not an enormous amount of money at stake. Again, if the tribes were to get something in return, such as concessions on internet wagering, the equation could change. This may eventually end up in the wheelhouse of Rob Bonta, the California attorney general. His office, when contacted by The Times, referred the question about HHR to the CHRB, which is in favor of HHR. But it is unclear whether the attorney general endorses that position or simply was declining to discuss it publicly. The specter of HHR in California has been there for a while. But it exploded when CHRB chairman Greg Ferraro told the New York Times in November that HHR machines would be in California tracks shortly and that the CHRB would approve it. 'I guess the cat is out of the bag,' one CHRB commissioner told The Times. But Ferraro's comments seemed premature as months passed without HHR machines appearing on the CHRB agenda. Beneath all the politics, how quickly tracks can use HHR machines likely hinges on whether they are considered games of chance or skill. If it is skill, and proved to be a pari-mutuel product, then the path to success is much easier. If it is shown to be a game of chance, such as slot machines, then it would be nearly impossible to use the machines without tribal cooperation. The Times played the 1/ST Racing HHR machine, powered by PariMAX, and the Churchill Downs product under the name Exacta. Representatives of both products were willing to exhibit their products at the Global Symposium in Tucson, but declined to publicly discuss the machines. There is little doubt that the machines are designed to provide fast action with a payout that is clearly better than horse racing. Takeout on horse racing gambling — the fee immediately withheld from any winnings — is usually in the mid to late teens but can exceed 20%. The average take on a slot machine is 82% to 95%. People familiar with California horsemen's sentiments told The Times that they probably would accept an 8% takeout, with at least one point (of 100) going to breeding, at least two or three for purses and the remainder split between the track and the tribes. Kentucky has about an 8% takeout, which is far superior to what bettors get if playing the horses. Playing the HHR machines is identical to the experience of playing a slot machine. You can play as fast or slow as you want and your eyes are transfixed on the middle of the machine where you see the traditional symbols of cherries, dollar signs and jackpot payoffs. You can hit another button and get minimal handicapping information that, essentially, is worthless to someone who really wants to play horse racing. If you pull the handle, or push the button, the wheels spin until the result of traditional slot symbols is final. Then at the top of the machine, you get about the last second or two of the race. No more. There is an option to view the full race, but few use it. 'We just discovered that people don't want to watch the race, they just want the action and that the race slows things down,' said a vendor representative who said they could not be quoted on any issue. HISA's Keech helped develop the first HHR machines and his name is on the original patent. 'When you go to play a slot machine, it's like going to a movie, there's a particular experience you're looking for,' Keech said. 'As a player, what you want in the experience is not watching horse racing. Sorry, it's not. But it's a way for horse racing to monetize historic content. 'It's OK for movies to do that, it's OK for singers to do that, it's OK for all these other industries to do that, so why is everyone wigged out that horse racing wants to monetize its content. … I have some disagreements with some of the designs of things, but no, it is 100% not a slot machine. If you look at a slot math model and then look at an HHR math model, they aren't even close.' If you wondered how HHR can crank out as many races as it can and still build a mutuel pool, it's because of a model that you aren't just playing people in the same room as you, but all over the country. Santa Anita believes it has the infrastructure ready to go. In late November, the track rolled out the machines and plugged them in on the third-floor grandstand. At the time, Butler said the machines were at the track since at least 2019 when he joined the company. HHR experts looked at pictures of the machines and verified they are very old models. Butler was angry that word of the machines had leaked and when The Times inquired about them, he ordered the machines to be shut off and put back in storage. If Santa Anita were to add machines, they would probably be newer models produced by the company that owns the track. Unless an agreement can be reached with the tribes, the use of HHR machines in California is likely to be decided by the courts. And perhaps the question of whether HHR is a game of skill or chance will favor horse racing, despite some obvious challenges. 'You know the old saying, 'If it walks like a duck and quacks like a duck?'' said Marc Guilfoil, HISA's director of state racing commission relations. 'Well, we call those swimming chickens.'
