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Los Angeles Times
28-07-2025
- Business
- Los Angeles Times
Historical Horse Racing machines key to the sport's future in California are in peril
California horse racing, struggling to stay afloat, got a stark reminder how uphill its battle is to add a new form of supplemental income this month when state Atty. Gen. Rob Bonta ruled against daily fantasy sweepstakes. The decision underscored the power of Indigenous tribes when it comes to gambling in California. Bonta's ruling upholding tribal sovereignty, in conjunction with rare public comments from an influential tribal leader, puts the idea of Southern California getting Historical Horse Racing machines to bolster purses in worse shape. The sport has been in decline nationally. Dwindling foal crops, shrinking purses and a stagnant and aging fan base has pointed to California racing being on the edge of extinction. Mutuel handle, the amount of money bet, at Santa Anita this past meeting was marginally up mostly because the track's parent company killed its northern California track, Golden Gate Fields, and the California Horse Racing Board (CHRB) in conjunction with the Thoroughbred Owners of California, facilitated the end of fair racing in Northern California. The idea was that the money normally bet in Northern California, or acquired through simulcast wagering, would then be redirected to the south, so that Santa Anita and Del Mar could increase its daily purses. The solution to these problems was identified a few years ago: The sport needs to get Historical Horse Racing, which looks, feels and sounds like a slot machine, so that revenue generated by the machines could be put into purses that would attract more trainers and owners to California. The question everyone keeps asking is: What is the industry doing to get Historical Horse Racing? In February, The Times outlined five pathways to adding Historical Horse Racing in California. Now only one or two seem viable. The group that is running point on adding the machines is made up of former CHRB chair and Santa Anita official Keith Brackpool, now a consultant; Aidan Butler, president of 1/ST Racing, also known as The Stronach Group (TSG); Scott Daruty, a senior executive at TSG; Josh Rubinstein, president of the Del Mar Turf Club; and Bill Nader, president and chief executive of the Thoroughbred Owners of California. The options earlier this year were: work a deal with the tribes; roll out a limited number of machines at the tracks and ask for permission later; install up to 1,000 machines at the tracks without permission; seek legislative or ballot initiative help; or negotiate with a single tribe instead of all of them. The tribal nation's control of California gaming is solid 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 passed laws that allowed only five types of gambling: American 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%. And Bonta ruled against daily fantasy sweepstakes, reiterating the state's position on gaming. 'While the California Nations [Indian] Gaming Assn. commends Atty. Gen. Rob Bonta for standing up for the rule of law in California, it is also very clear that California has long turned a blind eye to illegal gambling — at the direct expense of tribal governments,' association chairman James Siva said. 'Untold millions if not billions have been illegally wagered over the past decade. Where is the enforcement? Where is the accountability?' This is not the ideal moment for the tracks and tribes to work out a deal. 'The chances of horse racing ramming something past the tribes is slim and none,' said Victor Rocha, conference chair of the Indian Gaming Assn. Rocha spoke to The Times as owner and publisher of a website designed to give tribal members the latest news on politics and gaming, rather than as chair of the IGA because the IGA has a separate spokesperson. 'There are times that we work together [with the tracks,] but then there are groups like The Stronach Group who try and push things through, which is the definition of a fool's errand,' Rocha said. 'Let's just say they are very ambitious,' he said. 'But I would say they don't have enough juice or enough power. They don't have enough people who care. The average age of a horse player is decomposing. This would be a desperate act by a desperate company.' The Stronach Group did not respond to The Times' requests for comment. There were no responses to multiple requests to interview Brackpool, Daruty and the attorney general. Rocha questions the value of negotiating with horse racing leaders. 'The whole argument that [Historical Horse Racing machines] will save horse racing is false,' Rocha said. 'The only thing that can save horse racing is the second coming. Can anything save horse racing? The answer is no. If you look across the country and the modern day racino [a casino and race track with shared financial interest on the same property], you see it's not about the horses. It's about the bottom line of the owners. 'It is a dying industry. They are going to have to get a ballot initiative or go through the tribes. The tribes have exclusivity for Class 3 gaming in California. And we will protect our exclusivity. The attitude is, if they go down that path [without us,] there will be a fight.' Historical Horse Racing machines are generally set up with an 8% takeout, the money that is kept by the operators and not returned to the bettors. Rocha was asked about a scenario in which 1% goes to the California breeders, 3% to racing purses and the tribes keep the remaining 4%. 'I don't know if there is a deal to be made,' Rocha replied. Adding to the frustration of the horsemen and horse players is the lack of information coming from the tracks on how they plan to address this issue and secure their future. Rocha, who checked with others in tribal groups before answering the question, said he is unaware of any contact between the tribes and the group put together to secure Historical Horse Racing. His account conflicts with what Butler, president of The Stronach Group, told The Times in May. 'I believe there are a lot of ongoing talks with industry partners,' Butler said. He added there have been conversations with a few of the tribes about the issue. Butler attributed the lack of information coming out of his working group to the sensitivity of the topic. 'You can't litigate or negotiate in the media,' Butler said. 'Some of the these are very, very delicate. You've got casinos, you've got tribal interests, you've got big gaming interests. Anything you do has to be so tactfully thought through. You'd love to say we're doing this or we're doing that, but the bottom line is anytime you put a statement out there, it's dangerous to the overall strategy. Context is everything. You don't want to say anything that a potential future partner or non-partner could get the wrong idea.' The Times talked to almost two dozen people working in the horse racing industry in search of more details about the group's actions, and none could provide insight. All members of the working group have signed a nondisclosure agreement. The CHRB is not involved in the discussions but would be the regulator that oversees Historical Horse Racing should it ever come to fruition. A little talked about option would be for a track to put forth an agenda item about adding the machines, and the CHRB could mostly rubber stamp it. In 1983, state Atty. Gen. John K. Van de Kamp, who went on to lead the Thoroughbred Owners of California, issued an opinion that said: 'The Legislature's delegation of authority to the Board covering all aspects of horseracing has been upheld by the Supreme Court.' The opinion referenced was the 1961 Supreme Court decision in the Flores vs. Los Angeles Turf Club. At issue was not HHR, which hadn't been invented, but the ability of tracks to offer horizontal wagers such as the Pick Six and not have it viewed as a 'sweepstakes,' which would not be legal. 'I think given this opinion, [the CHRB could authorize it] if it is done right,' said I. Nelson Rose, a professor, attorney and author considered one of the world's leading experts on gambling and gambling law. 'One provision is you would have to have a race meet taking place and a few other technicalities. Politically, that's really going to be difficult because the tribes have such power in the Legislature. They've got huge power. 'The tracks just can't compete politically with the tribes,' he said.' But they do have enough political juice to keep the tribes from getting some things they may want.' The CHRB recently stirred the hornet's nest of adding Historical Horse Racing. In November, CHRB Chairman Greg Ferraro told the New York Times that he expected Historical Horse Racing machines to be in California race tracks in the near future. Nine months later, the only Historical Horse Racing machines that were rolled out were on the third floor grandstand at Santa Anita, but not usable by the public. The Times asked Butler about it at the time. He then ordered the machines to be shut off and put back in storage. 'The Northern California contraction has taken an inordinate amount of time and resources, but with that behind us some effort for purse supplements could start up again,' said Scott Chaney, executive director of the CHRB. 'The CHRB is very much in favor of a purse supplement and will aid in seeking that.' Chaney would not talk about Historical Horse Racing, only the need for supplementing purses. 'We would need a few more regulations in place,' he said. 'It's a lot more complicated than just putting machines in. There is a lot of regulation no one wants to talk about.' There could be another problem. Brackpool, who came to California after pleading guilty to criminal charges relating to securities trading in Britain, headed a group called Cadiz, which wanted to mine the water under the Mojave Desert and sell it to Los Angeles water interests. The leaders of the Chemehuevi tribe, or Nuwu, opposed the project because of the aquifer's potential connection to Bonanza Spring. The spring is part of the Nuwuvi Salt Song Trail, which is considered an ancient ceremonial loop in the desert. The Salt Songs are considered sacred and are used at many ceremonies to celebrate cultural revitalization and spiritual bond. Brackpool and his company were viewed as opposing the tribes. 'If the guy comes in with baggage and if they think they want an Indian fighter, then they will get an Indian fight,' Rocha said. 'Make that a failed Indian fighter. Bring him on. ... The tribes are undefeated for 25 years.' The Stronach Group and Del Mar also opposed the tribes during a meeting with Bonta in Sacramento late last year during which they asked the attorney general to oppose the tribes and get on board for Historical Horse Racing. It didn't happen. Bonta's office previously met with Kentucky operators to try to find out if there was a legal path for Historical Horse Racing machines. His office concluded that the machines were not legal under California law, according to a person with knowledge of the meetings not authorized to speak publicly about it because of the sensitivity of the matter. Others support Rocha's contention that horse racing needs more than Historical Horse Racing to survive. 'The problem is we don't have enough bettors, enough gambling dollars going into racing,' said Marshall Gramm, chair of the economics department at Rhodes College in Memphis, Tenn., where he teaches a class on the economics of gambling. He is also a horse owner and gambler. 'If the current economic model is that we need outside revenue, then it is unsustainable. [People could ask] if racing is supported [by state subsidies], why isn't that money going to the local mill that is closing. 'I'm very worried about The Stronach Group's commitment to racing overall,' he said. 'Is there going to be someone to fill their void if they leave the business? TSG is extremely unpredictable. Tomorrow they could do something great for racing or they could do nothing. 'I would love see racing in a position of surviving without external sources of revenue.' Racing could pull a last-minute rabbit out of its hat. But it has to start with conversations with those who can help the sport. The idea of negotiating with just one tribe is still on the table, although it would likely cause problems with the other tribes. 'Even if they make a deal with one tribe, it better be the right deal,' Rocha said. 'The tribes see it as the camel's nose under the tent. 'The way to get it done is through the [attorney general]. It's the state of California that decides,' he said. 'If it's illegal, the tribes will take it to court. It took pressure from the tribes to get Bonta to make his [latest] ruling. The tribes are very protective of their exclusivity.' Most people interviewed for this article said the outlook for adding Historical Horse Racing machines in California is grim. 'The race tracks' influence is declining, but they have 70 years of history with the state legislature,' said Rose, the gambling expert. '[The state] doesn't really care about the industries, but they do care about the taxes.'
Yahoo
16-05-2025
- Entertainment
- Yahoo
CHRB Food Fight? California's Top Horse Racing Regulators Clash After Humboldt County Fair Dates Request Is Denied
Guy Fieri tried, but even the Food Network star of 'Diners, Drive-Ins and Dives' couldn't save horse racing in his small northern California hometown of Ferndale, the site of the Humboldt County Fair since 1896. Racing has been a mainstay of the fair most of the years since, but that is coming to an end in 2025. On Thursday, for the second month in a row, the California Horse Racing Board voted against approval of the Humboldt County Fair's dates request for three consecutive weekends of racing between Aug. 13 and Sept. 1. The regularly scheduled meeting was held in Sacramento at the California Exposition and State Fair Grandstand. Technically, the April vote, 3-2 against granting the dates, meant no action was taken by the board because a majority of four of the seven CHRB seats is required. One commissioner, Damascus Castellanos was absent from the April meeting, and one board seat was open because of the resignation of John Carvelli in February. Thursday's vote was 4-3 against the request, with chairman Dr. Gregory Ferraro and commissioners Dennis Alfieri, Thomas Hudnut and Castellanos voting no. Voting in favor of the Humboldt County Fair dates request was vice chairman Oscar Gonzales, along with commissioners Brenda Davis and Peter Stern. Stern was recently appointed to fill the vacant CHRB seat by California Gov. Gavin Newsom. The vote came after presentations by representatives of the Humboldt County Fair, recognition that a number of local, state and Congressional politicians had written to the CHRB in support of approving a race meet in Ferndale, and pleadings from owners, breeders, trainers and track employees who said a meet would be beneficial to California racing and breeding. One speaker read a letter from the well-known television star Fieri, who annually attends the fair and whose food career was launched as a teenager with a pretzel cart on the fair grounds. In pleading for approval of the dates, Fieri wrote in his letter, 'To put it very bluntly, taking this meet away from Ferndale would be a bullet to the heart of the fair community. There's no other way to say it.' Speaking against the request for dates was Bill Nader, president and CEO of Thoroughbred Owners of California. Nader outlined the disastrous results of the short-lived Golden State Racing meet at the Alameda County Fair in Pleasanton last year, which the CHRB approved over TOC protests. That meet, Nader said, required a bailout from Southern California interests and caused severe financial losses to the California Authority of Racing Fairs, which had previously operated fair meets throughout Northern California. CARF ended up selling equipment needed to operate a race meet to a track in Wyoming and has refocused its business on helping Northern California fairs operate their off-track betting facilities. "We need to be very careful with how we govern and how we go forward to protect and preserve California racing," Nader told the CHRB commissioners. The denial of the Humboldt County Fair dates mean there will be no Northern California racing this summer. Since Belinda Stronach, owner of Golden Gate Fields, closed the Bay Area track in June 2024, the only racing was the short-lived Golden State meet from mid-October through mid-December. The CHRB last month voted 4-1 against a request by newly formed Bernal Park Racing to conduct a June 10-July 6 meet at the Alameda County Fair. Bernal Park Racing, an entity started by owner-breeders George Schmitt and John Harris, was set to operate the Ferndale meet if the dates had been approved. Schmitt spoke at the meeting and said he and Harris deposited $1.5 million to help fund the Humboldt County Fair meet and had spent over $100,000 so far on fees and other fairs have applied for 2025 dates. After the dates request was voted down, vice chairman Gonzales, who has clashed with chairman Ferraro in past meetings and was particularly critical of him over the Ferndale vote in April, called it a 'serious, serious, serious mistake that this board made." Gonzales asked the CHRB's executive director, Scott Chaney, the logistics of calling for a follow-up meeting to address the request again. "Commissioner Gonzales, how many votes do you want to have on this?' Ferraro asked. 'You've lost twice. Do you not accept the vote?' 'I don't. I don't, Mr. Chairman,' Gonzales responded. 'Well, that's your problem. That's not the problem of the board,' Ferraro answered back. As chairman, Ferraro can veto calls for a special or emergency meeting and said he would do so if Gonzales tried to have one scheduled. Later, during a public comment period, Gonzales irked Ferraro again, complaining about a back-and-forth between Ferraro and a member of the public. 'Are you being particularly rude today," Ferraro asked, "or do you just have a problem?' The meeting was then adjourned. If Fieri was there to serve lunch, a food fight might have broken out between California's top two horse racing regulators.
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.'
