Historic Horse Racing Threatens Arizona Gambling Expansion

Recent news has seen Arizona inch closer to gambling expansion. However, an emerging point of contention has formed over historic horse racing machines. The Arizona House of Representatives passed HB 2772 in a 48-12 vote. The bill would regulate sports betting, fantasy sports, and establish a statewide Keno system.

Despite the overwhelming legislative majority, there is no guarantee Arizonas will soon be headed to the local casino to bet on their Cardinals and Diamondbacks. Due to the state Senate’s insistence on including historical horse racing legalization, crucial stakeholders remain hesitant to support a deal.

What Is Historic Horse Racing?

Historic horse racing (HHR) machines are video gaming terminals that share a lot of features with traditional slots. However, unlike slots, an HHR machine operates using parimutuel betting. This means odds are adjusted based on wagers placed, and winning bets are paid from the pool of losing bets. It is the same system used at traditional horse tracks.

An HHR machine will display historically accurate information regarding a horse’s past stats. But the name of the horse is hidden, as is the name of the trainer and jockey. Betting is based on the horse’s blind resume.

Once bets are placed, the HHR will run a random horse race from the past. Players can watch the whole race or skip directly to the results. With all its bells and whistles, HHR machines can generate the excitement of slot machines.

Why Is Historic Horse Racing Preventing Gambling Expansion in Arizona?

The Arizona House did not include HHR in HB 2772. However, the state Senate includes a provision authorizing HHRs in the state in their gambling bill, SB 1797. For expanded gambling to be legalized, the House and Senate will need to reconcile their bills.

The Senate’s insistence on legalizing HHR presents a roadblock to agreement. Arizona is one of the many states that runs all gambling through a compact with local Native American tribes. Since tribal gaming gained a legal foothold in the 1980s, states have partnered with indigenous casino operators. Regulating gaming through a compact avoids lawsuits and acrimony. It also earns both the state and the tribes a piece of the revenue pie.

The only problem is that Arizona has given its tribes the exclusive right to operate gambling in the state. And the Native American operators vigorously oppose historic horse racing machines.

Arizona Negotiates Gambling Options With Tribes

Behind the scenes, Arizona Governor Doug Ducey has negotiated an updated compact with the state’s Native American tribes. However, he has refused to release the details of an updated agreement. Despite opposition to his lack of transparency, the state House still authorized a gambling expansion including regulated sports betting.

Gov. Ducey has insisted that keeping the details of an updated agreement secret is necessary to ensure tribal support for expanded gambling. From reports, the new compact would issue tribes up to ten sports betting operator licenses. It would authorize new casinos, possibly closer to Phoenix’s urban core. Tribes would also be able to offer now-prohibited games such as craps and baccarat.

In exchange, the tribes would allow Arizona to authorize its professional sports teams to offer retail sportsbooks. While particulars are scarce, it is a good sign that tribal operators are willing to cede part of their gambling monopoly.

Unfortunately, the new compact does not address historic horse racing terminals. The Senate bill would allow them to be placed at various retail locations throughout the state, such as OTBs. Native American casino operates believe this would threaten their businesses. HHRs have a similar practical experience for a player as slot machines. The tribes fear their best customers will simply visit their local OTB to play HHRs.

What’s Next for Arizona Gambling Expansion?

In the past, Gov. Ducey has opened up to the possible new revenues regulated sports betting would bring. However, the inclusion of HHR in SB 1797 functions as a poison pill for expanded gambling. If Arizona offers gaming on non-tribal lands, they violate the tribal compact. Tribal casinos would then be freed from any current restrictions on locations and styles of gaming. Massive lawsuits would follow.

Now that the House has sent a bill to the Senate, look for the Senate to possibly drop its inclusion of HHR legalization. While lobbyists for the horse racing industry have Senators’ ears, HHRs may be currently included merely for leverage. By dropping the inclusion of HHR, targeted Senators could receive a boost to one of their pet policies. 

Reconciling Arizona’s House and Senate gambling proposals should not require more than basic political wheeling and dealing. Arizona’s 2021 legislative session is scheduled to end April 24. Therefore, there will be upcoming action and debate on more gambling options.