Sometimes Better Is Best - by Eric Mitchell

 

Kentucky still has some hurdles to clear, but it looks as though the historical electronic racing game, called Instant Racing, is going to be the industry’s only weapon against the gaming-enhanced purses offered by surrounding racing states.

Considering all the effort exerted in the pursuit of casinos, it would be ironic if Instant Racing turns out to have been Kentucky’s best option all along.

Instant Racing is preferable to a casino because it is run by the racetrack and has a set takeout, just like live and simulcast wagering. No third-party casino operator is involved. Also, the main purpose of the game when it was launched at Oaklawn Park was to grow purses and improve the quality of racing. Live racing never took a back seat to the electronic game, unlike the strategy of most racino operators.

One has to admire the entrepreneurial inventiveness that created Instant Racing at Oaklawn in 2000. The game is called historical racing because it uses the outcome of previously run races to generate the numbers that determine a winning play. Because it is packaged in a device that looks like a slot machine, the first impression is that Instant Racing is just that—merely a rose by some other name.

But Instant Racing is a pari-mutuel game, born during a desperate time that nearly killed Oaklawn. Mississippi approved casinos in 1992 and was quickly followed by Louisiana and Missouri. Within three years the competition from 65 casinos was draining the economic life out of the Hot Springs, Ark., track.

Arkansas tried to pass a constitutional amendment allowing casino gaming, but the casino companies in the surrounding states “kicked our teeth in,” said Eric Jackson, general manager of Oaklawn, remembering the vote to be a 60-40 pounding. With its back to the wall, the racetrack repackaged the only form of gambling it could conduct. Instant Racing launched in 2001.

“We have had a purse increase every year since then; 12 consecutive years, I believe,” Jackson said. “Our open maidens since 2005 have nearly doubled, and we just announced our second purse increase of the year. We feel like Lazarus.”

Instant Racing has been christened a pari-mutuel game by Kentucky’s Attorney General, but that ruling has been challenged. In a Feb. 20 decision the Kentucky Supreme Court passed on determining the game’s legal status because such a ruling “depends upon facts not in the record.” The issue got thrown back to the Franklin Circuit Court for supporters and opponents to go through discovery and make their case.

Generally speaking, pari-mutuel wagering requires bets to be pooled, with the losing wagers paying the winning payouts, minus deductions for the operator, purses, and taxes. Pari-mutuel also requires the player to choose a wager—win, place, or show, for example. With a slot machine, the winning numbers are randomly generated by a computer and no decision is made except to pull the lever.

Instant Racing fits the pari-mutuel definition in several ways.

First, all the money is pooled though the payout is more like a Pick 6 pool than an individual race where the odds are determined by how much money is bet on each horse. With a Pick 6 the winning pot keeps growing until someone hits the winning combination. So it is with Instant Racing. Every historic race in the system has its own pool for each wagering choice—win, place, show, exacta, or trifecta, for example. If you bet $1 to win on a race, your wager goes into the win pool for that race. If you lose, the pool grows by $1. If you win, you get the payout of all the other losing bets.

Secondly, Instant Racing is operated through AmTote totalizator hubs just like live horse racing. RaceTech, which markets and licenses Instant Racing games, also has agreements similar to simulcast agreements with more than 40 racetracks and horsemen on the historic races being shown.

“Every time we show a race from Churchill Downs, they get a portion,” said Louis Cella, vice president of product development for RaceTech and the son of Oaklawn Park president Charles Cella.

And finally, there are the races themselves. No, they aren’t live, but they are Thoroughbred races whose outcome is not generated by a 
computer.

The real promise of Instant Racing in Kentucky is the potential to grow large mutuel pools. Wyoming began offering Instant Racing in December. Idaho is looking to launch its games in late spring/early summer, and Oregon is expected to have the games before the end of the year. Once these states are online, the games can be linked, just like simulcasting.

“It is a racing product. It is racing helping itself and it has worked out very well for us,” Jackson said.

Hopefully, it will for Kentucky, too. 

1 Comment

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Fred and Joan

Here in Oregon Instant Racing has now passed the house and is waiting for our governor`s signature. Many here in the racing industry hope that the monies gained by Instant Racing will increase purses and help to maintain the viability of Portland Meadows.

26 Feb 2014 10:59 AM

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