Backers of Nebraska’s shrinking Thoroughbred racing industry are betting their future on glitzy terminals that let players place bets on the past.
The historical horse racing terminals resemble slot machines but operate differently, allowing bets to be placed on the results of previously run horse races. Selected races are generated automatically by the terminal from a historical library of at least 10,000 events.
Fonner Park in Grand Island wants to install at least 50 of these terminals to shore up sagging revenues. While 92 percent of the take from the terminals is paid out in prizes, the rest of the money would go to the track, and to the horse racing industry.
“The immediate impact would be these horsemen and breeders would finally get some money back to help a depleted industry,” said Chris Kotulak, Fonner Park’s chief operating officer.
The idea has run into fierce and powerful opposition, though, from Gov. Pete Ricketts, a longtime foe of expanding legalized gambling in Nebraska, and Attorney General Doug Peterson.
The faith-based Nebraska Family Alliance spoke out against the terminals at a public hearing Jan. 16 in Grand Island. So did Gambling With the Good Life, which has battled gambling expansion in Nebraska for more than 20 years.
Nate Grasz, the Family Alliance’s policy director, described the historical racing terminals as “slot machines by another name.”
“Electronic gaming machines are commonly referred to as the ‘crack cocaine’ of gambling because they are the most addictive and destructive form of gambling,” Grasz said.
Pat Loontjer, a Gambling With the Good Life board member, told the Nebraska State Racing Commission that she doesn’t object to live horse racing because, she said, “It’s an event. It’s a day. It’s entertainment.”
But she sees the electronic version as predatory because of the potential for addiction.
“This is going to destroy lives,” Loontjer said. “You can walk in and play that machine, and go home without your paycheck.”
The terminals have the backing of the Racing Commission, which runs and regulates pari-mutuel wagering in the state. In a pari-mutuel betting system, all bets are placed together in a pool, with payoffs determined by sharing the pool among all winning bets.
Races shown on the terminals are real, having occurred at tracks across the country in recent years. Players are given actual handicapping information on the horses and jockeys, but the identities and tracks are hidden until after bets are locked in and a button is pressed to reveal the results.
So it’s said to be a game of skill, not chance —just like betting on flesh-and-blood Thoroughbreds.
“If you’re a good handicapper, you could win 100 percent of the time,” said Tim Yelton, vice president of business development and sales for AmTote, a wagering technology business whose PariMAX subsidiary produces historical horse racing terminals. Currently the terminals are legal in Kentucky, Oregon and Wyoming, and one county in Alabama.
“It is geared to someone who likes to play slot machines — but it’s not a slot machine,” Kotulak said.
The commission’s five-member board of directors voted unanimously in October to approve the terminals at Fonner Park.
Peterson’s office responded by sending a stern letter arguing that the meeting violated the state’s open meetings law. The office also said the commission lacked the authority to approve the terminals on its own.
“As much as the commission wants to approve historical horse racing, it cannot,” Assistant Attorney General Laura Nigro told the commission at the Jan. 16 public hearing. “That must be decided by the Legislature or the people of Nebraska.”
The fight isn’t a new one. Twice before, the state has squashed efforts to allow betting on historical horse races.
In 2012, the Nebraska Legislature passed a bill allowing the terminals, but then-Gov. Dave Heineman vetoed it as unconstitutional.
Two years later, lawmakers approved a constitutional amendment to put the issue before the state’s voters.
But the Nebraska Supreme Court threw it out, ruling that the measure required voters to vote on two unrelated measures: whether to allow betting on what is also called “instant racing” and how to distribute the tax revenue.
That prompted the industry to try again through the State Racing Commission.
“It would give us a chance to catch up,” said Jesse Compton, an owner and trainer from Shelby, Nebraska. “It would let those of us who breed the horses, care for the horses, continue to operate in this state.”
At the commission’s January public hearing, the board reluctantly undid its October vote.
Then officials from Fonner Park and PariMAX, aided by Commission Chairman Dennis P. Lee, a lawyer from Omaha, made their case that the terminals are legal.
The horse racing industry in Nebraska has been in steep decline for years, slammed by increasing competition for the gambling dollar, especially in neighboring Iowa. In 1966, seven Nebraska racetracks put on 161 days of racing.
For decades, the crown jewel was Ak-Sar-Ben, in Omaha, which attracted busloads of tourists from as far away as Chicago and Kansas City.
In 1986, a dog racing track opened in Council Bluffs. Iowa legalized casino gambling, and three casinos were eventually built in the Bluffs. Ak-Sar-Ben closed in 1995.
The remaining tracks have stayed afloat by adding “simulcast” betting on live races at other tracks across the country.
Last year, their betting handle (gross betting receipts) totaled $63.7 million, only $5.2 million of which was bet on live races. Those numbers were down from $67.9 million and $6 million the year before.
Nebraska tracks this year will have fewer than 60 days of live racing, including 31 at Fonner Park, 14 in Columbus and just nine in Omaha. As the number of race days has declined, so has the breeding industry in Nebraska.
The state’s breeders produced only 27 foals in 2018 — down from a peak of 745 in 1985 and 129 as recently as 2009.
“The tradition, the history, the infrastructure are here,” Kotulak said. “We have these people who would love to breed Nebraska-bred horses.”
Keith Miller, a Drake University law professor who specializes in gambling law, doesn’t blame Nebraska’s horse industry for trying whatever it can to draw crowds.
“The horse tracks are in a very precarious situation,” he said.
He said horse racing is running up against fickle consumer tastes when it comes to spending their gambling dollars. Game players have so many other choices than horse racing, in which only one or two races take place in an hour.
“The most important thing is speed of play,” Miller said. “The younger generation doesn’t want to wait half an hour for the results.”
But he cautioned that promoters of new types of gambling tend to overpromise and underdeliver when it comes to future revenues.
“Counting on a steady flow of money from something like this is risky,” Miller said.
Lee, the State Racing Commission chairman, adjourned last month’s hearing on historical horse racing without taking a vote. He gave the public until Feb. 1 to submit written comments.
Tom Sage, the commission’s executive director, said Friday that no one had yet commented and that a date hasn’t yet been set for a follow-up meeting and vote.
Horse racing interests have discussed trying to amend the Nebraska Constitution to allow “racinos,” which combine racetracks and casinos. That would allow gambling machines to subsidize the horse industry.
But Fonner’s Kotulak isn’t confident that voters would allow them.
“We believe that casino gaming won’t pass here in Nebraska,” he said.
Allowing the historical racing terminals, he argued, could allow a horse racing industry with deep roots in the state to survive while keeping Nebraskans’ gambling dollars at home.
“News flash: Nebraskans like to have a bet,” Kotulak said. “We don’t need to become a casino state.”