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FRANKFORT, Ky. (CN) — The Kentucky Supreme Court ruled Thursday that historical horse racing slot machines are illegal under the state’s definition of pari-mutuel betting, poised to put a dent into the state’s billion-dollar gaming industry.
The court’s unanimous 7-0 ruling further limits gambling in Kentucky as the state already restricts betting to only horse races and has no casinos.
Oral arguments for the case were held in August, and the court’s decision hinged on the exact definition of pari-mutuel wagering and if the betting machines in question fit that definition.
Broadly speaking, pari-mutuel wagering refers to a system of wagers where all bets are pooled together, and in which the bettors are essentially wagering among themselves.
This would be opposed by traditional games of chance like blackjack, where the bettors are directly playing and betting against the casino.
The specific machines being challenged create the bettor’s odds based on three randomly selected historical horse races, which are usually shown on a screen near the top of the machine.
The court found that because the bettors were not necessarily wagering on the same exact race, they were not actually betting among themselves which is required by the definition of pari-mutuel wagering.
Another issue found by the court is that the betting pools must be established only by the betting patrons, and that in practice the establishments actually furnish the initial money pool or in certain circumstances may have to replenish the pool if one patron wins it all.
The ruling does not specifically spell out what happens to these games or the establishments that run them, but the court did acknowledge the impact of its ruling.
“We acknowledge the importance and significance of this industry to this Commonwealth. We appreciate the numerable economic pressures that impact it,” wrote Justice Laurance VanMeter who authored the opinion.
“If a change, however, in the long-accepted definition of pari-mutuel wagering is to be made, that change must be made by the people of this Commonwealth through their duly-elected legislators, not by an appointed administrative body and not by the judiciary.”
The Family Trust Foundation of Kentucky, a non-profit advocacy group and the case’s plaintiff, celebrated the court’s decision.
“The Family Foundation is grateful to the justices for seeing through the smoke screen generated by the tracks and the Kentucky Horse Racing Commission that for years has masked a form of gambling that ignored the clear legal definition of pari-mutuel wagering,” said Martin Cothran, a spokesperson for the group, in a statement.
“This decision reaffirms that words have meaning and that even the state’s most powerful industry can’t turn the plain language of the law upside-down for its own economic benefit. We are grateful to the justices on the Court for their common sense ruling that the rule of law still prevails.”
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Besides just championing the court’s decision, the group also called on all horse racing tracks that run these games to “cease operations until it can be demonstratively shown that their activities are legal.”
Despite the apparent setback of the court’s ruling, attorney Daniel Wallach of Wallach Legal LLC which specializes in sports wagering and gambling law, told Courthouse News that he thought the ruling was not doom-and-gloom, and that the court was simply “punting the issue back to the Legislature.”
“The court is saying if you are going to operate historical horse racing in Kentucky, it has to be pari-mutuel in nature and these games don’t fit within that definition,” Wallach said.” By no means does this decision outlaw historic horse racing, it just requires it to be truly pari-mutuel in nature in the Commonwealth of Kentucky.”
The ruling overturned a decision from the Franklin County Circuit Court that had found that the machines were legal under the definition of pari-mutuel wagering.
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Concurring on the ruling were Justices John Minton, Christopher Nickell, Debra Lambert, Lisabeth Hughes, Michelle Keller and Samuel Wright.