The court’s ruling, delivered this week, affirmed a lower court’s decision that Act 437, which permitted HHR machines at licensed off-track betting facilities, was improperly enacted.
According to the judge, the law introduced a “new” form of gaming that was not previously authorised under Louisiana law, and therefore required voter approval at the parish level before it could take effect.
“Betting bears little, if any, relation to betting on a live horse race, often involving only a random wheel spin that renders historical horse racing the equivalent of a slot machine using horse racing to brand the device,” the court stated.
The court further explained that the off-track wagering law never authorised this form of gaming, which did not even exist when off-track wagering was first enacted.“Based on our de novo review of the evidence, Act 437 authorises a new form of gaming not authorised in Louisiana before October 15, 1996. Thus, the Louisiana Constitution requires prior voter approval of historical horse racing in a local election.”
Impact of ruling
Unlike live horse race betting, HHR is a gaming system that uses an algorithm based on the results of previously run horse races. Bets are placed at a terminal or machine that closely resembles a slot machine.
The ruling is expected to have significant implications for gaming operators in Louisiana, particularly Churchill Downs, which had installed HHR machines at all 13 of its off-track betting parlours near Orleans Parish.
Last year, industry analysts pointed to HHR as a rapidly growing segment of gaming revenue, with a 67% compound annual growth rate leading to $1.4bn in revenue over the past five years.
Analysts have also noted Churchill Downs Incorporated’s (CDI) dominance in the market, holding approximately 60% of US market share in 2023.
