Gambling in American History

West Virginia
The West Virginia legislature authorized an experimental installation of video gaming machines – keno machines, poker machines, and machines with symbols – at Mountaineer horse-racing track beginning on 9 June 1990. At first only seventy machines were installed. During the experimental time the number grew to 400 in 1994. Most were keno machines. The first machines had payouts of 88.6 percent. During a three-year experimental period, the lottery agreed not to put machines in other locations. Now machines are at other tracks. According to information in International Gaming and Wagering Business in June 1994, the track was able to keep 70 percent of the revenues, and 30% went to the state.

Rhode Island
The second state to have machines was Rhode Island. The machines were authorized for Lincoln Greyhound Park and a jai alai fronton. Operations started in September 1992. The greyhound facility soon dropped the word greyhound from its name and directed most of its advertising toward machine-playing customers. By mid-1994 there were 1,281 machines at the track. They were video machines, which in initial years won profits of $31,912 per machine per year. At first, 33 percent went to the track and 10% went to purses for the dog races, according to information in International Gaming and Wagering Business in January 1995. Later the state took 33 percent, the track took 60 percent, and 7 percent went to purses.
In late 1993 Rhode Island added “reel” machines to the mix, as it was felt that the players should have the same variety of machines that was offered by a casino in nearby Connecticut.
“The introduction of VLTs stopped the bleeding,” according to Dan Bucci, vice president and general manager of the track. In July 1994, he commented in International Gaming and Wagering Business that “we’re living proof it can help. But I’m not sure gaming machines are a panacea. If there’s a magic bullet out there for all of racing’s problems, I don’t know what it is”. He commented that “it’s a lot harder to create new pari-mutuel patrons than it is to create new machine patrons”.

Louisiana
Although Louisiana has a long history of gaming, legal gaming machines appeared only in the 1990s. Pari-mutuel racing was well established when a state lottery was authorized in 1989. Tracks were affected by the new competition, and they immediately began to lobby for machines. VLTs were authorized for truck stops, restaurants and bars, and racetracks in 1992. Tracks were allowed to have an unlimited number of machines. The advantage of having machines was short lived, as tracks had to compete with fifteen newly licensed casino boats.
One track with machines was Louisiana Downs near Shreveport. The general manager of the track, Ray Tromba, commented that “it [the installation of 700 machines] was hopefully a way to help the race track be more of an entertainment facility; for the first two years it worked extremely well”. Attendance at the track went up. Purses were raised and used to attract better horses for races. The patrons enjoyed the better races. Eighteen percent of the machine revenue was authorized for purses. Tromba maintained that “pari-mutuel can stand on its own if it’s a good enough product that people will want to wager on it, it’s as simple as that. This is not rocket science” (McQueen 1998, 59).

Delaware
Delaware authorized all types of slot machines and other gaming machines for its tracks in 1995 (McQueen 1996). Delaware Park offered the machines first, but according to information in International Gaming and Wagering Business in October 1996, that track was soon followed by Harrington Raceway and Midway. Delaware Park pursued a strategy somewhat different from that elsewhere (Rhode Island, Iowa), as it sought to make a strong separation between the machine gaming and the track wagering. According to marketing director Steven Kallens, track efforts to bring slot players to the track windows were simply unsuccessful. “People got too confused. It was clear we had a pretty dedicated group of slot players with no interest in racing”. But perhaps the situation was made to be that way. An unused 60,000-square-foot section of the grandstand was converted to slots. No racing monitors were placed in the room, and players had to go to another room to make racing wagers.

Iowa
Like Delaware, Iowa authorized slot machines (as well as VLTs) for its tracks right from the start of racino operations.  Local approvals were given for the operations. The Prairie Meadows horse track in Altoona near Des Moines was the first to open in 1995. Machines are also at two dog tracks, the biggest one in Council Bluffs. Prairie Meadows has 1,164 machines. Without a doubt, they have turned the finances of the facility around.
The Prairie Meadows racetrack opened in 1989, but the opening preceded the state’s approval of riverboat casinos by only months. In 1991, as the boats opened, the last races were held, and the track entered bankruptcy protection. There were no races in 1992. In 1993 a short calendar with a mixture of thoroughbreds and quarter horses was held, but it was not successful. By then a large Native American casino had opened its doors only sixty miles away in Tama. Machines made all the difference. With their installation, racing began anew in 1995, but it was machines that led the way. The 1995 revenues consisted of $118 million from the machines, $4.9 million from on-track race betting, and $25.8 million from simulcasting (McQueen 1996).
Iowa’s Prairie Meadows has tried very hard to involve the machine players in track wagering, although the track racing has not become a self-supporting cost center. Machines have horse racing themes. One block of quarter machines is called Quarter Horses. The slot players can see track events from the slot area. Staff members circulate among slot players promoting racing and answering questions about race wagering. The players can also make bets to the staff directly while sitting at their machine locations. According to media director Steve Berry, slot players are also able to win free pari-mutuel tickets (McQueen 1996).
Of the retained revenues, $14 million is put into purses for horse races. Purses were only $1 million in 1994 prior to the introduction of slots. As a result of the increased purses, the quality of racing is improving, and simulcast revenues are up 4–5 percent. Attendance is approximately 10,000 a day, and handle has increased 16%. No other horse track in the Midwest has done as well as Prairie Meadows.

New Mexico
In 1998, the state of New Mexico agreed to let tracks have machines as long as they could all be tied together in a slot information network. The track gives 25% of the revenue directly to the state and gives 20 percent to horsemen through race purses. The track keeps 55 percent. Machines are permitted to run twelve hours a day, every day – as long as the track offers some racing products.
There are four tracks in the state with machines. On 4 May 1999, Ruidoso Downs, less than half an hour away from the large Native American casino of the Mescalero Apache tribe, was permitted to start operating 300 machines. Of the machines, 70 percent are traditional reel-type slot machines, and 30 percent are video gaming devices. The machines are played with coins, and they distribute coins to winners. The track has simulcast racing each day of the year, so the slot machines are available to players 365 days. Live racing – thoroughbred and quarter horse – occurs four days a week from Memorial Day to Labor Day. The nation’s leading quarter horse race—the All American Futurity—is run on Labor Day. According to a telephone interview on 8 June 1999 with Keith Henson, the track is beginning to turn around several years of losses (it never stopped racing), but it would like to be able to stay open longer hours and also have more machines in order to compete more equitably with the Mescalero casino.

Canada
In 1998 a decision was made to allow eighteen racing tracks in Ontario to have slot machines under the direction of the provincial lottery corporation (McQueen 1998). Windsor Raceway, a track just a few miles away from the very successful Windsor Casino, was the first to start operations. In December 1998, 712 machines were set into action.  The lottery corporation receives 15 percent of the revenues; 10 percent goes to the track and 10 percent to horsemen through purses and other awards. The remaining revenues go to the provincial treasury in Toronto (McQueen 1999).
According to John Millson, president of the raceway, “When the first coin went in, I knew there would be no turning back. it was music to my ears”. He was also very supportive of the fact that the lottery corporation ran the machines. “It’s a government agency, and quality and proper perception is extremely important, so they do it right.” He also commented, “It means a tremendous opportunity for us to market our facility as a gaming and entertainment facility”(McQueen 1999).
The track-machine situation was mixed in other parts of the province. The major track in Toronto – Woodbine – was stymied in its early efforts to get machines, as the city council refused to grant a zoning variance for the activity. That action was appealed by the lottery corporation. Overall, it was expected that twelve of the eighteen tracks in the province would have machines by the end of 1999.
The earliest province to embrace gaming on tracks was Saskatchewan. There a full casino was placed into operation underneath the stands of the Regina Exhibition Park’s racing facility. Revenues from the casino were earmarked for Exhibition activities. The casino at the track discontinued operations a year after the provincial government began a major casino in downtown Regina. When the new casino opened, track handle decreased 23%. The new casino agreed to give a share of its revenues to the Exhibition, according to an interview with Kathy Maher-Wolbaum, Casino Regina, on 15 September 1998.
Racinos are also found at the tracks in Alberta and Manitoba.

Mexico
The Agua Caliente track in Tijuana developed a sports betting complex to supplement dog racing and horse racing activities, but the horses have stopped running at the tracks. An operation in Juarez also offers dogs and sports betting.

The racino is a facility that mixes dog or horse track activity with casino-type activities.
For myriad reasons racetrack entertainment has experienced a steady decline over the past several decades. There have been many efforts to stem the ongoing decline. For the most part, however, these efforts have not achieved desired goals. During the 1990s a new solution received considerable support from track interests as well as political leaders in many jurisdictions. They recommended that tracks become venues for other forms of gambling, specifically gaming machines – video poker and slot machines.  The policy recommendations have become manifest in several states and provinces. Six states (Iowa, Louisiana, West Virginia, Rhode Island, Delaware, and New Mexico) and four provinces (Alberta, Saskatchewan, Manitoba, and Ontario) have permitted gaming machines to be installed at racetrack facilities. In addition California’s Hollywood Park has a very large card room casino. A racetrack in Omaha offered keno games; however, racing activity ceased after the keno operations began.
The tracks have particular advantages as casino-type venues. They have large parking areas, they are separated from the core urban populations by natural land barriers, and they have space that is underutilized. On the other hand, critics suggest that the facilities may prey too much on local habitual gamblers, as very few racinos are geared to attract tourists. Additionally there is debate over whether the casino-type gambling can add to the profitability of racing activity or whether it merely offers more competition, hence hastening the doom of the racing events.
Richard Thalheimer conducted an in-depth economic analysis of market demand forces, a type of investigation he has followed also in analyses of other innovations such as simulcasting, offtrack betting, and exotic betting as well as impacts of lottery and casino gaming on track operations. He found that the introduction of machine gambling results in decreased pari-mutuel wagering and decreased pari-mutuel revenues. But overall, revenues at the tracks increased as the machines more than made up for the deficit in pari-mutuel activity. He concluded that the issue of importance that must be addressed is just what share of the machine profits are assigned to the track and to horsemen either in purses or through other means. Thalheimer found that the regular horse players at the tracks did play the machines; on the contrary, however, those attracted to the track to play the machines did not tend to make wagers on horse races. His data are confined to Mountaineer Park in West Virginia.
Track dynamics are such that pari-mutuel gambling is not fully compatible with machine gambling. Seasoned horse players are renowned as cerebral, educated calculators of odds and probabilities that particular horses may win a race. For them, information is critical. Their activity requires a considerable amount of entry knowledge. Learning is a long process. One gaming executive commented that “betting on horse races is a game of skill, unlike the mindless tapping of a slot machine button, and our philosophy is that the customer must be gently educated on how to study form before he places his bets”.
Features of the style of horse-race betting can be found in some other games. For instance, persons betting on other sports events often use great amounts of information in calculating their betting activity. The same is true in the live casino game of poker. Most casino games, however, require almost no skill. Wheel games and dice games require no skill, as the result of the game is determined fully by chance. Machines call for almost no skill in play.
Wherever machine gaming is introduced, it seems to dominate other gambling products. Inside Las Vegas’s most plush casinos, machine revenues now exceed revenues from tables that cater to high rollers. The Oregon Lottery introduced video lottery terminals (VLTs). According to information in International Gaming and Wagering Business in June 1994, revenues from the machines quickly dwarfed figures from traditional lottery products. Machines have brought in 90 percent of the lottery revenues in South Dakota.  Governments seem to enjoy the opportunities to expand budgets as a result of machine gaming.

See Dog Racing and Horse Racing.