In this Sports Betting Operator article, Whitney Fore and Melanie laCour explain the evolving regulatory landscape for historical horse racing machines and online pari-mutuel-backed games, which offer casino-style gaming experiences in states that don’t otherwise permit traditional slot machines or iGaming. Drawing on recent court decisions, attorney general opinions and legislation in states including Kentucky, Minnesota, Louisiana and California, they break down the two questions at the center of these disputes: whether the products qualify as pari-mutuel wagering, and whether a slot-like interface still creates a new or separately regulated form of gaming.
“For operators developing the next generation of pari-mutuel-backed games, legal classification is therefore becoming part of product architecture itself. The relevant question is no longer simply what determines the result. Increasingly, courts, regulators, legislatures, and tribal stakeholders are also asking: what product is being offered to the player?”
Historical Horse Racing (“HHR”) machines—sometimes referred to as “instant racing”—and their newer online cousins sometimes described as pari-mutuel-backed games (“PBGs”) have emerged as alternative pathways to offering casino-style gaming experiences in states that do not otherwise permit traditional retail slot machines and/or interactive online gaming (“iGaming”).
In some jurisdictions, these products have also provided an additional revenue stream for the pari-mutuel racing industry as wagering on traditional live racing has declined over the past several decades.
To the untrained eye, HHR and PBGs may appear, for all intents and purposes, to be casino-style gaming—primarily in the form of slot machines. However, just because it walks like a duck and quacks like a duck does not necessarily make it a duck, at least according to proponents of alternative forms of pari-mutuel wagering. While HHR machines and online PBG platforms can look, move, and reveal results like slots, the central distinction advanced by proponents is that the wagering outcome derives from pari-mutuel horse racing rather than the random number generator (“RNG”) that determines outcomes in traditional slot machines.
Those who are familiar will recall that we’ve been down a similar road before with video lottery terminals (“VLTs”), which proliferated years ago at racinos and other authorized venues. To the player, a VLT may appear virtually indistinguishable from a slot machine, while the underlying architecture relies on a central lottery system rather than an RNG independently determining the outcome of each play.
For HHR and PBGs, pari-mutuel wagering on horse races serves as the engine in place of the RNG. Physical HHR terminals allow patrons to wager on previously run horse races, frequently displaying characteristics typical of traditional slot machines, such as spinning reels, symbols, lights, and sounds. Developers of online PBG products use a different structure in which customer funds are routed through advance deposit wagering (“ADW”) infrastructure into live pari-mutuel racing pools, with the resulting wagering outcomes displayed through customer-facing interfaces designed to resemble online casino games. In both instances, the player sees a casino-style experience on the front end, while the product is structured around pari-mutuel wagering on the back end.
Pari-mutuel wagering is one of the oldest legal forms of gambling in the U.S. and, until recently, remained unchanged in substance. Even the proliferation of ADW changed only where and how customers placed wagers, not the underlying nature of the wager itself: a bet on a live race placed into a commingled pari-mutuel pool.
HHR and PBGs represent efforts to adapt that longstanding model for modern gaming formats. Yet compared with other novel gaming products, little attention has been paid to the regulatory implications.
The disputes that have emerged around HHR and PBGs tend to bifurcate into two distinct but related questions:
- Are these products—and HHR in particular, given its use of previously run races to determine win/loss—properly classified as pari-mutuel wagering?
- Even if the answer is yes, does a slot-like interface or delivery mechanism nevertheless create a new or separately regulated form of gaming that falls outside the existing authorization for pari-mutuel wagering?
Those two questions can, in turn, require separate consideration of whether the wager type and pool are authorized, whether the operator and delivery channel are properly licensed, and whether federal interstate-wagering rules, constitutional provisions, or tribal-state compacts impose additional constraints.
The Federal Floor: IHA, Wire Act and UIGEA
Before turning to those questions, the PBG model presents an additional federal layer because it relies on interstate ADW infrastructure. That federal framework must also be considered when assessing the product’s legality within the existing U.S. pari-mutuel wagering regime.
Unlike physical HHR machines, the PBG model implicates the Interstate Horseracing Act (“IHA”), which governs interstate off-track wagering on horse racing. Broadly, the IHA provides that an interstate off-track wager may be accepted only when the wager falls within the Act and the required consents are obtained from the host racing association, host racing commission, and off-track racing commission. See 15 U.S.C. §§ 3002, 3004. Because the wagers are transmitted interstate via the internet—or “wires”—the Wire Act is also potentially implicated, although a full Wire Act analysis is beyond the scope of this article. The Unlawful Internet Gambling Enforcement Act (“UIGEA”) is likewise relevant, but expressly excludes activity allowed under the IHA from the definition of “unlawful Internet gambling.” See 31 U.S.C. § 5362(10)(D).
The question of where an electronic wager is “accepted” for purposes of the IHA was recently addressed in Churchill Downs Technology Initiatives Co. v. Michigan Gaming Control Board, 162 F.4th 631 (6th Cir. 2025). In that case, ADW operator TwinSpires challenged Michigan requirements that conditioned its ability to accept wagers placed by Michigan residents on state licensing tied to an in-state racing relationship. TwinSpires argued that its Oregon wagering hub—not the bettor’s location—was the place where the wager was accepted and therefore the relevant off-track jurisdiction for purposes of the IHA’s consent requirements.
In December 2025, the Sixth Circuit affirmed preliminary injunctive relief on TwinSpires’ IHA conflict-preemption claim, and on January 6, 2026, the district court granted summary judgment and a permanent injunction. The decisions treat the relevant off-track jurisdiction as the ADW hub where the wager is accepted and limit states’ ability to impose additional licensing conditions that conflict with the IHA’s consent structure.
However, Churchill does not turn the IHA into a nationwide safe harbor for every product self-characterized as pari-mutuel. It addresses interstate regulation and state licensing conditions imposed on otherwise lawful horse-racing wagers, but it does not answer whether a particular product qualifies as lawful pari-mutuel wagering in the first place.
Notably, even post-Churchill, states continue to regulate online pari-mutuel wagering. In February 2026, for example, South Dakota enacted H.B. 1058, requiring certain out-of-state providers offering online pari-mutuel wagering to South Dakota residents to obtain multi-jurisdictional totalizator-hub licensure.
Question One: Is It Pari-Mutuel Wagering?
Regarding the characterization of HHR and PBG games, the first question above is the threshold: does the platform satisfy the governing definition of pari-mutuel wagering? HHR has generated most of the litigation to date because of its use of historical races. Both HHR and PBG, however, can raise questions about whether their pooling mechanics satisfy traditional pari-mutuel requirements, including whether bettors are genuinely wagering against one another in a common pool tied to an authorized wagering event.
Kentucky: What Makes a Pari-Mutuel Pool?
Kentucky provides the clearest example of this threshold fight. In 2010, the Kentucky Horse Racing Commission—now the Kentucky Horse Racing and Gaming Corporation—adopted regulations authorizing HHR. The Family Trust Foundation of Kentucky, Inc. challenged the Commission’s authority to authorize the games, arguing that HHR did not constitute lawful pari-mutuel wagering.
In Appalachian Racing, LLC v. Family Trust Foundation of Kentucky, Inc., 423 S.W.3d 726 (Ky. 2014), the Kentucky Supreme Court held that wagering on historical races could fall within the Commission’s authority, but only if the wagering system satisfied the legal requirements of pari-mutuel wagering. The litigation eventually culminated in Family Trust Foundation of Kentucky, Inc. v. Kentucky Horse Racing Commission, 620 S.W.3d 595 (Ky. 2020), where the court determined that the HHR system before it did not satisfy Kentucky’s then-existing pari-mutuel framework. Patrons were not wagering against one another on the same discrete event; different patrons could be wagering on different randomly selected historical races rather than participating in a common pool tied to the same race. The court also concluded that the association-funded initial seed pool impermissibly involved the association in creating a pool that was required to be established by the patrons.
The Kentucky Legislature responded in 2021 by enacting S.B. 120, which broadened the statutory definition of pari-mutuel wagering to encompass wagering on live, simulcast, or previously run races; permitted wagers to be placed into one or more wagering pools; and expressly allowed wagers involving different races or sets of races to be pooled together, directly addressing the concerns underlying the litigation.
The Kentucky dispute and subsequent legislative solution illustrate how regulatory approval and a pari-mutuel label do not necessarily foreclose judicial scrutiny of whether the mechanics fit the statutory definition. They also demonstrate that judicial rejection of a particular HHR structure need not be the end of the road if the legislature chooses to broaden what counts as pari-mutuel wagering.
Minnesota: The Legislature Answers the Question Directly
An example of a state legislature going in the opposite direction occurred in 2024, when the Minnesota Racing Commission approved requests by Running Aces and Canterbury Park to offer HHR at their facilities. The Legislature responded by amending the statutory definition of “pari-mutuel betting” to expressly exclude wagering where bettors are not wagering on the same live or simulcast race or do not share in the total amount wagered. Minn. Stat. § 240.01, subd. 14; the practical result of which was to override the Commission’s approval and establish that HHR does not qualify as lawful pari-mutuel wagering. The Legislature also separately prohibited licensed racetracks from offering HHR in Minn. Stat. § 240.071.
Notably, because it uses live racing rather than previously conducted events to determine win/loss, if challenged, the PBG model may present a stronger argument under traditional pari-mutuel definitions where each play is tied to a wager placed into a live-race pool. However, calling a platform an ADW, or describing the underlying transaction as pari-mutuel, does not itself resolve the classification question.
Question Two: Even If the Wager Is Pari-Mutuel, Is the Product Something Else?
Even assuming the underlying wager qualifies as pari-mutuel under the applicable state statutory definition, can the interface or overall customer-facing presentation independently constitute a new or separately regulated form of gaming? The cases and regulatory disputes that have emerged suggest that, in some jurisdictions, the answer may be yes.
Tribal Exclusivity: A Separate Classification Question
Question two—whether HHR and/or the PBG model constitute a new or separately regulated form of gaming—has drawn scrutiny in tribal gaming states. Under the Indian Gaming Regulatory Act (“IGRA”), both pari-mutuel wagering on horse races and slot-machine gaming fall within the Class III game category, but the scope of tribal gaming exclusivity depends on state law and the terms of the tribal-state gaming compact. As a result, even if the underlying wager is pari-mutuel by definition, the game interface or device may separately qualify as a compact-defined “Gaming Device,” slot machine, electronic facsimile, or other form of gaming exclusively reserved for tribal operators.
In Ariz. Att’y Gen. Op. I18-010 (Aug. 23, 2018), the Arizona Attorney General concluded that nontribal HHR would implicate compact exclusivity because HHR was not an authorized form of gaming at the compacts’ relevant 2002 historical baseline. After Arizona amended its compacts in 2021, Ariz. Att’y Gen. Op. I24-003 (Feb. 22, 2024) concluded that the amendments did not change that result. The 2024 opinion further noted that the “appearance, graphics, animation, and sound” of modern HHR terminals are nearly identical to slots, while the principal distinction lies in the pari-mutuel back-end mechanics, and concluded that the terminals fit the amended Compact’s definition of a “Gaming Device.”
Minnesota tribes raised a similar concern before the 2024 prohibition discussed above. The Shakopee Mdewakanton Sioux Community argued to the Minnesota Racing Commission that modern HHR devices were “no different from slot machines” notwithstanding their use of pari-mutuel races to determine win/loss.
Idaho offers a more historical example of the political implications of authorizing HHR in a tribal gaming state. In 2013, the state legalized HHR pursuant to Idaho Code § 54-2512A. After critics—including Idaho tribes—argued that the terminals were effectively slot machines rather than the pari-mutuel product lawmakers believed they had authorized, the Legislature repealed the HHR authorization in 2015. The Coeur d’Alene Tribe then successfully litigated to require certification of the repeal after the governor’s attempted veto. Coeur d’Alene Tribe v. Denney, 161 Idaho 508, 387 P.3d 761 (2015). Notably, Denney decided the veto issue, not whether HHR constituted a slot machine; however, its significance here is as a case study in the political and legislative consequences that can follow when the implementation of a wagering product is perceived to differ materially from the authorization that produced it.
Oregon: An Authorized Product, but a Prohibited Casino?
Oregon expressly authorized HHR under Or. Rev. Stat. § 462.155, and HHR operated for several years at Portland Meadows racetrack. However, when an operator sought to install 225 HHR terminals at the Flying Lark adjacent to Grants Pass Downs, Oregon DOJ Opinion OP-2022-1 (Feb. 11, 2022) concluded that the proposed machines were games of chance that afforded no meaningful opportunity to exercise skill and that the proposed 225-machine operation would create a constitutionally prohibited casino.
The Oregon Racing Commission expressly disagreed with aspects of that analysis, stating that HHR was pari-mutuel wagering and that the Flying Lark was not a casino, but concluded that it was constrained by the Attorney General’s opinion and denied the application to install the machines.
For the newer PBG model, comparable reported judicial or published regulatory disputes have not yet developed. The use of live-race pools may strengthen the pari-mutuel argument relative to HHR, while leaving unresolved whether the consumer-facing product itself triggers separate gaming-law requirements.
Louisiana: Pari-Mutuel, but Still a “New Form of Gaming”
Louisiana provides the clearest illustration of Question Two for HHR. The Louisiana Constitution requires local voter approval for any “new” form of gaming not previously authorized before a specified cutoff date. In 2021, Act 437 defined HHR as pari-mutuel wagering and authorized it through Louisiana’s existing racing framework.
In Fremin v. Boyd Racing, LLC, 403 So. 3d 546 (La. 2025), however, the Louisiana Supreme Court held that HHR constituted a new form of gaming requiring local voter approval. In doing so, the court emphasized that HHR used “slot machine-like gaming terminals,” that historical race results were used to generate the underlying betting algorithm, and that the wagering bore “little, if any, relation” to wagering on a live horse race.
The significance of Fremin lies in the court’s rejection of the argument that simply placing HHR within the pari-mutuel framework resolves the separate constitutional question of whether the product constitutes a new form of gaming.
California: Approval of the Wager vs. Approval of the Product
Most recently, in January 2026, California Department of Justice law-enforcement personnel seized twenty-six “Racing on Demand” terminals from Santa Anita Park. The terminals were a form of HHR offering a version of a “3×3” pari-mutuel wager using previously concluded races. Los Angeles Turf Club subsequently filed suit in Los Angeles Superior Court, seeking return of the machines and a declaration concerning the legality of the wagering.
Los Angeles Turf Club’s position is that the underlying 3×3 wager had previously been approved by the California Horse Racing Board in 2024 and that Racing on Demand used that format with randomly selected races that had already concluded. The state’s position is that approval of the 3×3 wager for contemporaneous live races did not authorize that implementation.
This pending dispute asks how far an operator may extend an approved wager before the resulting product becomes materially different from what the regulator authorized and requires separate approval. As of this writing, the litigation remains pending, but its resolution could illuminate the distinction between approval of a wager and approval of the product through which it is delivered.
Are Looks Everything?
None of the foregoing means that a casino-style interface, standing alone, converts an otherwise lawful pari-mutuel wager into an illegal slot machine. But experience in other gaming verticals suggests that regulators, law enforcement, and courts may also be unwilling to treat the user interface as legally irrelevant.
For purposes of analogy, one need only look to the recent proliferation and subsequent crackdown on online dual-currency sweepstakes casinos. On August 19, 2026, for example, the Florida Attorney General filed two lawsuits against operators of online sweepstakes casinos and their payment processors, alleging that their sweepstakes structures disguised unlawful real-money gambling. He summarized the state’s position as: “If it looks like a casino, takes real money like a casino, and pays out like a casino, it is a casino.” While the complaints do not rest on appearance alone, the Attorney General’s statement reflects a willingness to look beyond the asserted legal mechanics to the product delivered to the player.
Pennsylvania’s recent physical “skill game” litigation provides another helpful example. In June 2026, in the consolidated In re Three Pennsylvania Skill Amusement Devices and POM of Pennsylvania appeals, the Pennsylvania Supreme Court held that the devices at issue were subject to the Gaming Act and Crimes Code and that the POM device satisfied the statutory definition of a slot machine. Although the court observed that the devices “outwardly resemble[d]” modern electronic slot machines, the holding turned on Pennsylvania’s statutory definition of “slot machine,” which encompasses machines involving skill or a combination of skill and chance. The broader point being that substituting a different mechanism for one traditional feature of slot gaming does not necessarily remove a product from an independently applicable statutory gaming classification.
Looking Ahead
It will come as no surprise that legislatures are now increasingly confronting both questions. In New York, pending S.6969 and A.11432 would expressly authorize HHR through specified racing and off-track betting entities and place the product within the state’s pari-mutuel wagering framework.
Massachusetts illustrates the same classification debate in legislative form. In July 2026, the Massachusetts House passed H.5576 with provisions that would treat wagers on certified HHR terminals as pari-mutuel wagering and permit eligible licensees to accept HHR wagers both at authorized facilities and through account wagering. The Senate subsequently passed a substitute version, reflected in S.3228, that omitted the House HHR provisions. The House nonconcurred, and a conference committee was appointed on July 30. As of September 3, 2026, the HHR issue remained unresolved. The contrasting approaches nevertheless illustrate how the categorization of these games can come down to a legislative policy choice.
Conclusion
HHR and the PBG model sit at an unusual intersection of old law and new technology in a rapidly evolving, highly scrutinized gaming space. Their legal foundation rests on an old and heavily regulated form of gambling, while their consumer-facing presentation increasingly resembles newer, more tightly regulated casino gaming products. Whether these platforms qualify as pari-mutuel wagering—and, even if they do, whether their interfaces or other product features independently trigger another gaming classification—remains a jurisdiction- and product-specific question.
For operators developing the next generation of pari-mutuel-backed games, legal classification is therefore becoming part of product architecture itself. The relevant question is no longer simply what determines the result. Increasingly, courts, regulators, legislatures, and tribal stakeholders are also asking: what product is being offered to the player?
Republished with permission from the September 23, 2026 edition of Sports Betting Operator.