In California, Santa Anita Park recently witnessed the introduction and subsequent state seizure of “Racing on Demand” machines within a week. On January 15, the park installed 26 such machines, but the California Department of Justice (DOJ) confiscated them two days later, including the funds housed within. Santa Anita promptly filed a lawsuit against the DOJ and Attorney General Rob Bonta in the Los Angeles Superior Court. This incident could signify another contentious issue involving state gaming tribes, as the legal complaint indicates deeper regulatory concerns about past race betting, an area that remains unresolved since its approval for live races in 2024.
The machines involved allowed $1 parimutuel “3X3” bets, where participants predict trifectas on historical race data from outside California. This resembles the historical horse racing (HHR) machines permitted in other states. The installations were not unexpected; Santa Anita had communicated its plans to the California Horse Racing Board (CHRB) multiple times, including in December, without receiving opposition to their legal assessment or feedback disputing their right to offer these bets.
The seizure caught Santa Anita and local labor unions, including the Service Employees International Union and the Teamsters, off guard. Criticism was directed towards the DOJ’s approach, labeling it as “misguided” and “reckless,” according to a joint letter from several unions to Attorney General Bonta. The unions argued that removing these machines added instability to an already economically challenged industry, potentially affecting the state’s $1.7 billion annual economic impact from horse racing.
The broader political landscape includes scrutiny over Attorney General Bonta’s ties to state gaming tribes, who have historically maintained exclusive rights over Class III gaming, including casino games and sports betting, since 2000. Bonta’s activities, such as proposing card room rule changes and his stance on daily fantasy sports, have aligned with tribal interests. His campaign financing, heavily supported by tribes, further complicates perceptions of his neutrality. The controversy highlights the intricate dynamics between political contributions and regulatory actions in the state’s gaming sector.
Santa Anita argues that the “Racing on Demand” system is not Class III gaming due to its parimutuel nature, distinguishing it from traditional casino games. However, the response from tribal entities remains muted. The California Nations Indian Gaming Association and other tribal organizations have refrained from public comment, reflecting the significance and sensitivity of this issue among California tribes.
Further compounding the situation are prediction markets, which pose a growing challenge to tribal gaming interests. Companies such as FanDuel and DraftKings have begun offering these markets in California, relying on federal preemption arguments similar to those that underpin tribal gaming under the Indian Gaming Regulatory Act. Although tribes have had mixed success in legal challenges against prediction market operators, the developments underscore the evolving landscape of gaming in California and the potential for further regulatory contention.
As the Santa Anita lawsuit proceeds, the future of “Racing on Demand” will likely hinge on legal interpretations of California’s gaming laws and the influence of tribal gaming rights. The case could set a precedent for how similar disputes are managed in the state, affecting operators and potentially reshaping the market landscape. The outcome will be closely monitored, with implications for regulatory practices and the ongoing balance of power in California’s gaming industry.