Racetracks Push for Gambling Machines

California’s horse racing industry, hoping to reverse declining fortunes, proposed legislation Wednesday to authorize nearly 13,000 new video gambling machines at racetracks across the state.

Las Vegas-style slot machines are legal in California only on Indian reservations -- and tribes have lobbied hard in the Legislature and at the polls to defend that monopoly.

Tracks have developed new “instant horse racing” machines. With flashing lights, the brightly colored machines look like slots and are activated when gamblers bet a quarter or more.

But they are built in such a way that they mimic betting on a race and thus are not explicitly prohibited under state law, industry executives say. The legislation, which could be heard as early as Tuesday, seeks to specify how proceeds would be split. Much of the revenue would be poured back into horse racing in the form of richer purses.

“We think we have found a potential solution to our problems,” said Frederick Baedeker, senior vice president for governmental affairs at Hollywood Park and Bay Meadows in the Bay Area suburb of San Mateo.

If each machine takes in an average of $100 a day, that would amount to $470 million a year, although not all of that would be profit, Baedeker said. He estimated that the machines could generate $300 million in annual profits for the tracks.

“This is about saving an industry,” said Assemblyman Leland Yee (D-San Francisco), who introduced the bill, AB 2409.

California’s Indian tribes have nearly 60,000 highly lucrative slot machines. Although most tribes closely guard their profit figures, experts say each slot can average $300 a day or more at many Indian casinos.

A study issued last month by the California Research Bureau, a state agency, found that betting at Indian casinos increased by more than 36% between 2002 and 2004.

Gambling overall had become a $13-billion industry in California by 2004. However, the report also found that betting on horse racing fell by $138 million, to $4.1 billion, in fiscal 2004-05.

“We don’t believe the industry is crying wolf,” said Barry Broad, a lobbyist for the Teamsters union, which represents some track workers and is backing Yee’s measure.

Rather than relying exclusively on luck, as is the case with slot machines, gamblers playing instant horse racing devices bet on the outcome of horse races run in past years. Bettors are offered information such as the number of horses in the field and the odds in play at the time of the race.

They make their wager and watch a built-in television monitor that shows a video of the race being run. They win or lose based on how they placed their bets, as if they were betting on a live race.

“We put it in a pretty machine. But the game inside is horse racing, not slots,” Baedeker said.

Yee’s bill would authorize up to 1,850 machines at seven tracks, including the Los Angeles County Fair, Santa Anita, Hollywood Park, Los Alamitos and Del Mar, and at two tracks in Northern California, presumably Golden Gate Fields and Bay Meadows.

The bill would earmark 30% of the revenue for purses at California’s live races. That would double their current size, and richer stakes would generate more interest in racing, Baedeker said.

Most of the rest of the money would be split among county fairs statewide, cities where the tracks are located, jockeys and other racetrack workers.

The racetracks face a fight with lobbyists for California’s tribes. In 2004, tribes spent $33 million to defeat an initiative that would have authorized slots at tracks and selected card rooms. Tracks and card rooms spent more than $20 million to promote Proposition 68, but it garnered only 16% of the vote.

The California Tribal Business Alliance, which represents six tribes with major casinos, announced its opposition to Yee’s bill Wednesday. “They’re trying to do piece by piece what they couldn’t do with Proposition 68,” said Alison Harvey, the alliance’s executive director.

At least some representatives of tribes said they worried that if racetracks won the right to operate the machines, they would siphon business from Indian casinos, which generally are located outside major cities.

“There would be serious concern about the impact of this bill on tribal gaming,” said Sacramento attorney Howard Dickstein, who represents several tribes with casinos, including some in the tribal alliance.

Calling the bill “extremely open ended,” Dickstein said: “I didn’t see any limitations on the types of games that would distinguish them from slot machines.”

Neither Senate President Pro Tem Don Perata (D-Oakland), Assembly Speaker Fabian Nunez (D-Los Angeles) nor Gov. Arnold Schwarzenegger voiced a position on the measure Wednesday.