Sanborn, once a state senator in New Hampshire, faced significant challenges last year when he had to shut down and sell his casino. In August, Attorney General John Formella accused him of inappropriately using $844,000 in Covid relief funds related to the casino and other businesses. While there have been no charges from that investigation, Sanborn was arrested on October 18 for falsely reporting the casino’s earnings to gain additional relief funds.
Following the initial investigation, a legal battle ensued between Sanborn and the state, dragging on for almost a year. Although he originally had until June to sell the casino, the deadline was extended several times. Despite ongoing negotiations, the state ultimately declined to approve any sale by late November.
Sanborn’s legal team intends to appeal the decision, but it seems the extensive negotiations may have been futile. Emerging details suggest that companies like Bettor Investments Inc. and Full House Resorts were in talks, though it remains uncertain if either was the potential buyer who got rejected.
Despite all the commotion, the sale debate was not centered on the casino itself, a modest venue housed in a sports bar. The real value was in Sanborn’s historical horse racing (HHR) license, now suspended for at least two years.
### HHR’s Growing Importance in Gaming
Since the early 2000s, HHR machines have become a unique form of gaming, revitalizing various struggling markets in the US. These devices are distinct from Class III traditional slots and Class II bingo-style machines commonly found in tribal casinos. HHR gaming allows players to place bets on historical horse races without knowing specific details of the races, randomizing the experience. However, in most scenarios, players opt to “autopick” selections, mirroring the traditional slot machine experience. These systems are known for their complex mathematics to ensure they are both functional and compliant.
HHR machines must connect to a central system and offer parimutuel wagering, where players compete against each other in a betting pool rather than against the house. With technological advances, HHR machines now visually resemble Class III and Class II machines, and most leading suppliers have adapted their games to the HHR format, making these casinos indistinguishable from others.
### Supporting Race Tracks and Regional Markets
For several decades, the horse racing industry in the US has faced decline. Many race tracks are in rural areas, often in states with limited gaming options. HHR has provided a viable method for these tracks to remain operational and even grow, offering states an opportunity for rejuvenated revenue streams.
Gradually, HHR has expanded beyond tracks into regional casinos, such as in Concord. As a result, smaller operators like Churchill Downs have invested in HHR, allowing them to grow in less competitive markets without directly facing larger companies like MGM and Caesars.
Buddy Frank, with extensive experience in the slot machine industry, noted to iGB that HHR’s growth is largely due to its legal standing. He acknowledged that suppliers and operators have significantly improved HHR technology, offering Class III-style gaming without the hassle of legislative approval. Often, these games can be legally incorporated under existing horse racing or parimutuel regulations.
“These machines are essentially slot machines, with the primary difference being how outcomes are determined,” he explained. “Ultimately, it’s about finding ways around existing laws.”
### Rapid Expansion in Several States
Regardless of its origins, HHR gaming’s success is undeniable. In New Hampshire, where Sanborn’s saga unfolds, HHR was legalized in 2021. Figures from the state lottery commission show that in October, the total bets reached $176.9 million, with operator revenues at $11,597,471—a 43% increase from the previous year. By October, year-to-date operator revenue totaled $105,445,230, marking a 64% jump from the prior year.
In Kentucky, known as America’s horse racing hub, HHR was also legalized in 2021. In its first reporting month, July 2021, the handle was $548.9 million. By October this year, it surged to $819.6 million. Virginia is another prominent HHR market. From its first revenue report in April 2019 showing $15 million in handle, it climbed to $415.2 million by August of this year.
These figures illuminate why companies like Bettor Investments and Full House might pursue such licenses, though Sanborn’s remains temporarily unavailable. However, New Hampshire residents can look forward to a new HHR casino on the horizon. The Cordish Companies are currently constructing a $200 million casino with 900 HHR machines in Salem, expected to open next year.