Where Does Wyoming Gambling Go Next? $2 Billion… | Cowboy State Daily

Wyoming’s legal gambling industry is reaching a crossroads.

The growth of gaming in Wyoming is accelerating, and now the Joint Appropriations Committee of the state Legislature is trying to get a better handle on what has become a more than $2 billion a year industry in Wyoming.

If this growth continues, state Rep. Bob Nicholas, R-Cheyenne, predicted during the committee’s Friday meeting that gaming will in the near future become the third largest industry in Wyoming.

“The impacts become greater and greater over time,” he said.

Many lawmakers say that a number of the state’s laws on gaming are opaque or relatively open-ended, with numerous loopholes. The industry is overseen by a citizen commission and staffed department, but only the Legislature can create new laws to reign in the industry.

Some of the biggest questions facing lawmakers are how much should Wyoming’s gaming industry continue to grow and what should that growth look like?

Wyoming Gaming Commission Executive Director Charles Moore told Cowboy State Daily his agency needs clearer guidance from the Legislature on how to approach gambling in the state. He believes any gaming activity can be regulated in a positive way as long as it’s done with a robust regulatory structure that protects the public.

“Define what you want Wyoming to look like,” Moore explained.

In neighboring Montana, gaming is extremely prevalent with slot machines and neon casino signs found at seemingly every bar and strip mall. In Colorado to the south, gambling activity is much more curtailed than what Wyoming now allows, limited to just a few cities.

Senate President Ogden Driskill, R-Devils Tower, is a liaison to the Wyoming Gaming Commission who has a very clear preference for Wyoming’s future, and it’s not what’s happening north of the border.

“Montana sucks,” he said. “Not my idea of what a class act is.”

Moore, who considers himself to be a “very conservative person,” agrees. When asked if he would like there to be a gambling machine on every street corner in Wyoming, he responded, “Hell no.”

“Things can be done respectfully and responsibly and take a very methodical approach to what’s best for the Cowboy State,” he said.

Coming Present

On Friday, the Horse Palace Swan Ranch opened its doors to the public outside Cheyenne. The 30,000-square-foot facility features gambling machines, off-track horse and greyhound betting, a steakhouse, live music and a Dunkin’ Donuts shop, the first from the brand to open to the general public in Wyoming.

The newly opened Horse Palace is expected to create more than 140 jobs and $2.6 million in annual tax revenue. Wyoming Horse Racing LLC, which runs Swan Ranch, also has plans to open a hotel and a theater on the 36 acres it owns just north of the Wyoming-Colorado border. The facility came with a $25 million investment from its ownership group.

For the everyday customer, the Horse Palace won’t look any different than the inside of most other casinos across the country, except for the lack of card games and roulette, which aren’t allowed in Wyoming.

Growth like this has raised some eyebrows around the Cowboy State about the potential societal drawbacks it could cause such as gambling addiction, and the larger impacts it could have on the state’s culture and the way communities look.

Supporters have countered by pointing to the benefit gaming provides for live horse racing and tax revenue in Wyoming.

Nick Hughes, president of Wyoming Horse Racing, takes a different angle entirely, arguing that the primary target audience his Horse Palace is gambling on is Colorado residents, who he expects will make up a large majority of the outlet’s client base.

“This will create with Colorado dollars, Wyoming taxation,” he said. “It’s a win-win.”

How Did We Get Here?

Most of what we see as Wyoming’s gaming landscape today developed only over the last 10 years.

Although many people may think gambling is synonymous with the Old West, evoking flowery images of high-stakes poker games held between gunslinging cowboys in dusty saloons, gaming has actually had a somewhat muted past in Wyoming. It was outlawed in the state as a result of the McGill Act of 1901 following an uprising in the late 1800s.

It wasn’t until 1967 that legal gambling was permanently established in Wyoming with the legalization of parimutuel wagering. With that, the first iteration of what is now known as the Wyoming Gaming Commission was established.

That year, the Legislature also authorized live horse racing. Despite some early success and legislative changes favoring Wyoming-bred horses and multiple wagering opportunities, participation in this sport declined to the point that by 2010 there was no more live horse racing in the state.

Thus came the inspiration for the legalization of historic horse racing (HHR) in 2013, which uses the results of previously held horse races to determine the winners and losers playing on gambling machines. This is the format that’s used at the Horse Palace.

A few years later, skills-based gaming, a form of digital gaming where the outcome of a game is based on a player’s skill, started showing up in Wyoming but without formal legalization. This drew an official opinion from the Wyoming Attorney General’s Office in 2018 that the activity was illegal. Two years later the activity was enshrined into law.

Driskill said although he wasn’t overly excited about this form of gaming when it started, he acknowledges that many smaller communities in Wyoming benefit from the income it generates.

“Once they’re there and inserted, it gets really hard to change,” he said.

But unlike other forms of gambling, skill games don’t require any local approval or considerations other than permission from the Gaming Commission to set up. Driskill said he would support increasing overall local control of gaming.

“I think it’s a really a bad loophole in our law that we espouse local control and governmental hand, and yet we give them absolutely zero say,” he said.

Former state legislator and Senate President Phil Nicholas believes the ends have not justified the means when it comes to gaming in Wyoming.

“I’m not thoroughly convinced anything positive comes out of the gambling other than jobs for Native Americans,” he said. “The amount of money sucked out of the state is disproportionate to the benefits.”

Historical Horse Racing Pulling The Load

The major draw for the legalization of historic horse racing terminals, a parimutuel device, was to help reinvigorate Wyoming’s live horse racing industry, a notoriously difficult sport to turn a profit on. It’s a form of gaming also legal in Louisiana, Kentucky, Virginia and New Hampshire.

Some detractors have criticized the use of historic horse racing terminals as they visually look and in many ways feel identical to standard slot machines.

“A lot of the people think that they are playing slot machines and they are not slot machines,” said Nick Larramendy, deputy director of the Wyoming Gaming Commission. “The second you play that spin button, the machine already knows if you’ve won or lost because the results of that race have already happened.

“Although they look a lot like slot machines and act a lot like slot machines, they are not.”

Sen. Cale Case, R-Lander, said he considers the difference inconsequential and a loophole of sorts for the gaming industry. Case, who voted against the legalization of historic horse racing in 2013, wants more regulation of gaming as a whole and considers it generally negative for society.

“I would be for more regulation and local people getting to weigh in more about the regulation of horse racing,” he said.

The proceeds raised from historical horse racing in Wyoming dwarf what’s made off the live racing industry, and the main reason its supporters argue for its existence is to help subsidize the live horse racing efforts in Wyoming.

Last year, $6.7 million was raised for the Wyoming Breeder Award Program, which helps Wyoming horse owners recoup some of the high costs that come with raising a top level horse.

Eugene Joyce, a managing partner for the Horse Palace and general manager at Sweetwater Downs in Rock Springs, predicts that sometime soon there will be a Wyoming-bred horse racing in the Kentucky Derby.

“Because of the HHR, we’ve been growing meteorically,” he said.

Also, unlike standard slot machines, most of the money spent by customers on HHR is pooled into a prize money purse rather than being retained by a casino.

As of 2023, there were 2,486 historic horse racing gaming terminals at 43 Wyoming locations.

A total of 98% of the Gaming Commission’s overall revenues since 2013 can be attributed to proceeds of historic horse racing. From 2013-2023, revenue from historic horse racing provided $69.8 million for local governments and another $36.3 million to Wyoming state government.

Driskill wants local governments to be getting a bigger cut of this money.

“It’s absolutely insane the amount of money that gets wagered around the state,” he said.

Live Horse Racing

At Friday’s Appropriations meeting, Rep. Tom Walters, R-Casper, expressed pessimism about how successful HHR has been for the live horse racing industry in Wyoming.

Since the Legislature’s official authorization of historic horse racing, the number of live horse races in Wyoming has increased from 10 in 2013, to 20 in 2014, and 50 by 2021. Joyce said the number of horses racing has increased from 50 to around 365 last year.

“People are now bringing in horses from other states to race. It’s been a huge natural success story,” he said.

Although he enjoys horse racing, Case said there is a dark side to the sport and he’s not sure how prevalent it should be in Wyoming.

Some Challenges

For the month of May, total gambling revenue in Wyoming was about $188.9 million. From this, the state received about $827,196, local cities received about $1 million and counties $933,000.

“When there’s a tremendous amount of money involved. It does open yourself up to loopholes,” Moore said. “People that are looking at different things and looking at ways that they can game the system.”

The Gaming Commission has recently hired a third-party firm to conduct a study of its gaming industry where it will analyze a number of questions such as whether Wyoming is getting a fair share of the gambling profits.

Larramendy said there’s no direct correlation between Wyoming gaming activity and organized crime, but mentioned how fights have broken out at facilities where gaming machines are located.

“It’s hard to tie those two together. Was it there because they were playing a skill game or is it the alcohol?” he questioned.

He also said some people have tried to exploit certain gray areas in Wyoming’s gambling laws created by vague or outdated definitions for terms and rules. He mentioned how a number of for-profit Wyoming companies have attempted to get licenses for bingo, which is only allowed for charitable purposes, as a way to leverage money for a standalone profit-driven company.

There have also been instances of smoke shops around the state using multiple LLCs for their skills-based gaming machines to get around a rule that states only four machines can be used at a given location.

Addiction Concerns

Phil Nicholas went to college in Reno, Nevada, where he saw the impacts of gambling firsthand, and has concerns about rising gambling addiction rates in Wyoming. He believes a lot of the money raised by gambling will end up going to provide treatment services.

“Ultimately, it’s a lot of money being wagered for the hope of economic development,” he said.

Andi Summerville, executive director of the Wyoming Association of Mental Health and Substance Abuse Centers, said she hasn’t seen any noticeable spike in gambling addiction, but there has seemed to be an increase in awareness of the risk.

According to Wyoming Department of Health data, the number of people seeking treatment for gambling addiction a year has stayed relatively flat and low since 2011, topping out at 21 in 2022, which makes up 0.15% of the state population.

Moore likens many of the challenges seen today to common growing pains associated with a highly successful industry. He considers gaming the quickest-evolving industry in the world.

Moore also said few could’ve predicted that gambling would reach the heights it’s at today with each increment of new legalization that occurred.

Industry Perspective

Hughes said he doesn’t oppose increased regulations.

“For the public to build trust in gaming, it needs to be responsible gaming,” he said. “If companies want a free-for-all market, this is not the place for it.”

Dave Picard, a lobbyist with the Sports Betting Alliance, a national lobbying arm of BetMGM, DraftKings, FanDuel and Fanatics Sportsbook, told the Appropriations Committee his group is rather agnostic on increased regulation as long as it’s done in a fair and predictable manner.

He said the only type of gaming in Wyoming that has a robust and competitive illegal market is online wagering due to the lack of verification measures that can be placed on it.

“It is truly the Wild Wild West,” he said.

Capturing Illegal Activity

Picard cited a 2021 study that found Wyoming’s illegal sports wagering market was worth about $400 million. Since that time, Picard said the industry has shrunk because of the legalization of sports gambling.

“Most citizens would rather be operating legally rather than illegally,” he said.

Picard also said increased regulation would be attainable on a state level with measures in place like geofencing, but he’s less than enthusiastic about a proposal committing the gaming industry to help take on the cost to enact these measures.

Other Solutions

The Appropriations Committee has assembled a working group to study adding more gaming laws in Wyoming. The group has attempted to tackle ways that the state can better regulate the gaming industry by studying some of the approaches that other states have taken.

On Friday, the committee considered a few new bills that the working group had drafted up.

One would raise the minimum age for regulated gaming from 18 to 21. Operators now have the option in Wyoming to enforce gaming at 21.

According to the Legislative Service Office, states have done both ages across the country, but 21 is more common.

The committee also considered a bill that would remove the profit cut that operators get to take from winning bets.

Unsurprisingly, the gaming industry isn’t excited about that proposal.

Laurie Urbigkit, a lobbyist for Wyoming Horse Racing, mentioned how one Wyoming operator had more than $600,000 in that type of revenue last year.

Another bill would require permission from a city or town for the issuance of a parimutuel gaming permit in their communities. Currently, only county commissioners have direct approval over local gaming permits. Walters mentioned how when historic horse racing was shut down in Gillette by the county commissioners there, many city officials there were unhappy as there was nothing they could do about it.

The Wyoming County Commissioner Association also drafted a bill of their own that would allow county commissioners more control over permits after they’ve been approved.

Former House Speaker Tom Lubnau suggested the creation of a professional citizens commission for gaming, whose members would have some professional gaming expertise and are paid, similar to the setup of the Public Service Commission.

Driskill said the current commission, which he strongly supports, needs much broader authority to regulate the industry so that politics can be removed as much as possible from decision making.

“Gaming has a history … of creating corruption and bad things when they get to politicians,” he said.

Wyoming Gaming Commission Vice Chair Cactus Covello said Friday he isn’t opposed to Lubnau’s proposal but believes Wyoming is in a solid position with gaming at the moment despite the industry’s meteoric growth.

“We as commissioners spend a good time coming to grips with all the changes,” he said.

Moore, who serves on several national-level gaming committees and boards, expressed the same level of confidence, but mentioned to Cowboy State Daily how each time a new type of wagering activity has been legalized in Wyoming by the Legislature, lawmakers have failed to give the Gaming Commission a larger budget or more staff to regulate it.

“It’s kind of a Wyoming thing, I think we’re all resourceful,” he said. “We just keep moving forward in a positive manner the best we can.”

Leo Wolfson can be reached at leo@cowboystatedaily.com.