California HHR Standoff: Santa Anita Terminals Test Tribal Slot Exclusivity
Twenty-six Racing On Demand terminals at Santa Anita reopen a fight tribes thought they had won.
California's longest-running gaming dispute has a new front. In January 2026, Santa Anita Park installed 26 historical horse racing terminals — branded "Racing On Demand" — on its casino-style gaming floor, reopening a question that has simmered for nearly a decade: do HHR machines infringe on the constitutional exclusivity that tribal casinos hold over slot machines in California? The California Nations Indian Gaming Association responded within days, signaling that the new terminals would be challenged on the ground that, to a player, the experience is functionally indistinguishable from a slot machine.
The dispute matters far beyond a single Arcadia racetrack. California is home to the largest tribal gaming market in the United States, with more than 60 tribes operating casinos under Class III compacts that explicitly reserve slot-style gaming to the tribes in exchange for state revenue contributions. Anything that erodes that exclusivity — whether prediction markets, sweepstakes platforms, or HHR terminals — strikes at the structural bargain that underpins tribal gaming in the state.
What HHR actually is
Historical horse racing terminals allow a player to wager on the outcomes of previously run horse races. The races and the horses are stripped of identifying detail; the player selects from anonymized options, the machine simulates the result based on actual historical race data, and the payout is determined by parimutuel-style pooling among other HHR players. The legal theory under which HHR operates in jurisdictions that have authorized it treats the activity as a form of parimutuel wagering on racing — a category that pre-dates IGRA and that states have historically regulated independently of casino gaming.
To a player, however, the user interface looks and behaves like a slot machine. Spinning reels, animated symbols, near-instant outcomes, and machine-style payouts dominate the experience. CNIGA's argument is straightforward: differences invisible to the player should not be sufficient to evade the slot-exclusivity protections that California voters approved in successive ballot measures. The horse-racing industry's counter is that the underlying parimutuel mechanism is real, that the games have been operating lawfully in other states for years, and that California law has not categorically prohibited the technology.
Why California is different
California's slot exclusivity is unusual in its strength. It derives from Proposition 1A in 2000, subsequent ballot-validated amendments, and the resulting tribal-state compacts that channel a significant share of slot-machine revenue to state and local benefit funds. The exclusivity is not absolute — the state's card rooms operate a constrained form of casino gaming, and the lottery offers electronic products — but slot-style banked gaming has been understood to be reserved to tribes operating under compact. Erosion of that understanding, even at the margins, raises the question of whether the consideration tribes pay under their compacts is still proportionate to the exclusivity they receive.
That question is freshly relevant. The California tribes' decision to defer their next push at a sports betting ballot measure to 2028 was driven in part by a desire to assemble a more durable coalition and to address adjacent exclusivity threats first. HHR proliferation, if unchecked, complicates that strategy by giving non-tribal operators a foothold in slot-adjacent gaming before any sports betting framework is in place.
Exclusivity is not just a legal status — it is the economic premise of the modern California tribal gaming compact. Each new HHR terminal raises a question the state will eventually have to answer.
The regulator's dilemma
The California Horse Racing Board has been in discussion with tribal officials, the racetrack industry, and state officials about whether HHR is compliant with California law on parimutuel wagering. Those discussions have included the possibility of a revenue-sharing arrangement that would direct a share of HHR proceeds to tribal interests in exchange for tolerance of the machines — a model used to defuse similar disputes in other states. Whether any such arrangement is acceptable to California tribes is far from clear; their starting position has been that HHR terminals should not operate at all.
The CHRB faces a structural challenge: the horse-racing industry in California has been in financial stress for years, with handle declines, track closures, and concerns about the long-term viability of major racing dates. HHR revenue, where it has been authorized in other states, has bolstered purse structures and operating margins. From the CHRB's perspective, blocking HHR could accelerate the racing industry's contraction; permitting it risks inviting a tribal legal response and undermining the compact framework that has stabilized California gaming for two decades.
Litigation, ballot, or both
How this resolves is genuinely uncertain. CNIGA has the legal resources to bring a direct challenge in California state court, arguing that the terminals operate slot machines under a different name and that their authorization conflicts with the constitutional grant of slot exclusivity. The racing industry has the option to seek explicit legislative or regulatory authorization, ideally tied to a revenue-sharing component that gives tribes a stake in the outcome. A ballot measure — affirming or constraining HHR — is also conceivable, though California's experience with gaming ballot measures suggests caution.
For tribes outside California, the dispute is instructive. HHR has expanded in Kentucky, Virginia, New Hampshire, Wyoming, and elsewhere, and similar exclusivity tensions exist wherever tribal compacts pre-date the technology. The California fight will set tone for how aggressively tribes elsewhere are likely to defend slot exclusivity against parimutuel-adjacent encroachment. Background on the underlying compact framework is in our explainer on tribal-state revenue sharing; the broader California market context is on the California state hub, with cross-state comparisons available via the Legal Guide.