Gambling (Legal)

The 1874 Arkansas Constitution dealt with only one type of gambling: lotteries. Article 19, section 14, originally prohibited lotteries in all forms in the state. Thus, under the state constitution, gambling aside from lotteries was not originally prohibited and was a matter subject to various state laws.

However, the state constitution did not define “lottery,” and this lack of definition allowed horse racing (and the gambling that accompanied it) to take place in the state. In the late 1890s, Sportsman Park was built on the southeastern side of Hot Springs (Garland County), sparking interest in bringing the increasingly popular sport of Thoroughbred racing to Arkansas. In 1902, William McGuigan, a member of the Arkansas General Assembly, bought land on Malvern Avenue in Hot Springs. In 1903, a number of anti-gambling laws that had been passed in the 1880s and 1890s were repealed, and McGuigan turned that land on Malvern Avenue into Essex Park, which opened in 1904.

Essex Park was immediately successful, attracting the attention of would-be competitors. A group of businessmen that included Charles and Louis Cella formed the Oaklawn Jockey Club in 1904 and purchased land north of Hot Springs on which to build another horse-racing track. Oaklawn opened in 1905 and, unlike the open-air wooden grandstands of Essex Park, featured a glass front and steam heat to make watching the races more comfortable.

McGuigan, angry that Oaklawn was eating into Essex Park’s profits, joined with the Reverend W. T. Amis and formed the Citizens Improvement Union, whose only apparent goal was to stamp out horseracing in Arkansas entirely. In 1907, McGuigan succeeded in getting the Citizens Improvement Union’s bill passed, outlawing horse racing anywhere in the state. Oaklawn initially tried to ignore the new law and continue having horse races. However, Oaklawn was forced to close its doors to horse racing in 1907, though the infield was used for other purposes, including the Arkansas State Fair from 1906 to 1914.

In 1913, fires ravaged downtown Hot Springs, leading to a downturn in tourism dollars. In 1914, a group of Hot Springs business leaders decided that a return of horse racing would improve the local economy. A bill to revive horse racing in the state easily passed the legislature in 1915, but Governor George Washington Hays vetoed it. A lawsuit followed, attempting to get the veto overturned, but the Arkansas Supreme Court sided with the governor and affirmed the veto. Nevertheless, in 1916, Oaklawn reopened in connection with the Business Men’s League, under the guise of having horse races with no betting. It was successful enough that Oaklawn and Essex Park made plans to split a full racing season in 1917. Essex Park, however, burned to the ground immediately after the opening day of the 1917 season. In 1919, a circuit judge ruled that holding the races at all was illegal, and Oaklawn again had to cease having races.

In 1929, a new bill to legalize horse racing passed the Arkansas legislature, only to be vetoed again, this time by Governor Harvey Parnell. In 1934, Hot Springs mayor Leo McLaughlin and several prominent businessmen formed the Business Men’s Racing Association and announced that racing would restart at Oaklawn in March 1934, which it did, without any approval by the legislature or the state in general. Betting was still technically prohibited. However, the Arkansas legislature passed, and Governor Junius Futrell signed, Act 46 of 1935, which legalized pari-mutuel betting on horse races—this is a form of betting in which the bettors on the top three horses divide the money wagered by the people whose bets did not win. A citizen sued the secretary of the Arkansas Racing Commission, arguing that such betting was an illegal lottery prohibited by the state constitution. The Arkansas Supreme Court in Longstreth v. Cook disagreed, but the legal uncertainty about the future of pari-mutuel betting in Arkansas drove John G. Cella (who had taken over from Charles Cella in 1940) to get a proposed amendment placed on the November 1956 ballot. The amendment, which passed easily and became Amendment 46, stated in no uncertain terms: “Horse racing and pari-mutuel wagering thereon shall be lawful in Hot Springs, Garland County, Arkansas, and shall be regulated by the General Assembly.”

In the 1957 legislative session, the Arkansas General Assembly went to work codifying and cleaning up the rules regarding horse and greyhound racing. Act 46 of 1957 created a system of licensing and taxing horse-racing facilities, and it gave each county a local option to approve, by popular vote, new horse racing venues in the state once a temporary license was issued. Act 191 officially legalized greyhound racing and pari-mutuel betting, placed it under the aegis of the Racing Commission that was created under Act 46, and gave a local option for approval of new greyhound racing venues. The latter act was in response to a lawsuit by Southland Racing Corp. in West Memphis (Crittenden County), which had applied, in 1956, for a license to hold greyhound races, with pari-mutuel betting, in Crittenden County. Southland had built a forum for the races and had complied in every required way with the statutory framework at the time. However, the Arkansas Racing Commission denied Southland’s application, despite Southland’s compliance with the statutes, and Southland sued the commission for an injunction directing the commission to issue the license.

That is where legal gambling stood in Arkansas for several years, without much change to the horse or greyhound statutes. Then, in 2005, the legislature passed Act 1151, which allowed for the people in “cities or counties where horse racing or greyhound racing parks are located” to vote on whether to allow the horse- or greyhound-racing venues to feature, in addition to racing, “electronic games of skill.” While the pre-existing statutes allowed any county or city to vote on whether to have a horse- or greyhound-racing venue, the 2005 legislation allowed only those places that had horse or greyhound racing to vote to have electronic gaming. Many argued that the 2005 law was specifically designed to guarantee that only Oaklawn and Southland would have electronic gaming for the foreseeable future. In addition, “electronic games of skill” meant games played through any electronic device or machine that afforded an opportunity for the exercise of skill or judgment when the outcome was not completely controlled by chance alone. This definition was done in accordance with the Longstreth decision, which defined lottery as “determined entirely or in part by lot or mere luck, and in which judgment, practice, skill and adroitness have honestly no office at all, or are thwarted by chance.” However, Arkansas Department of Finance and Administration regulations regarding electric games of skill specifically allowed for games based on a random-number generator. Those regulations even have lengthy descriptions of how random and non-countable a random-number generator must be to be part of an approved game.

Unlike the horse-racing-related Amendment 46, the state constitution’s specific prohibition against lotteries meant that the legislature could not create one simply through legislation. Instead, it would take a constitutional amendment to make that happen. In 2006, as part of his campaign for lieutenant governor, Bill Halter began to talk about pushing for a statewide lottery, with proceeds going to educational scholarships. Halter won that race and helped spearhead the effort to get the legislature to refer a constitutional amendment to the people to create that lottery system. The proposed amendment appeared on the November 2008 ballot and passed by a roughly two-to-one margin, becoming Amendment 87. Starting in the 2009 regular legislative session, the Arkansas General Assembly put together the statutory framework for how the lottery would be run, how money would be disbursed, and other factors.

After almost a decade of no newly approved gambling in the state, the 2017 General Assembly passed Act 1075, which allowed for the playing of daily, paid fantasy sports (e.g., DraftKings and FanDuel). Interestingly, despite the fact that those kinds of games actually do require skill and allow for someone to wager his or her money and receive a payout based on outcomes that are a combination of skill and luck, the legislature specifically mentioned in Act 1075 that “a paid fantasy sports game conducted in compliance with this chapter does not constitute gambling for any purpose.” Regardless of that distinction, Act 1075 effectively allowed players to participate in online daily fantasy sports games and imposed a tax on the operators of those games. The real impact of Act 1075 was the attempt to let Arkansas profit from an activity that was already happening and to clarify that these games were not illegal in Arkansas.

On May 14, 2018, the U.S. Supreme Court struck down a 1992 federal law that prohibited most states from legalizing gambling on sporting events. That decision found that, while the federal government could regulate sports betting itself, what it could not do—and what the 1992 statute did—was direct the states to prohibit sports gambling under state law. Then, in November of that year, Arkansas voters approved a constitutional amendment, Amendment 100, allowing full casino operations, including sports betting, at four sites in Arkansas, barring the approval of local officials: West Memphis, Hot Springs, Pine Bluff (Jefferson County), and Russellville (Pope County). By 2019, Oakland and Southland had begun expanding their operations into full casinos, and the Quapaw Nation had announced plans to open a casino in Pine Bluff. Potential casino operations in Russellville, however, ran into a legal hindrance given that county voters supported an ordinance opposing casino operations.

In December 2021, the Arkansas Racing Commission and the Arkansas Department of Finance and Administration were sued for a failure to establish gambling-disorder treatment and educational programs; that lawsuit was later dismissed. On December 30, 2021, the Arkansas Racing Commission established rules to allow Arkansas casinos to offer online sports betting. On February 22, 2022, the Joint Budget Committee signed off on a subcommittee’s approval of those rules, which require Arkansas casinos to keep fifty-one percent of the net revenue from such betting, despite heavy lobbying from national gambling companies wanting a larger share of said revenue.

For additional information:
Anthony, Isabel Burton. “Happy Birthday Oaklawn Jockey Club: Oaklawn Park Celebrates a Century of Thoroughbred Racing.” The Record 45 (2004): 1–15.

Campbell-Miller, Sarah. “Pope County Casino Still on Hold.” Arkansas Business, January 10–16, 2022, p. 9.

“The Development of the Law of Gambling: Arkansas.” Arkansas Lawyer 13 (July 1979): 108–110.

“The Development of the Law of Gambling: Arkansas (Part II).” Arkansas Lawyer 13 (October 1979): 151–153.

“The Development of the Law of Gambling: Arkansas (Part III).” Arkansas Lawyer 15 (April 1981): 78–80.

Friedman, Mark. “Mobile Sports Bets May Be Just a Tap Away.” Arkansas Business, January 10–16, 2022, pp. 1, 7.

Haddigan, Michael. “Charles Cella’ $5 Million Wager.” Arkansas Times, October 25, 1996, pp. 10–13.

Hardy, Benjamin. “Arkansas Becomes Casino Country.” Arkansas Times, November 15, 2018, pp. 14–18. Online at https://www.arktimes.com/arkansas/arkansas-becomes-casino-country/Content?oid=25648105 (accessed October 11, 2019).

Lancaster, Bob. “Oaklawn Reincarnated as Simulcasting City.” Arkansas Times, July 28, 1995, pp. 11–12.

Magsam, John. “Winnings of Casinos Increase 23% in 1Q.” Arkansas Democrat-Gazette, April 25, 2023, pp. 1A, 3A. Online at https://www.arkansasonline.com/news/2023/apr/24/arkansas-casinos-report-23-first-quarter-jump-in-winnings/ (accessed April 25, 2023).

Massey, Kyle. “Racetracks Take Opposite Turns.” Arkansas Business, January 10–16, 2022, pp. 1, 6.

Nelson, Rex. “There’s More Than One Way to Race: The Evolution of Oaklawn Park.” The Record 56 (2015): 12.1–12.12.

Roberts, Jeannie. “State Casino Rules Hashed out, Adopted.” Arkansas Democrat-Gazette, February 22, 2019, pp. 1A, 7A. Online at https://www.arkansasonline.com/news/2019/feb/22/state-casino-rules-hashed-out-adopted-2/ (accessed July 11, 2022).

Showers, David. “Casino Gambling Amendment Bears Fruit for Hot Springs, Garland County.” Arkansas Democrat-Gazette, October 4, 2019, pp. 1B, 5B.

Waldon, George. “Saracen Draws New Funding after Showing a Good Hand.” Arkansas Business, January 10–16, 2022, p. 8.

Wickline, Michael R. “$5.2B Wagered in Machine Bets at State’s Tracks.” Arkansas Democrat-Gazette, September 15, 2019, pp. 1A, 10A.

———. “Efforts on to Help Problem Gamblers.” Arkansas Democrat-Gazette, July 11, 2022, pp. 1A, 2A. Online at https://www.arkansasonline.com/news/2022/jul/11/proposals-sought-from-educational-treatment/ (accessed July 11, 2022).

———. “Judge Tosses out Lawsuit over Problem Gambling.” Arkansas Democrat-Gazette, December 9, 2022, pp. 1B, 3B. Online at https://www.arkansasonline.com/news/2022/dec/09/illegal-exaction-lawsuit-filed-against-arkansas/ (accessed December 9, 2022).

———. “Sports-Wager Proposal Breezes through Panel.” Arkansas Democrat-Gazette, February 23, 2022, pp. 1A, 7A. Online at https://www.arkansasonline.com/news/2022/feb/23/mobile-sports-betting-in-arkansas-gets-ok-from/ (accessed February 23, 2022).

Wickline, Michael R., and Rachel Herzog. “State Sued over Problem Gambling.” Arkansas Democrat-Gazette, December 3, 2021, pp. 1B, 5B. https://www.arkansasonline.com/news/2021/dec/03/illegal-exaction-lawsuit-targets-lack-of-arkansas/ (accessed December 3, 2021).

Matthew D. Campbell
Little Rock, Arkansas

This entry originally appeared in a different form on the website Blue Hog Report.