With Luckity.com, Churchill Downs moves beyond horse races into online real-money gambling

Churchill Downs has been synonymous with horse racing since the first running of the Kentucky Derby (which actually started in 1875). Now the company is moving into real-money online gambling — beyond horse racing — thanks to a quirk in interstate gambling law.

Real-money online gambling is illegal in most states in the U.S. — except when it comes to live horse racing. Gamblers can bet on the horses via online web sites. But now Churchill Downs’ Luckity.com subsidiary has started a number of casino games — such as daily jackpots and slot machines — in which players can put down real bets and win cash prizes.

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They do so by placing bets on horse races that are disguised as casino games. You are really making a bet on a horse race, but Luckity may have reskinned that contest to look like a a slot machine game.

The Luckity.com games are legal because federal law allows interstate gambling on horse races. When you place a bet in a game on Luckity.com, it is put into a wagering pool on one or more live horse races that are occurring (24 hours a day, all over the world). The outcome of a horse race becomes the way to resolve how a particular bet turns out, either as a win or a lose.

“The horse race is our random number generator,” said Eric Hartness, the vice president of marketing at Luckity.com, in an interview with GamesBeat.

Technically, you’re still betting on horse races through Churchill Downs’ online horse racing gambling site, twinspires.com, based in Mountain View, Calif. That’s how Luckity.com stays within the law. But it dresses the bets up by disguising them as casino games, which have wider appeal. The online gambling business is licensed and regulated in the state of Oregon. With this kind of betting, bettors have to put down money in advance, known as advanced deposit wagering.

Players can bet real money and win cash prizes. It may sound illegal, but it’s not, Hartness says. The idea of Luckity.com is to extend online gambling beyond those interested in horse racing to a broader market. While horse racing is more interesting to males, the broader games on Luckity.com are targeted at older women and others who like casual games.

Horse racing is popular, with races taking place around the world at all hours. But sometimes you’ll have to wait for another race to start. So the experience of playing games on Luckity.com is not like an instantaneous slot machine. In that sense, Luckity.com may have trouble satisfying players who want instant gratification. On the other hand, you can bet real money on it — something that you can’t do in most states.

The payouts can vary widely. Right now, the challenge is convincing gamers that the gambling is legal. The site has 24 cash-based games, with more on the way. Churchill Downs Interactive president Ted Gay said the company has worked on the technology for months.

Churchill Downs has about 2,000 employees, while the Louisville, Ky.-based Luckity division has six dedicated employees. While Zynga wants to enter the real-money gambling market, it cannot yet legally do so. But if the online gambling laws are changed, as some in Congress want to do, then Luckity will have a lot of new competition. Luckity has pplied for a patent on the technology.

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Check out Luckity’s videos below.