Horse race gambling closely parallelled the rise in popularity of horse racing itself. It grew despite its status in the early decades underground affair. Only horse owners could gamble on the outcome of races; the general public could either pay bookies, who might or might not pay out, particularly when an unexpected victory led to a large losses for them. Alternatively racing gamblers could make betting pools of their own and risk the holder of the pool not disappearing before the race. Either way, the grieved parties had no recourse before tentative steps were taken to bring gambling into a legal system.

On this day, May 26, 1887, the New York legislature legalized parimutuel betting, the kind still used today in “off-track” betting, on horse races. Parties would pool their money, and the winning payout is determined by the amount contributed to the pool.

Off-track gambling could have remained a small affair if not the for the effort of Colonel Matt Winn, who owned the Churchill Downs racetrack, site of the Kentucky Derby. Racing authorities forbade spectator gambling of the races, but Winn, hating the idea of a lost channel of revenue, found no laws on the books forbidding parimutuel betting. The practice was allowed in 1908 at the Kentucky Derby and went the next year to Pimlico, via the Maryland Jockey Club.