A legislative fix for the legal question of historic horse racing (HHR) in Kentucky is on the way, according to legislators speaking at a rally held at Keeneland Feb. 1. Sen. John Schickel (R-District 11) told observers at the track and watching online that he plans to introduce a bill before a legislative committee this week that would make the HHR machines at Keeneland and the Red Mile part of the state's definition of parimutuel wagering.
The rally was organized by the Kentucky Equine Education Project (KEEP).
The Kentucky Supreme Court ruled in September that the HHR machines made by Exacta Systems do not qualify as parimutuel wagering because wagers are pooled from multiple races to determine the payout for a wager placed from a given machine. The ruling was in response to a suit brought in civil court by The Family Foundation to have the games halted. The court decided last week not to rehear the case. On Jan. 24, Keeneland and Red Mile, which both have Exacta Systems terminals installed, closed their HHR operations.
“Tonight, I'm going to appeal to your worst fears,” said Sen. Damon Thayer (R-District 17). “Our worst fear is if HHR goes away — and we've already seen it, hopefully temporarily, suspended down at the Red Mile — the result will be cataclysmic. Catastrophic. We are on the cusp of greatness in Kentucky. Now this unfortunate Supreme Court decision last fall has put a temporary straw in our pathway, and we're going to do everything we can to sweep this straw aside.”
Thayer also pointed out that there have been questions about how much of the revenue on HHR goes to the state's general tax fund, with some critics claiming the state is getting short-changed. Thayer said it's important to note that the tax rate of 1.5 percent of gross income on HHR wagering is the same rate paid by living racing and simulcasting. Thayer claimed the rates have been twisted by HHR's critics, who fail to recognize that the 1.5 percent is against the gross income before the tracks pay out to the customer and to purse accounts, and the rate actually works out to roughly 33 percent of net profits.
“You're going to see all kinds of specious arguments and wailing and gnashing of teeth as we try to get this bill passed,” said Thayer. “The opponents of this will make all sorts of wild claims. One of them will be that 1.5 percent of gross is a sweetheart deal; it's not … there's no reason for the racing industry to be ashamed of that. It's worked very well since 2014.”
Schickel took a somewhat different tack, saying that as Kentucky's signature industry, racing should get special consideration.
Both legislators said they had been asked why they weren't advocating for legalizing sports betting along with the new HHR definition, and said that it's important to consider the issues one at a time.
“There are some people who support historical horse racing who do not support sports wagering and casinos,” he said. “One of the reasons I'm so committed to historical horse racing is that the focus is on racing. My buddies at happy hour razz me all the time and say, 'John why are you giving the tracks this sweetheart deal?' And I plead guilty as charged. The reason they are is that Thoroughbred racing is our signature industry, and that's where our focus should be this session.”
KEEP executive vice president Elisabeth Jensen urged attendees to think beyond the Central Kentucky area when pushing their representatives to support HHR. Jensen pointed out that many of the people at the rally were from the same eight or ten counties surrounding Lexington, but successful lobbying will require those who are passionate about the issue to reach out to friends and colleagues in more far-flung areas.
KEEP offers an easy tool for Kentucky residents to contact their legislator about the issue and a petition for those who live outside the state to voice their opinion.
So far, Jensen said people have used the system to send 4,500 unique messages to Kentucky legislators requesting their support for HHR.
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