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Romans: Historical Horse Racing A Game-Changer For Good In Kentucky

As a second-generation horse trainer and Kentuckian, my entire life has been spent in Thoroughbred racing. I've seen Kentucky racing at its finest, and I've seen how quickly out-of-state competition can render us increasingly irrelevant. Right now Kentucky is at the top. But it doesn't have to stay that way.

I currently have 50 employees and do business with more than 100 vendors in Kentucky alone. Without Historical Horse Racing (HHR) revenue supplementing the purses for which our horses compete, many of those jobs will have to leave the state, as will our business with all those area vendors.

People forget, but it wasn't that long ago that Kentucky racing was badly hemorrhaging amid regional and national competition for horses. As more horse owners and trainers opted to race at tracks with purses fueled by slots and casino gaming, Ellis Park's summer meet and Turfway Park's winter racing were on life support. Even legendary Churchill Downs and Keeneland struggled with a profound horse shortage. Our breeding farms suffered from an exodus of mares they'd previously boarded, leaving the Bluegrass for states with more meaningful incentives – supported by revenue from racinos and casinos – for horses foaled in those jurisdictions.

First introduced by then-struggling Kentucky Downs in 2011, Historical Horse Racing proved the game-changer for good, reversing the downward spiral for Kentucky's signature industry. HHR is not a subsidy for horse racing. It's an innovative, racing-based product that reinvests in our iconic industry. This is one of those win-win-win situations that has benefitted the whole state. It has sparked significant economic development and creates and preserves jobs.

Purses are the universal language of horsemen. We follow the money. And where our horses go, so go the jobs. American horse racing is not the sport of kings. It's the sport of thousands of stables operating as local businesses employing real people in communities across the country.

Horse racing is an extremely labor-intensive business; you're never going to automate caring for a horse. And that's a good thing. We want it to be labor intensive and give people the opportunity to work in our industry.

Because of Historical Horse Racing and combined with our quality of life and affordable housing, Kentucky is now the mecca for horsemen. Trainers and jockeys on both coasts are increasing their presence in Kentucky, if not making it their primary base. Ellis Park and Turfway's barns are full for their meets, as are area training centers. The horses occupying those stalls reflect added jobs.

Within the short period of time in which it has been up and running, HHR has completely changed the dynamics of racing on a national level, with Kentucky once more at the forefront.

This provides a huge boost for the entire economy of Kentucky, not only horse racing. Just ask the mayors and county judge executives in Henderson and Simpson counties what HHR has meant for their communities. Historical Horse Racing has brought entertainment dollars back to Kentucky, with HHR operations themselves employing 1,400 people in six cities. Our racetracks have invested nearly $1 billion the past 10 years in capital projects with another $600 million planned.

Make no mistake, that will change for the worse if the Kentucky Legislature doesn't act to protect HHR. It needs to follow the simple blueprint the Kentucky Supreme Court provided to address its constitutionality concern.

It is not hyperbole to say three of our five thoroughbred tracks will close without HHR: Ellis Park, Turfway Park and Kentucky Downs. Harness racing will be history. Jobs will evaporate, millions of economic development and tourism dollars lost.

Whether you approve of alternative gaming or not, it is right here in our market — just across the border in Ohio, Indiana, Illinois, West Virginia and not far away in Pennsylvania. The majority of Kentucky's population can get to a casino to gamble within 30 minutes.

Kentucky's horse industry has a $5.2 billion economic impact and employs 60,000 people directly or indirectly. The commonwealth's racetracks pay more than $100 million annually in state and local taxes. Out-of-state money flows into Kentucky's coffers as a result of horse racing and its economic driver, HHR.

Do we want to needlessly sacrifice that?

It's important to have a year-round, consistent racing circuit in Kentucky. Without HHR, Kentucky racing will be an afterthought in a very quick period of time. Legislators must ask themselves: Can we afford that?

Dale Romans has trained in his native Kentucky since 1986, racing extensively at the commonwealth's five thoroughbred tracks and reigning as Churchill Downs' all-time win leader for 2 1/2 years until being surpassed by Steve Asmussen last June. Romans, the recipient of the 2012 trainer Eclipse Award, has won 2,076 races, including the 2011 Preakness Stakes with Shackleford and three Breeders' Cup races. He is a vice president of the Kentucky HBPA, which represents owners and trainers at the state's thoroughbred tracks.

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Yet Another Horse Racing Bill Filed in Georgia

In what has become a nearly annual long-shot endeavor in Georgia, legislation has been filed to legalize pari-mutuel horse racing.

The latest bill, SB30, was introduced Jan. 27 by Senator Brandon Beach, (R-Alpharetta). It shares the same title as the Rural Georgia Jobs and Growth Act that he filed during the 2019-20 legislative session.

The 51-page bill would create a state racing commission that would have the power to issue licenses for up to three racetracks situated at least 125 miles apart that would be required to host 60-date minimum race meets (unless the licensees can demonstrate via waiver application a need to reduce the dates requirement to 45).

The bill includes provisions for historical horse race (HHR) gaming, simulcasting, and advance-deposit wagering.

The initial 10-year licenses would be up for bid at $50 million each, and could be renewed thereafter for $250 million.

Another stipulation mandates that tracks within 50 miles of a major international airport would need to have a minimum initial investment of $250 million per facility. If further away from a major airport, the minimum investment would be $125 million.

Entrepreneurs who are entirely new to the racetrack business need not apply, as per a clause in the bill that states, “No application for the equestrian facility shall be considered unless the applicant, a majority of its owners who individually possess at least 5% of the applicant's stock or membership, or its management, can demonstrate a successful history of operating at least one horse racing track in one of the previous five years from the date of the application.”

According to the Atlanta Journal-Constitution (AJC), two other pieces of gambling-related legislation have also been field recently. One would put a question on an upcoming ballot asking Georgia voters whether they support allowing casinos in the state. The other would legalize online sports betting.

The stumbling block to getting pari-mutuel laws enacted in Georgia–as it has been for the past three decades since Georgia's lottery became legal–has nothing to do with a lack of enthusiasm for horses. The difficulty has always been rounding up enough elected officials who are willing to support expanded gambling in a state where moral objections to it run high and religious conservatism carries considerable clout.

The AJC reported that “Adding casino gambling or horse racing would require Georgians to approve a constitutional amendment allowing the expansion…. Sports betting supporters said the resolution is not needed to allow sports betting. That difference is important. A bill only requires that more than half of each chamber support a measure to make it to the governor's desk. Constitutional amendments need two-thirds of each chamber to clear the General Assembly–a tall ask from the Legislature–and then a majority vote in an election.”

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HHR Bill With Support of Kentucky Senate President to be Filed Feb. 2

A Kentucky State Senator whose district includes Turfway Park said Thursday that he intends to file legislation and hold a hearing next week to make historical horse race (HHR) gaming legal, “maintaining the status quo” for the revenue flow that annually contributes tens of millions of dollars to purses in the state.

“Next week, I will file legislation to keep historical horse racing operational in Kentucky,” Senator John Schickel (R-Union) stated in a Jan. 28 press release first published by WTVQ.com. “The bill, which I am pleased to say will be co-sponsored by Senate President Robert Stivers, will address the recent Kentucky Supreme Court decision on pari-mutuel wagering and ensure that historical horse racing facilities are able to continue operating, while employing Kentuckians, generating state tax revenue and strengthening our signature equine industry.

“This effort is about preserving a system of wagering we've known for live racing for decades and historical horse racing for the last 10 years. This is about maintaining the status quo. Our immediate action as legislators is critical to protecting current and future jobs and economic development across the Commonwealth.

“I have long supported Kentucky's equine industry and recognize the importance of historical horse racing to its continued success. This issue is of particular importance in my district with the future of Turfway Park potentially in the balance, but if left unaddressed, the negative consequences are sure to impact the entire state. I look forward to working with my colleagues in General Assembly to address the clear legislative direction provided by the Kentucky Supreme Court,” Schickel concluded.

Schickel's statement did not disclose any specifics of the bill.

According to kentuckytoday.com, Schickel later added that he plans to file the bill Feb. 2, the first day lawmakers are back in session, and that it will have a hearing in the Senate Licensing and Occupations Committee, of which he is the chairman, on Feb. 4.

In a Sept. 24, 2020, judgment, the Supreme Court ruled 7-0 that HHR machines made by Exacta Systems do not “create a wagering pool among patrons such that they are wagering among themselves as required for pari-mutuel wagering.” The ruling also told a lower court to re-examine the legality of the most crucial form of funding for purses in Kentucky.

Although the Supreme Court case only involves HHR machines made by Exacta Systems, whose machines are in use at the Red Mile, Kentucky Downs and Ellis Park, the gaming systems operate in broadly the same manner throughout Kentucky, meaning that a precedent established for one version is likely to affect all forms of HHR. Anti-gambling advocates in Kentucky have challenged the legality of HHR since the inception of that form of gaming.

On Jan. 21, the Kentucky Supreme Court denied a petition for rehearing its September judgment, creating an apparent dead-end to the case in the courts.

Three days later, on Jan. 24, Keeneland Association and Red Mile announced they would be shutting their joint historical horse racing (HHR) venture at the Lexington harness racino while imploring the Kentucky legislature to provide “more clarity” regarding the disputed legal status of HHR.

On Jan. 26, Vince Gabbert, Keeneland's vice president and chief operating officer, said that “the measures that we took over the weekend have helped bring the urgency even more to the forefront than what we had so that the legislature understands the impact that not only racing, but HHR has on the economy in the commonwealth.”

Gabbert termed the HHR closure a “conservative” decision. It stands out because HHR venues operated by other licensees have remained operational in Kentucky.

Also on Jan. 26, Ellis Park general manager Jeffery Inman warned in a statement that “Without the revenue associated with HHR, there is no realistic path forward for Ellis Park.”

Turfway Park is currently conducting spectator-free live racing with simulcasting and HHR gaming proceeding at its satellite facility 12 miles away in Newport. But back in October, Churchill Downs Inc., (CDI), the gaming corporation that owns the tracks and HHR licenses associated with Churchill Downs Racetrack and Turfway Park, halted reconstruction on the Turfway grandstand it demolished a year ago, vowing not to continue with the planned rebuild until HHR's legality gets sorted out.

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Decision to Close HHR has brought Urgency to the Forefront

Two days after Keeneland Association and Red Mile announced they would be shutting their joint historical horse racing (HHR) venture at the Lexington harness racino while imploring the Kentucky legislature to provide “more clarity” regarding the disputed legal status of HHR, Vince Gabbert, Keeneland's vice president and chief operating officer, was called upon during the Jan. 26 Kentucky Thoroughbred Development Fund (KTDF) teleconference to explain why that decision was made in the absence of any formal order from state officials to cease HHR, which is ongoing at other licensed locations despite an apparent dead-end to the case in the courts.

“We did, as you can imagine, some significant research and going back and forth to ensure that we were making the right decision as it relates to our joint entities between us and Red Mile,” Gabbard said. “I will tell you that we feel like we took a very conservative approach.

“But I think in every way possible we've seen the measures that we took over the weekend have helped bring the urgency even more to the forefront than what we had so that the legislature understands the impact that not only racing, but HHR has on the economy in the commonwealth,” Gabbert continued. “And hopefully, we will see a legislative remedy in the next couple of weeks.”

The KTDF, which is funded by three-quarters of 1% of all money wagered on both live Thoroughbred races and HHR gaming, plus 2% of all money wagered on Thoroughbred races via inter-track wagering and whole-card simulcasting, has had a rough go of trying to supplement purses at Kentucky's five Thoroughbred racetracks over the past year.

The COVID-19 pandemic first wreaked havoc with Kentucky's ability to generate purses derived from gaming revenue last March, and the effects are still causing major ripples because of spectator-free race meets and capacity limitations at gaming facilities.

Then last week, on Jan. 21, the Kentucky Supreme Court denied a petition for rehearing its 7-0 Sept. 24 judgment that told a lower court to re-examine the legality of historical horse race (HHR) gaming in the commonwealth.

Although the Supreme Court case only involves HHR machines made by Exacta Systems, whose machines are approved for use at Red Mile, Kentucky Downs and Ellis Park, the gaming systems operate in broadly the same manner throughout Kentucky, meaning that a precedent established for one version is likely to affect all forms of HHR gaming.

The racing industry's urgent focus is now on Kentucky lawmakers to legalize HHR, but roadblocks loom in the form of conservative resistance to the expansion of gambling in the state and the fact that the legislature only meets for 30 days in odd-numbered years, with the 2021 session scheduled to end Mar. 30.

The articulation of Keeneland's position and the political leverage it could possibly generate came several hours after a dire Tuesday morning announcement by Ellis Park that its racino could go out of business without the legalization of HHR.

“Without the revenue associated with HHR, there is no realistic path forward for Ellis Park,” Ellis general manager Jeffery Inman said in a statement released to Kentucky's Eyewitness News. “Were we to rely only on racing and simulcast revenue, we could not even keep this 99-year-old facility maintained, let alone provide the financial investment necessary to prepare for and conduct a world-class live race meet. Without HHR support, purses would drop dramatically, resulting in a greatly diminished live racing product. In short, the loss of HHR revenue at Ellis Park would likely threaten the very survival of one of Kentucky's iconic racing venues.”

It's also been nearly four months now since Churchill Downs Inc., (CDI), the gaming corporation that owns the tracks and HHR licenses associated with Churchill Downs Racetrack and Turfway Park, has already halted reconstruction on its demolished Turfway grandstand, vowing not to continue the planned rebuild until HHR's legality gets sorted out.

As Bill Landes III, the chairman of the KTDF advisory committee, glumly put it during Tuesday's meeting, “As if we all don't know, we could use some remediation of HHR.”

But outside of writing letters seeking help to elected and appointed officials in Kentucky (which the KTDF board voted unanimously to do), there were no other concrete ideas proposed to put HHR back on firmer legal footing.

KTDF board member J. David Richardson suggested emphasizing in those letters that “our perspective is a bit unique in that we actually delve into what [HHR revenue] means to Kentucky racing, probably more deeply than virtually any group, I think.”

Richardson said it was important “to let people know that the stewardship of these monies are very closely monitored by this committee and by our staff and are really appropriately used.

“This isn't 'funny money,'” Richardson summed up. “I think it's important to reiterate every now and then how closely we follow every dime.”

To that end, the KTDF voted unanimously to forward approval recommendations to the Kentucky Horse Racing Commission for $2,061,900 in KTDF funds for Keeneland's spring meet and a range of $4.3 to $4.9 million for the Churchill Downs meet that spans April-June.

Gabbert said that Keeneland's “goal, from an overall purse standpoint, would be to be on par with where we were in spring of 2019.” He did not cite specific dollar amounts.

Ben Huffman, who serves in the dual capacities of racing secretary at Keeneland and the director of racing at Churchill, said that for Keeneland, “I'm kind of putting on the finishing touches of the condition book; actually may go to the printer with it in about 10 days or so. But the maiden special weights will be $79,000. And the 'non-winners of two' allowance race will be $81,000 at Keeneland this spring.”

As for Churchill's levels, Huffman said, “we haven't even met here collectively about spring purses yet,” but that he expects those figures to be available by mid-February.

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