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Keeneland, Red Mile Temporarily Closing Historical Horse Racing Gaming Room

The Keeneland Association and Red Mile issued a joint statement on Sunday saying the two Lexington, Ky., companies were temporarily shutting down historical horse racing (HHR) gaming machines at The Red Mile harness track. The closure, which takes effect at the end of business on Sunday, comes in the wake of a decision last week by the Kentucky Supreme Court not to rehear the case in which the court found in favor of the Family Foundation by a 7-0 decision, saying Exacta Systems HHR games do not qualify as pari-mutuel wagering because wagers are pooled from multiple races that determine the outcome of a bet made at a specific machine.

“We were disappointed the Kentucky Supreme Court denied our petition for rehearing,” the statement said. “At this time, Keeneland and Red Mile have made the very difficult decision to temporarily close historical horse racing operations until there is more clarity surrounding the situation. We have confidence the Kentucky legislature will continue its efforts to protect jobs and state revenue generated by historical horse racing, as well as protect Kentucky's signature horse racing industry.”

Promotional materials from Red Mile Gaming & Racing indicate the facility has 138 themed HHR games on which to bet. Sixty-eight of those games are from Exacta, with the remaining machines distributed by Ainsworth and Parimax.

In the wake of the September Supreme Court ruling, Exacta officials said they would make software adjustments to meet the Supreme Court standards.

None of the other HHR operators in Kentucky have indicated they would shut down while awaiting legislative action. Churchill Downs Inc.'s Derby City Gaming in Louisville and Oak Grove Gaming and Racing in Christian County both use Ainsworth games, which were not in place when the Family Foundation suit was filed in 2012. Kentucky Downs in Franklin, Ky., the first track to embrace HHR, also remains open.

Historical horse racing has added millions of dollars to Kentucky purses annually since approved by the Kentucky Horse Racing Commission in 2010.

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Legislative Fix For HHR Still Unclear In Kentucky; No Bill Pre-FiledYet

According to The Louisville Courier-Journal, the future of the horse racing community in Kentucky could be at stake after a recent state Supreme Court ruling on historical horse racing (HHR). The supreme court dealt a blow to the racing industry in September when it ruled that one manufacturer's HHR terminals don't comply with the legal definition of pari-mutuel wagering in the state.

Supporters and opponents of HHR appeared before the General Assembly's Interim Joint Committee on Licensing, Occupations and Administrative Regulations to discuss the path forward for HHR.

Racing industry representatives warned that the loss of HHR would seriously cripple Kentucky's Thoroughbred industry. The machines have provided $717 million in direct revenue to the horse industry so far.

Representatives from the Family Foundation, which brought the original suit questioning the legality of the machines, say a constitutional amendment would be required to change the state's definition of pari-mutuel wagering to accommodate HHR. The group opposes the machines, which resemble slot machines but use video of previously-run races to determine winning number combinations.

Senate Majority Floor Leader Damon Thayer disagreed.

“We're not looking for an expansion of gambling here,” Thayer said. “All we're looking to do is to put in statute that historical horse racing meets the definition of pari-mutuel wagering and this body has the authority to do that.”

As of Monday, no bill had been prefiled by a legislator regarding pari-mutuel racing in Kentucky. The next legislative session begins in January.

Cauthen: Historical Racing Is ‘Moving Our Industry Forward While Bolstering Many Others’

On Monday, Kentucky legislators heard arguments from both sides of the historical horse racing debate. The discussion was precipitated by the state's Supreme Court ruling declaring the games do not qualify as pari-mutuel wagering, and thus are not legal under state law. Horsemen are seeking legislation allowing HHR terminals to be legal, and Doug Cauthen, chairman of the board of the Kentucky Equine Education Project, penned an op/ed for the Northern Kentucky Tribune to urge state legislators to protect historical horse racing.

Cauthen explained that historical horse racing is directly responsible for 1,400 jobs across the state, and has contributed over $52 million to Kentucky's general fund. The games support the state's horse racing industry, which has a $5.2 billion economic impact.

“Historical horse racing is not a new idea or some 'what if' concept,” Cauthen wrote. “It is brick and mortar facilities that are generating valuable state revenue, providing paychecks for Kentuckians and moving our industry forward while bolstering many others. (…) By taking action to protect the future of historical racing, our elected officials are protecting critical jobs, state revenue and economic development—all of which greatly benefit their constituents and their communities.”

Read more at the Northern Kentucky Tribune.

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KTA: Downward Trend Awaits Kentucky Racing If HHR Is Halted

If the Kentucky Supreme Court doesn't reconsider its recently-published surprise opinion on the legality of historical horse racing (HHR) machines in the state, Kentucky's racing industry will be in big trouble.

That's the gist of a document filed in the case this week by the Kentucky Thoroughbred Association (KTA). The KTA is seeking permission to file a brief of amicus curiae in the civil case between The Family Trust Foundation of Kentucky and the Kentucky Horse Racing Commission. Last month, the state supreme court reversed a 2018 lower court decision that determined HHR machines made by Exacta Systems were a form of legal pari-mutuel wagering.

The Kentucky Chamber of Commerce also submitted an amicus brief last week, expressing concern over the potential economic impact of the court's decision.

The KTA provided figures showing an upward improvement in all sectors of the state's racing and breeding industry since the introduction of HHR machines in 2012. The Kentucky Thoroughbred Development Fund is generated from half of the 1.5 percent excise tax imposed on wagering at tracks with HHR. The fund paid out purse supplements of just over $4.9 million in the year before the inception of HHR in Kentucky, and over $19.5 million last year.

The KTA's brief explains that this increase in purses has led to an increase in field size (which is above the national average) and handle (which increased 18.5 percent with the addition of HHR).

“Eliminating historical horse racing will have a significant negative effect on the Thoroughbred horse industry, which, again, is Kentucky's signature industry,” the brief read. “It will result in horses, trainers, jockeys, grooms, owners, racing executives, and other industry participants going to other states to compete. Kentucky will lose tourism dollars. Kentucky will lose revenue from on-track sources and also from off-track (and in many cases out of state) sources.

“In addition, reducing the KTDF purse supplements will reduce the purses, which will reduce the amount owners will be willing to pay for Kentucky-bred horses that are eligible to race for these supplements. This will lead to decreased spending on yearlings sold in Kentucky each year. It will lead to decreased spending on mares and stallions sold in Kentucky each year. It will lead to fewer mares being maintained in Kentucky. All of this would lead to decreased tax revenue, decreased employment, decreased tourism spending, and decreased economic impact. In short, Kentucky's signature industry would suffer and Kentucky racing would trend the way racing in other states is trending: downward.”

The KTA also raises questions about the legal elements of the Family Foundation's case and whether the court correctly interpreted definitions of pari-mutuel wagering, initial seed pools, and the commission's regulatory authority, among other things.

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