Senate Bill 120, which would expand Kentucky's definition of parimutuel wagering to include historical horse racing (HHR), passed the state's Senate Committee on Licensing and Occupations unanimously Thursday morning. The committee, led by bill sponsor Sen. John Schickel (R-District 11), heard testimony from representatives of the horse racing industry as well as The Family Foundation, which has long opposed HHR.
Trainer Tommy Drury provided the committee with perspective on the “trickle down” impact of the horse racing industry, beyond the people it employs directly and to the vendors who provide hay, grain, and other services to his barn.
Drury also pointed out that even with purses fueled by HHR, some Kentucky tracks are already struggling. He pointed out that for a given set of maiden conditions, the purse at Turfway is $32,000 while the same conditions at Oaklawn match a purse of $82,000.
In fact, Drury, who bases in Kentucky year-round, said he could afford to continue training while providing a consistent base for his family in part because Churchill Downs Inc., purchased Turfway Park and increased purses from where they had been — a move he credits to the income from HHR.
But predictably, The Family Foundation cast doubt on racing's portrayal of the HHR issue. The state supreme court ruled last fall that the Exacta Systems machines installed at Keeneland and Red Mile did match the legal definition of parimutuel wagering, and ruled Jan. 21 it would not rehear the case as requested by the tracks. Family Foundation spokesman Martin Cothran was critical of the tracks' decision to keep HHR running between the ruling in the fall and the appeal in January.
“They were the ones who asked the court if what they were doing was on the up and up,” he said. “Now we have that answer, and they've been ignoring it.”
Contrary to the usual terminology used by the racing industry, Cothran referred to the HHR machines as “slots” and pointed to CDI executives as beneficiaries of the games moreso than their employees.
“This company is associated in the minds of many people with a horse race which is considered by many to be the most exciting two minutes in sports and of which many of us, as Kentuckians, are quite proud,” said Cothran. “But in fact, this company has moved further and further away from racing, becoming an ever-more lucrative, multi-billion dollar casino corporation. Its stock is also publicly traded, which means it is owned by shareholders, many of whom live outside of the state.
“In 2019, 76.7% of this company's employees were hourly and the median compensation was $23,670 … and that calculation includes the compensation of the company's opulent executive cast. The CEO's total compensation in 2019 was $10,601,294 — 447 times the median compensation to gain entry. We wonder what that comes to as an hourly wage, and how it compares to the wages the company pays the grooms and the hotwalkers it is using to represent the industry.”
The primary question that seemed to concern committee members was whether the legislature could pass a law allowing historical horse racing to become part of the legal definition of parimutuel wagering, or if that would require an amendment to the state's constitution, which states that only lottery, charitable gaming, and parimutuel wagering are permitted. Racing supporters believe a legislative fix is sufficient, while The Family Foundation believes it requires constitutional amendment.
Schickel stated during the hearing he did not favor a constitutional amendment to address the question, as he does not want to open the door for casino gaming in Kentucky. While giving 'aye' votes, several committee members admitted they weren't sure which side was correct and suspected the issue would continue to be contested in court.
The bill will now move to the floor of the state senate. The Lexington Herald-Leader reported Thursday that it's generally expected to succeed there, but the state house of representatives is another question. The current bill does nothing to change the structure of tax revenue from HHR, which was one concern cited by critics. Besides that issue, there remain a number of socially conservative areas of the state which do not benefit from the racing industry as greatly or directly that are likely uncomfortable with additional gaming in the state.
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