The Kentucky House Appropriations and Revenue Committee sent racetrack gaming legislation to the full House of Representatives for consideration June 18.
During a two-hour hearing that began at 1 p.m. EDT, committee members heard testimony from the bill’s sponsors. Many legislators said they believe it’s time for the issue to be voted upon by the House.
“This is a tough vote for me, but the issue is of such significance,” Democratic Rep. Mike Denham said. “I think the full House should have the opportunity to debate this issue.”
The legislation, which would devote hundreds of millions of dollars in revenue to school construction, calls for video lottery terminals at licensed racetracks in the state. The sponsor, Democratic House Speaker Greg Stumbo, said tracks would pay a total of $510 million in up-front licensing fees over five years, and a tax rate that would vary from 28% to 38%.
Kentucky Governor Steve Beshear's original proposal called for $360 million in up-front licensing fees to be paid over two years.
"In these times, we need to help sustain our state budget in the likely shortfalls that will ensue in upcoming years," Stumbo said. "We need to have as much stability in our revenue stream as we possibly can."
Stumbo also explained his reasoning behind raising Beshear's tax rate of 25% for the first five years of operation. "It's a whole lot easier to create a rate up front, and then if our industry doesn't develop in the way some projected it will, the General Assembly could come back and reduce that rate," he said.
The legislation mandates that tracks offer the same number of live racing and simulcast dates as they do this year.
“In my opinion, in this type of legislation, we need to be very careful that we preserve our racing industry,” Stumbo said. “I don’t think any of us want to see (a reduction in dates). We want to boost and preserve our live racing circuit.”
While Beshear's proposal earmarked VLT funds for lottery operations, military income-tax relief, income-tax credit for motor vehicles, and the horse farming sales relief tax, Stumbo's proposal added the Problem Gambler's Awareness and Treatment Fund, Regional Tourism and Infastructure Development Fund, and an education funding proposal to create a building initiative for new schools.
The plan to devote VLT revenue to education would be included in the state budget bill, which could be voted on by the House Appropriations and Revenue Committee June 19. Stumbo said he wanted to move the VLT bill first so House members would know if that revenue would be available for the budget.
The House will vote on the VLT legislation the morning of June 19. The committee vote was 19-9, with one absention.
"This is a tough vote for me coming from a conservative district," said Democratic Rep. Brent Yonts, whose district includes part of Christian and Hopkins counties, as well as Muhlenberg.
Yonts, who was originally against the casino proposal, voted to move it to the House floor partly because of the number of horse owners in his district that would benefit from the removal of the sales tax on equine feed and supplies.
"(VLTs) are not a casino," Yonts said. "I'm against casinos, and I still am. This is allowing slots at a place where gambling is already taking place, and I wouldn't vote for a further expansion of it beyond those facilities. This is all a balancing act of doing what's best for my district."
Some committee members said they want a full House vote even though they may oppose the measure. Racing industry officials have privately said they believe there are enough votes in the House and Senate to pass the legislation.
Following the committee hearing, three industry figures provided feedback on what they thought the outcome of the legislation might be on the House floor.
Patrick Neely, executive director of the Kentucky Equine Education Project, said: "We're very pleased it passed with such an overwelming majority in this committee, and look forward to it going to the full House. We feel confident we have stated our case. The (horse) industry is facing a severe competitive disadvantage, and we hope this goes to the floor of the House and passes."
Said Ron Geary, owner of Ellis Park: "We're very excited to see the result (in the full House). We've all worked really hard and put all the cards on the table. All the representatives have studied it a lot. The truth of the matter of it is the industry is in distress. It's at risk, and we have to do something to fix it.
"We're thankful to (the legislators) giving us the opportunity to take the full floor, and we hope the facts will speak for themselves. We remain positive and optimistic."
Said David Switzer, executive director of the Kentucky Thoroughbred Association: "My glass of water is still half full. I'm quite pleased with what we heard up here. People are starting to take the industry seriously and seeing that we've got some economic problems. I feel good about (the House vote). There will be some good floor discussions and debates, and hopefully everything will work out for the best."
Esther Marr contributed to this article