Political Cover Sought on Instant Racing?

Legislation authorizing Instant Racing at Kentucky racetracks is in line for major revisions that would place approval squarely in the lap of the governor or Kentucky Horse Racing Commission.

A bill authorizing Instant Racing easily passed a Senate committee on a bipartisan vote March 11 and appeared headed to the Senate floor, but since that vote, the Senate has had a change of heart.

The Lexington Herald-Leader reported March 17 that Republican Senate President David Williams said Instant Racing authorization would be stripped from the bill. It would, however, maintain a provision calling for a 1.5% tax on gross revenue that would go to purses and breed incentives.

Just days ago, Williams said the bill approved by the Senate Committee on State and Local Government had bipartisan support. The revised measure, on the agenda for the committee’s March 17 meeting, would place the onus of approval on Democratic Gov. Steve Beshear, who would have to sign an executive order, or the KHRC, which would have to write new regulations.

Executive orders can be overturned by future governors.

The Kentucky situation is very similar to one in Ohio, where legislators in 2009 refused to vote on racetrack video lottery terminals but approved shell language backing up the governor's directive to the Ohio Lottery to install the machines. The VLT issue immediately generated legal challenges, and in the meantime, Ohio voters approved full casino gambling that returns little to horse racing.

A Beshear spokesperson told the Herald-Leader the governor wouldn’t comment on the latest developments until he sees the legislation. The title of the bill has been altered to declare a state of emergency involving the horse industry, which is losing ground to racing and breeding in other states in which alternative gaming revenue funds purses and breed development programs.

Democratic Attorney General Jack Conway earlier issued an opinion saying Instant Racing is permissible through changes in pari-mutuel statutes.

The 1.5% tax on gross revenue wouldn’t produce the largest chunk from Instant Racing machines, which are pari-mutuel in nature but resemble video lottery terminals. The racetracks and horsemen would cut up the “commission,” which could be about 10% of all money wagered depending on the takeout rate.

The original Senate bill left those revenue splits to negotiations between tracks and horsemen’s groups, which hammer out similar contracts for regular pari-mutuel revenue.

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