KY Commission Approves Form of Instant Racing
by Ron Mitchell
Date Posted: 7/20/2010 3:36:39 PM
Last Updated: 7/22/2010 4:07:50 PM

Photo: File Photo

The Kentucky Horse Racing Commission has unanimously approved regulations that will permit "Instant Racing" wagering at the state’s licensed tracks as a way to combat declining revenues and competition from alternative gaming at other states.

Technically referred to as wagering on "historical races," the new form of wagering was approved by the KHRC as part of a set of new and amended exotic wagering regulations.

The move came after recent efforts by the state’s racing industry to have casino-type gaming approved failed in the legislature. Modeled after the Instant Racing electronic gaming first introduced at Oaklawn Park, the historical racing wagering will permit pari-mutuel type wagering on previously run races.

"I believe the approval of these regulations will help our ailing racing industry by providing much needed revenue to increase purses and help keep owners, trainers and their horses in Kentucky," KHRC chairman Bob Beck said in a statement.

Kentucky’s attorney general had previously issued an opinion stating that wagering on historical horse races is not currently allowed because that type of wagering is not defined by the administrative regulations. The amended and new regulations will permit the wagering to take place.

Although there has already been a legal opinion stating historical race wagering is permitted if the enabling regulations pass, the commission and racetracks will go to court to seek a declaratory judgment stating that:

--The commission has the statutory authority to regulate pari-mutuel wagering of horse racing under Chapter 230 of the Kentucky Revised Statutes (KRS);

--The licensed operation of pari-mutuel wagering on historical horse racing, as authorized by the regulations, does not contravene the statutes prohibiting gambling under Chapter 528 of the KRS, and;

--The Department of Revenue’s determination that revenue generated by pari-mutuel wagering on historical horse races is subject to the pari-mutuel tax is a valid and lawful exercise of its statutory authority to interpret and enforce the tax laws of the Commonwealth.

Because the new regulations will be subjected to public hearings and the court ruling, it could take as long as six months before any of the historical race gaming becomes reality, Beck said.

The commission’s action was immediately met with favoritism by track operators.

Bob Elliston, president and CEO of Turfway Park, which has severely cutback on its live race in recent years, noted the pressure the Kentucky racing industry is under.

"I therefore appreciate the good news from the Kentucky Horse Racing Commission and applaud their initiative in pursuing an option we are allowed to use in addressing our competition," Elliston said in a statement. "While Instant Racing likely may not generate sufficient revenue to put us on equal footing with other states, it could give us a bit of breathing room in the near term."

"Keeneland supports today’s move by the Kentucky Horse Racing Commission regarding pari-mutuel wagering on historic races," said Keeneland president Nick Nicholson in a statement. "The reason is simple: this new pari-mutuel wager would be another tool that we could use to help generate additional revenue to boost purses and assist our industry during an extremely challenging period... What it is not is a panacea for the challenges confronting our industry. It would not, frankly, generate the revenues for our industry or our Commonwealth that would be created by other forms of expanded gaming – the types of games that are significantly boosting purses in other states and altering the competitive landscape in our industry.

"That said, what our industry has always wanted is the ability to help itself – with tools that will allow us to invest more in our businesses and, most importantly, boost the purses that keep our races compelling and competitive with tracks on our borders and across the country. A new pari-mutuel wager such as historic racing has the potential to be one such tool. I hope we will be allowed to move forward quickly in assessing its viability so that we can make the kinds of investments that will keep Kentucky’s signature industry the world’s capital for Thoroughbred horse racing -- creating jobs and economic growth for our Commonwealth."

 Instant Racing machines resemble slot machines because they are electronic games. But Instant Racing allows bettors to wager on previously run races, using limited handicapping information for the races that are randomly generated.

Instant Racing has been deemed legal in Kentucky because it is a form of pari-mutuel wagering in which bettors compete against each other rather than the racetrack staging the race. As a result, a percentage of the money wagered on Instant racing will be subjected to the customary splits to tracks, purses, and the state.

Lisa Underwood, KHRC executive director, said the regulation does not spell out how the revenues should be distributed. She said that would be determined in negotiations between tracks and horsemen, as are takeout rates on other types of wagering.

The new form wagering will be permitted at the eight tracks in Kentucky that conduct live Thoroughbred, harness, and Quarter Horse racing, as well as the Trackside training and wagering facility owned by Churchill Downs in Louisville. Instant Racing would not be permitted at the state’s off-track betting parlors.

"The regulations will provide an additional tool that Kentucky horse racing tracks can use to draw people to their venues, to supplement purses, and to assist horsemen who are struggling but want to race in Kentucky," Kentucky Gov. Steve Beshear said in a statement.



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