Kentucky Downs: 'Canary in the Coal Mine'
by Tom LaMarra
Date Posted: 8/31/2011 9:00:23 AM
Last Updated: 9/1/2011 9:21:50 AM

Instant Racing Machine
Photo: File Photo

Amid the uncertainty of reception in the marketplace and a lingering legal challenge, Kentucky Downs officially christened expanded pari-mutuel wagering via Instant Racing machines during an evening reception Aug. 30.

It would be an understatement to say the Kentucky horse racing and breeding industry has a lot riding on the 200 video lottery terminal-like machines located in a tastefully understated room on the first floor of the racetrack on the Tennessee border.

The Instant Racing parlor is scheduled to open to the public the morning of Sept. 1. It will be open seven days a week.

“In terms of growing the business, this is one way to do that,” said Ray Reid, a partner with Kentucky Downs president Corey Johnsen in the racetrack as well as Thoroughbred breeding stock and racehorses. “Somebody had to step forward and make this happen. I guess you could say we’re the canary in the coal mine to see if it works for Kentucky.”

Indeed, many industry officials believe at least one racetrack had to move ahead with Instant Racing given its approval by the Kentucky Horse Racing Commission. Now it's a question of how many will follow suit.

During the reception organized by the Kentucky Equine Education Project, Kentucky Horsemen’s Benevolent and Protective Association president Rick Hiles made the ceremonial first wager in one of the machines, whose video games are dependent on the results of previous run horse races.

Though Instant Racing machines look like VLTs, wagers are pooled in pari-mutuel fashion. The Kentucky Attorney General’s office issued an opinion last year saying the machines are pari-mutuel, and the KHRC approved regulations that are now on the books.

There is, however, an outstanding legal challenge by the Family Foundation of Kentucky, a public policy group. The state Supreme Court refused to expedite a ruling on Instant Racing and sent it to the Kentucky Court of Appeals, which has yet to issue a ruling.

Kentucky Downs is the only racetrack in the state that opted to move ahead with Instant Racing.

“When you have a state like Kentucky where purses are constrained, it’s difficult,” Reid said. “You have to make these types of decisions.”

The Kentucky HBPA partnered with Kentucky Downs in a short-term deal that shifts projected purse revenue to operations to help get Instant Racing off the ground. Kentucky HBPA executive director Marty Maline called the move a “no-brainer.”

“This is a good test,” Maline said. “Everyone feels if it works here, it can work in other locations around the state. The place looks great; they did a wonderful job. This all came together in about two months, so it’s not like it can’t happen (quickly at other tracks).”

“You’ve got to break the ice,” Hiles said. “If it generates a lot of tax revenue for the state, maybe the legislature will step up and do something for the horse industry.”

Economic benefits will be a selling point for Instant Racing, which currently operates only in Arkansas. It has had stops and starts in other states and, from a revenue standpoint, isn’t considered as attractive as VLTs or slot machines.

Still, Kentucky Downs hired 80 employees with the expansion in a community of about 8,000. Reid noted that’s 1% of the local population, not a small number given the economic climate.

“I think it’s going to provide a much-needed boost,” said Patrick Neely, executive director of KEEP, which lobbied for and worked behind the scenes on Instant Racing. A lot of hard work went into getting this done, so it’s an extremely satisfying and a good night for the horse industry.”

The addition of Instant Racing and remodeling of the Kentucky Downs first-floor restaurant also will bring expansion of the track’s full-card simulcast offerings. Kentucky Downs had cut back to four days a week for simulcasts, but beginning the week of Sept. 4 will go to seven days a week given an expected increase in traffic at the facility.

Ellis Park owner Ron Geary said his track most likely will be the next to apply to the KHRC for an Instant Racing license. He said he wanted to see how things worked out at Kentucky Downs before taking the first step.

Of the other Thoroughbred tracks in the state only Turfway Park has publicly said it intends to pursue Instant Racing pending the court ruling.

Joe Costa, president of The Red Mile harness track, said that property’s overall business plan includes some redevelopment and the addition of Instant Racing. Costa said, however, the owners will wait until the legal challenge is resolved.

Costa noted The Red Mile and neighboring Keeneland have had an agreement to partner and share the Lexington market on casino-style gaming, but because Instant Racing is considered pari-mutuel, each facility can have its own machines. He said The Red Mile is prepared to move ahead by renovating its second floor to accommodate Instant Racing.



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