Kentucky ADW Tax Clears House Committee

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The Kentucky House Appropriations and Revenue Committee passed legislation authorizing a tax on advance deposit wagering Feb. 12, but it remains to be seen if all parties agree on the language in the measure.

The bill would place a tax of 0.5% on Internet and telephone wagers made by Kentucky residents. The state would get 15% of the revenue, and racetracks and purse accounts 85%, according to legislation filed by Democratic Rep. Larry Clark.

The bill further breaks down how the racing industry would be paid. On bets placed on Kentucky races, 85% of the tax would go to the track hosting the live race. On wagers placed on out-of-state races, the Kentucky host track at that time would get 85%, and on wagers placed by a resident who lives within 25 miles of a Kentucky track, that facility would get the 85%.

When talk of a tax on ADW bets first started several years ago, the idea was to generate revenue for the Kentucky Thoroughbred Development Fund, which supplements purses for horses bred in Kentucky and registered with the KTDF. There are no provisions in Kentucky statute for the KTDF to receive a cut of ADW.

On wagers–live or simulcast–made at Kentucky racetracks, the KTDF receives 1.5% of revenue.

The House bill would award the 85% to general purses but makes no reference to the KTDF.

A fiscal note attached to the bill estimates revenue of $300,000-$400,000 per year from the ADW tax. That means purses could earn an extra $340,000 a year on the high end.

Meanwhile, legislation introduced by Republican Sen. Damon Thayer that would alter the definition of a Kentucky-bred harness horse passed the Senate Licensing, Occupations, and Administrative Regulations Committee Feb. 12.

The bill strikes statutory language that defines a Kentucky-bred Standardbred as one having been sired by a stallion standing in the state. It allows the Kentucky Horse Racing Commission to adopt rules to determine eligibility, residency, and registration of mares and their progeny.

Standardbred stakeholders in the state have held meetings to find ways to beef up the Kentucky Sires Stakes, which is supported by harness racing's share of the Breeders' Incentive Fund. The money, about $2 million a year, funds the sires stakes program.

Advocates would like to open the program to horses sired by stallions in other states, but there would be residency requirements for mares. The number of Standardbred stallions in Kentucky has decreased dramatically in the past 20 years.

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