KY Lawmaker Questions Raid on Instant Racing

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The Kentucky House of Representatives Feb. 27 passed legislation that in part would take revenue from historical race wagering to fund pensions for state workers, but one lawmaker questioned the bill's impact on the horse industry.

Republican Rep. David Osborne, a Thoroughbred owner/breeder from Oldham County, was the only House member to discuss the measure's impact on racing before the vote. It would cap the revenue horse racing would receive at $300 million in total wagers through historical race wagering, also known as Instant Racing.

"I'm an ardent supporter of expanded gambling and Instant Racing, but I think you've come up with a creative way to get me to vote against an expanded gambling bill," Osborne told Democratic House Speaker Greg Stumbo, who introduced the plan in conjunction with an amended pension bill passed by the Senate.

Osborne said historical race wagering was implemented through Kentucky Horse Racing Commission regulations to benefit the horse industry in the absence of casino gambling revenue. He said that for 30 years, the Kentucky Thoroughbred Development Fund, which receives a small percentage of revenue from a tax on on-track bets, including Instant Racing, has been off limits.

"This violates that fund for the first time ever," Osborne said.

Historical race wagering is conducted at only Ellis Park and Kentucky Downs. Other tracks in the state are waiting for a Supreme Court ruling on its legality before they move forward.

Stumbo, in his discussion of the pension funding mechanism, said he believes the high court will rule in favor in of historical race wagering. He said should his bill pass the Senate, it wouldn't codify existing regulations on historical race wagering, which never received legislative approval.

From September 2011 to Dec. 31, 2012, about $228 million had been wagered through the machines, which resemble video lottery terminals but are considered pari-mutuel under an opinion by the state Attorney General's office. General purses so far have received only $2 million, while the KTDF and Breeders' Incentive Fund received much less.

Stumbo, whose funding plan also would draw upon revenue from new Kentucky Lottery games, said one projection is for historical race wagering to generate $800 million in wagers should all racetracks implement it. In five years the state would get about $73 million a year for the pension fund, he said.

The $300 million cap would prevent any real revenue growth for the horse industry through historical race wagering.

Osborne earlier in the session introduced a constitutional amendment that would establish seven casino locations and provide up to $100 million a year for an Equine Excellence Fund. He acknowledged the bill wouldn't move this year but noted the contribution to the horse industry.

"We have a long history of underfunding things," Osborne said. "My interest in expanded gambling has never been about state coffers. It's about what it does for the horse industry."

The two Stumbo bills–the pension legislation and accompanying revenue measure–most likely are dead on arrival in the Senate for several reasons.

Neither bill achieved 60 House votes, or a three-fifths majority, for passage. The Senate believes that is a constitutional violation, while Stumbo said the 60-vote threshold only applies to "final passage" of any legislation.

The Senate also has said it traditionally doesn't act on any issue that is in the courts.