Instant Racing Machines at Kentucky Downs.

Instant Racing Machines at Kentucky Downs.

AP Photo

Instant Racing, ADW Taxes Approved in KY

The tax rates are included in a revenue measure hammered out by General Assembly.

The Kentucky General Assembly early March 30 signed off on a $20 billion state budget that includes revenue components for the horse racing and breeding industry.

Included is one-half of 1% tax on wagers made by Kentucky residents through advance deposit wagering services.

In regard to the tax on historical race wagering, also called Instant Racing, the House of Representatives and Senate settled on a flat pari-mutuel tax of 1.5%. Earlier versions of the legislation set the rate at 1.5%-3.5% depending on how much is bet through the devices.

Republican Sen. Damon Thayer, who was on the budget conference committee, said March 30 the language in the spending bill "doesn't codify or make an official opinion on Instant Racing." The Kentucky Supreme Court in a recent ruling said the form of gambling must be taxed by the state legislature but sent the question of whether it is indeed pari-mutuel back to circuit court for discovery.

"This is excellent news for those in the Instant Racing business and those considering its pursuit," Thayer said. "The way the language is written, it doesn't mean the General Assembly has legalized or authorized Instant Racing. It just sets a tax rate if the court does rule it's legal."

Instant Racing rules were promulgated by the Kentucky Horse Racing Commission.

Kentucky Downs and Ellis Park currently offer Instant Racing. The Kentucky Horse Racing Commission April 2 will entertain license applications from Keeneland and The Red Mile, two Lexington tracks that plan to build their own facilities to accommodate historical race wagering machines.

The ADW tax has been discussed for years. Legislation offered by Democratic Rep. Larry Clark, also a member of the budget conference committee, was incorporated in the revenue measure.

One of the issues that led to the legislation is that ADW bets made by Kentucky residents don't contribute any money to the Kentucky Thoroughbred Development Fund. Thayer said he would have preferred a higher number than 0.5%, but it was agreed to put the tax in place and gauge how much money is bet through ADW providers.

In another revenue measure, the committee agreed to shift $1 million from an almost $3 million pot devoted to the Kentucky Equine Drug Research Council, which awards the money for related projects, to the KTDF effective July 1. The KEDRC accrues the funds through the pari-mutuel tax.

In addition, the revenue bill allows KTDF money to be used for horses that compete for a claiming price of $25,000 or more in allowance/optional claiming races, and authorizes the KEDRC to award research projects to out-of-state entities.