Instant Racing Machines

Instant Racing Machines

AP Photo

KY Instant Racing Handle Nears $600 Million

The machines began operating at Kentucky Downs in September 2011.

If the monthly average holds, total wagering on historical races in Kentucky will top $600 million by the end of February.

From Sept. 1, 2011, through January 2014 wagering through Instant Racing machines totaled $573,240,488, according to the Kentucky Horse Racing Commission. Of that amount, $527,570,572 was returned to bettors under the pari-mutuel tax system in Kentucky.

Based on the KHRC statistics, the takeout rate for historical race wagering is 7.89%.

The Kentucky Supreme Court issued a decision Feb. 20 that upholds the authority of the KHRC to promulgate rules and regulate historical race wagering, though the high court the Kentucky Department of Revenue has no authority to tax the wagers under current statute. The tax question has been sent back to circuit court.

Soon after the decision was released, Democratic House Speaker Greg Stumbo told Pure Politics he believes the General Assembly, currently in session, should quickly act to pass legislation to tax Instant Racing.

Kentucky Downs has had the machines, which resemble video lottery terminals but are considered pari-mutuel under the KHRC regulations, since September 2011. Ellis Park came on board Aug. 31, 2012.

The total net track commission since the inception of Instant Racing in the state was $36,670,281. Purses received 14% of that amount, or $5,133,839, and the Kentucky Breeders' Incentive Fund got 1%, or $366,670, according to KHRC statistics.

The state commission–the 1.5% pari-mutuel tax–through 29 months of Instant Racing was $8,598,607. The largest shares of the state commission went to the Kentucky Thoroughbred Development Fund ($4,299,303, or 0.75%) and the state general fund ($2,006,341, or 0.35%).

Other beneficiaries of the state's share were the Equine Industry Program ($1,146,480, or 0.2%), equine drug research ($573,240, or 0.1%), and the Higher Education Fund ($573,240, or 0.1%).

Based on the KHRC statistics, Kentucky Downs thus far has collected $29,081,459 after purses and breeders' incentives are deducted from its commission. Ellis Park, since it began operating the machines, has collected $2,088,315 after the deductions.