Kentucky ADW Tax Bill Passes House

The legislation calls for a tax of 0.5% on bets made by Kentucky residents.

Legislation that would tax pari-mutuel wagers made by Kentucky residents through advance deposit wagering services passed the House of Representatives by a 79-15 vote Feb. 24 and heads to the Senate for consideration.

The bill, discussed by legislators during a pre-General Assembly hearing late last year and introduced in the House Jan. 9, was approved by the House Appropriations and Revenue Committee Feb 21.

Under the measure, a tax of 0.5% would be imposed on ADW operators from wagers made by Kentucky residents. Of that amount, the state’s general fund would earn 15% and horse racing would get 85%.

The Kentucky track on which a wager is placed, or a track that serves as simulcast host for out-of-state races, would get the 85%. The track would then give horsemen 50% for purses and breed development programs.

The impetus of the legislation is the fact the Kentucky Thoroughbred Development Fund, which supplements purses for Kentucky-bred runners in higher-level races, is bypassed by current statute that has no provisions for bets made through ADW services, even if the wagers are made via computer by someone at a Kentucky track.

The bill doesn’t specify the KTDF as a receiver of ADW tax revenue, but the Senate could amend the language.

A legislative fiscal note states “best estimates” have the tax raising $300,000 to $400,000 a year, which would amount to about $175,000 for purses. The Kentucky Horse Racing Commission is in the process of licensing ADW providers that accept wagers from Kentucky residents.