A study commissioned by a partnership of Kentucky horse racing interests shows that casinos at eight racetrack locations would have a first-year economic impact of $1.7 billion.
The results of the study, conducted by New Jersey-based Spectrum Gaming Group, were released by the Kentucky Chamber of Commerce on Jan. 16, one day before Kentucky Gov. Steve Beshear was scheduled to unveil his two-year budget proposal. With the state facing financial straits, the budget was projected to call for 7-9% cutbacks for many state agencies, according to published reports.
In his state of the Commonwealth address Jan. 4, Beshear said a constitutional amendment on expanded gambling is a major priority for the legislative session now in progress.
According to the Spectrum study, titled the “Kentucky Gaming Market Analysis and Impacts Report,” the eight racetrack operated casinos would generate $464.7 million in gaming tax revenue, of which $164.6 million would be used for racing industry programs.
The funds going to the horse industry are projected to provide $152.5 million for Thoroughbred and Standardbred purses, $10.5 million for the Equine Breed Authority, and $1.6 million for Quarter Horse purses.
The casinos at racetracks, commonly known as racinos, would produce 10,953 in full-time jobs tied to casino operations, with a payroll of $289.3 million. The 30-month “build-out” period would also result in 4,297 full-time construction jobs with a payroll of $338 million, according to the study.
The study is based on casinos being built at existing tracks and at a new racetrack/casino in the Corbin/London, Ky., area. The Lexington market, where Keeneland and Red Mile racetracks are located, would have one casino.
The greatest gross gaming revenue is projected to come from Kentucky Downs, located in Southcentral Kentucky near the Tennessee border. According to the study, Kentucky Downs is projected to have casino gaming revenues of $365.5 million in 2015, which is the first year in which the casino operations are forecast. Last fall, Kentucky Downs began offering a form of electronic gaming, called Historic Racing, modeled after the successful Instant racing concept in Arkansas. The legality of Historic Racing, which has been a success at Kentucky Downs, is being challenged in court.
The study estimated Kentuckians spent $546 million in gross gaming revenue in 2010, of which at least $451 million was spent in casinos in neighboring states, chiefly the six casinos on the Ohio River in Indiana and Illinois. Without casinos, by 2015 Kentucky would be exporting at least $527 million of gross gaming revenue to casinos in neighboring states, the study projects.
“Expanded gaming is not only about protecting Kentucky’s signature horse industry, it is a way to generate substantial investment and job growth in the Commonwealth,” Dave Adkisson, president and CEO of the Kentucky Chamber, said in a statement. “This study shows we have an opportunity to not only stem job losses, but to expand and grow them within our borders by recapturing economic activity from other states. Expanded gaming is an appropriate response to other states’ assault on our signature industry.”
“This study reinforces that it is time to keep Kentuckians’ money in the Commonwealth and create new revenue streams that benefit our state and its citizens,” Vince Gabbert, vice president and COO of Keeneland Association, said. “More than 80% of Kentuckians polled have asked for the right to vote on this issue, and we agree their voices should be heard.”
“Through this comprehensive market analysis, we can see the overwhelmingly positive impact casinos at racetracks will have on Kentucky’s economy and employment picture, in addition to helping preserve and grow Kentucky’s signature horse-racing industry,” Brett Hale, senior vice president of corporate and government relations for Churchill Downs Inc., said. “The forecast provides compelling data, and we look forward to sharing this information with our leaders in Frankfort as we continue our efforts to move our Commonwealth forward.”
“We have long known that hundreds of millions of Kentucky dollars are flowing out of our state and into the budgets of surrounding states with expanded gambling—paying for their roads and their schools,” Beshear said in a statement released Jan. 16. “The fact that gaming could generate nearly $2 billion in Kentucky in the first year reminds us just how much we are losing.”
A spokesman for The Family Foundation, which is challenging the legality of Instant Racing and is opposed to expanded gambling, said the study does not take into account the projected effects of the casinos on other segments of the state’s economy.
“Bringing casinos into Kentucky would divert money, not produce it,” The Family Foundation’s Martin Cothran told the Lexington Herald-Leader. “This is money that is now being spent at local restaurants, at local retail stores in communities all over the state. It’s going to take money from other businesses and put it in the hands of rich tracks and rich owners, some of whom are from out of state.”
