It appears Kentucky Downs will be the first racetrack in the state to apply to the Kentucky Horse Racing Commission for an Instant Racing license.
Regulations governing Instant Racing machines, which resemble video lottery terminals but are considered pari-mutuel in nature because the outcome of video games rely on previously run horse races, took effect July 1 in Kentucky after a second legislative subcommittee opted not to address the rules. The rules fall under the KHRC.
Still outstanding is a ruling by the Kentucky Court of Appeals. A Kentucky Circuit Court upheld the regulations as pari-mutuel, but the Family Foundation of Kentucky appealed that decision.
Kentucky Downs, located on the Tennessee border, is the only Thoroughbred track in the state that has said it will move ahead with Instant Racing even though the appeal is still active.
“The next step is to file an application with the racing commission,” Kentucky Downs president Corey Johnsen said June 29. “We are performing our due diligence in getting that together. What we do with Instant Racing will key off of that.”
Johnsen noted that despite the appeal by the public policy group, the state Attorney General’s office last year issued an opinion that Instant Racing—called “historical racing” in Kentucky—is pari-mutuel, and the circuit court followed with its ruling. The state Supreme Court earlier this year was asked by the KHRC, eight racetracks, and the state Department of Revenue to rule on Instant Racing, but it opted to send the appeal to the Court of Appeals.
“We believe Instant Racing is legal in Kentucky, and we’re willing to take some risk,” Johnsen said. “Our goal is to offer it sometime before the end of 2011, but a number of events could impact that schedule.”
Plans calls for the machines to be housed on the first floor of the colonial-style clubhouse at Kentucky Downs, which will offer four days of live racing in September but is open year-round for full-card simulcasts.
Should Instant Racing operate at Kentucky Downs, Johnsen said that, given the all-turf track’s limited racing schedule, it’s open to sharing purse revenue with other tracks in the state.
“We believe Instant Racing is critical for revenue growth for the industry,” Johnsen said. “Not only do we want to help the purse structure at Kentucky Downs but at other tracks. What’s good for the Kentucky horse industry is good for Kentucky Downs.”
Johnsen said he has been in contact with the Kentucky Horsemen’s Benevolent and Protective Association about the possibility of sharing purse revenue. It most likely would go to Ellis Park and Turfway Park, which offer one-quarter to one-fifth of the daily purse money paid at Churchill Downs and Keeneland but account for seven months of Kentucky’s year-round racing circuit.
Under the KHRC regulations, Instant Racing would be treated as an ontrack exotic pari-mutuel wager subject to customary pari-mutuel taxes such as the assessment on daily handle and a percentage for the Kentucky Thoroughbred Development Fund. Each track could set the takeout rate—money off the top—that would be retained by the association, most likely the 8%-9% customarily used for VLTs and slot machines in other states.
The KHRC by statute must also approve the type of games used at the tracks.
Instant Racing currently is available only in Arkansas. It is a product of RaceTech LLC and AmTote, a totalizator company now owned by The Stronach Group.
