KTDF Revenue Decline of Concern to Panel

Kentucky Thoroughbred Development Fund revenue is of concern to a committee.

Members of an advisory committee that oversees the Kentucky Thoroughbred Development Fund expressed concern June 8 over diminishing revenue for the program as well as one racetrack’s suspension of full-card simulcasts for a six-month period.

The KTDF, which provides purse supplements for Kentucky-registered horses in maiden special weight and allowance races, as well as some stakes, is funded by 0.75% of live pari-mutuel handle and 2% of non-live handle in the state. The fund, which years ago topped $10 million a year, could drop to about $5 million this year.

Handle generated through advance deposit wagering accounts in state isn’t covered by the KTDF statute, an issue that could be on the General Assembly’s agenda for 2012.

For the past two winters Ellis Park in western Kentucky has been closed for full-card simulcasts to prevent what track officials called large financial losses. It received approval to do so when the Kentucky Horse Racing Commission approved its racing dates and license.

In 2010-11, Ellis Park was closed from October through March, meaning it didn’t import signals from Keeneland, Churchill Downs—including the two-day Breeders’ Cup World Championships—and Turfway Park. When a track is racing live it serves as “host,” so it derives more revenue from other wagering outlets in the state.

“It sticks in my craw that Ellis Park shuts down for simulcasting six months a year,” said Bill Landis, a Thoroughbred breeder and member of the KTDF advisory committee. “There is nothing I can do to make you dance to my tune, but please take my message back to (Ellis Park owner Ron Geary) that Ellis Park isn’t acting like a team player.”

When full-card simulcasts were legalized in Kentucky in 1994 the premise was statewide participation year-round. No Kentucky track or off-track betting parlor is open seven days a week for simulcasts, and some, including Ellis Park and Keeneland, aren’t regularly open for evening signals.

Bob Jackson, general manager at Ellis Park, noted the track’s schedule was approved by the KHRC. He said Ellis Park, by shutting down for six months, probably saved about $1.5 million.

“If we get Instant Racing or alternative gaming, we’ll stay open for simulcasts,” Jackson said. “I’ve got 150 employees that want us to be open. But not being open in the winter is the difference between having a decent summer meet or closing our doors.”

By law Kentucky tracks have the option to open more cost-effective satellite wagering facilities in their market. Only one—Thunder Ridge Raceway, a harness track in Eastern Kentucky—has done so.

Other tracks in the state also have indicated they would offer more complete simulcast schedules and amenities if they get some form of video gambling.

Cliff Reed, chief financial officer for Turfway, said it’s hard for all tracks to make money during periods when they don’t have host-track status. But that’s no excuse to shut down, he said.

The Ellis Park shutdown cost Turfway, which struggles to maintain overnight purses at $120,000 a day, roughly $200,000 in purse revenue last winter.

“We understand the dilemma but all the tracks would say the same thing,” Reed said. “We lose money during (dark months). The Ellis Park situation is not unique to Kentucky tracks. Our ownership elected to bite the bullet to stay open. It benefits horsemen because (simulcasting) generates a significant amount of purse money.

“It’s unfair that we lose money by staying open but other tracks are able to operate only part of the year.”

Kentucky Downs general manager John Goodman said he sympathizes with Ellis Park officials, and that his track has considered closing for part of the year. Kentucky Downs in recent years has offered only four days of live racing but is open year-round for simulcasts.

“It’s something we’re looking into,” Goodman said. “We have investors, and people are on our backs. It’s getting harder and harder to pay bills in an industry that’s in decline.”

Dr. David Richardson, a Thoroughbred breeder who chairs the KTDF advisory committee, said the committee has no authority to mandate tracks remain open year-round for full-card simulcasts, but “we have a job to do—enhance the KTDF. We want to help this situation because it’s an integral part of having a year-round circuit.”

In a recent interview with The Blood-Horse, Kentucky Sen. Damon Thayer said improving the KTDF would be part of a racing-related legislative package he plans to float in 2012. Legislation passed this year opened the door for lawmakers to examine ADW handle and revenue.

“I hope we can come up with a mechanism so ADW bets on Kentucky races provide adequate funding to the KTDF like every other bet made in Kentucky,” Thayer said.

Thayer also noted the simulcast-related issues in Kentucky and how they negatively impact the KTDF. He mentioned Ellis Park as well as Lexington, where Keeneland and The Red Mile harness track are open simultaneously for breed-specific simulcasts. He called it “absolutely horrific” for patrons, and indicated enhancements could generate more pari-mutuel revenue in that market.

KHRC executive director Lisa Underwood noted that if tracks move ahead with Instant Racing, the KTDF would benefit. Instant Racing wagers under proposed regulations would be treated as exotic pari-mutuel wagers made on track, so 0.75% would go to the fund from each dollar bet.

Though Instant Racing—a pari-mutuel form of video gambling—remains tied up in the Kentucky court system, one legislative committee already has approved the KHRC regulations, and another is due to consider them soon. Kentucky Downs is “moving forward quickly” on Instant Racing, Underwood said, and the KHRC wants to ensure procedures are ready to go should the regulations pass the second legislative committee.

Kentucky Downs is the only track that has indicated it would move forward with Instant Racing before a final court ruling is obtained. The Family Foundation of Kentucky is challenging the legality of regulations that deem Instant Racing pari-mutuel in nature.