Instant Racing machine at Oaklawn Park.

Instant Racing machine at Oaklawn Park.

File Photo

KY 'Instant Racing' Decision Before Jan. 1

Proponents and opponents of historic racing present their cases before judge.

After hearing from both sides of the issue, a Kentucky judge said Dec. 14 he would issue a ruling on whether a form of Instant Racing is legal in the state prior to the end of the year.

Franklin Circuit Court Judge Thomas Wingate said that consistent with his original intent to render a decision prior to the Kentucky General Assembly session that begins in January, he would issue his verdict prior to Jan. 1, 2011.

During a 90-minute hearing, proponents and opponents of offering wagering on “historical racing”--a form of wagering on video machines patterned after the Instant Racing concept conceived and popularized at Oaklawn Park—essentially reiterated arguments made during a public hearing held by the Kentucky Horse Racing Commission earlier this year.

Historical racing permits a bettor to wager on previously run races that are shown on a terminal that resembles a video lottery terminal. The name, date, track, and runners in the race are not revealed at the time the bet is made.

The racing commission approved historic racing as a means of generating new revenue for the state’s eight racetracks, which have been unable to obtain legislative approval for alternative gaming such as VLTs and slot machines. Upon approving historic race wagering, the commission and racetracks immediately filed a joint suit seeking a declaration that the form of wagering is legal under state statutes.

The Family Foundation of Kentucky, which is opposed to historic racing, also became a party to the suit.

During the hearing before Wingate, a team of attorneys representing the tracks and state Department of Revenue presented arguments on why historic race wagering is consistent with state statutes permitting pari-mutuel wagering.

On the other side, attorney Stan Cave, representing the Family Foundation, argued that the type of wagering offered under historic racing does not comply with legalized pari-mutuel wagering. Cave also contended the KHRC did not have the authority to approve historic racing.

There was general unanimity that the definition of pari-mutuel wagering under Kentucky law requires that the wagers are made into a common pool that is distributed among the wagering participants after deduction of a fee. But the two sides differed on their interpretation of whether historic racing met that criteria.

“Are (historic racing wagers) somewhat different from wagers that would be placed at the track today? Yes,” said Jason Renzelmann, an attorney representing the racetracks.

But, Renzelmann argued, that does not mean the wagers are inconsistent with the intent of the state pari-mutuel wagering statutes. He noted the new wager would not be unlike exotic wagers such as the daily double, Pick 6, or trifecta. Though bettors are not all wagering on the same race at the same time in historic racing, bets are pooled and payouts are calculated accordingly.

“This is pooled pari-mutuel wagering in the classic sense of the word,” Renzelmann said.

M. Holliday "Hollie" Hopkins, executive director of the Office of Legal Services for the Public Protection Cabinet, said though historic racing and similar types of wagering are not spelled out in the definition of pari-mutuel wagering under statute, “it does not alter the fundamental criteria that is is a form of pari-mutuel wager.”

Hopkins, who will become legal counsel to Gov. Steve Beshear as of Jan. 1, 2011, said the legislature has given the KHRC broad discretion to enact regulations that help the racing industry, citing the statutes that created the commission and giving the body not only regulatory authority over horse racing but also a role in promoting and protecting the industry.

“It is no secret the horse industry is facing some difficult times,” Hopkins said.

Cave, citing state statutes that prohibit video gaming or reel-type gaming, said historic racing “is nothing more than slot machines at the track.” Because the bettor will likely be the only one betting on any of the thousands of races available at any given time, it was not pari-mutuel wagering, Cave said.

Noting the failure of the racing industry to obtain legalized alternative gaming through the legislative process, Cave said the industry was turning to the judiciary system to achieve its goals.

“As their last resort they came to this court to try to accomplish what they have not been able to accomplish (through the legislature),” Cave said. “They are here trying to do an end-run around the process.”

He said a ruling from Wingate approving historic racing “will set a precedent that will haunt the courts for years to come.”

Though he was not ruling on the case during the Dec. 14 hearing, Wingate cited other legal cases in which state bodies had wide discretion in drafting and interpreting regulations.