Anne M. Eberhardt

Kentucky VLTs, Gaming: More Talk Than Action

Legislation introduced by Sen. Damon Thayer to be considered Jan. 13.

As expected, expanded gaming and racetrack video lottery terminals were a hot topic when the Kentucky General Assembly convened Jan. 5.

But by the end of the first week the subject remained just that – the focal point of much discussion – with no action forthcoming.
The only alternative gaming bill that had been introduced as of Jan. 9 was Senate Bill 21, pre-filed by Republican Sen. Damon Thayer. Thayer’s bill would permit VLTs in up to seven counties that have racetracks, but the tracks would have to compete for the licenses. The legislation also requires a statewide vote on a constitutional amendment allowing VLTs and a local option vote in the counties where the alternative gaming would be conducted.
The measure calls for the state to get 50% of gross revenue, racetracks 25%, and horsemen and marketing programs 25%. Purses and breed development would get $100 million or 25% a year, whichever is higher, as well as half of the up-front license fees under a competitive bidding process.
Thayer said Jan. 9 that his bill is likely to be approved Jan. 13 by the Senate State and Local Government Committee, which he chairs. Beyond that, however, he was not making any predictions.
"I believe SB 21 will have the votes to pass committee and go the Senate floor for a vote,” Thayer said. “I am taking it one step at a time and will cross the next bridge, a Senate floor vote, when we come to it."
Representatives of the horse industry, who have pushed for VLTs exclusively at the racetracks, have said Thayer’s proposal has problems. Particularly because the tracks would not have a monopoly on alternative gaming, the revenue splits are not workable, they contend, and the constitutional amendment process would take too long to offer the immediate financial boost the horse industry needs.
Although it is not expected be filed until later this month, the VLT legislation that would have the horse industry’s support is expected to be offered by Democratic House Speaker Greg Stumbo. Stumbo’s proposed legislation, similar to a bill passed by the House during a special session in 2009 before being killed in a Senate committee, would grant the racetracks exclusive rights to offer VLTs under authority of the Kentucky Lottery Corp.
Whether Stumbo will even file the legislation came into question Jan. 8, however. The House leader said it would be futile for the Democratic majority in the House to even consider the bill, given the prospect that it would not make it out of the Senate, where it is opposed by Senate President David Williams.
“It's obvious that Senate leadership is not going to allow that bill to get to the floor,” said Stumbo. “I don't know why we continue to have a useless debate over it.”

Williams, who was responsible for the VLT legislation not making it out of the Senate during the special legislative session, said Jan. 8 he plans to file legislation that would allow voters to decide whether to allow an expansion of gambling. The measure would require the slots proposal or any other gambling issue to be ratified by voters in a ballot referendum.

While Williams’ opposition would appear to rule out any favorable VLT legislation during the General Assembly, horse industry officials are not giving up.

David Switzer, executive director of the Kentucky Thoroughbred Association, said he is hopeful Williams or other Republican state senators will change their minds and favor the racetrack VLT option.

Also thrown into the discussion during the opening week of the session was an opinion from state Attorney General Jack Conway that said Instant Racing, an electronic form of gaming based on previously run horse races, is legal in Kentucky but is currently not permitted under the regulations of the Kentucky Horse Racing Commission.

Thayer, who requested the opinion, said it would be up to Gov. Steve Beshear and the racing commission to change racing regulations to permit Instant Racing.

Instant Racing has provided a boost to purses at Arkansas’ Oaklawn Park, where the devices were first installed and which holds a license on the concept. Whether Instant Racing would help the Kentucky horse industry in a similar manner is questionable, Switzer said.

Switzer noted that while 14% of purses at Oaklawn Park are from revenue derived from Instant Racing, the benefit would not be as substantial in Kentucky. He explained that Oaklawn Park’s limited annual race meet of about two months does not compare to the year-round racing on the Kentucky circuit. Such a purse benefit would be watered down over a longer period of time, Switzer said. He added that if the Kentucky horse industry had thought Instant Racing would help resolve its economic woes, it would have been pushing for its implementation years ago.