Needed: About $5 million to support racing regulation in the self-proclaimed “Horse Capital of the World.”
The multi-year quest for a stable funding source for the Kentucky Horse Racing Commission took another turn March 10 when legislation to increase the powers of the KHRC unanimously passed a Senate committee. Whether the bill is approved — and whether the commission gets a new funding source — could be determined on the Senate floor.
The bill, sponsored by Democratic Rep. Larry Clark, would tighten licensing, allow for inspection of some training centers, and allow the KHRC to license advance deposit wagering providers and secondary pari-mutuel operations, commonly called SPMOs. A provision for out-of-competition testing of racehorses was dropped from the legislation. The measure passed the House of Representatives unanimously March 6.
The bill doesn’t address the lingering issue of funding for the KHRC, which has relied on daily racetrack assessments the state auditor suggested may not be legal. In addition, Kentucky tracks pay for all equine drug testing.
Clark this year introduced three bills, two of which identified funding mechanisms. One was a 3.5% tax on ADW bets made by Kentucky residents, and the other was changes in pari-mutuel taxes. Neither bill progressed.
Meanwhile, Republican Sen. Damon Thayer couldn’t find a sponsor in the House for legislation that would have shifted $4 million-$5 million in pari-mutuel taxes from the state general fund to the KHRC.
Perhaps the most surprising development during the 2009 General Assembly session came when racetrack gaming legislation that would produce hundreds of millions of dollars for tracks, purses, and breed development contained no provisions for KHRC funding or drug testing, even though some officials believed it would.
“I’ve been working years on this issue of trying to find funding, and this is the last time I’m going to do it,” Thayer told Clark and KHRC officials during the March 10 meeting of the Senate Committee on Licensing, Occupations, and Administrative Regulations. “If you need $5 million, ask for it in the state budget.”
Clark noted that, given the economic crisis in Kentucky, taking money from the general fund isn’t an option right now.
“I’ll have a hard time taking money from education and health and human services to fund racing,” Clark said.
Thayer backed away from an amendment on the shift in pari-mutuel taxes to racing on the grounds he and Clark would strike a deal before the measure makes its way to the full Senate. Clark, who said a bill containing Thayer’s funding scheme would die when it returns to the House, agreed to work toward a resolution.
There were, however, no promises. Thayer said he would enter amendments on the Senate floor if warranted.
Clark, a frequent sponsor of racing legislation, said much of his bill was derived from recommendations made by the Governor’s Task Force on the Future of Horse Racing. That panel also suggested a hike in pari-mutuel takeout to support the KHRC, but that was taken off the table.
“This is a compromise piece of legislation I think everybody involved agrees upon,” Clark said.
Thayer acknowledged the provisions in Clark’s bill and recent steps to improve regulation in the state, but insisted the KHRC funding issue must be resolved. The two-year budget cycle begins in July, and as of now, the daily track assessments are the primary funding source for the racing commission at a time when Kentucky tracks and horsemen are financially strained.
“I’m concerned about the racing commission having any racetracks left to regulate,” Thayer said.
The legislation to authorize video lottery terminals at racetracks could be discussed again in committee later in the week of March 8. The bill already cleared the House Committee on Licensing and Occupations; industry officials believe it could get full consideration during a special General Assembly session anticipated for this spring or summer.