Kentucky Task Force Focuses on Funding

Looks at Kentucky Horse Racing Commission.

Lack of funding for the regulatory functions of the Kentucky Horse Racing Commission was the focal point at a Sept. 30 meeting of the state's Task Force on the Future of Horse Racing.

During the panel’s monthly meeting, members were told that the Kentucky Horse Racing Commission is understaffed and underfunded, with the regulatory body having a projected shortfall of $6,000 for fiscal 2009. Unless other sources of funding are found, that figure could mushroom to a fiscal 2010 deficit of at least $600,000, assuming current personnel levels are maintained.

Those numbers came from the task force’s subcommittee on Proper Staffing and Funding Levels of the KHRC, chaired by Ellen Hesen.

While there was no official position taken, there was a general consensus among task force members that the state should look to the state tax on pari-mutuel wagering as a possible funding source.

According to information compiled by the subcommittee, of the $13.3 million generated from the state’s tax on pari-mutuel wagering in fiscal 2008, only $504,200 went to help fund the Kentucky Horse Racing Commission. The report showed that $6.6 million of the total from the tax was used to support purse and breeders fund supplements. Other horse industry programs funded by the tax include the Kentucky Equine Industry Fund, which received $460,708; a total of $433,784 went to the Kentucky Equine Drug Research Fund; and $433,784 supported the Higher Education Equine Fund. The remaining $5.3 million went into the state’s General Fund.

At the subcommittee meeting earlier this month, it was noted that staffing and funding for the KHRC falls well below that of other major racing states.

According to the subcommittee report, the KHRC has 23 full-time employees on its payroll, and a total budget of about $2.7 million for fiscal 2009. KHRC executive director Lisa Underwood told the subcommittee that the commission needs an additional $1 million to fund 18 part-time positions and eight more full-time staff positions: two stewards, three investigators, two veterinarians, and one secretary. The most critical vacancies are the investigator positions, as well as a pari-mutuel wagering supervisor. The total additional funding needed to support the new staff would be more than $1 million.

Task force member Ned Bonnie suggested that the estimate is lower than necessary to hire qualified personnel, particularly the veterinary positions.

Funding for veterinarians to inspect horses at the track and to conduct drug-testing became a focal point at a recent KHRC meeting when it was revealed that during the recent Ellis Park meet there was no testing for excessive levels of TCO2, the mix of sodium bicarbonate and electrolytes commonly referred to as a “milkshake."

Lafe Nichols, then the chief veterinarian for the commission, who resigned four days after the meeting, said that due to understaffing the veterinary duties at Ellis Park were mostly confined to monitoring horses at the track as a result of the hot and humid weather. He said conducted the TCO2 testing required a veterinarian to be present in the barn area while the races were underway.

Also during the meeting, a horse owner and breeder who is also an active bettor said providing adequate funding for the regulatory duties of the commission is of concern to bettors who must have confidence in the integrity of how racing is conducted within the state.

Mike Maloney, who said he wagers about $10 million on horse racing annually, said Kentucky could garner the lion’s share of the money wagered on simulcasting around the country if it were able to show that it had the highest standards of integrity. Noting that simulcasting accounts for 85% of the annual betting on horse racing, Maloney said Kentucky currently is not the leader among bettors who consider integrity as a criteria for which state’s races they want to wager on.

“I look at two things: make Kentucky a leader in regulation and oversight and make Kentucky more friendly with our simulcast signals. That would be the best marketing we could do,” Maloney said. “I can tell you, and I don’t know if the perception is fair or not, but Kentucky is not looked at as a leader in integrity because it has had some lax drug rules in the past. This is a very real thing. It’s important to players like me and it’s important to $2 bettors.

Maloney said some of his concerns might only be handled on a national basis, but that he sensed a desire in Kentucky to fix the problems.

Task force members, including the leaders of three Thoroughbred tracks who are on the panel, assured Maloney that they shared the same goals.

“We had better be listening because they’re our livelihood,” Churchill Downs president Steve Sexton said of bettors. “It’s going to require funding … but we can do that. Now is the time to act. If our customers are telling us this, we better act on it.”

The task force has been given a Dec. 1 deadline to issue a report to Gov. Steve Beshear, who appointed the panel.