KHRA Adopts Rules Governing Wagering Hubs

Almost two years after legislation was passed, the Kentucky Horse Racing Authority adopted regulations Jan. 17 to govern multi-jurisdictional wagering hubs in the state.

The regulations allow interested parties such as racetracks and account-wagering services to apply for a wager-processing hub in Kentucky similar to those that operate in Oregon. The idea is to funnel more pari-mutuel handle through the state to assist in economic development of the horse industry.

The 2004 Kentucky statute, like the Oregon law, says the daily licensing fee charged to hub operators can be no more than $200, and the tax on handle no more than 1%. Oregon, however, set its handle tax at one-quarter of 1% in an attempt to attract business. Some of that revenue supports live racing programs in the state.

KHRA executive director Jim Gallagher said Kentucky could end up having no handle tax depending on how the hub plan is received by the industry.

"We'll have to see what kind of interest we get," Gallagher said. "We're trying to create a good business environment for people to operate. This took some time (to come to fruition), but we're hoping there's a lot of interest."

The key to luring account-wagering concerns based in other jurisdictions is a competitive rate. But there has been talk that racetracks in Kentucky could form a consortium that would operate a hub.

Gallagher said the hub or hubs wouldn't impact existing account wagering operations in Kentucky, though only The Red Mile, a Lexington harness track, has its own phone-betting operation. Thoroughbred tracks in the state have deals with the TV Games Network account-wagering system, which currently hubs through Oregon.

Gallagher said there would be no surcharge on wagers made through a Kentucky hub, which means on-track prices would be paid.

La Juana Wilcher, secretary of the state Environmental and Public Protection Cabinet, which oversees the KHRA, said there would be no emergency rules sought to speed up the process. "(The hub regulations) will go through the normal regulatory process and be filed with the Legislative Research Commission," she said. "People will have the opportunity to make comments."

The regulations also require applicants to post a $500,000 letter of credit.