Kentucky Notebook: State Legislature Gets Another Chance

by Steve Moody
(Editor's Note: Content for this handicapping notebook is provided by Brisnet)

On Monday, teachers and other state workers attended protest rallies at several sites across the Commonwealth. They were protesting a proposed hike in their health-care benefits and a reduction of covered medical services. The hike would have many state workers paying the highest medical premiums in the nation. The teachers have threatened to strike next month if something is not done to meet their demands. Gov. Ernie Fletcher is expected to call for a special legislative session next month in hopes of diffusing the problem and hammering out a budget.

Earlier this year, when the legislative session ended, lawmakers were unable to agree to a budget. Kentucky has been facing a $500 million deficit, which has caused the governor and the legislature to scour the landscape looking to cut programs and save dollars in Frankfort's cash-strapped environment. One thing that's been lacking in their search, however, is for a consistent source of revenue.

Slicing benefits and cutting programs is one thing, but they're never going to approach a balanced budget until another source of revenue can be added to the coffers. Someone needs to take the governor and the legislature on a field trip to see where millions of potential Kentucky tax dollars are flowing. Each and every day, along the Ohio River which flows along Kentucky's northern border, there's also a steady flow of cash from Kentucky residents to gambling boats with names likes Argosy, Belterra, The Glory of Rome and Aztar. These riverboats have become popular in the Midwest and are operated mostly by Nevada-based casino operators, Caesar's and Harrah's among others.

A trip to the parking lots of these riverboats finds car after car with Kentucky license plates and buses streaming in with all manner of Kentuckians eager to try their luck at the tables or more likely at the slot machines. Caesar's operates the Glory of Rome, docked near New Albany, Indiana, just across the river from Louisville. Belterra is a short drive from Louisville as well as Carrollton and Lexington. Argosy brings in customers from Lexington, eastern and northern Kentucky, as well as the Cincinnati, Ohio, metropolitan area. Aztar is docked in Evansville, Indiana, and attracts a good number of players from western Kentucky.

The bottom line is these boats are taking in tens of millions of dollars from Kentucky residents and the winners and the losers are contributing to the general economy of the state of Indiana as well as providing a direct subsidy to the Indiana horse racing industry.

A portion of every admission to an Indiana riverboat is earmarked for the Indiana horse racing industry. The benefit to Hoosier Park, Indiana Downs and others is more money to offer higher purses, make capital improvements and enhance their racing programs, making them more competitive with their southern neighbor. While the gap between Indiana racing and Kentucky racing is still distinct when you're talking about Keeneland and Churchill Downs, the gap has narrowed significantly with respect to Turfway and Ellis Park.

Many Kentucky owners and trainers are sending their horses, especially claimers, to race in Indiana or West Virginia (another slots-enhanced racing state) to take advantage of higher purses. Even when you factor in higher shipping costs, it still makes financial sense for many Kentucky owners.

This is something the legislature could correct quickly, but the members, especially the Republican-controlled state senate led by David Williams, have consistently stonewalled any movement to pass a bill. Passage would be a major shot in the arm to one of the commonwealth's biggest industries and one that puts millions of dollars into the Kentucky General Fund. When you look and see what's happened in other racing states that have added alternative gaming, you have to wonder what Kentucky's elected officials are doing.

Williams, an anti-gambling advocate, claims to be taking a moral position here by saying he's opposed to any additional gambling in the state. That might fly if there were no gambling allowed in the state now, but betting on horse racing has been legal in Kentucky more than 100 years and a state lottery has been around for nearly two decades.

As more and more racing states throughout the country begin to allow other forms of gaming, Kentucky's racing program will struggle to keep up when it comes to matching purses and attracting the best horses. If and when other gaming becomes legal at New York racetracks, the Kentucky racing industry will face a crisis of major proportions.

It is way past time for the legislators to get their heads out of the sand, although representatives of Kentucky's race tracks to whom I spoke don't harbor any illusions that something will be passed during this special session.

If not, Kentucky voters can send a message on November 2.