Measure Would Authorize Betting Hubs in Kentucky

Legislation to authorize wagering hubs in Kentucky was introduced in the state Senate in early March and is moving through the legislative process as an amendment to a bill that would permit artificially inseminated horses to race in Kentucky. A hub measure was introduced in 2002 but it failed to garner support.

Meanwhile, another pari-mutuel bill introduced and sent to the House Licensing and Occupations Committee in early March would let the Kentucky Horse Racing Authority authorize Instant Racing, which employs recycled races in a video-gaming format.

The hub plan calls for a system similar to one in Oregon whereby out-of-state account-wagering providers funnel bets through a hub. Handle is subject to a tax of one-quarter of 1%, but the Kentucky measure calls for no tax. The 2002 legislation in Kentucky would have provided the state with a fee equal to 0.125% of total handle.

Commerce Secretary Jim Host told the Lexington Herald-Leader the state could attract a company such as the TV Games Network, which is headquartered in Southern California and hubs wagers through Oregon. All of Kentucky's Thoroughbred tracks are prominently featured on TVG, which returns source-market fees to the state's racing industry from its account-wagering operation.

The five account wagering companies that hub through Oregon generated total handle of more than $830 million in 2003. The National Horsemen's Benevolent and Protective Association, in a March 24 open letter from president John Roark, said it has requested handle reports from the Oregon Racing Commission but received no response.

"Those are great numbers from which horsemen benefit in the form of source-market fees and other streams," Roark said in the letter, which targeted AmericaTab, an Ohio-owned company which hubs through Oregon. "But are horsemen getting their fair share? That's the important distinction."

Concerns over account wagering and betting hubs continues to increase. The Ohio State Racing Commission, for instance, has been unable to determine how much money Ohio residents bet on out-of-state races through account wagering systems.

The artificial insemination measure is necessary to facilitate live Quarter Horse racing at The Red Mile this summer. There must be a law on the books to permit Quarter Horses, Appaloosas, and Arabians--breeds that employ AI--to race in the state. AI isn't permitted for Thoroughbred breeding.

Sen. Damon Thayer said the bill could come up a floor vote March 25.

No one in the Kentucky horse racing industry has publicly discussed the Instant Racing measure. Instant Racing, a pari-mutuel system that uses video-gaming technology, has been hailed as a success in Arkansas, where it has boosted purses at Oaklawn Park. RaceTech, the company that developed the machines, hopes to expand into other states.

The bill, still in committee, would provide 15% to purses and 85% to the receiving racetrack after applicable taxes are deducted.

Thayer, who has strong ties to the Thoroughbred racing and breeding industry in Kentucky, said he wasn't aware of any push for Instant Racing. "It would be dead this session anyway because there are so few days left in the session," he said.

A bill to authorize casino gambling at five racetracks and four non-track locations failed to clear committee during the current Kentucky legislative session.