Kentucky Bills Call for Track License Fees, Slots Vote

A Kentucky legislator has pre-filed several bills for the 2004 General Assembly session, including one that would authorize electronic gaming devices at racetracks, and another that calls for a constitutional amendment on the subject.

Rep. Tom Burch of Louisville has pre-filed the racetrack gaming measure with the Interim Joint Committee on Licensing and Occupations. The bill is quite similar to one that failed to muster widespread support earlier this year, though it does include provisions for racetrack operators to pay an up-front license fee, or "advance payment," for the right to operate EGDs.

Track operators floated the advance-payment idea during the 2003 session in a last-ditch attempt to win legislative favor. It was viewed as a sharp good-faith move by some observers, and likened to a bribe by others.

The 2004 bill calls for the state Lottery Corp. to oversee operation of EGDs and collect proceeds for the state under the following sliding scale: 28% of annual gaming income that doesn't exceed $50 million up to 41.44% of annual gaming income over $200 million. The bill lists which state programs would benefit from EGD revenue.

Purses would get anywhere from 10% (annual gaming revenue not higher than $50 million) to 15.28% (annual gaming income $200 million or more), according to the bill. For Thoroughbred racing, 50% of that amount would go to breed development in the following manner: The Kentucky Thoroughbred Development Fund would get 10% to 40% for purses, while 10% to 20% would go to new fund for supplements for Kentucky-breds in claiming races.

For Standardbred racing, 20% of the total purse fund would go toward a sires stakes program, and 5% of that amount to support county fair racing. Horsemen and harness tracks would be able to negotiate whether daily average purses should be higher than $150,000, and whether purse money should be shifted from track to track.

The bill also awards small percentages of revenue to backstretch improvement funds and horsemen's associations, and says no less than $2 million a year (depending on revenue generated) would go to a fund for problem gambling.

Racing associations would have to pay a percentage of $400 million in advance to the Lottery Corp. to be licensed to operate EGDs. It breaks downs as follows: Kentucky Downs, 27.04% ($108,160,000); Turfway Park, 24.78% ($99,120,000); Churchill Downs, 10.33% ($41,320,000); The Red Mile, 9.10% ($36,400,000); Keeneland, 7.87% ($31,480,000); Ellis Park, 7.86% ($31,440,000); Bluegrass Downs, 7.02% ($28,080,000); and Thunder Ridge Raceway, 6% ($24 million).

The percentages apparently stem from projected revenue and anticipated market share, which was discussed by track operators during the last legislative session. Kentucky Downs, for instance, is located on the Tennessee border and is believed to be in the most lucrative location of the state's eight tracks, at least in terms of revenue from EGDs.

The second measure pre-filed by Burch proposes an amendment to the state constitution. It says "the General Assembly may by general law permit the operation of video lottery terminals at horse racing tracks, and if it does, it shall pass general laws to ensure the proper functioning, honesty, and integrity of video lottery terminals at horse racing tracks and the organizations conducting video lottery terminals at horse racing tracks."

The question to be submitted to Kentucky voters regarding the proposal would read: "Are you in favor of allowing the General Assembly to authorize video lottery terminals at horse racing tracks?"

Racing industry officials continue to plot their strategy for 2004. Though the Burch measures only call for racetrack gaming, there could be a push from others for gaming at facilities other than racetracks, or perhaps for full-scale casino gambling at tracks and other sites.