Kentucky Racetrack Gaming Bills Back With a Twist

Legislation to authorize electronic gaming devices at Kentucky racetracks was introduced Feb. 18 with a new twist: The tracks have offered to pay hundreds of millions of dollars up front to help the state tackle its lingering budget crisis as long as they get exclusive rights to gaming in the marketplace.

This year, there are two bills. One would authorize EGDs at the tracks, while the other addresses licensing issues. Rep. Tom Burch, often associated with racing industry-related measures, sponsored both measures.

Turfway Park president Bob Elliston said legislation introduced in 2002 was "tweaked" and split into two bills. The revenue splits from last year's measure haven't been changed.

"The sum total of them is almost identical to legislation introduced in 2002," Elliston said.

Under the current bills, the Kentucky Lottery Corp. would supervise the racetrack gaming program. An eight-member advisory board with representatives from the Lottery Corp. and the Kentucky Racing Commission would oversee operation of EGDs.

The revenue plan in the 2002 bill was based on a sliding scale. The state would get from 28% to 41.4% of annual gaming income depending on how much money is pumped into the machines. The 41.4% take is based on annual gaming income of $200 million.

Using a blended rate, horsemen, through purses, would get 12.7%, and the tracks, which must bear the infrastructure and labor costs, would get 52.25% on average. Those percentages may be smaller than in some other states with alternative gaming, but the pie is expected to be larger in Kentucky, officials have said.

According to 2002 projects, average purses would go from $188,000 to $380,000 at Ellis Park; $172,000 to $464,000 at Turfway Park, which races predominantly in bad-weather months; $416,000 to $764,000 at Churchill Downs; and from $655,000 to $1.15 million at Keeneland.

At Kentucky Downs, the all-turf track on the Tennessee border, daily average purses would go from $257,000 to $1.92 million under the facility's current seven-day-a-year racing schedule. Much of that hinges on a revenue-sharing plan for the Thoroughbred tracks.

Meanwhile, Rep. Greg Stumbo told the Lexington Herald-Leader he would attach an amendment to Burch's legislation to allow the tracks to pay taxes in advance. That money--about $200 million a year over the next four years--would be used to help balance Kentucky's budget.

The Rev. Nancy Jo Kemper, executive director of the Kentucky Council of Churches, called the offer a "bribe." Elliston said it's merely an early payment of taxes.

"It's acceleration of our tax obligation that would come about by passage of the legislation," Elliston said. "It's conceptual. There are no guarantees."

Elliston said the tracks would pool their collective resources and borrow against any future revenue stream generated by EGDs. He said the plan hinges on two key elements: It's legally acceptable for the legislature to adopt the plan, and the tracks receive assurances they will have exclusive rights to the marketplace.