Kentucky Horsemen Near Consensus on Slot Revenue Splits

Published in the Jan. 26 issue of The Blood-Horse
The chances of alternative gaming at Kentucky racetracks will lie in the hands of lawmakers, but as of mid-January, racetrack officials and horsemen's groups were said to be close to agreement on revenue splits, a crucial component of any legislation that may be introduced.

Though officials chose to withhold details given the sensitive nature of the subject, they indicated discussions moved forward the week of Jan. 14. A key part of the talks has been how revenue for purses will be handled.

"I think we've got 95% of the issues dealt with," said Bob Elliston, president of Turfway Park, which is located in a market with three riverboat casinos nearby on the Ohio River in Indiana. "The other 5% centers on revenue splits. I, for one, do not believe we're far apart, and I hope we can get something done soon."

John Asher, vice president of communications for Churchill Downs, also said the two sides are "very close" to consensus.

"We've had meaningful dialogue and due diligence," said David Switzer, executive director of the Kentucky Thoroughbred Association. "(The talks) have been cordial. We're working toward having a unified front so when we come to Frankfort (the capital), we can walk down the aisle arm and arm and kissing each other."

Marty Maline, executive director of the Kentucky Horsemen's Benevolent and Protective Association, couldn't be reached for comment after the latest round of meetings between the tracks and horsemen. The Kentucky HBPA is the sole negotiator for horsemen at Ellis Park and Turfway Park, and the majority negotiator at Churchill Downs. At Keeneland, the Kentucky HBPA and the KTA have an equal say.

In an earlier interview, Maline said division of revenue between tracks and horsemen would be the sticking point.

Revenue splits vary in states where racetracks offer alternative gaming. In Delaware, about 11% of the net revenue goes toward purses; in 2001, the total was $55 million. The state's three tracks got $244 million, the state earned $176 million, and vendors were paid $26 million, according to figures from the Delaware Lottery.

In West Virginia, 14% of gaming revenue goes to purses at Charles Town Races, and 1.5% to the state breeders' fund. Since only Charles Town offers races for West Virginia-breds, 15.5% of revenue goes toward purses at Mountaineer Race Track & Gaming Resort, the state's other Thoroughbred track.

Elliston said legislation, if introduced in Kentucky, would contain protection for live racing dates and perhaps a requirement that tracks invest money in backstretch improvements. In addition, it's possible Kentucky-bred horses that race in claiming races could be rewarded through a reworked Kentucky Thoroughbred Development Fund, money from which currently goes to maiden special weight and allowance races, as well as stakes.

There has been no discussion about dedicating a portion of revenue for marketing efforts designed to boost racetrack attendance and wagering, Elliston said. In Indiana, a portion of revenue from riverboat casino admission receipts goes toward marketing and promotions at Hoosier Park.

It appears legislation will be drafted, but its chances of passage are uncertain. During a series of meetings last summer, legislators who took part indicated a willingness to consider any proposal from the racing industry as long as all parties are on the same page.

Citizens Against Gambling Expansion fired its first salvo when it held a press conference Jan. 8, the first day of the 2002 legislative session in Kentucky. CAGE, whose moderator is Rev. Nancy Jo Kemper, executive director of the Kentucky Council of Churches, claims expanded gambling is "bad economics." CAGE has fought previous attempts by the racing industry to push for alternative gaming.

Figures as to how much money the state could make from racetrack gaming, and how much money Kentucky residents spend at Indiana's riverboat casinos, have varied. One thing is certain: Kentucky needs money--anywhere from $350 million to $530 million, depending on the source--to balance its next budget.