Kentucky Reaping Benefits of Instant Racing
by Ron Mitchell
Date Posted: 7/10/2012 3:36:17 PM
Last Updated: 7/27/2012 12:56:04 PM

Kentucky Downs
Photo: Ron Mitchell

When Kentucky Downs conducts its short, all-turf meet in September, it will offer some of the most lucrative purses in the Bluegrass State this year, thanks to the success of Instant Racing.

Located in Franklin, Ky., near the Tennessee border, Kentucky Downs has always offered a rich purse structure due to purse money accrued from year-round simulcasting that gets dispersed over just a few days of racing. This year, Kentucky Downs has a total purse structure of $2.4 million that will be dispersed during a six-day meet on a Saturday-Monday-Wednesday schedule over the course of two weeks.

Last year, purse distribution totaled $769,810 during a four-day meet.

This year, the stakes schedule consists of seven races with purses totaling $650,000, compared with three stakes offered for total purses of $250,000 in 2011. The stakes schedule is highlighted by the $200,000 Kentucky Cup Turf (gr. IIIT) Sept. 15.

According to a draft of the Kentucky Downs 2012 condition book, maiden special weight races will have a minimum purse of $60,000, the highest of any track in Kentucky so far this year and well above the average of $25,000 for the same level of races during the 2011 meet.

Kentucky Downs was the first track in the state to begin offering Instant Racing, a form of electronic gaming that has a video lottery terminal feel but is considered pari-mutuel. Though Instant Racing is still facing a legal challenge from the Family Foundation, the Kentucky Horse Racing Commission and state attorney general’s office have deemed the alternative form of gaming legal because the outcomes of the games are based on previously run races, or “historical races.”

The machines have been a huge success at Kentucky Downs, with $19.5 million put through them during the first three months of operation, beginning Sept. 1, 2011. Through July 8 of this year, Instant Racing revenue has totaled $89.4 million.

The machines have been a boon not only for Kentucky Downs, but for the rest of Kentucky racing. In addition purses at Kentucky Downs, a portion of every Instant Racing wager goes to support other aspects of Kentucky horse racing, including equine drug research and the Kentucky Thoroughbred Development Fund.

The KTDF, which is funded by a portion of pari-mutuel handle, enhances purses of maiden special weight and allowance races and stakes. To qualify for the KTDF, a horse must be both Kentucky-sired--that is by a registered stallion standing in Kentucky the entire breeding season in which the horse was conceived„Ÿ„Ÿand Kentucky-bred, that is foaled in the state.

At the upcoming Kentucky Downs meet, the track will distribute about $700,000 in KTDF money. For example, half of the $60,000 purse being offered in maiden special weight races comes from the KTDF, and the six stakes with purses of $75,000 include $25,000 in KTDF money.

During a July 10 meeting, the KTDF advisory committee approved a request from Kentucky Downs to share with the state’s other tracks an estimated $800,000 in KTDF money accrued from wagering on historical races in 2012. Of that, up to $600,000 in KTDF money would be used to boost purses at the current Ellis Park meet, and the rest split among Churchill Downs, Keeneland, and Turfway Park, in accordance with when their live race meets take place.

The KTDF allocation to Ellis Park comes on top of an additional $600,000 Kentucky Downs has already sent the Henderson track to support its 2012 meet. In all, Ellis Park will be the beneficiary of about $1.2 million from Instant Racing at Kentucky Downs under an agreement worked out between horsemen and the tracks.

Kentucky Downs president Corey Johnsen said the additional help for Ellis Park, which historically races from July 4 through Labor Day, was viewed as especially important this year in helping maintain a year-round Kentucky racing circuit. In recent years, Kentucky tracks have seen an exodus of horsemen, particularly during the summer months, to tracks in other states where purses are enhanced by casino-type gaming.

“This whole situation came out of discussions we had in January and February, when it was just a theory,” Johnsen said. “The thought was there is a unique need at Ellis Park to increase purses. Based on the number of horses that have stayed in Kentucky and the field sizes during the opening week at Ellis Park, I think it worked.”

According to The Jockey Club Information Systems, for the first four days of the meet Ellis Park had average daily purse distribution of $154,022 and an average 8.46 starters per race. For the entire 31-day meet in 2011, Ellis Park had average starters per race of 8.04 and average daily purses of $137,471.

Bob Jackson, director of operations at Ellis Park who participated in the July 10 KTDF advisory committee meeting via telephone, said all-sources wagering at the track increased 67%, 54%, 28%, and 31%, respectively, during the first four days of the meet when compared with a year ago. In the past, Ellis Park’s opening competed with the closing of the Churchill meet, which ended earlier this year.

Jackson said Ellis Park is scheduled to begin offering Instant Racing prior to the conclusion of the current meet. He said plans are being made to convert a portion of the first floor of the clubhouse to accommodate 177 Instant Racing machines, with a tentative launch date of Aug. 15.

Cliff Reed, vice president at Turfway, said Instant Racing “is very important to us” but that Rock Gaming, a casino company that owns most of the northern Kentucky track, is reluctant to proceed until the legal issues are resolved. He noted that as a casino company, actions by Rock Gaming in one state can affect its ability to be licensed in other jurisdictions.

Reed said Turfway has conducted the planning necessary to initiate Instant Racing when, and if, there is a final court determination on its legality.

“We are prepared go to,” Reed said.

Phil Milliner, vice president and corporate comptroller for Churchill Downs Inc. who participated in the KTDF meeting via telephone, said the Louisville track continues to study whether it should offer Instant Racing should it becomes legal.

“It’s really two issues for us„Ÿthe legal viability as well as the financial viability„Ÿgiven what we perceive to be a more competitive environment where we are in the state,” Milliner said. “The economic aspect of it is constantly being debated, discussed, and analyzed internally as well as waiting to see what the legal developments are going to be."

The Kentucky Downs KTDF distribution agreement approved by the advisory committee, which is chaired by Dr. J. David Richardson, must be approved by each of the state’s tracks and sent on to the KHRC for consideration.
 



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