Expanded gaming may be nonstarter, but lawmaker hopes to standardize instant racing licensing this session

02/15/2015 03:10 PM

FRANKFORT — A year after the General Assembly set up a taxing system for instant racing, state Rep. David Osborne hopes to give the Kentucky Horse Racing Commission more authority over the game still in legal limbo.

House Bill 446, sponsored by Osborne, would allow the commission to charge annual licensing fees on tracks and betting machine vendors of up to $100,000 and $5,000, respectively. 

The legislation comes in a year without a major push for expanded casino-style gambling, but Osborne told Pure Politics the bill does not legalize instant racing, in which bettors use video terminals to wager on previously run horse races based solely on handicapping information.

The Kentucky Supreme Court ruled last February that the commission could regulate the games but did not decide the legality of historical racing, instead sending the Family Foundation of Kentucky’s lawsuit against the state back to Franklin Circuit Court.

“This basically gives the racing commission a framework under which to regulate something that they are being told that they have to regulate,” Osborne, R-Prospect, said in an interview Friday. “They don’t actually have a framework in place.”

He added: “If the Supreme Court comes in and rules that the game is illegal then this will have no bearing at all. This just is a stopgap measure right now that says that as long as the racing commission is being asked and mandated to regulate (instant racing), this gives them the actual ability to mandate it and charge the fees to do so.”

So far only Kentucky Downs in Franklin and Ellis Park in Henderson offer instant racing after Gov. Steve Beshear issued an executive order authorizing the games in 2010. Keeneland and The Red Mile announced in October plans for a $30 million historical racing parlor with 1,000 terminals near downtown Lexington, according to the Lexington Herald-Leader’s Janet Patton, and Keeneland also plans to open a new track in Corbin with instant racing machines by 2016 at the earliest, according to the Louisville Courier-Journal’s Greg Hall.

After the high court’s ruling, the legislature enacted a new taxing structure for the games in the closing days of last year’s session. The two tracks combined in December for $31.2 million in bets and $936,896 in pari-mutuel taxes paid to the state, racing commission figures show.

Osborne said his bill, which was filed Thursday, would set racetracks and instant racing vendors on a level playing field in setting up the games in Kentucky. Both the tracks and the commission want clarity on how to move forward, he said.

“Without legalizing the product in anyway shape or form this actually allows them to charge a fee for the licensure of the instant racing machines,” he said.

If the bill passes the legislature, Kentucky Downs would see some relief. Osborne said the track is paying about $120,000 per year in licensing fees.

“Everybody believes that the fees are sufficient, but in some cases, particularly with Kentucky Downs, it would probably actually be a fee cut for them,” he said.

Osborne is cautiously optimistic about HB 446’s chances, but he said moving the bill through the legislature will require a lot of work since fees are involved.

He hopes last year’s debate on the instant racing taxing structure will make lawmakers amenable to passing HB 446. “We had to have the argument last year that this in fact does not authorize anything,” he said.

Osborne said he had not hear from opponents of instant racing, but he expects to as the legislative process quickens its pace in the second half of the 30-day session, even though HB 446 isn’t as controversial as it seems.

“The bill looks on face like we’re actually authorizing something and charging licensing fees that authorize, but it doesn’t,” he said. “Like I said, just as the revenue bill that we did last year did not authorize anything, it just said as long as we’re doing it we need to have a structure in place under which to actually collect the pari-mutuel fee that is being collected.

“This does the same thing. It doesn’t authorize or make anything legal, it just simply says that as long as we’re going to have it, we need to regulate it and we need to regulate it the right way.”


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