Ky. Horse Racing Commission hopes to pass regulatory framework for instant racing in 2016 session

10/09/2015 08:12 PM

FRANKFORT — The Kentucky Horse Racing Commission is hoping to pass legislation in the upcoming session to license and regulate the state’s controversial instant racing industry.

The commission presented a draft bill to the Interim Joint Committee on Licensing and Occupations on Friday, saying such legislation is needed to further the group’s mission to protect “the integrity of pari-mutuel wagering” and “cover regulatory costs” associated with the game, whose legality has been the subject of a court challenge since 2010, according to KHRC General Counsel Susan Speckert.

Tracks that host instant racing parlors currently pay a monthly regulatory fee in various amounts, Speckert said. Kentucky Downs in Franklin has 488 instant racing terminals and paid $100,810 in fees in fiscal year 2015 while Ellis Park in Henderson, with 177 video terminals, paid $77,443, she said.

A joint instant racing parlor between Lexington’s Keeneland and Red Mile opened in September with 902 machines, which will increase the racing commission’s regulatory costs, Speckert said. The proposed bill she presented would set an annual licensing fee of up to $100,000 for those who offer the game and a licensing fee of up to $50,000 per year for manufacturers.

“What we’re hoping to do is impose a fee of approximately $75,000 a year, but we’re asking for the flexibility so that gives us an opportunity to study our actual regulatory costs, which we will do,” she told lawmakers on the panel when talking about tracks that offer the games, which offer gamblers handicapping information on past races for wagering.

Opponents, however, contend historical racing terminals are essentially slot machines. The Family Foundation of Kentucky challenged administrative regulations promulgated by the racing commission to enact the games in 2010, and the Kentucky Supreme Court remanded the case back to Franklin Circuit Court for further proceedings in February 2014.

But the high court said instant racing could be taxed by the General Assembly, which it did in 2014.

Speckert said the proposed licensing bill would include a similar provision as the 2014 legislation, which stipulates that enactment should not be seen as a judgment on the game’s legality.

“What this would accomplish is just like what the tax bill accomplished,” she said. “Essentially while historical horse race wagering is offered, it should be taxed and properly regulated.”

Rep. Larry Clark, D-Louisville, said the commission is attempting to handle the matter “backwards,” suggesting instead the group get a better handle of its regulatory costs with the new Keeneland-Red Mile venture before moving forward with a new licensing fee.

He called the $75,000 proposal floated by Speckert “a gift” to the tracks considering how much each has paid in fees, saying they “should pay their full load on the front end and make sure we’re doing what’s right.”

“I’m really concerned that you say you don’t even know the cost, but you’re going to give them a break on the front end, then try to figure out on the back end if you’d done what was right,” Clark said. “Well, I think you’re going about it wrong.”

Rep. Dennis Keene, D-Wilder, co-sponsored a similar bill during this year’s session, although manufacturers would have paid just $5,000 per year in licensing fees under that proposal.

House Bill 446 did not receive a hearing in his House Licensing and Occupations Committee, but he sounded confident that such legislation would pass the chamber with upwards of 70 votes in favor.


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