In a 22-15 vote, the Kentucky Senate passed SB 120, which changes the definition of parimutuel wagering to include historical horseracing machines. The measure now moves to the House.
The Kentucky horseracing industry pushed for the legislation after the state Supreme Court ruled last year that certain HHR machines are not parimutuel in a lawsuit filed by the conservative Family Foundation. Proponents said allowing the state’s racinos to offer the current 3,625 HHR machines would protect the state’s signature Thoroughbred racing and breeding industry.
After the bill passed the Senate, Governor Andy Beshear said he “would sign it if it makes it to me.” He noted HHR wagering brings in $15 million a year in revenue to the state and provides jobs.
State Senator John Schickel, the lead sponsor of SB 120, said, “What this bill does, is simply clarify the parimutuel definition issue once and for all so that Kentucky can remain the horse capital of the world.” He said without HHR, several racinos would close; in fact, the high court ruling already has led to the temporary closure of a HHR venue jointly operated by Keeneland and Red Mile in Lexington.
State Senator Whitney Westerfield stated state government should not “get in bed with an industry that requires its people to lose for the industry to succeed.” He added, “Gambling in all its forms is predatory and bad public policy. We’re being asked to step in and rescue an industry from its own blunder.”
The Family Foundation warned it will continue to mount legal challenges against the machines. The group’s spokesman Martin Cothran stated “SB 120 is now limping toward the House. From here on out, the bill’s chances start going down pretty dramatically.” Cothran said HHR machines only can be legalized through a constitutional amendment, which would require a statewide referendum and could not take effect until late 2022. However, supporters claim a majority vote on SB 120 in both legislative houses is all that’s required.
The Family Foundation is not alone in opposing historical horseracing. In a recent op-ed, Richard Nelson, executive director of the conservative Commonwealth Policy Center, wrote, “Should we feel bad for Kentucky’s favored industry that has skirted the law and defied the legal process by which public policy is rightfully changed?” He noted, “The legislature never changed the law. Heck, there’s never been a legitimate hearing where legislators had a chance to hear both sides present their case at the same time. The Kentucky Horse Racing Commission magically discovered in one of their meetings over a decade ago that if you called slot machines historical horseracing and devised new electronic games called horseracing machines, then it would be ok. But it’s not ok. It’s dishonest.”
Kentucky bettors wagered more than $2 billion on historical horseracing machines in the previous fiscal year. Proponents point out those revenues help support racetracks and horse farms as well as businesses, communities and tourism. The money also has helped increase race purses and breed development, making Kentucky racetracks more competitive with those in other states, supporters note.
Yet, despite surpassing $2 billion in handle in the prior fiscal year, historical horseracing machines delivered tax revenue of just $33.8 million, with $15.1 million going to the state General Fund. The reason is historical horseracing revenue is taxed at a much lower rate than live racing and simulcasting. Several advocacy groups have asked legislators to increase the tax rate on historical horseracing and thereby raise state spending on education, health care and other services.
