On September 24, the Kentucky Supreme Court ruled that historical horseracing (HHR) machines using Encore Racing-based systems are not parimutuel. On January 21, the court denied a petition filed by the Kentucky Horse Racing Commission and several state racetracks asking it to reconsider its earlier opinion.
A group called the Family Foundation challenged the legality of the terminals and pursued the case to the Supreme Court. Members believe the ruling means all historical horseracing machines operating in Kentucky may be illegal.
“The Family Foundation is grateful to the justices for seeing through the smokescreen generated by the tracks and the Kentucky Horse Racing Commission,” said Family Foundation spokesman Kent Ostrander. He charged that for years the commission “masked a form of gambling that ignored the clear legal definition of parimutuel betting.
“The gambling industry gambled, and they lost,” he said. “And they’re experiencing what Kentucky citizens have over these last 10 years, losing $800 million.”
With the high court’s ruling, Keeneland and Red Mile racetracks announced that they would temporarily close their joint HHR operation, located at Red Mile. In a statement, the tracks said, “We were disappointed the Kentucky Supreme Court denied our petition for a rehearing. At this time, Keeneland and Red Mile have made the very difficult decision to temporarily close historical horseracing operations until there is more clarity surrounding the situation. We have confidence the Kentucky legislature will continue its efforts to protect jobs and state revenue generated by historical horseracing, as well as protect Kentucky’s signature horseracing industry.”
In its September ruling, the Supreme Court said the case should return to the Franklin Circuit Court “for entry of a judgment consistent with this opinion.” It suggested the state legislature should be involved. “We acknowledge the importance and significance of this industry to this commonwealth,” the court said. “We appreciate the numerable economic pressures that impact it. If a change, however, in the long-accepted definition of parimutuel wagering is to be made, that change must be made by the people of this commonwealth through their duly elected legislators, not by an appointed administrative body and not by the judiciary.”
An event was scheduled for February 1 at Keeneland to begin the legislative push, which has bipartisan support. Democratic Governor Andy Beshear, in his State of the Commonwealth address, said, “Speaking of laws that unduly restrict us from growth and innovation, it is time to pass sports betting and save horseracing.”
Republican state Rep. Adam Koenig said the state Supreme Court ruling “came out of the blue.” He expects a Senate bill to be introduced soon, even though there are less than two dozen days remaining in the session when the legislature reconvenes February 2.
“This has to get done and I have been and continue to be fully committed to getting this done,” Koenig said. “There’s the revenue hole that will happen if this bill doesn’t pass and all these historical horseracing machines have to shut down.
“We’re getting a lot of support, more than I expected from the people I’ve talked to in the legislature,” Koenig added. “But the Family Foundation hasn’t really brought out the big guns and hasn’t whipped up their base to try to kill it yet.”
Analysts indicate that eliminating historical horseracing would result in the loss of purse enhancements, 1,400 jobs and more than $1 billion in investment. It also would negatively impact breeders, feed and bedding suppliers, tack and equipment dealers, veterinarians, farm hands, blacksmiths, owners and trainers.
At Red Mile, Marketing Director Mary Catherine Jones said, “We shut down all 900 of our historical horseracing terminals and we have 302 employees that right now are very concerned they don’t have a job to come back to.”
Jones said HHR terminals “caused the rebirth of Red Mile the racetrack, (and) also the rebirth of standardbred racing in Kentucky, enabling us to build up our purse money. It’s a trickle-down effect that is massive and truly affects this entire state.”
At Ellis Park Race Course in Henderson, General Manager Jeff Inman commented if lawmakers don’t act, the 99-year-old racetrack might have to close.
“Right now these HHR units are what’s keeping Ellis alive and what’s supporting the thoroughbred industry of the commonwealth of Kentucky,” Inman said. He noted the racetrack is hoping to celebrate its 100th year with a $65 million expansion. But it all depends on the fate of historical horseracing machines.
