By Tom LaMarra
Updated: Wednesday, December 29, 2010 5:40 PM
Posted: Wednesday, December 29, 2010 12:46 PM
A Kentucky circuit court judge has ruled draft regulations for Instant Racing “are a valid and lawful exercise” of the Kentucky Horse Racing Commission’s statutory authority.
The ruling was issued Dec. 29 by Franklin Circuit Court Judge Thomas Wingate.
Wingate’s ruling also states licensed operation of pari-mutuel wagering on “historical races”—called Instant Racing in Arkansas—doesn’t contravene statutory prohibitions of gambling in certain Kentucky statutes, and that the state Department of Revenue’s contention that Instant Racing would be subject to typical pari-mutuel taxes is valid.
The KHRC and Kentucky’s eight racetracks petitioned the court this summer to get a ruling on the proposed regulations before going forward. The Family Foundation of Kentucky stepped in to challenge their petition.
Plans for Instant Racing moved forward earlier in 2010 when Attorney General Jack Conway issued an opinion saying there is nothing in state statute to bar pari-mutuel wagering on historical horse races, a form of gambling known as Instant Racing. The devices, which resemble video lottery terminals but are considered pari-mutuel because all money from the machines is pooled, rely on old races to generate the results of various video-like games.
The legality of Instant Racing was upheld in Arkansas but not in a few other states.
“We’re extremely pleased with the ruling,” said Patrick Neely, executive director of the Kentucky Equine Education Project. “We believed we were on firm legal footing, and the court affirmed it. Instant Racing has made a significant difference to the racing and breeding programs in Arkansas, and we’re hopeful it can do the same in Kentucky.”
Turfway Park president Bob Elliston called the ruling “good news because it confirms what we believe.” But he said it’s too soon to say what will happen next.
“We, too, wonder what next steps there are,” Elliston said. “There is a losing party in this (decision). It’s also a single court’s ruling that doesn’t have statewide jurisdiction.”
During a hearing in early December, both parties in the petition suggested they would appeal Wingate’s final ruling if it didn’t go their way. The Family Foundation indicated Dec. 29 it would appeal the ruling to the Kentucky Supreme Court.
Elliston said the part of the ruling dealing with the Department of Revenue could be an impediment. If a track’s daily pari-mutuel handle is above $1.2 million, the tax rate goes from 1.5% to 3.5% by statute.
Since the takeout rate on Instant Racing is roughly 8%-9%, similar to VLTs, not the about 20% it is for wagering on live horse races, the tax rate “could put a ceiling on what the tracks could do” in developing Instant Racing facilities, Elliston said. He acknowledged, however, the General Assembly could make changes in the tax rate.
Tracks will be hesitant to move forward given the uncertainty, but Turfway plans to “initiate internally a planning process about how we’d go about” handling Instant Racing, Elliston said.
The Family Foundation called on the court to employ a five-part test to determine the nature of pari-mutuel wagering. In his ruling, Wingate states the court “finds that the essential element of a pari-mutuel wagering system is that the patron does not wager against the association,” and that the “association must not have a financial interest in the outcome the bet beyond the uniform deduction allowed by law.”
Democratic Kentucky Gov. Steve Beshear issued a statement after the ruling was released. “We are very pleased with the court’s decision,” he said. “We feel strongly that the Kentucky Horse Racing Commission has the statutory authority to regulate historical horse racing, and we expect revenue produced from these games will help support our trademark racing industry.” End
by Ed DeRosa
Kentucky racetracks received the answer they were hoping for when Franklin Circuit Judge Thomas Wingate ruled Wednesday that the operation of Instant Racing is legal in the commonwealth.
The state’s five Thoroughbred and three Standardbred tracks joined together to seek a ruling before investing millions of dollars to offer the machines at their facilities. Even with the ruling, however, Keeneland Association in Lexington, anticipates some final hurdles.
“We haven’t made any final decisions,” said Vince Gabbert, executive assistant to Keeneland President Nick Nicholson. “The Family Foundation has the right to appeal, so we’ll continue our evaluation process while the adjudication is going on.”
The Kentucky Horse Racing Commission already has approved regulations that would allow tracks to accept wagers on historical races. A subcommittee and committee of the Kentucky Legislature are considering those regulations, and tracks will be able to seek approval for Instant Racing machines once the legislation promulgates the regulation, which is included in the exotic wagering regulation of Kentucky’s racing statute.
“Once those regulations are made effective, the racetracks will be free to approach us and request permission to offer wagering on historical races,” said Lisa Underwood, executive director of the Kentucky Horse Racing Commission, who was hesitant to put a timeline on legislative action because of uncertainty regarding the Family Foundation and its right to appeal the judge’s ruling.
Representatives from Kentucky’s other Thoroughbred tracks were not immediately available for comment on this story, but Kentucky Downs President Corey Johnsen said during arguments before the court that the Franklin track wants to install the machines “as soon as possible.” End
John Asher, Churchill Downs spokesman agreed that there would likely be more activity in the courts on the issue before any games are installed at Kentucky tracks.
Kentucky’s race tracks have been wanting to conduct and benefit from expanded gambling for years. But Instant Racing is not nearly as lucrative as slot machines.
Asher said Churchill officials have reservations about the game, particularly when full casinos are available nearby.
And I agree. These tracks should be given slots. Not crumbs.
But who is this Family Foundation and why exactly are they sticking their noses into Horse Racing?
The Family Foundation of Kentucky is a non-profit organization based in Lexington. Headed by Kent Ostrander, the Foundation serves as a public policy watchdog on Kentucky issues affecting the family. Though often sympathetic to causes important to religious conservatives, the organization has no religious affiliation.
OH BROTHER GIVE ME A BREAK HERE.
Historically, the Foundation has stood in favor of:
- Abstinence education
- Judicial restraint
- Religious liberty in the public arena
- Adult stem cell research
The Foundation has historically opposed:
- Same-sex marriage and the gay rights movement
- Legalized or expanded gambling
- Pornography and sexually oriented businesses
- Sale of alcoholic beverages
- Embryonic stem cell research
Well let me break this gently to this group. LEGALIZED GAMBLING WAS HERE LONG BEFORE YOUR FOUNDATION.
Is this a joke or what? Has Historically??? opposed EXPANDED GAMBLING? What right does this group have to interfere with Horse Racing in the State of Kentucky? They are a right-wing group of LOONS.
You don’t like Race Tracks or Casino’s, DON’T GO TO THEM. Why is the Government allowing these people in a court the time of day? I don’t give a damn what they are opposed to. All I know is Kentucky has had Race Tracks since 1875.
Louisville, Kentucky, USA
Kent Historically began work on The Family Foundation in 1988, establishing a Board and incorporating the organization in 1989.
So Gambling was in KY 114 years before this foundation was formed. But they have something to say about what goes on at the Race Tracks? I mean Historically speaking?
I’d say the word Historically would apply to something that started in 1875, not 1989.
My conclusion is the Kentucky Courts need their heads examined.