SBD/Issue 182/Facilities & Venues

Kentucky Gov. Introduces Plan To Allow Video-Lottery Terminals

Churchill Downs Would Have To Pay $75M 
Fee For Video-Lottery Terminals Under Plan
Kentucky Gov. Steve Beshear yesterday introduced his plan to "allow video-lottery terminals at Kentucky's horse tracks, a move he says would direct roughly $627[M] in its first year to the state's ailing equine industry," according to Steitzer & Hall of the Louisville COURIER-JOURNAL. Beshear: "I believe my proposal will help level the playing field for Kentucky's horse industry and help retain the 100,000 jobs and $4[B] economic impact that Kentucky enjoys as a result of horse racing." State Senate President David Williams said that he "supports helping the horse industry but believes it should come in the form of increased purses and breeders' incentives and not direct assistance to the tracks." Under Beshear's proposal, Turfway Park would have to pay $100M for a license; Churchill Downs, $75M; the joint Lexington facility operated by Keeneland Race Course and The Red Mile, $75M; Kentucky Downs, $50M; and Ellis Park, Bluegrass Downs and Thunder Ridge, $20M each. The Kentucky Horse Racing Commission (KHRC), created by Beshear, "would get $4[M] a year under the bill." KHRC member John Ward said, "Without this, our Kentucky breeding industry is getting ready to be at the bottom of the list. It's got to be a good industry, because all the states want it." Ellis Park Owner Ron Geary, "whose summer meet will be about half its normal duration, reiterated yesterday that his track will close after this summer's meet if video terminals aren't approved." Steitzer & Hall note tracks "would keep 58.8[%] of video-lottery revenue the first year, to be spent on operating costs, debt service and capital improvements" (Louisville COURIER-JOURNAL, 6/10).

THE PROPOSAL: In Lexington, Jack Brammer notes under Beshear's proposal, Keeneland and The Red Mile "would share a gambling facility." Beshear "anticipates that his plan would generate about" $796.7M from wagering, and about $298M of that "would go to the state's General Fund, which pays for most state programs, in its first year of operation." For the first five years of the plan, following state taxes and payments to the horse industry, Kentucky tracks "would get to keep about 59[%] of earnings, compared to an industry average in other racino states of about 51[%]." After five years, when Kentucky's tax rate rose, tracks "would get to keep" about 49%. West Virginia and Pennsylvania both "let their tracks keep only 45[%] of earnings" (LEXINGTON HERALD-LEADER, 6/10).

ON THE RIGHT TRACK? A LEXINGTON HERALD-LEADER editorial stated Beshear's proposal is the "right idea, but expanded gambling will never be put to rest until the people have voted on it." The economic model's "hope of success rests on keeping slots only at tracks." If Beshear's plan "should become law and survive legal challenge, it seems inevitable that in future sessions locations other than the handful of racetracks will want a piece of the action." If they "successfully press their case, racetracks would face even more competition for gambling dollars" (LEXINGTON HERALD-LEADER, 6/8).

SLOT POSITION: In Baltimore, Laura Smitherman reports attorneys for Laurel Park racetrack have asked the Maryland Court of Appeals to “restore its disqualified proposal for a slots casino license, suggesting the state would be better off restarting a bidding process that has fallen short of expectations.” A slots license selection committee in February “tossed out a bid from Laurel Racing Association” because it didn’t submit a $28.5M licensing fee. Attorney Alan Rifkin: “They’ll raise more money, and they’ll protect the Preakness” (Baltimore SUN, 6/10).

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