Kentucky crisis: Impact of losing HHR could go beyond the track

This is part two of a look at the effects the loss of historical horse racing (HHR) could have on Kentucky's racing industry. Read part one here.

No state wants to lose 80,000 jobs. However, if nothing is worked out in the Kentucky legislature to keep the state’s historical horse racing (HRR) machines operating, racing advocates say that is exactly what could happen.

Horse racing is big business in Kentucky. Huge business.

According to the Kentucky Equine Education Project, the annual impact of the equine industry on the state’s economy is around $3.2 billion and supports those 80,000 jobs. Much of that money has come from HHR machines, which were suddenly declared illegal in a September ruling by the Kentucky Supreme Court.

The jobs include the obvious public jobs like trainers, jockeys and gate crews. However, behind the scenes, more goes on than horsemen believe politicians can see.

“Senators and congressmen come to my barn, and I put them on my golf cart, and I drive them around,” trainer John Hancock said of his operation at Ellis Park. “Show where we have these facilities for these people to live in. We have this restaurant on the backside where people are fed. The jobs that are out here.”

Ellis Park, where Hancock has spent much of his life as a third-generation trainer, directly employs 300-400 people, according to general manager Jeff Inman. However, the number of people whose livelihood depends on the track numbers closer to 800-900, he said.

Henderson County judge executive Brad Schneider confirmed that the track is a massive part of the area’s economy.

“For tax revenue it’s important. For employment it’s important,” Schneider said. “Tourism, absolutely. It attracts horse fans from around the region.”

The track was planning a $65 million expansion with more HHR machines that would have created another 150 jobs Inman said. That expansion will not happen without the state resolving the HHR issue.

“What we were planning on was putting approximately $10 million into the grandstand and the tracks and then expanding the property, expanding the clubhouse,” Inman said. “That’s solely dependent on us continuing the revenue from the HHR.”

Ellis Park is not the only track to put expansion on hold due to the HHR shutdown. Churchill Downs Inc., which claimed its HHR machines are legal due to being a different system than the Exacta Systems machines used at Ellis Park and Kentucky Downs, has paused construction on a new grandstand at Turfway Park and a hotel project at Churchill Downs.

Kentucky Downs recently completed a new addition with more HHR machines. General manager Ted Nicholson said the track employs 275 people, making it one of the biggest employers in Franklin.

He also said the track attracts a “sizable amount” of the town’s tourism.

“When you have 2,000-2,500 people coming – especially across the border from Tennessee – a day, they’ve got to get gas somewhere,” Nicholson said. “If they’re not eating on property somewhere they might grab a bite to eat somewhere else or they might buy an antique. They make a day of it. They might make a weekend of it.”

Simpson County judge executive Mason Barnes said he felt the track was crucial to the area.

“Very important,” he said. “It’s one of if not the biggest tourist attraction in Simpson County.”

Statewide, the role of the equine industry is hugely important to the economy. More than 35,000 operations in Kentucky include at least one horse, and each horse requires care.

“You can’t automate giving a horse a bath,” said Jennie Rees, who covered racing in the state for the Louisville Courier-Journal before moving on to become a publicist for several tracks and the Kentucky Horsemen’s Benevolent and Protective Association.

Culture

Beyond their roles as job creators and revenue generators for towns across the state, Kentucky racetracks have also embedded themselves into communities in ways that make them important parts of local identity. Particularly at Ellis Park, which enters its 99th year in 2021, the town of Henderson has a deep attachment.

“It’s not just horsemen,” Hancock said. “I’d hate to see the community (lose Ellis Park). People don’t understand sometimes how much these racetracks contribute to these communities.”

Hancock said he was particularly sad to see the possibility of track closures at a time when he felt the sport was making positive gains in attracting new fans with ventures such as MyRacehorse, which sold microshares in Kentucky Derby winner Authentic.

“We’re trying to do things to generate, to bring the young people into the game, to energize the game,” Hancock said. “We need more energy brought back into it.”

Buff Bradley, a trainer who is another longtime fixture in the Kentucky racing scene, agreed with Hancock about the gains that were being made. He said that without the HHR, he was concerned the sport would become a game that only the rich could play, decreasing the amount of race days and the exposure that young people could have to it.

“It might get back to the sport of kings only,” Bradley said. “Where you are racing just a couple of days a year.”

Schneider, who covered racing as a newspaper reporter from the 1980s until 2008, said Henderson County has a deep attachment to the track.

“I’m biased of course, but to lose Ellis Park would be like, for a larger community, like Nashville losing the Ryman (Auditorium),” Schneider said. “It’d be tragic.”

Keeping the status quo

To rescue HHR and avoid problems say would go with their removal, Kentucky will have to clear the legal hurdles through a state legislature that has long had issues passing any expanded gambling in the state.

However, advocates say they expect the HHR to be easier to pass, as recently defeated measures were for expanding into sports gambling, while any new legislation would simply define pari-mutuel wagering to include the HHR machines, maintaining what has been happening for the past decade.

Republican state Sen. Damon Thayer, the majority leader, is one of the main proponents of continuing HHR operation.

“I know it’s going to be difficult,” Thayer said. “But it’s going to be an important vote, because literally, if it comes to that, legislators hold the future of Kentucky’s signature industry in their hands.”

The original lawsuit to halt the HHR was brought by the Family Foundation of Kentucky. The conservative organization, run by Kent Ostrander, opposes any expansion of gambling in the state, also listing drugs, pornography and gay marriage as things it opposes.

Thayer, also a conservative, blasted the Family Foundation in a December meeting of the Kentucky Interim Joint Committee on Licensing and Occupations.

“While it appears to me that the Family Foundation has been on a 10-year rant to help destroy Kentucky’s position as the horse capital of the world, I ask Mr. Ostrander, since you purport to represent families, what about the families of these workers? ” Thayer said at the meeting. “These 100,000 jobs supported by the equine industry.”

Thayer is joined in his support of a possible bill by Democrat Gov. Andy Beshear. He had campaigned to bring sports gambling to the state, a promise that fell by the wayside due to Republican opposition.

Beshear also has support in the Kentucky House of Representatives, including Republican Adam Koenig. The northern Kentucky representative said he was hopeful that something would be able to get through the legislature.

“Pari-mutuel wagering, even if it looks different than standard pari-mutuel wagering, is easier to stomach for some than a new method of gambling like sports gambling,” Koenig said.

Koenig also pointed out the loss in tax revenue, though not as severe as the job loss, could still hurt the state. Money from the machines goes into Kentucky’s general fund, more than 42 percent of which goes toward funding education.

“That will be the big effect, frankly,” Koenig said. “We have one of the worst-funded pension systems in America, and we can’t lose any revenue unnecessarily at this point.”

No bill has been pre-filed for the legislative session that kicked off Tuesday. Any such bill could still face opposition as several members of the Kentucky legislature have received donations from Joyce Ostrander, listed on the Family Foundation’s website as a policy analyst for the organization.

As for the horsemen who say their industry could be decimated by the loss of the HHR machines, they have remained optimistic that a fix will come through the legislature.

“I just have to think that something’s going to get worked out,” said former Kentucky Downs president and part-owner Corey Johnsen, who took a chance on installing the machines in 2011. “It hasn’t even entered my mind that, ultimately, something won’t get worked out.”