Racing advocates greet passage of Kentucky HHR bill

Kentucky’s racing industry breathed a sigh of relief after Senate Bill 120, which defined pari-mutuel wagering as including Historical Horse Racing (HHR), passed through the state legislature and headed to Gov. Andy Beshear’s desk, where he has indicated it will be signed into law.

The approved bill comes as a victory for industry advocates, who have said the loss of HHR revenue would cripple racing in Kentucky and force the closure of several tracks, including Ellis Park, Kentucky Downs and Turfway Park.

“I commend the House for their action today that keeps historical horse racing in Kentucky, preserves the strength of our state’s signature industry and protects thousands of jobs that are dependent upon it,” Churchill Downs Inc. CEO Bill Carstanjen said in a statement.

The law became necessary to the survival of HHR after a lawsuit from the Family Foundation, a conservative organization that opposes gambling, resulted in the HHR machines being ruled to not be pari-mutuel. Following the ruling, construction was halted on new facilities being built at Turfway and Churchill Downs, while gambling temporarily stopped at several HHR facilities, including Red Mile.

The Family Foundation has claimed that continuing HHR requires a constitutional amendment and expressed its willingness to sue again. The foundation released a statement after the bill was passed saying the continued operation of the machines will hurt the racing industry.

“Money and political power won the political fight in the General Assembly,” Family Foundation spokesman Martin Cothran said in the statement. “The horse industry won today, but will lose in the future as mechanized gambling eventually pushes it out, and the state loses because it gets a pittance from these machines and supporters of this bill refused to raise the tax rate.”

Both politicians and racing advocates acknowledged that the tax rate on HHR gambling will likely be taken up in the near future. That rate currently sits at 1.5 percent of gross handle.

A bill introduced into the legislature earlier in the session sought to add a 1.5 percent surtax to HHR handle, as well as a 2.5 percent surtax on Advance Deposit Wagering handle.

“I reiterate our commitment to working constructively to revise and raise the tax structure on historical racing machines, including consideration of a fair and equitable graduated tax structure,” Carstanjen said in his statement.

Beshear also released a statement reiterating his support for the bill after it passed, mentioning possible tax reforms in the process.

“The passage of SB 120 is crucial to ensuring that our signature Throroughbred industry remains strong,” Beshear said. “In working toward the passage of this bill, each of our major tracks committed to enacting a more fair and equitable tax structure.”

Leaders from the state’s tracks, including CDI, Keeneland, Ellis Park, Kentucky Downs and Red Mile affirmed they will “work constructively,” towards changing the tax structure.