01/10/2012 2:56PM

Account-wager tax proposal introduced in Kentucky legislature

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The Kentucky House Speaker introduced a bill on Monday that would impose a 0.5-percent tax on bets made by Kentucky residents through account-wagering companies.

The tax would be levied against the companies, and not the companies’ customers, according to Larry Clark, the chief sponsor of the bill and the Speaker Pro Tempore of the House, which is controlled by Democrats. Under the bill, 85 percent of the money raised by the tax would be directed to the state’s tracks and horsemen, while the remaining 15 percent would be directed to the state’s general fund. Sponsors of the legislation estimate that the tax would generate approximately $400,000 a year.

Similar bills have failed to pass during the last two legislative sessions, in part because of opposition by account-wagering companies, including the Churchill Downs-owned Twinspires.com. Several other major account-wagering companies accept bets from Kentucky residents, including national leaders TVG and XpressBet.

Legislators and regulators have increasingly sought ways to target handle through account-wagering companies for additional revenue because existing statutes do not subject the bets to other statutorily mandated distributions, such as payments to the Kentucky Thoroughbred Development Fund. Account wagering has been the only steady source of handle growth in the U.S. racing industry for a decade, typically at the expense of other sources of handle.