02/15/2013 1:52PM

Keeneland agrees to buy harness track for Instant Racing license

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LEXINGTON – Keeneland Race Course is seeking to buy a troubled harness track in eastern Kentucky in order to raze the facility and relocate the license to Corbin, Ky., where it will open a casino with hundreds of Instant Racing machines, officials said on Friday.

In papers filed with the Kentucky Horse Racing Commission, Keeneland said it has reached an agreement to buy the track, Thunder Ridge in Prestonburg, in partnership with Full House Resorts, a casino company with properties in four states, including Indiana. The purchase is contingent on either the passage of legislation that would formalize the legality of Instant Racing or the resolution of a court challenge pushed by an anti-gambling group, Keeneland officials said. If the situation is resolved, Keeneland would seek to partner with the Red Mile, a harness track in downtown Lexington, on an Instant Racing parlor at that track as well, Keeneland chief executive Bill Thomason said on Friday.

The plans would allow Keeneland to collect revenues from Instant Racing machines without locating a casino on the grounds of its Lexington racetrack and auction facility. The racing commission passed rules allowing for the operation of the devices – which resemble slot machines – in 2010, and since then, two tracks, Ellis Park in Henderson and Kentucky Downs in Franklin, have opened Instant Racing parlors.

Under the plan, Keeneland would bulldoze Thunder Ridge and build a new track nearly 100 miles away in Corbin, near the Tennessee border. The track would conduct approximately “12 to 14” race dates for Quarter Horses during the summer, Thomason said, while the Instant Racing parlor would operate perhaps 300 machines.

Thomason said that plans for the facility have yet to be formally adopted, and he said that Keeneland did not know how much it would spend on the facility. Thomason also declined to discuss the structure of the partnership with Full House Resorts, which operates a casino in Rising Sun, Ind., near the Cincinnati metropolitan area.

Instant Racing machines use the results of previously run horse races to generate random numbers determining payouts to players. The machines at Kentucky Downs and Ellis Park have been averaging approximately $15 million in bets each month, according to figures from the Kentucky Horse Racing Commission.

Tracks receive approximately 6.5 percent of the handle through the machines, with additional disbursements for purses and the state. Through January, with 17 months of results for the machines at Kentucky Downs and five months of results at Ellis Park, the two tracks have earned $16.5 million from the machines and distributed $2.5 million in purses and breeders awards, according to racing commission figures.

The purchase of Thunder Ridge would also give Keeneland an additional racing license at a time when the state legislature is weighing several proposals to authorize casinos in the state. If a bill passes, racetrack license holders are expected to have the inside track in the competition to award casino licenses, though a proposal recently offered by Gov. Steve Beshear did not grant the racing industry any casino-license guarantees.

On Friday, a legislator introduced a bill that would legalize Instant Racing machines, but it was questionable whether the bill would be passed during the abbreviated 2013 sessions. Senate Majority Leader Damon Thayer, who called himself a supporter of the machines, said that the bill will “face an uphill battle” during the session, in part because of the ongoing court challenge.

“Our policy in the Senate is to stay away from issues that are actively being pursued in the court system,” Thayer said on Friday.

The court challenge was launched by the Family Foundation of Kentucky. The group contends that the machines violate a state constitutional prohibition on casino gambling. In 2010, a court ruled that the racing commission was within its power to authorize and regulate the machines, but that ruling was dismissed by a higher court on the grounds that the Family Foundation was unable to collect evidence to support its case prior to the lower court ruling on the matter. Earlier this year, the Kentucky Supreme Court agreed to review the lower-court ruling, at the request of Kentucky racetracks and Gov. Beshear.