10/22/2014 1:08PM

Keeneland scraps plans for Instant Racing parlor


LEXINGTON, Ky. – Keeneland Racecourse has abandoned its plans for an Instant Racing parlor on its Lexington property, even before the track turned a shovel of dirt on the project.

Instead of its own Instant Racing operation, Keeneland will jointly operate a facility housing 1,000 of the slot-machine-like devices with the Red Mile, a downtown Lexington harness track that has already started construction on its own project, the two tracks announced Wednesday. Keeneland and the Red Mile have an agreement to share the revenue raised from the machines, but the tracks did not disclose the split in the joint release, and officials did not respond to requests for comment.

Keeneland announced in March that it intended to build a 40,000-square-foot building near the Keene barn that would house 600 of the machines and operate as a year-round simulcasting center, with a targeted opening date of the summer of 2015. But in July, the track announced that it had temporarily shelved the project to focus on its planning for the 2015 Breeders’ Cup, scheduled for Oct. 30-31.

Keeneland had earlier estimated that the devices would generate $30 million in commissions per year, with the association retaining the majority of that amount. Horsemen were expected to receive anywhere from 10 percent to 20 percent of the revenue.

Over the previous several years, Keeneland had been negotiating with the Red Mile on a joint project. The news that Keeneland intended to build its own facility, which was announced as the Kentucky legislature was winding down its 2014 session without addressing the legalization of slot machines at state racetracks, came as a surprise to many in the racing industry.

Vince Gabbert, Keeneland’s chief operating officer, said in the joint statement that Keeneland had come to prefer “a more centrally located and fully dedicated facility” in deciding to scrap the company’s plan for its own operation.

Instant Racing machines – which use the results of previously run races to generate random numbers determining payouts to bettors – were authorized by the Kentucky Horse Racing Commission in 2010.  The devices are being operated by two tracks, Kentucky Downs and Ellis Park, which use revenue from the machines to subsidize purses. Handle at the two locations is averaging approximately $1 million per day, according to the Kentucky Horse Racing Commission.

The legality of the machines has been challenged by an anti-gambling group that has contended that the devices are so nearly indistinguishable from slot machines that they should be considered illegal under the state constitution. The lawsuit remains unresolved. The suit has been cited by Churchill Downs and Turfway Park as the reason they have not pursued their own Instant Racing operations.