11/08/2007 12:00AM

Kentucky bill raises casino issue again

EmailLEXINGTON, Ky., - A state senator in Kentucky pre-filed a bill on Wednesday that would put a referendum on next year's ballot to allow casinos at 12 sites in the state, including all eight of its racetracks.

The submission by Sen. David Boswell, a Democrat, is largely symbolic, as the legislature is not in session and any legislation to implement the referendum would have to originate in the state House of Representatives. But the bill does set the stage for what will likely be a significant - and expensive - topic of debate in Kentucky over the next year: the legalization of casino gambling.

The bill was filed one day after Kentucky voters overwhelmingly elected a new governor, Steve Beshear, a Democrat who made a campaign issue out of his support for a referendum on casino gambling. The election loser, incumbent Ernie Fletcher, a Republican, campaigned against it.

Beshear has contended that a dozen casinos would provide $500 million in revenue to the state, but the details about how the revenue would be carved up remain unclear. Boswell's bill would simply ask voters to legalize casinos at the eight racetracks and four undesignated sites along Kentucky's borders.

All of Kentucky's racetracks have said that they support the legalization of casino gambling. Slot machines at racetracks in many other states have provided hundreds of millions of dollars annually in revenue to the track owners, and have also typically provided for millions of dollars in subsidies to horse owners and trainers.

Many of those tracks succeeded in getting local monopolies and rich cuts of the slot-machine revenue under the argument that the horse racing industry was dying and needed subsidies to keep it afloat. That argument may not take hold as firmly in Kentucky, where racetracks such as Churchill Downs and Keeneland generate solid numbers, and yearlings, 2-year-olds, and mares routinely bring multimillion-dollar prices at public auction.

The horse lobby, however, is extremely strong in Kentucky, and it has been able to get breaks from the legislature in the past. Most recently, the horse lobby succeeded in getting legislation passed that diverted all sales taxes on stud fees to a program providing subsidies to the owners of Kentucky-bred horses.

Boswell's filing of the bill also establishes the starting point for the vast number of interests that will likely spend millions over the next year in contributions to state legislators and for public-advocacy campaigns. In addition to supporters and opponents of expanded gambling, that list also includes the interests who will line up to get a share of the gambling proceeds.

One of the principal players in horse-industry lobbying is the Kentucky Equine Education Project, which was formed in 2004 and two years later presented a bill to the legislature that would give the racing industry 64 percent of an estimated $1.2 billion in casino proceeds. The chairman of the organization, Brereton Jones, is a horse breeder and former Kentucky governor. During 2006, when the legislature last considered expanded gambling, the group spent millions of dollars on advertising that supported casinos at racetracks.

On Thursday, the chief executive of Churchill Downs Inc., Bob Evans, congratulated Beshear during a conference call with analysts to discuss the company's third-quarter results. Evans said that Churchill expects to spend $3 million next year to lobby legislatures in Kentucky, Florida, and Illinois to get slot machines at the company's tracks.

Kentucky also has a strong conservative population that generally opposes expanded gambling. A poll conducted by the Lexington Herald-Leader before the gubernatorial election showed that although 82 percent of the respondents supported a referendum, 48 percent said they would vote against passage and 42 percent would vote for it. The remaining 10 percent were undecided.

Similar poll numbers existed in Ohio before an expanded-gambling referendum was placed on the ballot there in November of last year. Voters rejected the referendum by a vote of 57 percent against, the third time the state's voters had shot down an expanded-gambling referendum since 1990.

The earliest a referendum in Kentucky could be placed on the ballot is November 2008. Beyond the public opposition to casinos, Kentucky requires the legislature to approve any bill that places a referendum on the ballot by a three-fifths majority. Republicans have generally opposed expanded gambling, and because the Senate is controlled by Republicans by a 21-16 margin (one other member, an independent, participates in the Republican caucus), at least seven Republicans would have to cross the party line to enable passage.