Kentucky casino legislation could get tied to state's pension shortfall

An effort to approve casinos in Kentucky may get tied to the state’s pension woes after all, according to state officials who spoke Wednesday.

A bill providing for a referendum asking voters to approve casinos in the state was not expected to be brought up during an abbreviated, 30-day session of the Kentucky legislature this year due to pressing shortfalls in the state’s pension fund. However, on Tuesday, Gov. Steve Beshear resurrected discussion of the possibility of a bill being introduced this session when he told the Louisville Courier-Journal and Lexington Herald-Leader that opposition from some tracks to a bill was holding the effort back.

The comments indicated that negotiations over a casino bill have been ongoing, despite public proclamations from legislative leaders that the issue would be best addressed during the full 2014 legislative session. In fact, that is the case, said one lobbying official who wished to remain anonymous.

“There’s only two ways to close that [pension] shortfall,” the official said. “One is with tax reform, but no one wants to raise taxes. So we knew they were going to end up coming back to expanded gambling at some point.”

According to officials, the bill being discussed would provide for open bidding for casinos in the state’s major metropolitan areas and border cities. However, small tracks such as Ellis Park, the Red Mile, and Kentucky Downs have opposed open bidding under the concern that they would not be able to compete with bids from large casino companies. In addition, Keeneland, which does not want to open a casino on its track grounds, also has indicated that it opposes the bill. The track is seeking to partner with the Red Mile on one casino in the Lexington area.

The bill would divert a set percentage of all casino revenues to the racing industry, with guarantees that the money be used to fund racing operations, purses, and breeders’ awards. The percentage that would be guaranteed to the racing industry would be set in the constitutional referendum, protecting the racing industry from any changes to the percentage by the legislature, officials said.