12/13/2010 6:53PM

Kentucky puts new account-wagering rules on hold


LEXINGTON, Ky. - The Kentucky Horse Racing Commission on Monday tabled a set of new account-wagering regulations after an official of Churchill Downs Inc. raised concerns about the potential impact of the rules on simulcasting.

The commission voted to table the rules until its meeting in February, after members of the commission's staff and rule-making committee agreed to meet with the president of Churchill Downs, Kevin Flanery, over his concerns. The committee had been working on the rules for most of 2010 in an effort to require account-wagering companies that offer betting on Kentucky signals to apply to the state for licensing for the first time.

Flanery objected to a provision in the rules that would require account-wagering companies to pass the licensing requirements even if they do not take bets from state residents, a requirement that he said could lead some account-wagering providers to drop their Kentucky signals in order to avoid the licensing requirements and the costs associated with complying with the rules. Instead, Flanery said that the rules should require licensing from account-wagering providers that do business with Kentucky residents.

Supporters of the new rules said that they wanted to require licenses for any account-wagering company carrying a Kentucky signal in order to protect the pools of the Kentucky tracks, as well as the participants within the pools. By leaving out companies without Kentucky customers, those pools would still be exposed to potential problems because bets from Kentucky residents through other legal off-track outlets are commingled with them.

Tom Ludt, a commissioner and member of the rule-making committee, said that support for the broader rule was a "question of whether or not we want to be leaders" in regulating account-wagering.

Flanery also said that the commission already has the power to deny account-wagering providers and other betting outlets access to the pools of Kentucky racetracks through its ability to approve a track's simulcasting partners before a meet. He characterized the new rules pertaining to account-wagering providers as duplicative as said that they created "an additional burden of cost."

Churchill owns four racetracks and the largest account-wagering company in the United States.

The rule-making committee includes Mike Maloney, a Kentucky resident and professional horseplayer who has frequently criticized racetracks and bet-processing companies for failing to protect the integrity of the pools. Maloney spoke out forcefully for the new rules as a way to guard against potential weaknesses in the bet-processing system because of its requirement that offshore companies receive a Kentucky license regardless of where their small rosters of heavy betting customers reside.

"Kentucky is leading the way in looking at how the entire system is set up," Maloney said.