03/31/2014 2:00PM

Kentucky to tax account wagers, Instant Racing


The Kentucky legislature reached a deal on a budget Sunday that reinstates a 1.5 percent tax on Instant Racing machines and assesses for the first time a 0.5 percent tax on bets made through account-wagering companies.

The 1.5 percent Instant Racing tax was inserted into the budget to address a recent court ruling that said a regulation enforced by the Kentucky Horse Racing Commission to tax handle at the same rate on the slot-like machines was unlawful. The 1.5 percent tax will go toward the state’s general budget.

In the same ruling, the court said that a lower court needs to determine whether Instant Racing is legal in Kentucky. The case is expected to be heard later this year.

Kentucky Downs and Ellis Park operate the machines, which use the results of previously run races to generate payouts. Keeneland and the Red Mile, two Lexington tracks, have filed applications to operate the devices. The applications will be heard at the Kentucky Horse Racing Commission’s meeting Wednesday.

Legislators have considered the tax on account-wagering handle in the state for several years to make up for falling revenue going to the Kentucky Thoroughbred Development Fund because of the migration of handle from racetracks to account-wagering sites. While ontrack handle is taxed at a 1.5 percent to 3.5 percent rate, account-wagering handle in the state has never been taxed.

The tax will be applied to wagers made by Kentucky residents and will be paid by account-wagering companies.