04/07/2010 12:00AM

Kentucky ties tax break to Cup location

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LEXINGTON, Ky. - Kentucky Gov. Steve Beshear has signed legislation that would rescind a tax break this year for Churchill Downs and the Breeders' Cup if Churchill is not designated as a host site for the 2011 or 2012 Breeders' Cup.

The legislation suspends a state tax on all parimutuel wagers for the two-day event scheduled for Nov. 5 and Nov. 6. It would require, however, the tax to be paid if Breeders' Cup has not selected Churchill Downs as a host site in the next two years by Nov. 4.

The legislation increases the stakes for the Breeders' Cup as the organization considers host sites for the next several years. Kentucky's parimutuel tax has two tiers, at 1.5 percent and 3.5 percent, based on average ontrack handle, and if Churchill's ontrack handle this year is sufficient to trigger the 3.5 percent tax rate, the loss in revenue would likely amount to approximately $5 million. The 1.5 percent rate would cost the event approximately $2 million in revenue.

Breeders' Cup plans to designate a semi-permanent host site or a semi-permanent rotation of sites. The board is scheduled to conduct a "host-site discussion" during its April 22 board meeting, according to a spokesperson for the organization, Jim Gluckson.

Although Breeders' Cup officials have said that the organization has considered designating Santa Anita Park as a semi-permanent host site for the next five years beginning in 2011, the organization is also considering a three-track rotation that includes Santa Anita, Churchill, and Belmont Park in New York. Santa Anita has been the host of the last two Breeders' Cup events.

State legislatures typically forgive parimutuel taxes for the Breeders' Cup event. The Kentucky legislation is the first that would make the tax contingent on another development.