12/15/2008 12:00AM

Ky. task force calls for purse hikes

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FRANKFORT, Ky. - A task force set up by Kentucky Gov. Steve Beshear to examine the racing industry stopped short of explicitly recommending the legalization of slot machines at racetracks while calling for "increased purses" at tracks.

The task force's recommendations, contained in a report issued Monday, do not provide a mechanism to increase purses at Kentucky tracks. However, the report points to states that have already authorized slot machines at racetracks as an example of how to increase purses through subsidies. The report does not provide any other examples.

Kentucky's racetracks have lobbied aggressively for slot machines over the past four years, but an effort to pass a bill earlier in 2008 fell short because of concerns by legislators. Because the Kentucky Constitution can only be amended in even-numbered years, another bill authorizing slot machines is not expected to be introduced until 2010, unless lawmakers and lobbyists devise a strategy that would not require a constitutional amendment.

The task force, which was chaired by Tracy Farmer, a Kentucky businessman and horse owner and breeder, was created six months ago by Beshear, shortly after the legislative effort to authorize slot machines failed.

The report also calls for the state to implement a funding mechanism that would provide additional revenue to the Kentucky Horse Racing Commission. State auditors have said that the commission, which was revamped under Beshear, lacks the funding to perform its job.

The report provides several recommendations to increase the commission's funding, including an increase in the share of the parimutuel tax retained by the commission, an increase in takeout on Kentucky races, increasing the amount of money that owners must pay to the state as part of the purse in races worth $10,000 or more, requiring racetracks to pay for drug testing, increasing the parimutuel tax on certain racetracks, and licensing bet-processing and account-wagering companies.

Nearly all of those recommendations are expected to be unpopular. The racing industry is operating on thin margins, and Kentucky's budget is under strain because of widespread problems in the U.S. economy. Racing officials have so far resisted an increase in the takeout, but that resistance could erode in the face of less politically palatable solutions.

The report also contemplates the possibility of creating a drug-testing laboratory in Kentucky. However, the report says that the creation of the lab would require raising a $10omillion endowment to partially offset what is expected to be a $5 million start-up cost and $3.5 million in annual expenses.

The task force released its report shortly before a meeting of the racing commission Monday afternoon.

At the meeting, the commission approved a new set of regulations governing the physical characteristics of racing whips, along with rules about the use of the whip. The rules are nearly identical to a model rule developed by the Association of Racing Commissioners International to address public concerns about the use of the whip in racing.