01/18/2006 12:00AM

Slots not in budget plans for Kentucky, Maryland


LEXINGTON, Ky. - Budget proposals released by the governors of Kentucky and Maryland on Tuesday indicate that it is unlikely legislation establishing slot machines or other forms of casino gaming at racetracks in those states will make much progress this year. A New York budget proposal, meanwhile, calls for increased competition for existing racetrack casinos through the legalization of three additional slot-machine facilities.

The budget proposals in Kentucky and Maryland reflect the current strength of their state economies and the reluctance of some state officials to use gambling revenues to plug budget gaps.

The racing industry is increasingly relying on slot machines to boost purses and provide revenue to struggling operations. Racetracks in almost every racing state are lobbying for the machines in some form, with the most prominent battles taking place in Kentucky and Maryland.

The budgets released in those states Tuesday night made no mention of slot machines or expanded gambling, despite ongoing lobbying efforts by tracks.

In Kentucky, Gov. Ernie Fletcher's proposed budget for 2006 and 2007 did not include any revenue from expanded gambling. In fact, the budget relies on cost-cutting and other measures to avoid projected shortfalls in several state programs that supporters of casino gambling have targeted for revenue outlays from expanded gambling.

Jim Navolio, the executive director of the horse industry lobbying group Kentucky Equine Education Project, said Wednesday that he did not expect Fletcher to include any revenue from expanded gambling in the budget, considering Fletcher's public opposition to earlier proposals. The lobbying group is hoping to get legislation passed this year that would put a constitutional referendum on the ballot in November calling for casino gambling at tracks.

"The governor hasn't changed the position he's had all along," Navolio said. "So this wasn't unexpected. Our efforts are going to continue. We expect to get a hearing on it in the legislature, and we expect it to pass."

In Maryland, Gov. Robert Ehrlich, a supporter of slot machines at racetracks, released a $26.9 billion budget for 2006 with an estimated $1 billion surplus. In comments accompanying the release of the budget, Ehrlich said that the surplus would make it difficult for tracks to push a slots bill this year.

Opponents of slots in the state also said that reelection concerns, coupled with a strong state economy, would jeopardize any push for the legalization of slots this year.

"Not only is this an election year, but the fact that you have the unemployment rate that you have and the surplus you have, I don't know how you make a case for slots," said Michael E. Busch, the speaker of the Maryland House, quoted in the Baltimore Sun. Busch has helped scuttle slots bills three years in a row.

In New York, Gov. George Pataki released a budget that called for the approval of three new slot machine facilities in the state, with bidding open to any company. New York's existing law limits slot machines to Native American tribes and eight racetracks.

Pataki's proposal prohibits any casino from opening within a 15-mile radius of an existing casino, but that restriction would be lifted for New York City, where the New York Racing Association expects to open a slot-machine facility at its Aqueduct racetrack late this year.

Tim Smith, the president of Friends of New York Racing, a racing industry lobbying group that is seeking an overhaul of the state's racing laws, said that racing lobbyists will likely ask legislators during the budget negotiation process to consider Belmont Park as one of the additional sites. Current racing law prohibits Belmont Park as a site for slot machines.

"We're not against additional [slot-machine] facilities, but when you have an industry in need of revenue, and you have facilities that already exist with the infrastructure to handle it, we'll ask them to look there first," Smith said.

NYRA officials said late last year that they were close to filing bankruptcy, just before reaching agreement with state officials on a $30 million loan package from the state. NYRA has already received approximately $6 million of the package. A $20 million loan to NYRA from the state's Division of the Lottery was included in Pataki's budget.

The legislatures in all three states must approve the budgets, a process expected to take at least three months in each state.