Kentucky bill would create new structure for state's racing regulation

The Kentucky Senate on Tuesday passed a bill that would create a government corporation that would assume the functions and responsibilities of the Kentucky Horse Racing Commission.

The bill, which was headed to committee in the Kentucky House on Wednesday, would create the Kentucky Horse Racing and Gaming Corp., modeled after the Kentucky Lottery Corp., which was created by the legislature in 1989. It would have the responsibility of regulating all gambling in Kentucky other than the lottery, including pari-mutuel betting, sports betting, and so-called “historical horse racing,” which is conducted using devices similar to slot machines.

The bill grew out of discussions between Senate Majority Leader Damon Thayer – who has extensive experience with the racing industry and the commission – and House Speaker David Osborne, both Republicans. Thayer said on Wednesday morning that the growth of historical horse racing – which has generated hundreds of millions of dollars for racetrack owners over the past decade – and the recent legalization of sports betting had driven the talks to create a new framework for gambling regulation.

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“There’s a lot of money going through the racing commission now, and I think the appointees should go through the extra level of scrutiny that comes with Senate approval,” Thayer said.

Under the current structure, the KHRC is a cabinet agency, and commission members are appointed to their positions by the governor. Over the past three decades, it has been common for new governors to replace the commission wholesale at the starts of their terms.

Like the lottery corporation, the new gambling corporation would require the selection of a board of directors. Thayer said that the current members of the commission would likely comprise the first board if the bill passes.

The duties of the racing commission have expanded rapidly over the past decade as tracks have seized the opportunity to build casinos under laws that give tracks the exclusive rights to operate historical horse racing machines and the ability to control sports-betting licenses.

On the flip side, the role of the commission in regulating racing and enforcing racing rules has waned with the advent of the Horseracing Integrity and Safety Authority, a private company set up by a federal law that now has broad jurisdiction over many critical matters of racing regulation, such as drug-testing. HISA delegates some of its duties to racing commission personnel in many states, including Kentucky.

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