Kentucky Downs suing over license for Churchill/Keeneland partnership

Kentucky Downs has filed a lawsuit contesting the decision by the Kentucky Horse Racing Commission to award a license to a partnership between Churchill Downs and Keeneland for a harness track and casino in Oak Grove, Ky., near the Tennessee border.

The lawsuit, filed in the Franklin County Circuit Court of Appeals, alleges that the commission acted “arbitrarily” in awarding the license to the partnership, and it asks the court to void the decision. The commission awarded the license at a meeting on Nov. 16, favoring that bid over competing ones submitted by Kentucky Downs and Caesars Entertainment.

The license for the Oak Grove facility was eagerly sought by the three groups because of the potential for tens of millions of dollars in annual revenue for the winning bidder from devices at the facility that closely resemble slot machines. Kentucky Downs was particularly interested in either obtaining the license or blocking the approval of a license to other groups, considering that its own casino is only 50 miles from the Oak Grove location.

Susan West, a spokeswoman for the state’s Public Protection Cabinet, which oversees the KHRC, said on Wednesday that the cabinet would not comment on the suit because of rules prohibiting comment on matters under litigation.

Among a litany of complaints, the suit by Kentucky Downs relies heavily on its contention that the racing commission did not establish any procedures or criteria for awarding a license. The suit contends that the commission’s evaluation of the three bids was rushed and did not rely on any assessments by independent groups that could be used to determine whether projections by the bidders were based on reasonable calculations.

“The commission cannot make decisions or take action without stated grounds or bases, as such action would deny applicants such as Kentucky Downs any meaningful right of review or appeal,” the suit states.

The suit also takes issue with the Churchill partnership’s plan to use machines that at the time of the approval had been deemed to be noncompliant with Kentucky’s regulations. In addition, the suit states that the commission violated its own rules by approving the license despite the fact that the Churchill partnership did not have an agreement with the state’s harness horsemen’s association at the time of the approval.

The Churchill-Keeneland partnership was awarded the license after submitting a bid that included an estimated $150 million investment in the casino, track, and adjoining facilities. The Caesars bid envisioned a similar investment. Kentucky Downs ultimately submitted a bid promising to spend $100 million for the new facility and upgrades to its existing property.

The bidding process was complicated by the announcement just three days prior to the decision to award the license that Kentucky Downs had been sold to a partnership of Ron Winchell, the Thoroughbred owner and breeder, and Marc Falcone, a former casino executive. Winchell had urged the commission to delay a vote to provide the new owners with time to study the bid.

Churchill officials said after the Nov. 16 meeting that construction on the Oak Grove facility was ready to begin, with the goal of opening for live racing in the fall of this year.

A joint statement released on Wednesday night by Churchill and Keeneland defended the commission’s approval, calling the partnership “the very best option” among the three bidders. The statement said work on the site would proceed as planned.

“It is unfortunate that some, in a fit of sour grapes, are asserting baseless allegations to delay this exciting project, along with all of its accompanying economic benefits and job creation for the local community, the Commonwealth and the horseracing industry as a whole,” the statement said.