Kentucky House passes HHR bill, Gov. Beshear expected to sign

LEXINGTON, Ky. – The Kentucky House of Representatives on Thursday evening approved a bill that will give casinos at racetracks the green light to continue operating historical horse racing machines, following in the footsteps of the state’s Senate, which passed an identical bill earlier this week.

The bill, which modifies the statutory definition of pari-mutuel wagering to allow for the operation of historical horse racing devices, will now be sent to Gov. Andy Beshear, who has publicly indicated that he supports any effort by the legislature to clarify the legality of the machines. Historical horse racing devices were put in a state of legal limbo late last year when the State Supreme Court ruled that a certain type of machine in operation at some tracks did not fit the definition of pari-mutuel.

The House approved the bill by a vote of 55-38.

Like the state Senate, the Kentucky House is controlled by a supermajority of Republicans, and there was some uncertainty going into the vote on Thursday as to whether the party could muster enough votes among its members to get the bill to pass. Lobbyists for the racing and breeding industries in the state have been stressing the economic impact of the devices to make the case that the bill deserved support.

House floor debate included impassioned pleas from many Republican legislators citing moral, religious, or economic objections to gambling, but arguments by supporters about the impact of the devices on the state’s “signature” equine industry appeared to have won the day. Some directly cited the jobs provided by the casinos and the subsidies from the devices that flow to purses and breeder awards.

“If we don’t vote for this bill, you’re going to take jobs out of my district,” said Rep. Kevin Bratcher, R-Louisville, where Churchill Downs is located. “I don’t remember ever taking a vote up here that would kill jobs. That would be a first for my 20 years here.”

The passage of the bill was the No. 1 legislative priority of the state’s racing and breeding industry, and it comes as an enormous source of relief for Kentucky racetracks, which have poured hundreds of millions of dollars into casino investments over the past eight years. The investments have proved lucrative: In the last fiscal year, racetracks generated $156 million in revenue from the devices.

Of all the tracks in the state, Churchill Downs had the most at stake, as the company has built a new harness track in southwestern Kentucky from the ground up in order to obtain a casino license there; bought Turfway Park for $46 million and approved a $100 million renovation of the track and the building of a casino; and announced plans to build a new casino at its flagship Louisville track. Other tracks have also announced expensive renovation plans, projects that were put on hold due to the Supreme Court ruling.

During the debate on the House floor, legislators vowed to pass legislation later this session creating a task force that would examine the tax rates on the devices, bowing to demands by many in the chamber’s Democratic caucus who said they supported the bill but wanted the tax rates raised. The creation of the task force apparently emerged during a recess in the house’s business in the afternoon as supporters attempted to gain enough votes to ensure the bill’s passage.

Rep. Mary Lou Marzian, a Democrat from Louisville, read a letter from Kentucky’s tracks on the floor of the House during the debate that said the tracks promised to work with legislative leaders and Gov. Beshear “to revise and raise the tax structure” on the devices. A higher tax rate was being demanded by a group of Democratic lawmakers who mostly ended voting for the bill

“I think it’s important, Mr. Speaker, to get this on the record,” said Marzian, who eventually voted in support of the bill. “Each and every one of us need to hold their feet to the fire, and hold our feet to the fire. … I’m going to hold these CEOs of these tracks to what they wrote.”

Just prior to the legislation passing, the House passed a bill dealing with charitable gaming that included an amendment raising the tax rate on all advanced-deposit wagers made by Kentucky residents from 0.5 percent to 0.75 percent. The bill has not yet been taken up by the Senate.