Study projects Kentucky casinos would generate $1.1 billion per year

LEXINGTON, Ky. – A study paid for by the Kentucky racing industry has estimated that casinos at the state’s eight racetracks would produce $1.1 billion a year for casino operators, the state, and racing interests, such as breeders and owners.

The study is an opening salvo in the racing industry’s 2012 campaign to convince legislators and the public to allow casinos at the state’s racetracks. The racing industry has been lobbying aggressively for the right to operate casinos for the past four years without success, but the re-election of Gov. Steve Beshear, who campaigned for expanded gambling, has re-invigorated the industry’s hope that the effort will pass in some form this year.

The study, which was produced by Spectrum Gaming Group, based its conclusion on the legalization of casinos at all seven existing Kentucky racetracks, along with an eighth casino in southeastern Kentucky, near the border with Virginia and Tennessee, two states that prohibit casino gambling. The study estimated that the state would collect $464 million in taxes from the casinos in the first full year of operation, a figure that includes an estimated $164.6 million in subsidies to horse owners and breeders. The remaining $550 million in estimated revenue would be shared by the casino operators.

Michael Pollock, a managing director of Spectrum, acknowledged in an interview Tuesday that the study did not account for the financial impact of the legalization of casinos on the state’s existing businesses, in part because the study’s authors believed approximately half of the revenue at Kentucky casinos would be provided by Kentuckians who currently travel to neighboring states to gamble. Still, without an analysis of the migration of discretionary spending from existing businesses to casinos, the study presents an overly positive portrait of the casinos’ economic impact.

The study’s conclusions are sure to be trumpeted as casino supporters lobby for action this year during Kentucky’s three-month legislative session. In a statement issued Monday night in response to the release of the study, Beshear cited the study’s estimate of a $1.7 billion total economic impact in the first full year of operation for demonstrating “just how much we are losing.”

The $1.7 billion estimate includes direct and indirect economic impacts, such as spending by employees of casinos.

Beshear has said that he will support the passage of legislation this year that will ask voters to approve a constitutional amendment allowing casinos. The racing industry supports that plan as long as the amendment asks voters to approve casinos at racetracks, instead of at free-standing locations that could cut the racetrack operators out of a direct share of the revenues.

Efforts to legalize casinos have failed in past years because of opposition from the Senate, where Republicans are in control. Opponents of the effort have indicated that they would be more likely to support a referendum than direct legislative action.

Julie Koenig-Loignon, a spokeswoman for Churchill Downs Inc., said Tuesday that the company would back Beshear’s effort for a constitutional amendment.

“We’re very supportive of whatever approach he wants to take,” Koenig-Loignon said. “At this point, we support anything that would get it done.”