Oh, So Close…

by Ed Meyer

posted on February 15, 2009 in General Discussion, News | No Comments >>

In the world of racing, there has to be a stimulus plan as well to ensure survival. The game finds itself floundering, and in the heart of horse country, there is no exception.

A revised version of House Speaker Greg Stumbo’s bill, to allow video lottery terminals at racetracks, passed the House Licensing and Occupations Committee yesterday without opposition.

Despite committee support, the bill faces an uncertain future. House Bill 158 will be sent to the Appropriations and Revenue Committee, but Stumbo, D-Prestonsburg, repeated that it may not advance any further this year and currently doesn’t have the 60 votes he wants for it to pass the House.

House Speaker Larry Clark, D-Louisville, said he supports Stumbo but does not believe the bill is dead and that it could be helpful in addressing a budget shortfall for the 2009-10 fiscal year. Next year’s shortfall is expected to be larger than the $456 million this fiscal year.

“I don’t think it’s dead, but it’s the speaker’s bill and it’s his call,” Clark said.

The substitute approved by the committee significantly increases the $25,000 licensing fees that tracks would have had to pay in the original bill drafted by Stumbo, although the revision gives the tracks five years to pay the higher fees.

Churchill Downs would have to pay $100 million to operate a parlor with the slot-machine-like terminals, as would the two Lexington tracks for the parlor they could operate jointly. The highest fee would be $125 million for Florence’s Turfway Park, which would have a monopoly in Northern Kentucky, where casino proponents argued last year that two full-fledged casinos could operate successfully.

The other fees would range from $75 million for Kentucky Downs in Franklin to as low as $25 million for Thunder Ridge in Prestonsburg.

If the final ninth racetrack license is approved by the Kentucky Horse Racing Commission, a licensing fee for that track would not exceed $100 million.

Tracks also would have to pay a $25,000 application fee.

The fees were based on estimates of which tracks would take in the most money and how much the tracks were willing to pay last year.

Gov. Steve Beshear pushed casinos at tracks and other locations, including two in Northern Kentucky, last year.

Clark acknowledged tracks would complain that those fees were for full-service casinos — not just slots — and that those fees were discussed before the recession became apparent.

But Clark said Beshear’s plan also allowed more competition.

The new bill sets a tax rate of 28 percent for the first five years. Clark gave estimates that showed $1.178 billion in total revenue for the fifth year.

The bill also alters how the state’s share of the revenues would be spent — with additional tax breaks that weren’t in Stumbo’s original proposal.

The revised bill adds a sales tax exemption for horse farming supplies. It also creates a pool of up to $15 million for tourism, public protection and infrastructure projects within 30 miles of tracks in larger counties.

The new version caps the money for drug and alcohol addiction rehabilitation and county jails at $15 million each per year from the original $20 million.

The bill passed the committee with Rep. Adam Koenig, R-Erlanger, passing the equivalent of an abstention. Koenig said he supports the concept but promised his voters that he would give them the ability to vote on the issue with a constitutional amendment.

Louisville Republican Ron Crimm said it was his first vote in favor of expanded gambling after years of voting against it. He cited his constituents’ support for slots.

Stumbo said it’s most likely the slots debate will extend past this year’s session.

Keeneland Race Course President Nick Nicholson, a spokesman for the tracks, said if the issue isn’t addressed until the 2010 regular session, it would mean Ellis Park could close and Turfway, which Keeneland co-owns, would be in jeopardy.

“That’s not meant to be a threat,” he said, “… but it’s also meant to be a reality.”

David Edmunds, a policy analyst for the conservative Family Foundation of Kentucky, said slots cannot be approved under the state constitution without an amendment. He said an opinion issued by Stumbo as attorney general goes against other attorney general opinions that say an amendment is required.