Kentucky Lottery expects to offer keno in hundreds of locations later this year

bmusgrave@herald-leader.comJune 11, 2013 

STAFF FILE PHOTO 2003 — Lexington Herald-Leader

FRANKFORT — Kentuckians could be playing keno, a continuous bingo-style lottery game on an electronic terminal, in hundreds of restaurants, bars and bowling alleys as early as October.

The legislature's Government Contract Review Committee on Tuesday voted 4-3 along party lines to approve a $635,000 contract amendment for lottery vendor GTECH to provide keno in Kentucky by Oct. 19. Democrats voted for the contract and Republicans voted against the measure.

The Kentucky Lottery Corp. board voted in March to offer keno when the legislature was debating whether to use proceeds from new lottery games — including keno — to shore up the state's ailing pension system. The legislature ultimately approved changes to the tax code to help fund the pension system and did not rely on expanded lottery games.

Still, the Kentucky Lottery pushed ahead with plans to add keno.

Arch Gleason, chief executive officer of the Kentucky Lottery, said proceeds from keno — projected to be $8 million to $9 million in the first year — would help pay for merit-based college scholarships. Kentuckians could start playing keno in October or November, Gleason said.

In keno, players pick one to 10 numbers and try to match those numbers to 20 numbers drawn by the lottery from a field of 80. The numbers are refreshed every four to five minutes. Players can win from $1 to $100,000 on a $1 play. Thirteen states have keno games.

Kentucky Lottery officials said keno could be offered in as many as 450 hospitality venues. State revenue from keno could top more than $30 million in the next 10 years.

Republicans said Tuesday they didn't think the Kentucky Lottery has the authority to offer keno and similar games without new laws.

"I think it's really questionable whether the policy makers have made any real endorsement of making this change at this point," said Sen. Sara Beth Gregory, R-Monticello. "I view this as a pretty significant expansion from what our lottery offerings are at the present time."

At least one conservative group said Tuesday it was considering a lawsuit to block keno.

Democrats on the committee said additional money from keno "is needed for a variety of purposes."

Rep. Brent Yonts, D-Greenville, said many quasi-government agencies, such as regional mental health organizations, are stuck with ballooning pension costs they can't afford. The pension fix passed during the legislative session did not address the unfunded liabilities for those agencies.

Seven Counties Services Inc., a community mental health center in Jefferson and six other counties, filed bankruptcy earlier this year in part because it said its pension costs were too high.

Gleason said after Tuesday's meeting that he had not been approached by lawmakers about earmarking money from keno for purposes other than scholarships, which is where most lottery money goes.

Gleason said Kentucky Lottery officials would appear before the legislature's Licensing and Occupation Committee on Friday to talk about keno, and have been asked to testify before the Appropriations and Revenue Committee.

The Family Foundation, a Lexington-based conservative group, is weighing whether to file a lawsuit challenging the legality of keno, spokesman Martin Cothran said.

The Family Foundation filed a lawsuit when the Kentucky Horse Racing Commission approved instant racing — where people bet on previously run horse races using slots-style terminals — at horse racetracks. That case is before the Kentucky Supreme Court.

"The outcome of the instant racing case could potentially affect our decision," Cothran said.

When voters approved a constitutional amendment in 1989 that paved the way for lottery games, they did not envision keno, Cothran said.

"I think that what is going on now is that we are at least pushing the boundaries as to what people understand the lottery to be and possibly going beyond what was approved in 1989," he said.

Beth Musgrave: (502) 875-3793. Twitter: @BGPolitics. Blog: Bluegrasspolitics.bloginky.com.

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