Stumbo: Lawmakers need to approve tax on instant racing

jbrammer@herald-leader.comFebruary 21, 2014 


Kentucky House Speaker Greg Stumbo delivers a speech during a campaign rally for U.S. Candidate Alison Grimes Thursday January 16, 2014 in Prestonsburg, Ky. Photo by John Flavell


FRANKFORT — Kentucky lawmakers should approve a bill quickly to tax instant racing, House Speaker Greg Stumbo said Friday.

Stumbo's comments came a day after the Kentucky Supreme Court ruled that the Kentucky Horse Racing Commission has the legal authority to regulate instant racing, but that the pari-mutuel tax, which applies only to live racing, cannot be used to collect state revenues from the games.

With instant racing, bettors place wagers on previously run horse races that are presented on electronic gambling machines.

"The way I understand the opinion, those who operate the instant racing machines will take the profits and not pay any taxes on them," said Stumbo, D-Prestonsburg.

Stumbo said the legislature could tax instant racing as long as tracks are operating the games and despite some legal issues left to be resolved.

"The court didn't ban the operation of the machines," and the tax could generate several million dollars a year for the state, he said.

However, the legality of the wagers placed on instant racing machines has yet to be established.

The Supreme Court said the case must go back to Franklin Circuit Court, where it originated, to determine whether "the licensed operation of wagering on historical horse racing as contemplated by (the racetracks and the state) constitutes a pari-mutuel form of wagering."

The Family Foundation, a conservative advocacy group, had sued the state and the racetracks involved to block instant racing from taking effect after the racing commission approved the regulations in 2010. Franklin Circuit Court ruled that the games were legal, and wagering began in September 2011 at Kentucky Downs in Franklin.

The games later were added at Ellis Park in Henderson, but other racetracks have held off to see whether the Supreme Court would find them legal.

Through Jan. 31, more than $573 million has been wagered on instant racing machines, generating about $8.6 million in taxes. The tracks have received more than $36 million.

Finance Cabinet spokeswoman Pamela Trautner said Friday that the department was reviewing the opinion.

Stumbo said a vote to tax instant racing would not mean a lawmaker is condoning that form of gambling.

"Instant racing is going to occur," Stumbo said. "The court found that it was a proper regulatory function of the racing commission, so it is going to continue to occur.

"The question is, are you going to continue to tax that activity like horse racing or do you want them to be allowed to continue operating those machines and not pay taxes? It's as simple as that."

If the legislature does not tax instant racing, Stumbo said, more tracks are likely to implement the games.

Senate President Robert Stivers, R-Manchester, said he has done "only a cursory review" of the Supreme Court ruling.

"I don't want to say that he (Stumbo) is accurate until we have had a chance to fully review it," Stivers said.

He said more information is needed to determine if a tax could be passed without making instant racing legal.

He also said lawmakers may be reluctant to tackle the issue while the lawsuit is ongoing.

"We have tried to refrain from anything that still is in litigation," Stivers said.

Jack Brammer: (502) 227-1198. Twitter: @BGPolitics. Blog:

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