Red Mile racetrack plans $25 million, 500-terminal instant racing venue

jpatton1@herald-leader.comApril 1, 2014 

A driver walked his horse across the infield at The Red Mile on October, 4, 2011.

CHARLES BERTRAM | STAFF

The Red Mile, a historic harness racetrack near downtown Lexington, plans to invest $25 million in a potential new gambling parlor that could employ as many as 150 people, according to documents filed with the Kentucky Horse Racing Commission.

The track plans to renovate at least part of its grandstand, build a 50,000-square-foot facility, put in 500 so-called "instant racing" terminals, and open to the public by July 2015. The facility also would offer simulcasting.

Joe Costa, president and CEO of The Red Mile, did not return calls for comment.

The scale of The Red Mile's project is similar to the scope of an instant racing venue proposed by Keeneland Race Course; the Thoroughbred track also plans to build a 40,000-square-foot building to house instant racing as well as simulcasting, put in 600 game terminals, and open by July 2015. No dollar figure was provided for Keeneland's proposal.

Both proposals will be before the racing commission when it meets Wednesday afternoon at the Kentucky Horse Park in Lexington.

Only Kentucky Downs in Franklin and Ellis Park in Henderson have put in instant racing, approved by the racing commission in 2010. The legality of the games has been challenged by The Family Foundation. The Kentucky Supreme Court in February sent the case back to Franklin Circuit Court for discovery. But the court ruled the commission does have the legal authority to regulate "historical wagering," which has attracted more than $573 million in wagers since September 2011 and generated more than $36.7 million for the two tracks.

Now both The Red Mile and Keeneland want to offer instant racing, which is gambling on betting terminals designed to resemble slot machines. But the winner is determined by the outcome of a previously run horse race.

Although The Red Mile offers harness or Standardbred racing, the instant racing games would be based on Thoroughbred racing because those are the only races currently on the market and "time is of the essence due to the precarious nature of the Standardbred industry," according to the application.

The Red Mile, which is owned by the Lexington Trots Breeders Association, is in "earnest negotiations" with the Kentucky Harness Horsemen's Association on how much of the revenue from the games will go toward increased purses for the races, according to the documents.

The application states that the track, which has roots back to 1875, has been struggling financially for several years, with the owners already contributing more than $22 million.

"The owners may not be willing or able to continue providing this level of investment in The Red Mile, and in effect, to continue propping it up," the track wrote to the racing commission. "At some point, their investment will reach too high of a level to make sense. Historical horse racing, however, provides an opportunity for survival for the Standardbred industry in the commonwealth and the opportunity to attract new fans to the sport of live harness racing. ...

"The new revenue anticipated to be brought in from historical horse racing will prevent The Red Mile from going out of business and will enable The Red Mile to continue to support the viability of the Standardbred industry."

The application does not say how much revenue the track anticipates receiving from the games. Although Kentucky Downs has fared well with instant racing, Ellis Park has not seen similar returns. (Ellis Park has asked to move 50 terminals to Kentucky Downs, where they are expected to generate more revenue.)

Keeneland leaders last week told the Herald-Leader that the Thoroughbred track anticipates its handle will top $1 million a day from instant racing, with revenue of about $44 million a year once fully operational.

The Red Mile's proposed expansion would include 13,200 square feet for instant racing to hold 1,200 people, new dining areas, bars and a kitchen. The plans call for operating 10 a.m. to 2 a.m. Monday through Friday and 10 a.m. to 6 a.m. Saturday and Sunday.

According to the application, The Red Mile has been consulting with Kentucky Downs' president, Corey Johnsen, whose Magellan Gaming & Racing will manage the instant racing operations. Magellan also manages instant racing operations at Treasure Valley Racing in Les Bois Park in Boise, Idaho, and for Wyoming Horse Racing at its simulcasting facilities, according to the application.

In 2011, the Lexington-Fayette Urban County Government received approval from the Kentucky Economic Development Finance Authority for $25 million in tax-increment financing for public infrastructure costs associated with redeveloping The Red Mile property, on Red Mile Road between South Broadway and Versailles Road. The city has until Aug. 25, 2015, to activate the TIF.

According to the TIF application, the track's owners planned to invest $133 million in the project, an 80-acre mixed-used development of apartments, a hotel, retail and restaurant spaces, parking garages and offices.

The city originally requested $54 million for the TIF, with the proposal to include a remodeled 1,900-seat grandstand, a trackside hotel with 200 rooms, 277,000 square feet of retail and restaurant space, 24,000 square feet of office space, and 295,000 square feet of apartments spread throughout nine buildings in the development and three parking structures, according to a state description.

The Red Mile already sold 10 acres along South Broadway that used to hold its Tattersall's sales facility. The building was razed for student housing. The area around the track, which is near the University of Kentucky campus, has become a major center of student apartments, with thousands of students living nearby.

Janet Patton: (859) 231-3264. Twitter: janetpattonhl.

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