Churchill Downs, state Revenue Department want out of instant racing court case

jpatton1@herald-leader.comApril 23, 2014 

New Instant Racing electronic gambling machines are seen in the gaming room at Kentucky Downs during a media preview day on Wednesday, August 31, 2011 in Franklin, Ky. Kentucky Downs and Ellis Park now have Instant Racing machines, with Keeneland and The Red Mile to follow in summer 2015. Photo by Luke Sharrett

LUKE SHARRETT

FRANKFORT — Churchill Downs and the Kentucky Department of Revenue want to be dismissed from the court case involving instant racing.

Churchill Downs attorney Sheryl Snyder said the Louisville racetrack has no plans to install instant racing terminals and should be allowed to withdraw from the case, which has been sent back to Franklin Circuit Court for discovery.

In February, the Kentucky Supreme Court ruled that the Kentucky Horse Racing Commission has the authority to regulate electronic betting on previously run horse races — a form of gambling known as historical wagering or instant racing — but that the question of whether the games themselves are parimutuel has yet to be decided.

Snyder told Franklin Circuit Judge Thomas Wingate on Wednesday that Churchill Downs "is not employing any instant racing games, has not made any application to do so, has no plans to make application to do so, and therefore as to Churchill Downs, there is no case for controversy."

Churchill Downs Inc., the track's parent company, has repeatedly said that instant racing cannot compete with slots or full-fledged casino gambling and that the company does not plan to pursue a license to implement the games. Kentucky Downs in Franklin and Ellis Park in Henderson have the games; Keene land and The Red Mile have received license approval and plan to install them by July 2015.

The Family Foundation, a conservative advocacy group that challenged the legality of instant racing, has filed questions and requests for documents of Churchill Downs and of the state Revenue Department and the racing commission.

Revenue Department attorney Laura Ferguson told Wingate that the revenue issue was resolved by the state Supreme Court ruling in February that found that state statute did not permit taxing bets on historical wagering.

The state General Assembly has since passed a tax on the bets, which Gov. Steve Beshear signed this month.

Family Foundation attorney Stan Cave told Wingate that if the parties are allowed to withdraw, his ability to achieve transparency as to whether the games are parimutuel will be hampered.

A unanimous Kentucky Supreme Court affirmed a state Court of Appeals ruling that the Family Foundation should be allowed discovery, Cave said.

He said that if the track is dismissed from the case, he would have to subpoena records to get answers, which he said would be more difficult and expensive.

Peter Irvin, an attorney for the racing commission, said Cave "wants to get into a conspiracy theory."

Cave contended that the Supreme Court ruling did not limit discovery to just how the games work, as the tracks have suggested.

He said Churchill and the Revenue Department waited until he filed his first motions for discovery to ask to be let out of the case.

"But when they found out the questions I would like to ask, the facts I would like to ascertain, they said, 'Oh, no,'" Cave said. The tracks and the state, including the racing commission, also are trying to assert that many of the communications are privileged and should not have to be turned over to the Family Foundation.

To demonstrate the "substantial need" for those communications, Cave brought a chart of relationships and links among the parties in the case, including one of Wingate's former clerks.

Wingate asked, based on the chart, whether Cave wanted him to hear the case; Cave said yes.

Wingate said he would take a few days to decide whether Churchill and the Revenue Department need to comply with requests for discovery. He also indicated that he might need two weeks to rule whether they can be dismissed from the case.

Being dismissed would not preclude Churchill from installing instant racing machines later.

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

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