Lexington could soon have two major new gambling venues: both Keeneland and The Red Mile want to build instant racing facilities at their tracks.
Keeneland filed an application with the Kentucky Horse Racing Commission late Friday for 600 terminals, which would go in a new 40,000-square-foot building to be located behind the existing Keeneland Library and Entertainment Center and Keene Barn. The track hopes to have the games operating by July 2015.
Eventually, the facility could generate nearly $44 million in revenue annually to bolster the Lexington track's already-rich purses.
The application is expected to be on the agenda for the racing commission meeting scheduled for Wednesday.
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The Red Mile, Lexington's struggling harness racing track, is not involved in Keeneland's application and is expected to file one for a separate facility. Details of The Red Mile's proposal were not immediately available; Joe Costa, president and CEO of The Red Mile, could not be reached for comment.
Bob Stewart, president of the Kentucky Harness Horsemen's Association, confirmed that The Red Mile also has asked to be on the April 2 agenda. Stewart had no specifics but said: "I have seen the architectural drawings, and it looks like plans are to put up a magnificent building."
Rumors of the impending applications were reported in racing industry publications this month.
The two tracks have discussed partnering on a single casino, should Kentucky approve slots, but they apparently have no agreement to cooperate on instant racing.
Keeneland president and CEO Bill Thomason said Keeneland decided to move forward after the Kentucky Supreme Court in February ruled that the state Horse Racing Commission has the authority to regulate wagers on previously run horse races presented on electronic gambling machines.
The court also sent the case back to Franklin Circuit Court to decide the legality of the wagers themselves, but Thomason said they expect that to be ruled in their favor.
"We have an obligation to our industry to make sure we (use) every one of the tools we have to better our industry ... to put money in the business," Thomason said.
Architect Steve Graves of Murphy, Graves, Trimble is designing a building that matches the traditional stonework style of the track's grandstand. The building can accommodate 1,000 patrons, with parking for 650 vehicles, "in keeping with what people expect out of Keeneland, that's consistent with our mission, consistent with all the ideals and what people expect to be coming out of us," Thomason said. "Moderate and understated."
In other words: no neon.
"It's going to be a place that people will enjoy coming to," Thomason said.
The building also will house a new state-of-the-art simulcasting center with 200 workstations, and a café and sports bar for 200.
The track will have shuttles to take patrons from the instant racing facility to the track and back.
Thomason said the scale may be adjusted depending on where the Kentucky General Assembly sets the tax rate. In its February ruling, the Kentucky Supreme Court said existing state law does not permit taxing instant racing handle. The House and Senate have proposed different rates; a compromise will have to be a hammered out before the legislative session ends in mid-April.
Keeneland's proposal alone would double the scope of electronic gambling at Kentucky tracks.
Between Kentucky Downs in Franklin and Ellis Park in Henderson, bettors wager almost $1 million a day on historical wagering (slots-like gambling that uses previously run races to determine if a bettor wins.)
Keeneland anticipates its facility to have about $1 million in handle a day in the beginning, with eventually an approximate "win" of about $200 per machine per day, similar to that of Kentucky Downs, said Vince Gabbert, Keeneland vice president and COO.
That would generate about $120,000 a day, most of which ("couple million to start") would go back into purses, Gabbert said.
The bulk of money wagered on the machines is returned to patrons in the form of winning; the "takeout" rate on instant racing is about 8 percent, depending on the tax, Gabbert said.
Since instant racing terminals were installed at Kentucky Downs in September 2011, more than $604 million has been wagered on the games, generating more than $38.5 million for the two tracks. An additional $10 million was generated in pari-mutuel tax, but it is unclear whether that will have to be returned.
Thomason said the track plans to solicit input from community interests in Lexington as well as the racing community. Keeneland officials met with Lexington Mayor Jim Gray's office on Friday afternoon.
"Keeneland is about excellence in every detail. All indications are Keeneland will apply that same standard of excellence to this facility. This is something new for our community, and I have been assured we will have ample time for citizens to ask questions and voice concerns. I look forward to hearing more about the project," Gray said in a statement. The city has not been formally contacted by The Red Mile, the mayor's office said.
"This is Keeneland, we're being very open about this and that's the way we're going to do the process," Thomason said. "We feel we're owned by the community, we feel that deep responsibility we've got with the community. We're trying to do this in an open fashion with the groups we're going to be talking to, to make sure people understand this is their old Keeneland that is talking to them, who's being up-front, who's being honest, who's going to do it with community input about what we're doing and why we're doing it and where these proceeds are going to go. ... Everything we do goes back to support core missions of building fan base and giving money back to the industry."
Thomason said the track expects the instant racing facility will be an economic generator for the city as well, creating 65 to 70 new permanent jobs once the facility is up and running.
The track plans to operate the facility year-round from 8 a.m. to 1 a.m. Monday through Thursday; from 8 a.m. to 3 a.m. Friday and Saturday; and from 11 a.m. to midnight Sunday. Players would have to be 18, just like bettors at the track.
Keeneland officials said they hope for a ruling from Franklin Circuit Court in three months. The Family Foundation, a conservative advocacy group, has challenged the legality of the games and begun discovery.