The Kentucky Horse Racing Commission unanimously approved requests Wednesday from Keeneland Race Course and The Red Mile to install hundreds of instant racing terminals.
"It's a great day for racing," said Robert M. Beck Jr., racing commission chairman.
Kentucky Sen. Damon Thayer, R-Georgetown, who has long advocated for instant racing, hailed the new gambling venues.
Thayer called the Lexington venues "a game-changer," with Keeneland putting in 600 terminals and The Red Mile putting in 500 terminals.
"There is unlimited potential to grow the (purse supplements) fund on instant racing, if it's ultimately approved by the court," Thayer said. "I do believe the Lexington market will be a good one for historical racing, and has the potential to grow the pie and increase money to purses."
Keeneland officials said they anticipated $44 million in revenue annually from instant racing, and The Red Mile indicated their projections are similar.
There was no opposition to the proposals at the meeting, and very little discussion. Commissioner Alan Leavitt asked Red Mile president Joe Costa about the potential agreement with harness horsemen.
Other tracks have offered a minimum of 1 percent, Leavitt pointed out. "I hope that you are going to do the same thing," he said.
Costa told Leavitt he is aware of the agreements other tracks have made. "We are optimistic about reaching an agreement with the horsemen and the breeders, Commissioner Leavitt. So noted," Costa said.
The commission then gave the go-ahead for both tracks to build what will be essentially two casinos in Lexington, assuming they can reach deals with horsemen and meet all other instant racing regulations.
There are few, if any, other regulatory hurdles. Both Lexington tracks are scheduled to open their parlors in July 2015.
"We're very pleased. ... We're excited about launching the new product with our simulcasting center," said Vince Gabbert, Keeneland vice president, after the vote. "The biggest thing is the purse structure. ... The focus of this revenue-wise will be to put money back into purses to support that product, increase the competitive fields that we already have. And continue the great racing that we have."
Gabbert said the Thoroughbred track will have to get a conditional use permit from the Lexington-Fayette Urban County Government, and the track hopes to go before the board of adjustment in May. Construction could begin this summer, he said.
Keeneland has an agreement with Full House Resorts, a casino company, to run the new 50,000-square-foot facility, which will also incorporate a sports-book style simulcasting room, restaurants and bars.
Costa said The Red Mile already has rezoning approval from the city, which requested a tax increment financing development area with the understanding that instant racing would be part of the redevelopment. Costa said the harness track might still have to get planning commission approval for the building itself, which will be a 40,000-square-foot gambling parlor on the front of its grandstand; the parlor will wrap around to give views of the track.
"The hopes and aspirations are that we will have an opportunity for new customers, to revisit the facility and hopefully inspire them to become fans of standardbred racing — and allow us to reintroduce ourselves to a community that has been ignoring us, quite frankly, for some time," Costa said. "We're pretty excited about moving forward."
The Red Mile, which was represented by attorney and former racing commission executive director Lisa Underwood, will be permitted to use Thoroughbred horse races in its instant racing machines even though the harness track cannot simulcast Thoroughbred races.
Costa indicated the city anticipated a major mixed-use development project at The Red Mile.
"We believe what you see before you would be the core, the engine, the spine of that project," Costa said.
According to documents filed with the racing commission, The Red Mile plans to invest $25 million. Keeneland's planned investment was not disclosed, but Gabbert said it would be "significant."
The Red Mile had begun infrastructure improvements for a larger multi-use redevelopment that will include entertainment, shopping and possibly a grocery store.
Both tracks plan to move ahead as a court challenge to instant racing proceeds in Franklin Circuit Court, where the Family Foundation is arguing that the machines are not pari-mutuel and should be illegal. Keeneland officials have said they hope for a ruling in about three months.
The size of the projects will triple the scope of instant racing, which is so far only at Kentucky Downs in Franklin and Ellis Park in Henderson. The tracks collectively see about $30 million in wagering a month, with Kentucky Downs averaging about $1 million a day.