As Kentucky legislative leaders weigh a proposal to allow slot machines at horse racetracks, the governor of Ohio may have upped the ante.
Ohio Gov. Ted Strickland, who for years has opposed expanded gambling, announced Friday that he now favors adding slot machines at the state's seven tracks as a way to help balance that state's budget.
Those on either side of the debate in Kentucky had differing opinions on what that move means for Kentucky's slots bill, which passed the House Friday but faces an uncertain fate in the Senate.
"It will be tragic if they get started before we do," Keeneland President Nick Nicholson said on Saturday. "My assumption is they will move quickly, and we should do the same."
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Turfway Park in Northern Kentucky, which is co-owned by Keeneland, would be particularly hard-hit by increased competition from just across the Ohio River, said Nicholson.
He said he thinks Ohio is almost certain to approve Strickland's proposal, and "if the status quo in Kentucky prevails ... I just don't see a future for Turfway."
Jay Blanton, spokesman for Gov. Steve Beshear, said the Ohio governor's move "dramatically punctuates the need for Kentucky to move forward and move forward now.
"This puts even more pressure on our signature industry."
Supporters of slots at Kentucky tracks have already pointed to gambling competition from nearby states, such as Indiana and West Virginia.
If the Ohio legislature approves a slots measure, Kentuckians would go to that state to gamble, Blanton said.
"Why should we be funding Ohio schools and Ohio roads and Ohio human service needs?" he asked.
But opponents of slots at Kentucky tracks say expanding gambling here is not the best solution, even if Ohio does so.
If the Ohio legislature approves slots at tracks, it would mean 10 percent of Kentucky's anticipated revenues from slots would be lost, if such a bill were approved here, said Senate President David Williams, R-Burkesville. He said 8 to 10 percent of the slots revenues assumed under the Kentucky bill would come from Ohio residents coming here to play.
"It will make the amount of gambling that has to be done by Kentuckians to reach the goals that are in the House bill increase by 10 percent," he said.
He said that lost revenue would be combined with decreased sales tax receipts, since Kentuckians who gamble would have less income to spend on taxable items. More money would also be needed to cover a deficit in the Kentucky Educational Excellence Scholarship fund, since slots gambling would cut into lottery ticket sales, which fund KEES, Williams added. And he said more money would be needed to help deal with an increase in gambling addictions.
"They have spent all the money for the next 20 years that they will generate," Williams said. "The numbers just aren't there."
Kent Ostrander, executive director of The Family Foundation, agreed.
"We cannot borrow our way out of debt. We cannot spend our way to a balanced budget. You cannot gamble your way to prosperity," he said. "The Ohio governor ought to know that."
He said that in the late 1800s, states moved, one by one, to restrict gambling because "the nation was corrupted by gambling." Now, he said, the opposite shift is happening, as states follow one another in expanding gambling.
Rep. Susan Westrom, D-Lexington, agreed with Ostrander that Strickland is probably reacting to Kentucky's debate on slots.
But she takes a different view on what that means for Kentucky.
"This is just another nail in the coffin of our industry," said Westrom, who co-chairs a legislative committee on horse farms. "It just makes our horse people enticed to go just right across the border into a very convenient state so they can make a living."
She said she hopes the Ohio development will spur Senate leadership to reconsider their views on slots.
"I think we have the votes in the Senate," Westrom said. "The person who has to be moved is the president of the Senate."
The state House passed a bill to allow slots at tracks by a 52-45 vote on Friday but adjourned without delivering the bill to the Senate for consideration.
Williams has said the Senate will adjourn the special legislative session if it does not receive the bill by 4:30 p.m. Monday. If the bill does get sent over by then, he said it will fail in committee.
Racetrack owners in both Ohio and Kentucky have said their racing industries are at a disadvantage because neighboring states subsidize their purse winnings with proceeds from casinos or from slot machines at the racetracks.
Expanded gambling is also seen by supporters as a means of boosting revenues for education and other state budgetary needs.
According to the Associated Press, Strickland said a "conservative" estimate found the gambling expansion would bring in $765 million for Ohio, whose budget is about $54 billion. Ohio is facing a $3.2 billion budget deficit.
Strickland endorsed establishing the slots through legislative action and not through a vote of the people, who have shot down gambling initiatives four times in the past 20 years. He said legislative action was required to provide revenue quickly enough to avoid a tax increase.
Ohio House Speaker Armond Budish, a Democrat, praised Strickland's announcement in a statement as a move that "will help save Ohio jobs and avoid detrimental tax increases on Ohio families," the Associated Press reported.
"Kentucky racing and breeding are at a severe disadvantage," said Patrick Neely, executive director of the Kentucky Equine Education Project. "This would just further the competitive disadvantage. ...It sends a clear signal that other states are anxious to take our signature industry from us."