More taxes may be explored to support racing regulation

FRANKFORT — Kentucky may consider raising taxes on betting to pay for improved racetrack and betting security and more drug testing.

Members of a subcommittee of Gov. Steve Beshear's task force on horse racing on Thursday discussed how to augment the Kentucky Horse Racing Commission budget.

Among the ideas:

■ Increasing the "takeout," the percentage of money not returned to pari-mutuel bettors, and dedicating the gains to the KHRC.

■ Charging a "per start" fee on horses to help pay for increased drug testing.

■ Licensing, for a fee, pari-mutuel or "tote" companies that operate in the state.

■ Taxing bets placed through advance-deposit wagering platforms.

■ Seizing the money bettors don't claim on wagering vouchers and refunds.

■ Increasing assessments paid by racetracks;

■ Dedicating to the KHRC about $1 million in sales taxes paid from "claiming" horses, which are sold in races.

A commission analysis found that less than half a million dollars of the $13.3 million generated by pari-mutuel taxes goes to racing regulation.

The commission is also funded by licensing fees, racetrack assessments and fines, but is facing a $2 million shortfall over the next two budget years, according to Lisa Underwood, KHRC executive director. It's also asking for at least eight more full-time staffers in addition to its 23.

Ed Martin, executive director of the Association of Racing Commissioners International, told the panel that Kentucky spends far less than other racing states on regulation. Kentucky spends about $7,500 per racing day, while New York spends more than $10,000 and Florida spends more than $15,000.

Committee member Nick Nicholson, president of Keeneland, said the under-funding of the commission is "unacceptable."

"We in private industry have to be ready to look at all the options," he said.

Public Protection Cabinet Secretary Bob Vance said the task force has to look beyond the current budget climate, and to do that the commission will need a fixed funding source.

Underwood said she and others have met with the Council of State Governments to explore the possibilities of an interstate compact with other racing states to pool resources.

The full task force is scheduled to meet on Sept. 30. Its report to Beshear is due by Dec. 1.