Groups ask lawmakers to raise the tax on historical horse racing as they work to protect it
A coalition of groups is urging the Kentucky General Assembly to raise the “deeply inadequate” tax rate on historical horse racing as lawmakers prepare to hear a bill that could keep that lucrative form of gambling alive.
The 17 groups include the Kentucky Education Association, Jefferson County Teachers Association, Kentucky Coalition Against Domestic Violence and Kentucky Mental Health Coalition. They sent a letter to lawmakers on Monday arguing that historical horse racing could provide much-needed revenue for state services.
“Legalizing this activity but failing to adequately tax it will continue to shortchange schools, health care, infrastructure and other vital services while giving the green light to further expand this rapidly growing form of gambling across the commonwealth,” the groups wrote.
The slots-like gambling machines, which allow players to bet money on the outcomes of old horse races, were thrown into legal limbo last September by a unanimous Kentucky Supreme Court decision declaring that historical horse racing is not parimutuel wagering, and therefore, not legal under the state constitution.
State Sen. John Schickel, R-Union, is expected to file a bill when the legislature returns to Frankfort Tuesday that would declare historical horse racing to be parimutuel wagering. More legal challenges are likely to follow even if that bill becomes law, because some gambling opponents say a constitutional amendment is necessary.
Schickel did not immediately return a call seeking comment Monday about the possibility of a higher tax rate. The politically powerful horse industry has opposed higher taxes on historical horse racing.
Last year, the total handle for historical horse racing in Kentucky was $2.2 billion, up 11 percent from the previous year.
But the tax collected on historical horse racing was only $33.8 million, of which the General Fund got $15.1 million. That’s because the General Assembly, in 2014, set a much lower tax rates for historical horse racing than it already had in place for live races and simulcasting.
And under the law, much of the money collected from the tax on historical horse racing is diverted to purses programs that benefit the horse industry rather than being deposited in the General Fund, which pays for state services.
Compared to traditional slot machines that operate in other states, such as West Virginia, Ohio and Indiana, historical horse racing produces far less revenue for Kentucky’s government, the groups told lawmakers in their letter on Monday.
“Especially because these machines are in operation and appearance like slot machines, they should be taxed like slots in recognition of the associated social costs and to ensure the commonwealth’s public services are getting a fair share,” the groups wrote.
