No higher taxes for historical horse racing, task force says, but changes are coming
I’m sure you’ll be as shocked as I was to hear that a task force to look at more taxes for racetrack slots — co-chaired by a long time racing industry employee — declined to recommend that more of those millions and billions of dollars should go toward the General Fund.
It’s the latest twist in an amazing saga in Kentucky. “Historical horse racing,” or HHR as the tracks like to call these slots-like machines, started on very shaky legal footing, but went ahead and built a bunch of “racinos” to house them any way. When it looked like the courts might actually declare HHR illegal, the entire racing industry went hat in hand to the General Assembly, which at the last minute wrote legislation to legalize the practice, with the proviso that tracks might have to put more of those profits into the General Fund. (For more background, go here and here.)
After all, historical racing is taxed at 1.5 percent, the same as live racing, and much much less than what casinos in other states return to their General Funds.
Churchill Downs and Keeneland, who run the majority of the machines in “racinos” were so grateful they put out a statement saying “we will work constructively to revise and raise the tax structure on historical racing machines, including consideration of a fair and equitable graduated tax structure.”
Only it didn’t quite work that way. Instead the task force recommendations include losing the admission tax, since some tracks don’t charge admission; looking at changing the tax rate on advance deposit account wagering; and evaluating the actual legalization of sports wagering, which is legal in every state around us. Also advised is giving some HHR proceeds to the University of Kentucky and community college equine programs the way they go to the University of Louisville.
Martin Cothran, spokesman for the Family Foundation, which pushed the court case against HHR, said he was not even a little shocked, considering the task force was made up of people with close ties to the gambling industry or strong supporters of it.
“These machines are either parimutuel horse wagering (which is what HHR supporters say they are) or they are slot machines (what opponents say they are),” Cothran said in a statement. ”If they are parimutuel horse wagering, then why aren’t they taxed like horse betting? And if they are slot machines, then why aren’t they taxed like slots? In fact, they are now taxed at only about a third of the rate that horse betting is taxed and anywhere from 50-64 percent of the rate Indiana and Ohio tax their slot revenue.”
All is not lost, says co-chair Adam Koenig, R-Erlanger who oversaw the task force with Senate Floor Majority Leader Damon Thayer, a long-time employee of the industry who has strenuously opposed raising the rate. “There’s more than one way to increase revenue without increasing the rate,” he told me on Monday.
Koenig is working on legislation that could change around the rates on the extremely varied ways that betting revenue comes in so that the rates are more uniform, and produce more revenue. That probably means that some will go up and some will go down.
“I’m trying to thread the needle between those who want an increase and those who want to do nothing,” he said. “But I’m trying to thread it so we can generate more income.”
He will also file a separate bill to legalize sports betting for the fourth time, which could be an important new money stream that is currently going outside the state. He is “optimistic” that even with a Republican supermajority, more and more people will see the practicality of doing so.
Let’s hope so. Horse racing and breeding are signature industries in Kentucky; they employ many people in the state and bring in many more. They have also been well-rewarded with multiple tax breaks and perks from state government. It’s time to make sure that the people of Kentucky, including those who suffer from gambling addiction, are getting their fair share of the profits.
