Wealthy horse industry asks lawmakers for a handout after Supreme Court decision

There is nothing sadder than a hugely wealthy industry appearing in public, cup in hand, asking for handouts.

At a recent meeting in Frankfort of the Interim Licensing, Occupations and Administrative Regulation Committee, legislators heard from representatives of the horse industry and the state’s Chamber of Commerce about so-called “historical racing,” the slots-type games that the horse industry has been operating illegally since 2011. Oddly the Kentucky Horse Racing Commission, which has been approving the gaming as being horse racing, was nowhere to be found.

Pari-mutuel wagering on horse racing is lawful in Kentucky. Other than the State Lottery and charitable gaming, this is the only kind of gambling allowed under the state’s Constitution. But in 2011, the tracks decided that they would open gambling parlors with devices that it claimed, despite being indistinguishable from slot machines, were pari-mutuel wagering on horse racing. Laughable, isn’t it?

They approached a Franklin Circuit Court judge seeking an adjudication that the gaming was legal, but were challenged by The Family Foundation. The case made its way up and down the state’s court system for 10 years until, last September, the Kentucky Supreme Court ruled in a unanimous 7-0 decision that the gaming was not pari-mutuel and therefore illegal.

Now the industry, after offering what we now know was illegal wagering for a decade, has come to lawmakers with dire warnings of their impending demise if lawmakers do not pass a bill legalizing non-pari-mutuel wagering.

While small businesses around the state and around the country are struggling for survival and millions of people around the country are without jobs, the wealthy world of horse racing is asking lawmakers not only to pass a law to divert more money to the industry, but to ignore the state’s Constitution in the process.

They argue that 100,000 people work in the horse racing industry and that it would be endangered if historic racing is not allowed to continue. This is an old and discredited canard used by the Kentucky Equine Education Project since as far back as 2008, a figure which it said it got from the American Horse Council. But in 2005, the Deloitte consulting firm found only 51,000 employed by the industry, pointing out that, no, the restaurant waitresses whom horse workers pay for lunch are not horse industry workers. In 2012, an economic analysis by the University of Kentucky found there were only 32,000 jobs in the industry.

And what kind of jobs are they? If there is an industry that could be said to have a caste system, it is the horse industry, which has a few extremely wealthy people at the top, a few highly wealthy people at the next level, some moderately wealthy people the next level down, and then a huge bunch of low wage workers at the bottom.

A special welfare program for the richest people in the state’s richest industry. Just what we need.

And what does state government get out of it? Over the last ten years, out of some $800,000,000 in direct revenue for the racetracks from historic horse racing, the state has received only $58 million, just slightly over $5.8 million a year on a total handle of over $9.5 billion. Compared to revenue of other states, it could be the biggest rip-off ever perpetrated on a state.

The horse racing industry is telling legislators they just need to pass a bill to deem the machines pari-mutuel. But just calling them pari-mutuel won’t make them so. As many as 21 of the state’s best lawyers for the racetracks have already tried this and it didn’t work.

If the legislature wants to legally expand gambling in the state, it will have to pass a constitutional amendment and put the issue on the ballot.

Doing anything less is not only not honest. It is a bad bet.

Martin Cothran is the senior policy analyst for The Family Foundation.