On historical racing, our conservative Legislature isn’t very conservative any more

What is happening to conservatives at the Kentucky State Capitol?

Maybe it has something to do with the realignment going on in our politics right now. Or maybe it’s just the money. But we could be about to witness the widespread defection from conservative principles by many lawmakers in what is supposed to be a conservative legislature.

The impetus to legalize so-called “historical horse racing” slot machines came from a Kentucky Supreme Court decision last September in which the Court ruled in a unanimous 7-0 ruling that the machines were not pari-mutuel in the way they operated.

With one exception, the response by the big horse racing corporations running the slot parlors was to thumb their noses at the Court and continue to operate. That alone should have doomed their efforts in Frankfort, where laws are made on the expectation that they will be followed.

Some of the Republicans pushing this bill are fond of calling themselves “Constitutionalists.” Why are Constitutionalists pushing a bill that defines pari-mutuel wagering as something it is not in order to pretend to avoid the current constitutional restrictions which do not allow slot machines?

If they were really Constitutionalists, they would at least try to change the Constitution to allow for the machines. Instead they are simply changing the subject.

Supporters of the legislation argue that they are trying to create revenue for the state and save the horse industry. But, in fact, the legislation would do no such thing. In fact, the legislation now being considered would do very little for the state budget and, far from saving the horse industry, would more likely replace it. It would also result in more money leaving the state.

Of the approximately $750 million collected from the losses of Kentuckians at these machines since 2014, only about $57 million has gone toward the General Fund. Only .13 percent of the General Fund is made of slot revenue. And the rest? It has gone into the pockets of a small oligarchy of wealthy horse interests like Churchill Downs, a company that is worth over $8.3 billion, and whose stock value has increased by over 1800 percent over the last ten years.

Churchill Downs is associated in the minds of many people with the Kentucky Derby. But, in fact, it has moved further and further away from horse racing, becoming an ever more lucrative multi-billion dollar casino corporation. Its stock is also publicly traded, which means it is owned by shareholders most of whom reside outside the state.

How does legislation to allow historical horse racing slot machines help the state when little of it goes into state coffers and most of it goes to enrich a wealthy corporation with out-of-state owners?

Supporters of the slots bill also claim that the horse industry employs from 80,000 to 100,000 workers. But a University of Kentucky study found that only 32,000 work in the industry.

How does a company like Churchill Downs treat its employees?

After the company violated its collective bargaining agreements with the unions relating to both Churchill Downs and Derby City Gaming last year, it sued and lost.

In 2019, 76.6 percent of the Churchill Downs employees were hourly and median compensation was $23,670, about $11.325 per hour including benefits.

That calculation includes the compensation of Churchill’s Brahmin executive caste. Its CEO’s total compensation in 2019 was $10,601,294, 447 times the median compensation in the industry. It wouldn’t be very informative, but it would be fun just to calculate his hourly rate and see how it compares to the slave wages the company pays the plebeians who staff most of the rest of the company.

Conservatives are in favor of free markets. There is no free market here. The only businesses who get to operate the machines are the big ones. The local gas station owner who drives an old Buick is not eligible for a license, but the horse track CEO who drives a new Bentley is sitting pretty.

And saving the horse industry? Mechanized gambling drives out horses, mostly because it is far more lucrative. Nevada, the state that houses Las Vegas, used to have a healthy horse racing industry. It no longer exists thanks to mechanized gambling.

Slot machines will not save the horse industry. They will replace it. If that claim sounds overwrought, consider that at the beginning of 2020 there were only 1,000 slot machines operating in the state. If the slots bill passes, plans are for 5,750 by the end of the year.

This bill, pushed by self-professed conservatives, will ensure that, rather than the horse industry, slot gaming will become the state’s signature industry, and Kentuckians will be saying goodbye not just to horses, but to hundreds of millions of dollars.

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

This story was originally published February 3, 2021 at 3:44 PM.