Tax on betting could help pay for racing regulation

A task force on the future of horse racing wants to recapture betting taxes to beef up regulation of the sport.

More than $13 million is collected annually on parimutuel wagering, but only about $424,000 goes into the yearly budget of the Kentucky Horse Racing Commission. Kentucky spends far less on regulation per racing day than other major racing states do. Most of the tax money is dedicated to purses, but about $4.8 million goes into the state General Fund.

A task force appointed by Gov. Steve Beshear is looking at ways to finance improvements, including hiring at least eight full-time commission employees. But the racing commission is looking at a $614,000 budget shortfall in the next two years even without the extra employees.

Nick Nicholson, president of Keeneland, told fellow task force members the tax money could solve their present problem and help in the future.

He also said using it for increased regulation would be "philosophically compatible."

"The people betting on those horses have a real stake in a well-regulated industry," Nicholson said.

Mike Maloney, a Lexington handicapper who said he bets about $10 million a year, said improved integrity could increase handle on Kentucky racing. "Even the $2 bettors who love the game are very concerned about oversight," Maloney said.

Robert Lawrence, former director of the University of Louisville's equine industry program, said the tax money amounts to less than 1 percent of the $18.8 billion two-year state budget but could make a big difference to the state's signature industry. The additional money would more than double the racing commission's current $3.1 million budget.

"Seems to me this committee needs to focus on changing this fundamental piece," Lawrence said.

The task force is also looking at other revenue sources, including taxes on bets made through advance deposit wagering platforms, which includes Internet wagering.

One of the improvements under consideration is a state-funded drug testing and research lab, which would be a long-term project.

The task force will present its findings to Beshear by Dec. 1.