Spinning Wheels in Kentucky - by Eric Mitchell

Success has two faces, possessing equal power to drive progress or stymie innovation.

Unfortunately, success may be the stake that kills this year’s effort to bring casino gambling to Kentucky and put the Bluegrass State on a level playing field with other racing states bolstered by slot machines.

The first hammer strike on that stake apparently came right after the end of 2013, when the commercial Thoroughbred market realized a 27.7% growth in gross sales. After several desperate years all segments of the market finally experienced gains in median prices—yearlings were up 15%, 2-year-olds up 28%, weanlings up 40%, and broodmares up a robust 67%. The market improvements eliminated worry among farm owners and bloodstock traders, but it also apparently eliminated the Thoroughbred industry’s sense of urgency about gaming.

One senior legislator said the engagement by representatives of all racing breeds is “much worse than it was two years ago.” An activist in Frankfort added the remarkable lack of a grassroots effort behind this year’s casino legislation has left Republican Sen. Dan Seum, who introduced the Senate version of the bill, feeling awfully lonely.

The final blow to the casino effort, however, could come later this month when the Supreme Court of Kentucky is expected to rule on the legal status of Instant Racing. Kentucky Downs and Ellis Park have already started running these electronic pari-mutuel gaming machines, which rely on the outcome of previously run Thoroughbred races to generate winning numbers. Kentucky Downs operates 390 machines that grossed $291.2 million in handle and averaged nearly $24.3 million per month in 2013, while Ellis Park’s 187 machines handled more than $27.7 million last year and averaged $2.3 million per month.

These two racetracks pushed forward with implementing Instant Racing based on an opinion by the state’s Attorney General that the game was an extension of already legalized pari-mutuel wagering. If the high court gives its stamp of approval, then legislators who have been wringing their hands over allowing full-blown casinos in Kentucky will have a clear path to the exit.

Political issues are rarely black and white. Kentucky is only halfway through its 60-day legislative session, and it is possible that Gov. Steve Beshear and House Speaker Rep. Greg Stumbo will rally behind a casino bill and get approval from the House. If the House passes its version, it is possible the Senate could follow, though not enough supporting votes seem committed at this time. Considering Kentucky’s history with the casino issue, this scenario is possible but highly unlikely.

Instant Racing will generate new revenue for the state and help grow purses, but it won’t be nearly the boost that full-blown casinos would provide. Will it be enough to keep year-round racing in Kentucky viable? Right now it is hard to predict and will depend largely on how the games are presented.

Revenue could be substantial if Keeneland pursues a couple of projects that have been discussed. One, its Quarter Horse track project in Corbin, Ky., could provide live racing, a simulcast parlor, and Instant Racing. While Kentucky Downs can draw players from the Nashville area, Corbin can pull from Knoxville, Tenn., 85 miles to the south. In addition to the Corbin track, Keeneland and The Red Mile could join forces to build a fine dining facility that houses a sports bar, Instant Racing parlor, and race book in Lexington.

Maybe Instant Racing can generate enough success to motivate; not only to provide a boost to purses and incentive funds, but to lead to the creation of attractive entertainment outlets that promote not only gaming but live horse racing, too.


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