The Kentucky Thoroughbred Association petitioned to file an amicus brief this week, seeking a return of the historical horse racing (HHR) machines recently outlawed by the Kentucky Supreme Court.
The petition comes on the heels of an amicus brief filed last week by the Kentucky Chamber of Commerce illustrating the damaging economic impact of the court’s Sept. 24 decision. The KTA’s document emphasizes this point while amplifying the positive economic impact the machines brought the state’s racing and breeding industry.
Last month’s state Supreme Court decision ruled that HHR machines made by Exacta Systems were not operating as true pari-mutuel machines. The unanimous 7-0 opinion found the Exacta machines do not “create a wagering pool among patrons such that they are wagering among themselves as required for pari-mutuel wagering.”
HHR machines resemble slot machines, which are illegal in Kentucky. They base their winning combinations on the results of previous races. Because Kentucky doesn’t permit casinos, you’ll find HHR machines only at racetracks or satellite outlets.
HHR Machines Created an 84% Handle Boost in Five Years
According to industry experts, those machines deserve much of the credit for Kentucky tracks enjoying the highest average purse size — $64,250 – of any state in the country. HHR machines resulted in $2.26 billion of total handle in 2020, compared to $370 million in 2015.
This explains why the KTA jumped into the fray between the Family Trust Foundation of Kentucky, an anti-gambling organization that brought the original suit against the machines, and the Kentucky Horse Racing Commission. According to the KTA, the machines fuel the Kentucky Thoroughbred Development Fund through half of the 1.5% excise tax tracks with HHR machines pay.
In turn, according to the KTA brief, that fund paid out more than $19.5 million in purse supplements in 2019. Compare that to the $4.9 million in purse supplements paid out in 2011, the year before HHR machines arrived in Kentucky.
Pulling No Punches on What This Means to Kentucky
In its brief, the KTA wasn’t shy about illustrating what losing HHR machines means to the state’s flagship industry. The fact the KTA and the Kentucky Chamber of Commerce entered the dispute illustrates how important HHR machines are to the state’s economy.
“It will result in horses, trainers, jockeys, grooms, owners, racing executives, and other industry participants going to other states to compete. Kentucky will lose tourism dollars. Kentucky will lose revenue from on-track sources and also from off-track (and in many cases out of state) sources. In addition, reducing the (gaming-provided) purse supplements will reduce the purses, which will reduce the amount owners will be willing to pay for Kentucky-bred horses that are eligible to race for these supplements … All of this would lead to decreased tax revenue, decreased employment, decreased tourism spending and decreased economic impact.”
The state Supreme Court acknowledged the economic impact throughout its opinion, but said any change in the definition of pari-mutuel racing must be made by the state’s lawmakers, not by a governmental agency, and not via the judiciary.
The Elephant in the Room
Toward that end, KHRC Chairman Jonathan Rabinowitz opened Tuesday’s KHRC virtual meeting vowing his organization will find a way around the ruling – should it stand.
“I would like to discuss the elephant in the room, which is the Supreme Court opinion. I cannot say too much, but I do want everyone to know that if the current Supreme Court opinion is rendered final, that this commission is committed to finding a solution,” he said on the teleconference. “Additionally, after having a conversation with the governor, it’s clear the governor and his team are committed to finding a solution.”
The court’s ruling is not final until it sifts through all requests to reopen the case.