Just when it seemed Northern Kentucky’s economy would get a boost from the horse racing industry, the highest court in the state slapped a giant question mark on the sport’s future.
This week could provide some answers, with a vote looming in Frankfort. Those in the horse racing industry are waiting and watching anxiously. Advocacy efforts are ramping up: Turfway Park will host a group of jockeys, trainers and others to talk Wednesday about the impacts.
Kentucky’s Supreme Court ruled in September that the horse racing industry’s major funding source, Historical Horse Racing machines, were unconstitutional. The decision shocked many in the state, but especially those in Northern Kentucky who had just started to see how the machines could uplift their struggling track, Turfway Park.
Until very recently, Northern Kentucky didn’t have the devices — essentially slot machines — that allow people to bet on the results of old horse races. Other tracks used the machines to increase the pool of money a horse owner can win.
Florence’s Turfway Park saw a glimpse of what the machines could do for it when its offshoot, Newport Gaming & Racing, opened late last year with 500 of them and more than 70 full-time jobs. The average daily betting pool at Turfway Park saw a 65% increase. The new owners want to add even more at the track when it’s renovated.
The ruling stalled that project which is estimated to create 800 construction jobs. And the expansion’s future is questionable, too.
Northern Kentucky leaders told The Enquirer they’re worried the revival of the region’s horse industry would halt.
A state senator from Northern Kentucky last week took the issue to Frankfort and introduced legislation to save the machines and their revenue stream.
The legal battle over the machines
At first glance, the machines look like any other neon-colored slot machine. Instead of hoping for cherries or number sevens to pop up, people bet on the results of old horse races where the winner is already known
Even if you know the outcome you won’t have an advantage because the machines select the horses randomly, and the place of the pre-recorded races remains secret until after the bet is placed.
For example, a small race track in Henderson Kentucky had $30,000 daily purses two years ago. Now, with the machines, the purses are $50,000, Adam Koenig, R-Erlanger, Chair of Licensing and Occupations Committee previously told The Enquirer.
These machines are also responsible for the nation’s highest purse average of $64,250 in 2019, according to the Courier-Journal.
In September, the Kentucky Supreme Court ruled the machines were unconstitutional because they did not meet the state’s statute requirement of being “pari-mutuel” and that the Kentucky Horse Racing Commission exceeded its authority in allowing them.
To participate in pari-mutuel wagering, people must pool together money and split the pot among winning bets.
Judge Laurance VanMeter wrote if Kentucky wants the machines, the legislature has to change the law.
State Sen. John Schickel of Boone County filed a bill to do just that, but changing the definition of “pari-mutuel” to allow the machines.
When Schickel announced he was going to file the bill, the Lexington-based nonprofit The Family Foundation suspected it would cause more litigation and argued it would take a constitutional amendment to make the machines legal, according to the Courier-Journal.
Racing officials would prefer a faster, statutory solution because a Constitutional amendment would require the support of 3/5ths of both Kentucky houses, and could not be ratified by the voters before 2022.
The Family Foundation representatives testified against the bill Thursday during a committee hearing.
Martin Cothran of The Family Foundation argued the bill was unconstitutional.
“This bill will ensure that instead of horse racing, slot games will become the state’s signature industry,” he said during the hearing.
Keeneland Association attorney Bill Lear maintained the machines could be made legal by simply changing the definition of pari-mutuel wagering. Not doing so, he said, would distress horse racing jobs in the state.
More: Senate committee advances bill to legalize historical horse racing machines in Kentucky
The bill unanimously passed out of committee, which includes Northern Kentucky senators Schickel, Damon Thayer, and Chris McDaniel. The full Kentucky Senate could vote on it as early as this week.
Turfway Park struggled without the machines
The track saw an immediate change in its average daily betting pool when Churchill Downs, its new owners, opened an extension of the track with the machines.
Regulators and lawmakers craved the change for years.
Turfway got permission in 2015 from former Gov. Steve Beshear to install historic machines. But no one installed them.
Regulators used to blame the track’s previous owners, Detroit-based Jack Entertainment, for neglecting the track by not renovating it or installing the machines. Many theorized Jack Entertainment didn’t upgrade the track to keep competition away from its casino across the Ohio River in Cincinnati.
“The facts the way I see them is, Turfway Park is being held hostage by a casino across the river in Cincinnati, Ohio. Plain and simple,” said Kentucky Racing Commission Vice-Chair Mark Simendinger at a commission meeting, according to a 2018 meeting transcript. “Whether anybody here wants to admit that or not, that’s a fact.”
In 2019, the track was put in jeopardy when Churchill Downs went after a chunk of winter and spring races which regulators typically gave to the Florence track.
But then, Churchill Downs bought Turfway Park, planned up to $150 million in renovations that included 1,500 historical horse racing terminals, among other upgrades. The new facility is anticipated to support up to 400 direct full and part-time equivalent jobs.
In October, Churchill Downs opened a $38.4 million extension of the track, Newport Racing & Gaming.
After the ruling, Churchill Downs halted Turfway Park’s renovation, said the chief executive of Churchill Downs Bill Carstanjen during a third-quarter investor call in October 2020.
Newport Gaming & Racing will stay open, according to a statement from Churchill Downs, because it is waiting for the final ruling from the Franklin Circuit Court.
Churchill Downs’ Derby City Gaming in Louisville also remains open.
Keeneland’s Red Mile HHR facility in Lexington, which reported $22.8 million in net commissions during the fiscal year ended June 30, shut down instead of defying the state Supreme Court’s 7-0 decision or its 6-0 refusal to rehear the case, according to the Courier-Journal.
“Historical horse racing has allowed Kentucky racetracks to invest more in our communities through projects like the expansion of Turfway Park. Without the passage of Senate Bill 120, these opportunities to create new local jobs and grow our economy will disappear,” said president and CEO of the Northern Kentucky Chamber Brent Cooper in a press release.
The projects are good for tourism, too, said Julie Kirkpatrick president and CEO of Meet NKY, the region’s convention & visitors bureau
“Those are catalyst projects that bring in more visitors,” Kirkpatrick said.
The advocacy efforts are just beginning.
On Wednesday, the Kentucky Horsemen’s Benevolent & Protective Association will host Turfway Park horsemen at the track’s rec hall. People who work in the industry. such as jockeys and groomers, will talk about the machine’s impact on the industry over pastries and coffee with the community.
Julia is the Northern Kentucky government reporter through the Report For America program. The Enquirer needs local donors to help fund her grant-funded position. If you want to support Julia’s work, you can donate to her Report For America position at this website or email her editor Carl Weiser at [email protected] to find out how you can help fund her work.
Do you know something she should know? Send her a note at [email protected] and follow her on Twitter at @JFair_Reports.
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Randy Tucker contributed