Kentucky Casino Bill Faces Revision

By: Tom LaMarra and Esther Marr, Bloodhorse.com, 02/19/08

A legislative subcommittee studying expanded gambling in Kentucky has recommended a revised constitutional amendment that reduces the number of casinos permitted in the state to nine, requires local approval of some sort for all casinos, and removes dedicated percentages for gaming revenue.

The House subcommittee recommendation, approved Feb. 19, represents major changes from legislation offered by Gov. Steve Beshear only five days before. Beshear’s bill calls for 12 casinos--seven of them at racetracks--and details on how the state can spend its share of gaming revenue.

The new proposal would allow no more than five racetrack casinos and no more than four non-track gaming halls. The changes drew immediate reaction from some legislators who believe Kentucky’s “signature industry” should be protected in any gaming legislation.

“The horse industry is very important to this state, and I want it to stay that way,” said Democratic Rep. Carl Rollins, whose district includes many horse farms in Central Kentucky.

Rollins said the amendment as written could conceivably permit up to nine non-track casinos “that would overwhelm” the state and horse industry.

“I can’t foresee the public being receptive to the idea of not protecting the horse industry,” said Republican Rep. David Osborne. “This could lead to nine free-standing casinos. I can’t see that I could support something that didn’t protect the racetracks.”

Despite the concerns, most members of the subcommittee endorse a fewer number of casinos, and none opposed the move to remove dedicated percentages for the state’s share of revenue.

The Kentucky Equine Education Project made that scheme a key part of its 2006 racetrack casino legislation, but many lawmakers prefer not to be locked into revenue parameters pending future changes in the state.

“We want something that can ‘live’ for quite a while,” Democratic Rep. Joni Jenkins said of the more generalized constitutional amendment. “We thought it important to have flexibility.”

Jenkins said Beshear was not consulted on the revisions. Democratic Rep. Arnold Simpson said he would have preferred to first hear from the executive branch about the rationale behind its casino legislation and was “dismayed” the subcommittee was moving forward with it.

The measure passed the subcommittee on an 8-4-3 vote (three legislators passed) and is headed to the House Elections, Constitutional Amendments, and Intergovernmental Affairs Committee, perhaps as early as Feb. 20. That committee is chaired by Democratic Rep. Darryl Owens, who sits on the gaming subcommittee.

Horse industry representatives hedged their bets after the subcommittee vote.

“We’re just glad they mentioned concern about racing and protecting the state’s signature industry,” said Marty Maline, executive director of the Kentucky Horsemen’s Benevolent and Protective Association.

One lawmaker noted the racing industry has failed to explain how it plans to proceed with casino gambling or outline benefits. The Beshear bill funnels almost all the racing industry’s share of revenue to purses and breed development programs, as is the case in most states with racetrack gaming.

When asked why the racing industry has been in the background this year versus 2006, Maline said: “It’s obvious, as one representative said, that this affects the entire state of Kentucky. The focus needed to be away from racing. It’s not our bill. It’s the governor’s bill.”

Democratic Rep. Larry Clark indicated he’s not so sure. Clark said the way Beshear’s bill is written--it requires a local referendum for non-track casinos and calls for the facilities to pay the state about 50% of gross revenue--only racetrack casinos may be built.

“KEEP made sure they didn’t have casinos in the governor’s bill,” Clark said.

Democratic Rep. Tim Firkins said the object of casinos is to generate the most revenue possible for the state. “We all want to help the racing industry, but I don’t think that can be the compelling reason for going to expanded gambling in this state,” he said.

KEEP executive director Patrick Neely, who attended the subcommittee meeting, said the organization would evaluate the new proposal and then decide on a course of action. Neely noted it’s quite a change from 2006.

“The last bill (KEEP chairman Brereton Jones) supported only allowed for casinos at racetracks, so this is obviously different,” Neely said.

Neely, when asked whether he is fearful the new amendment would result in nine frees-standing casinos with no expanded gaming at the tracks, said: “You should probably talk to the racetrack guys first. KEEP as an organization will evaluate as we always do. We’ll evaluate the legislative proposals, and then the board of directors will decide whether they’re going to support it or oppose it.”
Kevin Flanery, vice president of national public affairs for Churchill Downs Inc., said the company’s flagship track in Louisville, Ky., already is a “destination location” that could accommodate a successful casino.

“If we can’t be competitive, yes, we’d be disappointed,” Flanery said. “It would be bad for Kentucky. We want to have a healthy signature industry.”

Jones, when contacted after the meeting, said the KEEP board of directors would meet in the next few days and then issue a statement.

“I think it would be better to wait until we have an opportunity to do that before I would make any more comments about it,” Jones said.

The debate figures to continue even if the revised constitutional amendment makes it to the House floor. In addition, the enabling legislation, which sets percentages racing would get for purses and breed development, also is subject to revision.

Meanwhile, there still appears to be no interest by the Senate to vote on casino legislation.