Kentucky Supreme Court Agrees to Hear Case That Will Decide Legality of Instant Racing Machines

Posted on: June 19, 2019, 12:12h. 

Last updated on: June 23, 2019, 05:36h.

Steve Bittenbender Read More
Expertise: Legislation, Sports Betting, Horse Racing.

UPDATE (6/23): On Thursday, Krista Locke, executive director for communications for the Kentucky Public Protection Cabinet, told Casino.org, “The agency is unable to comment on an ongoing legal proceeding.”

In a decision that may have significant ramifications for Kentucky’s horse racing industry, the state’s Supreme Court announced last week it will review a lower court’s decision that allowed instant racing in the state.

The Instant racing parlor at the Red Mile in Lexington is one of four venues approved by the Kentucky Horse Racing Commission. The state’s Supreme Court agreed to hear a case to determine if the machines are legal under pari-mutuel betting laws. (Image: Lexington Herald-Leader)

The court’s seven justices all agreed to hear a case brought forward by The Family Foundation of Kentucky that dates back nearly to when the Kentucky Horse Racing Commission first approved regulations for instant racing, also known as historical racing, nearly a decade ago.

Not one Kentucky citizen, not one legislator, not one legislative committee and neither of the two Chambers of the Assembly has ever voted to legalize these machines, yet we now have six ‘casinos’ authorized in the state,” said Kent Ostrander, executive director of The Family Foundation.

Casino gaming is illegal in the state. Last October, Franklin Circuit Court Judge Thomas Wingate ruled the instant racing machines, which look like slot machines but whose results are based off the outcomes of past horse races, were legal under the state’s pari-mutuel betting laws.

Rather than proceed to the Kentucky Court of Appeals, The Family Foundation made a direct request to the Supreme Court in November. Five years ago, the Supreme Court remanded the case back to the circuit court level saying more hearings were needed there before it could consider the case.

A decision isn’t expected soon. The Family Foundation’s brief will not be due to the court until later this summer. Then, the commission and the tracks which run instant gaming parlors will have 60 days to respond to that filing. The court will also need to schedule a date for oral arguments.

Questions About Payments

The foundation also has questioned more than $800,000 in payments made by some of the tracks and two manufacturers to a consultant selected by the commission to test instant racing machines. The Kentucky Center for Investigative Reporting noted earlier this year those tests were completed with scant oversight from the commission.

Marc Guilfoil, the commission’s executive director, referred questions to the Kentucky Public Protection Cabinet, which oversees the commission. A cabinet spokesperson did not respond to requests for comment.

At the present time, Kentucky has four instant racing parlors. Churchill Downs Inc. opened the newest one, Derby City Gaming, last September in Louisville, investing $65 million in renovating its off-track betting venue. Two other licenses have been approved by the commission, including a $150 million joint venture between Churchill Downs and Lexington-based Keeneland set to open next year along the Tennessee border in Oak Grove, a small town in the western part of the state. The other parlor is slotted for Corbin in the southeastern part of the state.

Instant Racing Benefitting Tracks

Instant racing has been a big money maker for Churchill Downs, Keeneland (which runs its parlor at the Red Mile in a partnership with the Lexington harness track), Henderson’s Ellis Park, and Kentucky Downs in Franklin. Through May, more than $1.8 billion has been wagered at the parlors in fiscal year 2019. That’s an 82 percent jump from the previous year, thanks mainly to the opening of Derby City Gaming. Its opening increased the number of approved terminals by nearly 1,000.

Currently, there are 2,829 approved machines operating at the four facilities.

Of the $1.8 billion, the tracks have received a gross commission of almost $150.8 million and the state has generated $27.2 million in taxes.

For Churchill Downs, Derby City Gaming has helped the iconic track increase its purses twice during the spring meet, which is running through the end of this month. Last year, the track paid out $22.2 million in purses for the 38-day meet. This year, it will pay out $33.5 million.

Instant racing revenues also allowed Churchill Downs to bolster the Kentucky Derby purse by $1 million to $3 million. The track’s other stakes races also received sizeable increases.