Kentucky Supreme Court Hears Arguments on Decade-Old Historical Horse Racing Lawsuit

Posted on: August 15, 2020, 02:30h. 

Last updated on: August 17, 2020, 11:37h.

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

The fate of historical horse racing (HHR) in Kentucky is back in the hands of the state’s Supreme Court. That’s after the panel heard arguments Friday about the legality of the gaming machines.

Kentucky HHR
Kentucky Downs in Franklin is one of four historical horse racing parlors in Kentucky. (Image: Kentucky Downs/Twitter)

The state’s top court ruled on the matter six years ago, when it sent the case down to a lower court.  That court found HHR gaming systems, also known as instant racing, met the definition of pari-mutuel betting. However, the panel agreed last year to hear arguments on that matter once again upon the appeal of the Family Foundation of Kentucky.

HHR machines are video gaming terminals that have the look and feel of slot machines or similar games, like video poker. However, HHR machine displays are based on the outcomes of past races.

The case has gone on for a decade, after the Kentucky Horse Racing Commission (KHRC), along with the state’s racetracks and other state agencies, sought confirmation that HHR machines met the definition of pari-mutuel wagering. While the Family Foundation challenged that ruling, Kentucky Downs opened the first parlor in Kentucky nine years ago.

Friday’s arguments centered on the use of the Exacta Gaming system, which is in use at two of the state’s HHR parlors. A lawyer for Churchill Downs, which uses a system developed by Ainsworth Game Technology, argued before the court that the case is only dealing with the legality of the Exacta system and that a judgment should not be applied against the Ainsworth system.

A Loud Silence

Among the arguments the Family Foundation has made is that gaming was expanded in the state without the approval of elected officials. The governor appoints the KHRC board members.

This case has a 10-year history, and it’s time to bring certainty to the question of the legality of historical horse racing and the Exacta Gaming system,” Family Foundation attorney Stan Cave told the court.

However, Jay Ingle, at attorney representing Kentucky Downs, argued that the legislature has had 10 years to get involved in the matter if it saw fit.

“The General Assembly, as this court knows, pays attention, and if it does not agree that this court’s opinion should be policy, it passes a new statute… If the legislature thought this was bad policy, if they thought historical horse racing terminals should be illegal, they would have said so, and they have not. And their silence speaks volumes,” Ingle stated.

It’s uncertain when the court may issue a ruling.

HHR Essential to Kentucky

Historical horse racing has become a big business in Kentucky. In fiscal year 2020, which ended in June, the state’s four parlors reported a handle of $2.26 billion. Even though the parlors were dark for more than two months because of COVID-19, the total handle was an 11.3 percent increase over the amount wagered the year prior. The parlors combined for gross revenues totaling nearly $189 million for the year.

Since 2011, more than $8 billion has been wagered at the parlors. The tracks have used proceeds from the machines to increase purses, which has helped attract larger fields for races as well as top horses, jockeys, and trainers.

“Historical horse racing enables Kentucky to keep its status as one of the leading states in horse racing because of the money that HHR generates for purses, for breed development funds, and equine medical research,” KHRC general counsel Jennifer Wolsing told the court Friday.

Currently, there are four parlors in operation. Ellis Park in Henderson, Kentucky Downs in Franklin, and the Red Mile in Lexington have parlors at their tracks. Churchill Downs owns Derby City Gaming, which is based about five miles from the company’s namesake track in Louisville.

More machines are coming soon. Kentucky Downs plans to celebrate the opening of its expanded facility in September. Ellis Park also has plans to expand in the future. Churchill Downs will soon open Oak Grove Gaming and Racing, a harness track it operates with Keeneland.

Churchill also has plans to build a new parlor in Newport in northern Kentucky, which will help provide funding for Turfway Park as it undergoes a massive rebuild.

The Red Mile, which operates its HHR parlor as part of a joint venture with Keeneland, will seek approval to add additional machines when the KHRC meets on Tuesday.