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Friday, September 25, 2020

Will Kentucky Supreme Court Decision Affect Newport Historical Horse Racing Facility?

The Newport Racing & Gaming facility in Newport Shopping Center is set to open next week. It is yet unclear if the recent court ruling against historical horse racing machines will impact it.

By Robin Gee

The answer to the question about the fate of the new gaming facility is uncertain at this point, but a decision announced late yesterday by the Kentucky Supreme Court does put the future of historical horse racing across the state in jeopardy.

The court decided unanimously that historical horse racing machines (HHR) do not meet Kentucky’s constitutional requirement as "pari-mutuel" gaming. Pari-mutuel is a term used to describe the type of betting used in horse racing.

According to the Sports Geek website, "Unlike most other forms of betting, the odds are not fixed. Rather than placing a bet against the race track, like one would with a bookie, horse racing bettors are wagering against each other...A horse racing track takes a minimal commission from all wagers as a fee for handling horse racing bets. It does not collect anything else when a bettor loses." 

RELATED: Newport Racing and Gaming to Open October 2

Churchill Downs cites a technicality

Churchill Downs Incorporated (CDI) issued a brief statement in response to the decision pointing to a technical difference between the machines described in the court case, known as the "Exacta system," and the machines employed in their facilities.

CDI facilities do not use the Exacta system, but the company did acknowledge the impact of the decision on industry, thanking Governor Andy Beshear who expressed support and vowed to work with all involved for a resolution.

The company currently operates two historical horse racing facilities, Derby City Gaming and Oak Grove Racing, Gaming and Hotel with plans underway to open Newport Racing & Gaming October 2.

Ultimately, the issue is a matter for the Kentucky legislature. The governor could call a special session, or the legislature could decide to take up the issue early in its next session.

RELATED: Churchill Downs Shares Details on Historical Horse Racing Facility in Newport

Potential impact on jobs, city revenue

Still, right now there is no news on how and whether that decision will affect the new Newport facility, but officials are bracing for impact.

Newport City Manager Tom Fromme said he had several meetings with company officials but the the case against the HHR machines moving up through the courts was never mentioned. 

At a time when restaurants, bars and entertainment facilities in Newport are struggling, it was not welcome news. "This could have a dramatic impact on us...this is 80 jobs or more. It’s bad timing with all the uncertainty of the pandemic; restaurant business in particular has slowed up, closed down."

The city would not only lose jobs but also the revenue that comes from employee spending, payroll and fees. A loss of the facility would impact the Newport Shopping Center and even have a ripple effect on businesses around it, he said.

An issue for the legislature

Right now there has been no news about what will happen with the Newport facility, if anything. Fromme says Churchill Downs has well over $30 million invested in the facility, as well as all its investment in the two facilities already in operation.

He agreed that the issue must be addressed at the legislative level. Whatever happens, he said, he has confidence in the resiliency of the community. "We are known as fast-paced in Newport. We are used to things changing at the drop of the hat."

Still, he admits this is potential bad news, especially right before the grand opening. For now, city officials can only wait and see what will happen. In the meantime, said Fromme, "We will do everything we can to help Churchill Downs work through this...We hope that Kentucky legislators will take this matter up quickly. Kentucky has a tradition of more than 200 years in horse racing."

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