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Monday, January 25, 2021

Kentucky Supreme Court reaffirms decision on slot-like gaming; legislature up next?

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The Kentucky Supreme Court has denied a motion for a rehearing on their decision issued last fall that stated historical horse racing is not pari-mutuel wagering and is therefore illegal under state law, ending a decade long legal battle and presumably putting the newly opened Newport Racing and Gaming venue in the Newport Shopping Center to a decision point. 

Churchill Downs, which owns Newport Racing and Gaming, as well as other facilities across the state have not made their plans public. 

Churchill Downs opened the $38.4 million facility at the Newport Shopping Center in September, which includes over 500 Historical Racing Machines on its 17,000  square foot gaming floor. Newport Racing & Gaming also features a simulcast room to watch horse races across the country. On the day of a race, guests can wager on races and watch the action on big-screen televisions.

Other facilities operating historical horse racing (HHR) gaming machines have temporarily closed as a result of the court's decision. 

The Keeneland Association and Red Mile issued a joint statement on Sunday saying the two Lexington, Ky., companies were temporarily shutting down historical horse racing (HHR) gaming machines at The Red Mile harness track. 

“We were disappointed the Kentucky Supreme Court denied our petition for rehearing,” the statement said. “At this time, Keeneland and Red Mile have made the very difficult decision to temporarily close historical horse racing operations until there is more clarity surrounding the situation. We have confidence the Kentucky legislature will continue its efforts to protect jobs and state revenue generated by historical horse racing, as well as protect Kentucky's signature horse racing industry.”

The Family Foundation, the organization which filed suit against the operation of HHR gaming machines sent a press release with their interpretation of the court's ruling, saying that they believe all sites must shutter under Kentucky statute. 

"Illegal slot parlors now have to close their doors," their statement read. "The tracks have continued to operate after the September ruling knowing that their chances of getting the Court to change its mind was a shot in the dark. Now that the Court has fully finalized its decision – unanimously, the tracks have to shut down their illegal gaming parlors."

This was the second time the High Court addressed the issue.

In 2014, they ruled that the Kentucky Horse Racing Commission had the legal authority to license pari-mutuel wagering on historical horse racing but sent the case back to the trial court to determine whether instant racing constitutes the unauthorized expansion of gambling in violation of Kentucky law.

The Franklin Circuit Court decided that the instant racing machines, even though they looked and operated in many ways like slot machines, met the definition of pari-mutuel wagering and were thus authorized under Kentucky law.

The decision by the Kentucky Supreme Court now potentially puts the issue in front of the Kentucky legislature to decide whether or not Historical Horse Racing machines are lawful. 

Senate President Robert Stivers said that the legislature "very much" has the ability to clarify HHR gaming machines. He said that the machines generate $35 million in revenue for the state and "the court's opinion was a significant one, which will have a ripple effect in the nation's economy." 

Gov. Andy Beshear agreed with President Stivers on the significance of the decision to Kentucky. “Historical Horse Racing is an important part of Kentucky’s economy that supports jobs and contributes over $21 million to the state budget. We are working with various partners to find a path forward.”

Lawmakers would need to vote on it by the end of March, when the 2021 session concludes. 

But the bill isn't guaranteed to succeed in the Republican-dominated House and Senate, where many social conservatives could be reluctant to formally endorse gambling.

Lawmakers have never formally voted to endorse historical horse racing. The industry got off the ground in 2011 and grew to more than $2 billion a year in wagers under the regulatory guise of the horse racing commission and the support of governors of both parties. 

Even if lawmakers do advance a bill, another legal battle is likely.

No legislation has been introduced for the 2021 legislative session dealing with the issue, however hints of new laws may be starting to stir. Steven Huffman, a lobbyist and partner with HCM Governmental Relations said Sunday he is helping to lead the effort for a legislative remedy. 

Fort Thomas Matters has reached out to Newport Racing and Gaming and Churchill Downs for further comment, but has not heard back at the time of publishing this article. 

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