| Louisville Courier Journal
FRANKFORT — The Kentucky House of Representatives passed a bill to legalize historical horse racing machines Thursday evening, after nearly three hours of debate.
Senate Bill 120 now heads to Gov. Andy Beshear’s desk, and he has indicated he will sign the bill into law.
The bill changes the definition of pari-mutuel wagering in Kentucky statutes to include these HHR machines, which closely resemble slot machines.
It passed the chamber by a 55-38 vote after several floor amendments were defeated and a dozen Republican members spoke out forcefully against the bill.
The horse racing industry championed the legislation after the Kentucky Supreme Court ruled last year that such machines do not constitute legal pari-mutuel racing, arguing the closure of tracks’ HHR facilities — and the massive revenue they’ve brought in over the past decade — would devastate the industry and lead to massive job losses.
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Some critics of SB 120 say it is unconstitutional and HHR machines could be legalized only through a constitutional amendment, while others say the legislation should have raised the tax rate on the machines to a rate comparable to slot machines in surrounding states.
Rep. Adam Koenig, R-Erlanger, said the bill was necessary to pass if Kentucky wanted to remain the horse capital of the world and avoid massive job losses throughout the state.
“Do we have enough signature industries that we can afford to lose this one?” Koenig asked. “Do we have so many jobs that we can kill off thousands of them?”
Conservative Republicans countered that message, denouncing the immorality of expanding gambling in Kentucky.
Rep. Chris Fugate, R-Chavies, said Kentucky voters in the November election gave Republicans a dominant supermajority in the House with 75 members to Democrats’ 25, along with a mission to “point Kentucky in a conservative, pro-life, pro-Second Amendment, pro-family direction,” and not to legalize casinos.
“Sometimes we come to Frankfort and our values start to get changed, because there’s a lot of pressure at this place… a lot of money at stake,” Fugate said. “But gambling is not going to fix — slot machines are not going to fix — the troubles of Kentucky.”
Rep. David Hale, a Republican pastor from Wellington, gave a passionate speech against the bill for more than 15 minutes, saying SB 120 “is not about jobs. It’s about greed for a greedy industry and a greedy corporation.”
Background: Coalition calls for taxing historical horse racing slots at higher rate if legalized
Rep. Mary Lou Marzian, D-Louisville, spoke about the need to increase the tax rate on HHR machines, which could bring in an additional $100 million in tax revenue for the state annually.
Citing a letter from Churchill Downs stating the company would be open to increasing taxes on HHR if made legal, Marzian said legislators “need to hold their feet to the fire” on making that happen and not just create another task force that results in no action.
Rep. Jim DuPlessis, R-Elizabethtown, brought forth a floor amendment to raise the excise tax on HHR wagering from 1.5% to 3.5% but it was ruled out of order, because the measure would raise revenue and the bill originated in the Senate. Revenue bills are able to only originate in the House.
The divide among the Republican caucus was present in the final vote on the bill, as 38 members voted for SB 120 — a slight majority of the 75-member caucus.
With a split Republican caucus, the legislation need the support of Democrats pass, with 17 Democratic members voting for SB 120 and just five voting no.
When SB 120 passed through the Senate on Tuesday, 15 Republicans voted for the bill and 15 voted against it, with all seven Democrats present voting yes.
In a statement praising the passage of SB 120, Beshear said the legislation is “crucial to ensuring that our signature Thoroughbred industry remains strong.”
Beshear’s statement also indicated that “each of our major tracks committed to enacting a more fair and equitable tax structure this session” as they worked toward the passage of the bill, adding “this is what can happen when we stop fighting and work together.”
According to an emailed letter from Churchill Downs CEO William Carstanjen to House Minority Leader Joni Jenkins, D-Shively, dated Thursday and obtained by The Courier Journal, the company and all of the state’s race tracks “are committed to working constructively to revise and raise the tax structure on HHR, including implementing a graduated tax structure.”
Carstanjen wrote that this pledge served to “reiterate our discussions” with Beshear, Jenkins and Senate Minority Leaders Morgan McGarvey, D-Louisville, on SB 120.
“We are prepared to sit down after the passage of SB 120 and devote all necessary time and resources to working with both Democrats and Republicans to achieve this revision to the tax code,” Carstanjen wrote.
Horse industry leaders from Churchill Downs Inc., Keeneland, Ellis Entertainment LLC, Red Mile Racetrack, and Kentucky Downs released a joint statement applauding the final passage of SB 120 to secure “the future of the Commonwealth’s signature industry,” also reiterating their pledge to Democrats to change the tax structure of HHR.
Martin Cothran of the Family Foundation — which testified strongly against the bill and won its fight with the horse racing industry over HHR in the Supreme Court last year — said after SB 120’s passage that “logic and common sense won the legal fight in Court, but money and political power won the political fight in the General Assembly.”
“The horse industry won today, but will lose in the future as mechanized gambling eventually pushes it out, and the state loses because it gets a pittance from these machines and supporters of this bill refused to raise the tax rate,” Cothran stated.
Reach reporter Joe Sonka at [email protected] and follow him on Twitter at @joesonka. Support strong local journalism by subscribing today at the top of this page.