State Approves Instant Racing At Kentucky Downs

Within two months, Kentucky gamblers might have a new game to play.
The Kentucky Horse Racing Commission on Thursday unanimously approved, with no discussion, an application by Kentucky Downs in Franklin to put in "historical" wagering, otherwise known as Instant Racing.

The application was the first by a Kentucky racetrack to take advantage of new regulations, which took effect July 1, that are designed to expand the gambling options tracks may offer.

Kentucky Downs president Corey Johnsen said the track's application is for 200 terminals to operate seven days a week: 16-hour days on weekdays and 20-hour days on Friday and Saturday.

"We plan to hire 85 people, so that's going to be a big boost for our area economy," Johnsen said Thursday.

The 200 terminals are just for now — if revenue meets projections, Kentucky Downs plans to add more machines.

"We've taken a phased approach to this," he said. "We thought it was very important to begin Instant Racing in this state. The horse industry needs economic growth and, frankly, needs a moral boost."

The racetrack along the Tennessee border begins its fall meet Sept. 10 and wants to have machines running by that time. Johnsen said installing what are, at heart, automated betting terminals, takes less than an hour per machine.

He said the track projects the machines will make "millions" annually for the state in tax revenue and for the horse industry in increased purses. But he said he doesn't have hard numbers on exactly how much.

"We wouldn't do this if we couldn't guarantee $1 million-plus" in revenue, he said. "We'll invest a lot — $3 million."

That $3 million includes the cost of a marketing campaign to pull in potential gamblers from Tennessee and other states that have few gambling options.

Johnsen, who is a part owner of the track, said his operation would be modeled on Oaklawn Park, the Arkansas racetrack that is the only one to operate Instant Racing. In 2009, Oaklawn's 400 Instant Racing terminals generated about $21 million in revenue, according to published reports.

Kentucky's racing commission approved the concept a year ago. Using machines that simulate play on an electronic slot machine, gamblers bet on which horse will win without knowing the track, trainer or much other information about the horses' past performances.

"We're close to getting started with something that's going to help Kentucky racing," Johnsen said.

He said Kentucky Downs might be able to raise purses for this upcoming four-day meet and expects to expand to six days next year. He said the average daily purses now are $150,000 a day, but he hopes by next year they will be closer to $250,000.

And he said that if the machines generate over and above a certain level, a revenue-sharing agreement with the Kentucky Horsemen's Benevolent and Protective Association allows for money to be shifted to purses at other tracks as well.

Johnsen said the track probably will run its simulcasting operation seven days a week as well, which also could generate more betting income.

The Kentucky Equine Education Project, a horsemen's group that has long lobbied for expanded gambling, hailed Thursday's action as a significant positive step for the state's racing and breeding industry.

"As we have seen in Arkansas, historic racing has been able to contribute millions to purses at Oaklawn Park and to the Arkansas breeders program," said Patrick Neely, KEEP executive director.
Johnsen is also chairman of KEEP.

A Franklin Circuit Court ruling that the regulations are legal is being challenged by The Family Foundation, which appealed the decision to the Kentucky Court of Appeals in Frankfort. A ruling is expected later this year, but oral arguments have not been scheduled.

Family Foundation executive director Kent Ostrander said after the commission meeting that he thinks the Franklin Circuit Court ruling will be overturned, meaning any investment in the concept would be down the drain. "If I were a betting man, I would say it would be unwise to install these machines," he said.

The Family Foundation argued that the betting is not truly pari-mutuel because players are betting on separate horse races, although the money is pooled into one jackpot.

Family Foundation attorney Stan Cave on Thursday sent a letter to the commission and to the Executive Branch Ethics Commission asserting that the racing commission's admitted "common interest" with racetracks constitutes a conflict of interest.

Ellis Park in Henderson is expected to follow with an Instant Racing application soon; owner Ron Geary said he doesn't plan to wait for the appeal to be resolved before applying to add the machines.

Geary wants to pursue an application after Ellis Park's current meet ends in early September. And he will be watching closely to see how things go in Franklin.

"That's one of the many factors we'll be looking at," Geary said. He said Ellis would invest along the same scale as Kentucky Downs.

Other racetracks are taking a more cautious approach.

"We will wait for the Court of Appeals to rule on the Franklin Circuit Court decision," said Bob Elliston, president of Northern Kentucky's Turfway Park, which is facing increasing competition from Indiana riverboats and, soon, Ohio casinos as well as slots at racetracks.

"At this time, Keeneland does not anticipate moving forward with Instant Racing until the legal process has reached its final conclusion," Keene land spokeswoman Julie Balog said in a statement. Keeneland probably would partner with The Red Mile, the Lexington harness track, on any local gambling expansion, track officials have long said.

Churchill Downs vice president John Asher told The Courier-Journal that his track probably will wait until the legal challenge is resolved as well.

The commission on Thursday gave approval for five specific games:

■ Cruisin for Cash: 10-cent wager on 35 machines.
■ Sir Willie's Treasure Chest: 10-cent wager on 35 machines.
■ Cash Carnival: 25-cent wager on 25 machines and $1 wager on 10 machines.
■ Wild West Willie's Lucky Draw: 25-cent wager on 25 machines and $1 wager on 15 machines.
■ Yukon Willie's Gold Rush: 25-cent wager on 35 machines and $1 wager on 20 machines.

The commission put several extra restrictions on the Kentucky Downs' application, including that the commission "shall have complete access to all security information and data, including video/digital surveillance data, upon request."

If Kentucky Downs does not comply with any conditions, the racing commission has the ability to assess fines, impose penalties or revoke approval for the games.

The games also must be tested by an independent lab to verify they are operating properly before the public may play. The commission is scheduled to consider an application in August for Amtote to handle the wagering.

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