The Kentucky Supreme Court ruled Thursday that the Kentucky Horse Racing Commission has the legal authority to regulate instant racing, but that the pari-mutuel tax, which applies only to "live" racing, cannot be used to collect state revenues from the games.
Without action by the legislature to reword the pari-mutuel tax law it appears the racetracks will take the machine's profits tax free. A revision to the tax law will not only allow the machines to continue generating millions for the state but will also allow the machines to add money to the Kentucky Standardbred Development Fund (KSDF), which funds the Kentucky Sires Stakes. The KSDF is funded, in part, by a percentage of the pari-mutuel taxes collected on all money wagered on live races at the track for harness racing.
Through Jan. 31, more than $573 million has been wagered on instant racing machines, both at thoroughbred racetracks, generating about $8.6 million in taxes. The tracks have received more than $36 million.
House Speaker Greg Stumbo has emphasized to lawmakers that a vote to tax instant racing would not mean a lawmaker is condoning that form of gambling and that is going to continue. Thus, the question is, are you going to continue to tax "instant racing" like horse racing or allow the racetracks to operate the machines tax free.
However, Senate President Robert Stivers has said more information is needed to determine if a tax could be passed without making instant racing legal.
He also said lawmakers may be reluctant to tackle the issue while the lawsuit is ongoing.