House passes Instant Racing Tax

The Kentucky House approved House Bill 445, a bill that includes a 2% instant racing wagering tax, by a 53-44 vote. The so called “revenue bill” was voted against by many due to it also increasing the gasoline tax. The bill now goes to the Senate for approval.

Most importantly for harness horsemen, the bill creates a new Section of KRS 138.510 to 138.550 that reads:

(1)       Beginning on April 1, 2014, an excise tax is imposed on all tracks conducting pari-mutuel wagering on historical horse races under the jurisdiction of the commission at a rate of two percent (2%) of all money wagered on historical horse races at the track during the fiscal year.(2)       Amounts collected pursuant to subsection (1) of this section shall be deposited as follows:
          (a)     An amount equal to three-quarters of one percent (0.75%) of all money wagered on historical horse races at the track during the fiscal year, not to exceed two million dollars ($2,000,000) in each fiscal year, shall be deposited in the Thoroughbred development fund established by KRS 230.400; and
          (b)     The remainder of the amount collected shall be deposited in the general fund.(3)       This tax shall be collected and administered as provided in Section 6 of this Act.

This new language is very similar to the current pari-mutuel tax on “live racing”, however it does not include any funding for the Standardbred Development Fund (which funds the Kentucky Sires Stakes) as the “live racing” tax currently does. The legislature estimates that the Thoroughbred Development Fund will receive $2 million as a result of the bill. Assuming this number is correct, the Standardbred Development Fund could be missing out on $2 million if changes aren’t made.

Even worse, the current House Bill would have Red Mile Instant Racing machines paying into the Thoroughbred Development Fund.

The bill is expected to make its way through the Senate Appropriations and Revenue Committee who will make revisions to the bill.


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