LEXINGTON, Ky. — The Kentucky House of Representatives Thursday passed a bill that attempts to save slot-like machines at Kentucky racetracks, which the Kentucky Supreme Court recently ruled were illegal.
Senate Bill 170 creates a legal definition for parimutuel wagering — which is one of the few forms of gambling allowed in Kentucky's constitution — to include historical horse racing machines, a slot-like game that bases winnings on the results of previously run horse races.
In the aftermath of the Supreme Court ruling, top legislative leaders launched a push to pass a bill that would legalize the machines, setting up a political battle of will between the socially conservative Republicans in the General Assembly who oppose gambling and the Chamber of Commerce Republicans spurred on by the powerful horse racing industry.
With at least one gambling facility forced to close because of the ruling — Red Mile in Lexington — the supporters of the bill painted it as a necessary bill to save jobs and help maintain an flow of money that has propped up Kentucky's horse racing industry in recent years.
"This bill today is about jobs," said GOP Rep. Matthew Koch. "I cannot imagine a more dangerous time to cripple this industry. I cannot imagine sitting here today and voting to put more families on unemployment."
For years, social conservatives have been able to effectively block bills that would expand gambling in Kentucky. With a new make-up in the House of Representatives and on an issue presented as preserving the status quo rather than expanding gambling options — and support from some Democrats — the bill had enough votes to pass.
Still, those members fought on, mirroring the fight between the conservative activists at the Family Foundation, which defeated the horse racing industry in court.
GOP Rep. David Hale, who is still recovering from lingering effects of COVID-19, said he had to have someone drive him to Frankfort so he could speak against the bill. In a passionate floor speech, he described the bill as the horse racing industry "begging and pleading" for a bailout from the legislature.
"I don't think it is about their jobs, I think it is about greed," Hale said. "I think it's about greed for a greedy industry and a greedy corporation."
Many members of the General Assembly have pushed for increasing the taxes on the games, seeing as they have generated about $700 million for the tracks since 2011 and more than $60 million for the state's General Fund, according to the Kentucky Horse Racing Commission. But an effort to do so failed Thursday.
One racing handle tax increase was passed: GOP House Speaker David Osborne introduced a floor amendment to a separate House bill focused on COVID-19 relief for charitable gaming facilities.
Osborne's amendment increased the tax rate on advance-deposit wagering platforms such as Churchill Downs' TwinSpires, tripling their rate to 1.5%.
The accounts let gamblers bet online on races once they put money in an account. Betting on ADWS has risen sharply during the pandemic, as spectators were sometimes barred from tracks, but the tax rate on the bets has been half of a percent, much lower than the tax on bets made at a betting window.
Osborne estimated that the tax increase would bring in $6 million for the state. The bill wouldn't take effect until 2022, providing a comprehensive tax reform bill is not passed by the General Assembly.
While the Senate will still have to vote to approve the tax increase, the bill allowing historical horse racing ultimately passed the House 55-38 and will be sent to the governor for his signature.
Gov. Andy Beshear is likely to sign the bill. On Thursday night, he said the passage of the bill ensures that "our signature Thoroughbred industry remains strong."
"In working toward the passage of this bill, each of our major tracks committed to enacting a more fair and equitable tax structure this session," Beshear said. "This is what can happen when we stop fighting and work together."
The bill will likely end up back in court, as the Family Foundation has vowed to challenge whether the new language is legal.
(Herald-Leader reporter Jack Brammer contributed reporting to this article.)
