Posts Tagged ‘kentucky horse industry’

Nothing like kicking someone when they’re down. 

The Lexington Herald-Leader took aim at a number of sales tax exemptions in Kentucky and specifically questioned the exemption provided to the horse industry, which is going through extremely hard economic times right now. Sales of horses purchased for breeding and sales of horses less than two years old to non-residents and sent out of state immediately, have been exempt since 1976, according to the article written by Janet Patton. Some other states have similar exemptions. (I wonder if publishers pay Kentucky sales tax on newspapers sold at vending machines.)

Sen. Damon Thayer said he is not proposing elimination of the exemption but thinks it is an issue that is "certainly cause for serious debate." Thayer’s opposition to legislation permitting Kentucky racetracks to install video lottery terminals and level the playing field with most other racing states has already put him in hot water with horse industry leaders. If he pushes for elimination of the sales tax exemption on some horse sales, he might end up as lonely a guy as the Maytag repairman.

Click here to read the Lexington Herald-Leader article.

Then come back to the Paulick Report and let us know what you think about this issue. — Ray Paulick

Two months ago, the Paulick Report featured the headline REPUBLICANS VS. REPUBLICANS regarding the 527 group started by Will Farish of Lane’s End and Bill Casner of WinStar Farm. Despite both being prominent and generous donors to the Republican Party nationally and locally, they found themselves strange bedfellows with Kentucky Democrats as they helped Robin Webb squeak past Jack Ditty in a State Senate special election in late August.

What created this unusual alliance? Kentucky Republican leadership has decided to champion the anti-slots viewpoint and subsequently leave Kentucky breeders, owners and racetracks at a disadvantage to neighboring states like Indiana and West Virginia. Bill Farish, the son of Will Farish and the chairman of the Breeders’ Cup and former personal aide to George Bush Sr., makes the case that Senate Leader David Williams and others are not pitting Republicans against Democrats but instead pitting Republicans against Republicans in the ultimate display of “eating your own.”

His accurate statement that the industry has never been more united and his call for bipartisanship among Republicans, Democrats and Independents is an earnest effort toward giving the Kentucky Thoroughbred industry equal footing with those in other states.The Paulick Report hope his editorial does not fall on deaf ears. - Bradford Cummings

By Bill Farish
For almost two decades, Kentuckians have been debating the merits of expanded gaming.  As our signature racing and breeding industries have become increasingly threatened by our neighboring states, who use revenue from gaming to substantially increase race purses and breeders incentive funds, Kentucky residents have responded with a near unanimous belief that we must do everything possible to protect Kentucky’s horse industry, and the 100,000 jobs that go with it.
 
A recent statewide poll indicated that nearly 70 percent of Kentuckians support putting video lottery terminals (VLTs) at Kentucky racetracks.  That such a large majority of Kentucky residents would agree on what had been a controversial issue is striking, and speaks to our collective belief that Kentucky’s racing and breeding industries should be put on a level competitive playing field.
 
Sadly, those who oppose VLTs at racetracks, and who have clearly lost in the court of public opinion, have decided to engage in cynical rhetoric meant to divide our state instead of uniting it.
 
Senate President David Williams has made it clear that he intends to make protecting our signature industry a partisan issue.  After making a promise to every Kentuckian that the issue would receive a fair hearing in the Senate, Sen. Williams sent it to a committee where the chairman declared it dead before even hearing testimony.  Imagine going on trial and the judge declares you guilty before your lawyer even makes an opening statement.  Would you consider that a fair hearing?  
 
Now, in an effort to inject partisan politics into the discussion, Sen. Williams has attacked Gov. Beshear and other Democrats for “poisoning the well” in Frankfort.  Sen. Williams also seems to suggest that Republicans should oppose VLTs at racetracks as a tenet of our political philosophy.  As a life-long Republican, and a member of a Kentucky family that has worked on behalf of the Republican Party and Republican administrations, I can say without reservation that protecting our signature industry is not a partisan issue.  In fact, the Republican Party should be standing up for Kentucky businesses, Kentucky jobs, and a free market environment that would allow Kentuckians to fairly compete with their out of state competitors. Due to Sen. Williams’ utter mismanagement, this issue now pits Republicans against Republicans, not Republicans against Democrats, as he would have us believe.
 
Sen. Williams and several members of his caucus are currently advocating that the government should stand in the way of our signature industry, and prevent it from being able to compete.  Government interference with Kentucky businesses and job creation does not sound like a Republican philosophy I am familiar with.  But regardless, saving 100,000 jobs and the industry that identifies our state all over the world does not rest in the domain of any political party. It should be the stated goal of all Kentuckians—regardless of political registration.
 
The other strategy currently being employed is similarly distressing.  Opponents have decided that the best way to defeat VLTs at racetracks is to pit horse owners and breeders against racetracks.  By suggesting that racetracks are greedy corporations that don’t care about our horse industry, our opponents lay bare their belief that our industry must be divided in order to be defeated.  In ramping up his rhetoric, Sen. Williams has made it clear that he intends to demonize Kentucky racetracks at every turn.
 
The horse industry is as united as it has never been in the past.  Opponents of VLTs have always relied on our discord to defeat the efforts to compete on a level playing field.  Now that the industry has formed a united front, opponents seek to break us apart again.  They will be unsuccessful in their efforts to do so.  Kentucky breeders recognize that we must have a healthy horse economy in this state in order to run successful breeding operations.  A healthy horse economy includes buyers willing to invest in our product and take their investment to the racetracks in the hopes of recouping their investment. Owners recognize that they need healthy racetracks offering good purses, so that they can attempt to win back some of their initial investment.  Racetrack operators understand that they need breeders to produce and owners to race their horses at their tracks.
 
We are all in this together, and the attempt to break us into factions is disheartening.  A fractured industry cannot survive, and a failed horse industry would be catastrophic for Kentucky’s economy.  Sadly, Sen. Williams seems less concerned about helping our industry, and more concerned about maintaining control over his Senate fiefdom.   
 
However, as a new legislative session approaches, we will stand together, Republicans and Democrats, owners, trainers, breeders, racetracks, and the 100,000 Kentuckians who rely on the horse industry to make a living.  We will continue to hold our elected officials accountable, and we will not stop working until our state government gets out of the way and allows us to have the tools necessary to compete.

UPDATE: The Kentucky Senate’s Appropriations and Revenue Committee rejected VLT legislation by a 10-5 vote on Monday night. The vote went pretty much along party lines, with Sen. Tom Buford the only one of 10 Republicans present  voting yes to send the bill to the Senate floor. Four of the five Democrats on the committee voted yes, with one abstaining.

Below is a live blog of the hearing….

After the Kentucky House of Representatives passed video lottery terminal legislation on Friday, the Senate’s Appropriations and Revenue Committee will give the bill a hearing late Monday afternoon. Ray Paulick is on the scene at the Kentucky Capitol in Frankfort and will provide up-to-the-minute coverage.

4:45 p.m. … The committee room was packed with people from the horse industry, but those without seats were told they would have to leave and move to adjacent room. Apparently, the Kentucky Senators may have feared an uprising.

4:50 p.m. … The hearing is called to order by Sen.Charlie  Borders,the committee chairman  who says opponents and proponents of House Bill 2 (VLT legislation) will each have up to an hour to provide testimony. He dismissed the notion that the bill would not get a fair hearing. He introduces Nick Nicholson of Keeneland, who begins by saying that he knew the bill would have a fair hearing because he knows the principals involved. Nicholson says the industry faces a problem not because of anything that’s happened in Kentucky, but because of what’s happening in competing states that have moved to offering slot machines. Eleven of 12 of Kentucky’s most compoetitive states offer alternative gaming at racetracks, Nicholson said, but the next time he testifies it will be 12 of 12 if Ohio goes in that direction, which Gov. Strickland said is now a necessity.

4:58 p.m. … Six casinos along the Kentucky border had a net win of $1.44 billion in 2008, Nicholson said. "I do know that hundreds and hundreds of millions of dollars of that $1.44 billion are hemorrhaging from Kentucky into Indiana," Nicholson said. 

5:00 p.m. …. Nicholson tells the panel that Kentucky’s horse breeders are the best in the world and that they are doing their job in producing the world’s best horses. "We aren’t going away tomorrow," he said. But Nicholson added that what is in crisis is Kentucky’s year-round racing circuit. He said the downhill slide of the racing  problem has come more quickly than expected. We didn’t think Churchill Downs would have to cancel one day of race a year, he said. "We thought we had more time." What’s changed the dynamic and caused the decline to happen more quickly than expected, was the bump in purses at Indiana racetracks, the increases in purses in Pennylvania and West Virginia, and the addition of a new track, Presque Isle Downs.

5:05 p.m. … Nicholson called the existing proposal "more moderate, more termparate," saying that the expansion of gambling would not be geographical. "I think it gives us the tools as an industry to compete with other states….We are asking you to give us the tools that our competitors have been given by their state government." 

5:10 p.m. … In the absence of House Speaker Greg Stumbo, Nicholson walked through the legislation and the differences between Stumbo’s version and the language proposed by Kentucky Gov. Steve Beshear. Among the differences, it’s worth noting, is that Stumbo’s version requires tracks to maintain the same number of racing dates they currently have. Stumbo’s version also charges a higher licensing fee to the various tracks, over $500 milliion to paid to the state over five years, versus $360 million in Beshear’s version.

"All 138 members of the legislature without exception want to help the horse industry," Borders said. He then referenced the "alternate" legislation proposed by Senate President David Williams that passed out of the Senate last week. That measure, obviously, was meant to be a pre-emptive measure to slow the momentum of the VLT legislation.

5:15 p.m. … Question time. Vice chair Bob Leeper wants to know if the projections were made before the financial markets meltdown of last September and suggests that casino gambling has taken it on the chin since then. Turfway Park’s Bob Elliston replies that "racinos" (racetrack casinos) have shown increases since then, going against the grain of standalone casinos.

5: 35 p.m. … Sen. Shaughnessy comments about the horse industry finally being together on the issue, saying that was far from the case when slots proposals first surfaced in the capital in the 1990s.  "I like the way you introduced this," Shaughnessy told Nicholson. Other industries have come to the capital for a bailout, he said, "but all you are asking for are resources to help make you competitive." He asks if the additional gaming will make it easier to market the overall racino experience, and be more than just a revenue enhancer. Tough question for Nicholson, since Keeneland is not planning to add VLTs to its racetrack and instead will share revenue from the Red Mile. "There are many, many disadvantages to being the last state to do this," Nicholson said. He added that being last does have the advantage of allowing Kentucky to see how other states have used the racinos to their benefit.

5:40 p.m. … Sen. McGaha gets a laugh from the audience when he said he’s in a hurry and demands "yes or no" answers from the slots proponents. First he asked Ron Geary of Ellis Park if he plans to run the original number of dates Ellis Park was given or the reduced number they now plan to run this year. Geary starts to give an answer that doesn’t start with "yes" or "no," then McGahah shouts "yes or no.," Geary says "yes," then McGaha says "Yes what?" I’m beginning to worry that the issue may be too complicated for some of these legislators.

5:55 p.m. … In closing, Sen. Borders reiterates his believe that every Kentucky legislator wants to helpo the horse industry, but then tips his own vote by saying, "We believe there is already a measure out there that does that. (the Williams alternate plan that taxes the lottery and out of state wagering on Kentucky racing."

The anti-gambling folks are next.

6:00 p.m. David Edmunds of the Family Foundation begins by complaining that Nick Nicholson’s PowerPoint presentation is getting stale. He also doesn’t think the VLT is constitutional, reading from Section 226 of the Kentucky Constitution. He evokes the name of Bernie Madoff in saying his type of pyramid scheme is unconstitutional under Kentucky law. How reassuring.

Edmunds continues to teach the legislature a history and civics  lesson….talking about the founding fathers and the evil of lotteries and horse racing. He also said House Speaker Greg Stumbo is very bad at bad. 

6:10 p.m. … Edmunds quoted from several published reports saying the Kentucky horse industry is doinig well, with great attendance at major events like the Kentucky Oaks and Derby, and even quoted from Churchill Downs CEO Bob Evans’ report to the shareholders at the company’s annual meeting, saying he had a bullish outlook for the company.  

A number of senators have walked out on Edmunds’ presenation, and can’t say I blame them. Edmunds is providing statistics compiled by people who have been educated at Harvard and MIT…that’s sure to impress some of these senators. His biggest concern seems to be an increase in the suicide rate if VLTs are allowed (oh, wait, they already allowed, just not in Kentucky). That’s the last straw: Edmunds tells us that the definition of insanity is doing the samme thing and expecting different results. No, Mr. Edmunds, you are the definition of insanity.

Next witness, please!

Sen. Shaughnessy ridicules Edmunds’ accusations that the state lottery is a "blood-sucking vampire." He then reminds Edmunds that he supports Williams’ bill to tax the lottery further as means to increase purses at racetracks. Edmunds stutters and hems and haws and then mercifully is done.

6:35 p.m. … House Speaker Stumbo enters the room..,..apparently the House has adjourned for the day. 

6: 40 p.m. …  The next witness (whose name I did not catch) slams the Herald-Leader for its accuracy and then cites a Herald-Leader story questioning the number of jobs the horse industry says it contributes to Kentucky’s economy. He then says the horse industry doesn’t spend enough money promoting itself and said Churchill Downs should have gone to night racing years ago when baseball and football went to night games. "Welcome to the modern world," he said.

6:45 p.m. Before the head of the charitable gaming association speaks, chairman Borders recognizes House Speaker Stumbo and tells him the pro-VLT legislation team did "an adequate job" presenting their position.  When riverboat casinos began in Indiana, charities on the north side of the state suffered a loss in players, Ron Morris of the charitable gaming association said. He said other developments such as anti-smoking laws have also hurt charitable gaming.

6:50 p.m. … Sen. Boswell moved to pass House Bill 2 to the Senate floor without comment. Chairman Borders said the motion was out of order but would be honored in a few minutes. That woke a few people up.

6:55 p.m. … One last speaker on the opposition side represents CAGE (Citizens Against Gambling Expansion). The spokesman for the group said people will be sold into bondage to slot machines in order to support racetracks in Kentucky, that they will spend hundreds of millions of their own money, and money they steal from their employers and credit card companies.

7:00 p.m. … Sen Boswell’s motion is made to pass the bill without expression (meaning no support or opposition stated). 

Boswell votes yes, but gives a lengthy explanation as to why he supports the legislation Buford votes yes but wants a local-option amendment to be added on the floor of the Senate.Sen. Angel also votes yes, saying her 81-year-old father is a retired trainer, and she also represents the district where Churchill Downs sits. Yesterday, Angel, said she heard from many constituents by email saying the people want a floor vote on the senate.

Harris votes no, saying the Senate has already passed a bill that protects the horse racing industry through improved purses and breeders’ incentives. "I’m also concerned that the (VLT projections) just don’t work," Harris said.

"This is a tough vote," says Sen. Kerr of Lexington. "I too feel that we have proposals on the table that could help the horse industry without damaging our most vulnerable decisions." Her vote will be a "no."

Wingnut Sen. McGaha says a yes vote for the bill is a vote for suicides and employee theft. Certainly the most rational explanation I heard during the hearing.

Sen. Shaughnessy complained before his yes vote that the committee did not represent a fair hearing, in large part because the committee is stacked disproportionately with Republicans. Shaughnessy said Senate rules call for committees to be divided between Democrats and Republicans along the ratio of their seats in the Senate. Democrats have 40% of the Senate seats but half that on the A&R Committee, he said.

7:15 p.m. … Let’s cut right to it. After a computer failure at just the wrong time, I can report that the measure failed to get the committee support and will not be sent to the full Senate. Voting no were Sens. Borders, Leeper, Harris,  Kelly, Kerr,  McGaha, Smith, Stivers, Tapp, and Tori.. Voting yes were Boswell, Buford, Angel, Pendleton and Shaughnessy.Sen. Palmer abstained and Westwood was absent.

The room cleared quickly, many of the people from the horse industry leaving with long, sad faces. One horse owner, Jack Smith, shouted in the direction of Republican Sen. Damon Thayer, "You will never get another penny of support from me," Smith told Thayer, who is a consultant to the horse industry and a former Breeders’ Cup and Turfway Park executive. Thayer called the remark inappropriate and said he was not a member of the committee that rejected the slots bill. Thayer never came out in support of the bill, either. And for a senator who claims to be the Thoroughbred industry’s point man on Kentucky legislation, that speaks volumes.

That’s it from the live blog

I knew about Calvin Borel the rider but not Calvin Borel the writer. Borel, the winner of this year’s Kentucky Derby aboard Mine That Bird and the Kentucky Oaks and Preakness aboard the filly Rachel Alexandra, has come out in support of video lottery terminal legislation (VLTs, or slots) that is being considered at the special session of the Kentucky legislature called by Gov. Steve Beshear. The special session begins next Monday.

The following op-ed, signed by Borel, is being distributed by the public relations firm hired by the Kentucky Equine Education Project (KEEP). – Ray Paulick