Posts Tagged ‘Kentucky’

Investigators with the California Horse Racing Board said they will take no action at this time against owner Ahmed Zayat, who in documents related to his Zayat Stables’ Chapter 11 bankruptcy filing said he loaned more than $600,000 to convicted bookmakers Michael and Jeffrey Jelinsky and other family members. The New York Times first reported the loans last week. The Jelinsky brothers were convicted of felony bookmaking charges last year after a federal investigation uncovered an extensive illegal betting operation they ran out of Las Vegas.

Two other states, Kentucky and New York, are said to be investigating Zayat’s relationships with the Jelinskys.

The CHRB explained, somewhat curiously, that the loans were made before the Jelinskys were convicted of a felony. But the regulation that applies to CHRB licensees says nothing about “convicted” only “known” bookmakers.

Here is the language of CHRB Rule No. 1902, Conduct Detrimental to Horse Racing.

“No licensee shall engage in any conduct prohibited by this Division nor shall any licensee engage in any conduct which by its nature is detrimental to the best interests of horse racing including, but not limited to: (a) knowing association with any known bookmaker, known tout, or known felon, (b) indictment or arrest for a crime involving moral turpitude or which is punishable by imprisonment in the state or federal prison, when such indictment or arrest is the subject of notorious or widespread publicity in the news media, and when there is probable cause to believe the licensee committed the offenses charged, (c) solicitation of or aiding and abetting any other person to participate in any act or conduct prohibited by this Division.

Did the CHRB investigator read the CHRB’s own rules?

Read it at Bloodhorse.com

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- Ray Paulick

The following op-ed, written by KEEP Executive Director Patrick Neely, is a well thought out plea for a reconsideration of expanded gaming in Kentucky. Refreshing in its details, it is clear that not only does KEEP want to continue to push for expanded gaming through collaboration but is also open to other ideas to help Kentucky’s signature industry.

- Bradford Cummings

By Patrick Neely
Executive Director, Kentucky Equine Education Project

During the last month, much has been written about expanded gaming in the context of our state budget crisis. Lost in most of the discussion about whether money from expanded gaming should be used to fill budget holes is the simple and sad truth that our signature horse industry is in a rapid state of decline.

It is not disputed, even by opponents of expanded gaming, that competitor states are successfully stealing our industry right out from under our noses. Using money from expanded gaming to significantly boost their purses and breeders’ incentive funds, states like Pennsylvania, Indiana, West Virginia and Louisiana are luring our racehorses and breeding stock out of Kentucky.

When horses leave, jobs go with them. Every horse that lives in the state of Kentucky is like a little factory, a full-blown jobs creator. Every horse requires people to grow their food, give them vet care, transport them, produce and sell tack and other equipment, build their barns and paint their fences, care for them on a day to day basis, shoe them and train them. Most racing and breeding stock also create jobs in the legal, insurance, advertising, and banking fields. Not to mention all of the employees at industry trade publications, sales companies, and of course, Kentucky racetracks. And how about the millions of dollars that come from worldwide tourists who recognize the beauty and attraction of our industry?

It is beyond dispute that tens of thousands of Kentuckians depend on the horse industry to make their living. And without a doubt, those jobs are being lost or moved to other states at an alarming rate.

The most common complaint I hear is that if our industry cannot stand on its own two feet, it does not deserve any special treatment. This would be akin to telling the University of Kentucky that they are not allowed to offer scholarships to their athletes, and then expecting them to “stand on their own two feet” and remain competitive. The simple truth remains—if your competitors are given a significant advantage, it makes it nearly impossible to compete. That is why the industry has been so steadfast in its request for a level competitive playing field.

In the wake of a recent Bluegrass State Poll that showed overwhelming support for putting video lottery terminals (VLTs) at Kentucky racetracks, and similarly showed an overwhelming desire of Kentucky residents to vote on the issue of expanded gaming, it has been suggested that the industry should support Sen. Damon Thayer’s proposed constitutional amendment, which would finally “let the people decide.”

It should first be noted that Sen. Thayer has done much good for Kentucky’s horse industry, including strong support of the Breeders’ Incentive Fund. However, we fundamentally disagree with Sen. Thayer’s approach to this problem. First, an amendment could not be voted on before November. It seems a foregone conclusion that our out of state competitors, who have spent tens of millions of dollars to defeat gaming amendments in other states, would no doubt spend whatever it took to defeat an amendment here in Kentucky. But assuming an amendment would pass, where does that get us?

According to Sen. Thayer’s amendment, the legislature is not required to allow VLTs at racetracks, even if an amendment did pass. It simply gives the legislature the option to do so. In other words, even if an amendment passed, we would be in the exact same place we are right now in 2011, asking the legislature to pass a statute allowing VLTs at Kentucky racetracks. If they won’t pass such a law now, why would they pass it a year from now? We don’t need a referendum to know that Kentuckians support the concept. Poll after poll has demonstrated that a wide majority of Kentuckians believe we should have VLTs at Kentucky tracks. So why not just pass the statute right now?

If the industry were to clear the amendment and legislative hurdles, the Thayer provision then calls for a local referendum to approve VLTs at tracks. If the local referendum passes, then VLTs go out to a bid process that is open to everyone, and the machines do not have to go to racetracks. So a big out of state casino company could open a stand-alone slots facility in the same cities as our racetracks. After the bidding, a license procedure would have to take place, and if New York and Maryland are any example, the bidding and licensure process can last several years. Finally, once all of that is accomplished, the winning bidders would have to build the facilities and get up and running.

Even if the industry cleared every one of those numerous hurdles, the process would quite clearly last several years. The industry cannot wait several years for permission from state government to compete. We are losing horses and jobs today. Timely action is critical.

So where does that leave us? Our industry is willing and anxious to work with our elected officials to arrive at a creative solution. The Speaker of the House has offered an idea that seems to be the right compromise. His plan would allow cities that have racetracks to vote on whether those tracks should be allowed to install VLTs. This proposal should answer most everyone’s objections. The local referendums could take place as soon as this summer, and would be handled in a manner similar to wet/dry alcohol votes. Assuming the measures passed, money could flow to purses, breeders’ incentives and other worthwhile programs in a very short time after that. This proposal should also satisfy those legislators who want to “let the people decide.” Under this scenario, the people who live in communities with racetracks will make the decision whether or not they want VLTs in their communities. This system works for alcohol sales, so why not use it to decide the VLT question?

Another idea is to slightly lower the pari-mutuel tax, and to divert the tax proceeds to purses and breeders’ incentives. Kentucky racetracks are double-taxed on the wagers they receive (pari-mutuel tax and corporate income tax), so if the state wants to continue double-taxing the industry, it would make sense to send some of that tax money back to support the industry. A tax reduction and redirection could save our struggling racetracks a small amount, and could redirect funding into purses and breeders’ programs. That change would not come close to leveling the playing field, but it would be a good start.

Horse owners, breeders, trainers, and racetrack operators are willing to work in a collaborative fashion to solve this monumental crisis in the industry. The only option that is unacceptable is legislative inaction. The future of our signature industry and thousands of Kentucky jobs are at stake.

By Ray Paulick
The news just doesn’t get any better at the publication where I spent 15 years of my professional life, but the fact that Blood-Horse magazine has laid off at least five more employees today is just as much a sign of the collateral damage from the Kentucky Thoroughbred industry’s economic troubles as it is a statement on the present and future of newspapers and magazines.

Tick off five more losses from the estimated 100,000 jobs the horse industry contributes directly or indirectly to Kentucky’s economy. I have lost count of how many of my friends and former colleagues at Blood-Horse have lost their jobs in the last 18 months. As my Paulick Report partner, Brad Cummings, and I have traveled from business to business in Kentucky, we’re hearing the same refrain, whether it’s at farms, racetracks, suppliers, tack shops, insurance or advertising agencies: this industry is hurting, and it’s painful to see the continuing losses and the damage it inflicts on the individuals and their families.

Each job loss within Kentucky’s signature industry should send a dire message to Frankfort, but I’m afraid our state legislators are tone deaf. With the news that VLT or slots legislation is almost certainly a non-starter again in 2010, it means that Kentucky’s horse industry faces another year of operating on a playing field that is far from level with a majority of states. Racehorses, mares and stallions are leaving the state, and so are the jobs they contribute.

You’ve read it here and many other places that print publications are in trouble, and there’s no doubt the razor thin issues the Blood-Horse has been printing lately reflect a significant shift in advertising dollars from print to online publications. Advertisers are adjusting out of necessity since their revenues are down, and they have to maximize every dollar they spend. Make no mistake: I’m grateful to be on the right side of the technology curve, but it doesn’t make it easier to see what’s happening to so many former colleagues.

Copyright © 2010, The Paulick Report

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Kentucky State Senate President David Williams’ referendum calling for a constitutional amendment on expansion of gambling failed in a party line vote yesterday. While it received a majority (21 - 16 with one Democrat absent), it takes 23 votes for any legislation to pass the Senate.

Senator Kathy Stein called out Williams by pointing out his hypocricy on the issue. This is a referendum and noted that the Senate President had previously stated Kentucky isn’t a ‘referendum state’.

Click here for the entire Blood-Horse article

Then come back to the Paulick Report and let us know what you think

- Bradford Cummings

By Ray Paulick
I’ve known Damon Thayer going on 20 years, and I don’t think he’s a bad person. But I’ve seen how good people can be intoxicated with power, and am convinced that is what is going on with the former racing industry executive who is now a Kentucky state senator from Scott County representing the 17th district.

A few weeks ago I reported on an interview Thayer did on the Horse Racing Radio Network (click here for the article), in which he complained that no one from the Thoroughbred industry was contacting him about his proposed constitutional amendment calling for a statewide referendum and local option vote to permit slot machines in Kentucky counties where racetracks are located (not necessarily at tracks, but in counties where tracks are currently located).

Woe is him.

Perhaps the reason no one is interested in calling the senator from Scott is the fact his proposed amendment is outrageous because it would ultimately lead to out-of-state casino companies and developers putting Kentucky racetracks out of business. That’s exactly what is happening in the state of Maryland, where slot machines were approved for a location not at Pimlico or Laurel but at a shopping mall owned and operated by the Cordish Company. Yes, that’s the same Cordish Company that developed Fourth Street Live in Louisville.

If Thayer’s folly is somehow approved as written (very much a longshot at best), Cordish will be salivating over the prospect of getting the slots license in Jefferson County, Kentucky, where Churchill Downs is located. Another well-funded casino company would surely end up with the license in Northern Kentucky. So we’d have Turfway Park certainly out of business as a racetrack, and Churchill Downs severely impaired financially.

But, Thayer says with almost ghoulish delight, we’ll have all that slots money going into purses, based on how his amendment is written. Yes, Damon, just like in Maryland, where there will be money for purses, but no tracks able to stay open to run the races where the purses will be offered.

Sources tell the Paulick Report that employees of the Maryland Jockey Club are being told Laurel is going to be bought by a developer (Cordish?), and closed for live racing. Someone will operate Pimlico for 30 days during the Preakness meeting in the spring, at least as long as the walls of the rickety old racetrack grandstand don’t collapse. And that, along with a short meeting at the state fair in Timonium will be it for live racing.

If true, it will be a devastating and final blow for the once-proud Maryland breeding industry, where the mighty Northern Dancer once stood as the world’s most important stallion. Allowing Thayer’s folly to proceed will cause similar destruction to Kentucky’s signature industry.

So Thayer, in a snit because no one was calling him to discuss his ludicrous proposal, decided to drop another bomb when a reporter from the Lexington Herald-Leader called him to inquire about the horse industry’s exemption on sales tax for certain horses sold at auction (the exemption, which does not apply to all horses sold, is not as comprehensive as that given to the horse industry in other states).

When asked whether the exemptions should be discontinued, Thayer said it is “certainly cause for serious debate.”

It was his way of flipping the almighty bird to a now struggling industry that is not only vital to the economic future of this state, but one that has provided him and his family a very good living for many years.

Speaking of the almighty, it’s amazing to me that a Senate committee chaired by Thayer (the State and Local Government Committee) wasted taxpayers’ time and money on Wednesday, approving along a straight party-line vote (Thayer’s Republican colleagues won the day over Democrats 7-5) something called the 21st Century Bill of Rights. Among other things, this new and improved bill of rights (as if our Founding Fathers weren’t very wise) would prohibit a ban on the Ten Commandments being posted in public buildings. If you get a chance, check out this troubling and funny video clip of a Georgia Congressman, Lynn Westmoreland, who sponsored a bill requiring the Ten Commandments to be posted in public buildings. (Click here to view.) Seems the Congressman has a hard time knowing exactly what those Commandments are…which makes me wonder how Sen. Thayer and his colleagues would do on a pop quiz.

But I digress.

Thayer is essentially drunk with power, sitting on his senatorial throne while waiting for individuals in the horse industry to come to him, hat in hand, begging for some scraps. If he were a true leader, he would have been out amongst the people, meeting with horse farmers, trainers and racetrack owners who are suffering now, watching stallions, mares and racehorses being tugged away from Kentucky by states with more favorable economics and more enlightened legislators. It is the same kind of arrogance and insular thinking that we’ve witnessed most recently in the White House, where a president who was elected under the mantra of change failed to understand how deep the suffering and unhappiness is among the very people who voted for him, leading to an embarrassing defeat for the Democratic Party Tuesday in Massachusets, the most liberal state in the union.

I hold out little hope that my old friend, the senator from Scott, will understand  how wrong he is and how much help the horse industry needs. There is little to do but find and support a strong candidate to displace him from his office in 2012.

Copyright © 2010, The Paulick Report

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By Ray Paulick
Every Kentuckian’s favorite piñata, Republican state Sen. Damon Thayer, was Mike Penna’s guest last Saturday on the Horse Racing Radio Network’s “Equine Forum,” discussing, naturally, the issue of slot machines at Kentucky racetracks.

(To listen to a rebroadcast of the interview, click here.)

Thayer is feeling his oats these days, following the drubbing Republican Jimmy Higdon gave the horse industry-backed candidate, Jodie Haydon, in the recent special election for a Senate seat in the 14th district made available when the Republican incumbent accepted a judgeship offered by Democratic Gov. Steve Beshear. Had Haydon defeated Higdon, the Republican majority in the state Senate would have been wafer thin and the heavy-handed rule of Senate president David “Blackjack” Williams might have been in jeopardy.

But Williams and, I would assume, Mitch McConnell, the U.S. Senate’s minority leader from Kentucky, devised a brilliant last-minute scheme targeting prominent Democratic leaders Nancy Pelosi and Harry Reid as Higdon’s real opponents. It was enough to turn the election in Higdon’s favor in this rural, conservative district, where Democrats in name only outnumber Republicans in voter registration rolls by a wide margin. Higdon won despite being heavily outspent by Haydon, thanks in large measure to a 527 organization, Keep Our Jobs in Kentucky, formed by prominent members of the horse industry who backed Haydon because of his position in favor of video lottery terminals or slot machines at Kentucky racetracks.

Thayer is feeling much maligned these days as a result of his non-support of a bill permitting racetrack VLTs that died in a Senate committee last summer and his more recent proposal for a constitutional amendment on the issue. That proposal fell on deaf ears during an October meeting with horsemen who called the measure “too little, too late.”  (click here for details). In the wake of the horse industry’s recent setback at the polls, Thayer said he plans to push his proposal forward in the legislative session that begins in January and urged leaders of Kentucky’s horse industry to get behind it, or at the very least work with him on the bill.

“It’s not beneficial to the horse industry that despite the election loss they keep speaking out on my bill,” Thayer said during his radio appearance. “I have some Republican votes for this bill. I think you’ll be surprised by the number of Republicans who would vote for this. Democrats said they would block vote against this, which I think is fraught with peril.”
 
Thayer repeated his stand that he believes “slots by statute”–as he called the bill that was passed by the House but stopped in a Senate committee last summer—is not constitutional and would be held up by a lengthy legal challenge if it passed. Kentucky’s current attorney general said the statute would not be unconstitutional, though previous attorneys general opinions have gone the other way. “And by the way,” he added, “it is dead for the foreseeable future, OK, because there are not the votes in the Senate.”

A horse industry consultant who formerly worked for Jerry Carroll at Turfway Park and as an executive with the Breeders’ Cup, Thayer said he understands the economic pressure the horse industry is facing from the slumping economy and gaming in other states that is subsidizing tracks and purses. “There is no doubt, absolutely no doubt, the horse industry in Kentucky is suffering from not only the downturn in the economy, as is the horse industry throughout the United States, but also from an uneven playing field. I get it. I worked at Turfway Park when casino boats landed in Indiana.”

Thayer said many in the horse industry misunderstood the challenge those casino boats presented at the time. “No, no we don’t need to worry about those riverboats in Indiana, we don’t need to worry about casinos and slot machines in surrounding states” he cited as the prevailing opinion. “We’re Kentucky. We can withstand that. All those people changed their opinion.”

Penna challenged Thayer on the timeline a constitutional amendment would present, along with language in the bill that would open bidding on VLTs to businesses other than racetracks in the seven Kentucky counties were tracks exist. Thayer’s proposal, if it is approved by the legislature and passed by a simple majority of Kentucky voters in November, would then require local referendums, followed by a bidding process.  Opponents have said implementation could stretch out until 2012 or ’13 if approved, but Thayer said slots could be up and operating as early as mid-2011. He also thinks the statewide referendum “could pass…my personal opinion is it’s probably a tossup. I believe the horse industry has made progress convincing people of the importance of this industry to every county. I think you shouldn’t be afraid of having a statewide debate on this issue. It would be huge. Huge. The press would cover it. You would get an opportunity to make your case like you’ve never done before in a statewide debate, and I think it would have a chance of passing.”

As for opening the bidding process to non-racetracks, Thayer said, “These slot licenses are things of value to the Commonwealth.” One of the things he said he heard during last summer’s failed effort to pass legislation was, “Why do the racetracks get a monopoly on this?”

Thayer chided the horse industry to work with him on the legislation calling for a constitutional amendment, which he said the Kentucky Equine Education Project and pro-slots Gov. Beshear previously supported. “Somewhere along the way in the last 12 months they changed their positions and decided they wanted to pursue what I call slots by statute,” he said. “People see (Beshear) has flip-flopped on the issue…and he has egg on his face.”

“My bill is the only bill that has the potential of passing the next legislative session,” he said. “A hundred million dollars would go into purses and breeders incentives in Kentucky…I guess I’m struggling to find out what part of $100 million doesn’t benefit the horse industry…

“I’ve had this proposal out since September. That’s three months ago. I put it out there early so we could have a discussion about it and people could talk to me about what they have issues with in the bill. Since then all that’s happened is people have criticized me and questioned my motives. If they really want to pursue this they need to come talk with me. This is a very controversial issue that’s been debated since 1993. It’s time to move the bill.”

Copyright © 2009, The Paulick Report

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Press Release

(LEXINGTON, Ky.)— In a meeting held this morning, the Kentucky Equine Education Project Board of Directors unanimously voted to redouble their efforts to protect Kentucky jobs and put our signature horse industry on a level competitive playing field.
 
“As we all know, our competitor states are using revenue from expanded gaming to enhance their purses and breeders incentive funds, which is causing a severe loss of Kentucky racing and breeding stock to those other states,” commented KEEP Chairman Brereton Jones. “When horses leave our state, jobs go with them, from the farmer who grows the hay, to the veterinarian, feed supply salesperson, equipment manufacturer, groom, equine insurance agent and on and on.”
 
“One-hundred thousand Kentuckians depend on the horse industry for their livelihoods. We have a duty to make our industry as healthy as possible, to bring back the jobs that have already left the state, and to protect and create new jobs right here in Kentucky. We have no choice but to keep fighting for our industry.”
 
“The KEEP Board voted unanimously to pursue a legislative strategy that would save jobs and provide immediate relief by putting our industry on a level competitive playing field,” continued Jones. “The Board also voted unanimously to further engage our 15,000 members statewide in the political and fundraising process, and to continue the trend of growing our membership across the state. Our industry is committed to recruiting and supporting candidates that will support the horse industry.”
 
“This will continue to be an industry wide effort,” concluded Jones. “Seventy percent of Kentuckians agree that our industry should be put on a level competitive playing field, and a bill passed the House of Representatives for the first time ever this past June. We are so close to reaching our goal, and our resolve has only strengthened. We will not quit until the fight is won.”

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By Bradford Cummings
Kentucky Republicans connected to the horse industry will find themselves in an interesting predicament next year. The always-pending slots issue has caused much consternation for those of us on the right that see this as an economic development issue and not a moral one. In a state with legal gambling on horse racing, a statewide lottery and an abundance of charitable gaming, the overused/misused word hypocrisy easily comes to mind when considering the social right’s argument.
 
And yet I have stayed silent on this issue publicly. Until recently, I was the chairman of the Jefferson County Republican Party (Louisville) while also working for the Paulick Report. It was a non-paying 40-hour-a-week volunteer position, and eventually I had to make a business choice and walked away after 16 months served to fully focus on the growth of this website. (Those of you who have served in volunteer political positions can attest it is a love-hate experience if you try to do it right.)
 
While not the reason I resigned, the slot machine issue is a perfect example of why my career will likely never head back in the direction of party politics. (That sound you just heard was the last shred of my political career flushing down the toilet…I sure hope we can turn the racing industry around!)
 
Part of the party game, Republican and Democratic, is to create a platform and get the entire machine to walk in the same direction while beating the same drum. I do not say this to disparage the process. To a certain extent, this sort of singular focus is necessary to get anything done politically or otherwise. Have you ever attempted to get a consensus among 30 people, 10 people or even you and your spouse? The concept of majority rules definitely serves its purpose. But it can also be incredibly destructive for those who feel passionately about an important issue.
 
And this is where I find some sympathy for the likes of state Sen. Damon Thayer, the Georgetown, Ky., Republican who plans to file legislation in support of a constitutional amendment to legalize slot machines at Kentucky racetracks. Damon is a friend of mine and from what I can tell, a good man trying to do right in a difficult position. Anyone who believes his actions are to help himself personally needs to consider a Kentucky state legislator only makes roughly $30,000 a year. I am not sure what his other work pays, but considering his talents and the fact he has a family to feed, the Senate job probably has less short term upside than his Thoroughbred interests.
 
Philosophically, I agree with the constitutional amendment. On large fundamental issues, the people’s voice should be heard from directly and I assume Damon’s intentions are to find an opportunity to give this issue a proper public hearing. But upon further review and especially with the details of his proposed legislation, I have to admit to being wrong. The statutory path is likely the only one to bring expanded gaming to the Bluegrass State.
 
Obviously, much of this rides on how the special election for Republican Sen. Dan Kelly’s now vacated seat turns out. The district has a heavy Democratic registration advantage and their candidate, Jodie Haydon, comes from the most populous region within its boundaries. The Republican, Jimmy Higdon, is well liked and will be a strong candidate but comes from a much less populous part of the region. In many ways, this race shapes up to be a mirror of the election this summer that went to Democrat Robin Webb by a slim margin. If history repeats itself, Kentucky will see a Senate that once had a 23 – 15 Republican advantage slip to a 20 – 18 margin (including one Independent caucusing with the Republicans) in little more than a year. With the commitment from Kentucky’s horsemen obvious, a strong case could be made that this slip may lie primarily at the feet of David Williams’ decision to go down swinging on the slots issue.
 
Assuming the worst for Kentucky Republicans, which is more likely? Republican Tom Buford continues to vote for slots as he did this year and one other Republican is swayed out of fear of an electoral minority after 2010, or an amendment passes by a margin of 23 – 15, meaning that three Democrats throw away the pro-slots momentum their party currently enjoys and allows Republicans to claim a victory for the horse industry? Anyone who believes Democrats will give up that power clearly does not understand the underbelly of the political system.
 
Additionally, the House would have to find eight more votes than it had this year and again ignore the historical boost of momentum Republicans would earn from this legislation. The Democrats who possess a super-majority in the House would have been more likely to publicly admit voting for John McCain in last year’s Presidential election.
 
Even more concerning though is the cost a referendum would put on the horse industry. Millions of dollars would have to be spent to win this referendum, millions of dollars many horse industry folks do not have to spend, especially after the performance of Kentucky’s Thoroughbred sales this year.  The opposition would be well funded by social conservatives and other lobbying interests who would prefer to see Kentucky without slots. So while the slots issue polls well now, the political climate would be impossible to foretell. As they say, a year equals several lifetimes in politics.
 
Assuming this process was a success, Thayer’s amendment proposition requires passage of a local referendum in the counties with racetracks. Likely, most counties would agree to the local referendum but another year would pass, putting us into 2012 before slot machines could be seriously considered. That time frame doesn’t take into account the bidding and licensing process. And if my interpretation of the proposed legislation is correct, racetracks may have to compete with other potential gaming outfits to secure the franchise rights, and might end up without VLTs. While money would still be earmarked for purses, the tracks would suffer if that occurred.
 
But at least you don’t have to worry about that worst-case scenario happening. This would never get out of the Kentucky House. As Senate Democratic leader Ed Worley, it would be “dead on arrival.”

By Ray Paulick
A summit meeting between the leader of the Kentucky state senate’s majority Republican Party and a group of prominent Thoroughbred owners and breeders began shortly after 3:30 p.m. in the offices of the U.S. Pony Club at the Kentucky Horse Park near Lexington on Tuesday afternoon. The expected subject matter was the future of Kentucky’s beleaguered signature industry and the gulf that exists between horsemen and Sen. President David Williams on the issue of VLTs or expanded gambling at state racetracks.

Williams has repeatedly used his power and influence to block slots or VLT legislation that most in the horse industry see as necessary in the wake of competition from bordering states—this despite a reported penchant for gambling at out of state casinos and riverboats that has earned Williams the nickname of “Blackjack” here at the Paulick Report (more about that later). Williams has come under fire recently from fellow Republicans in the horse community, most notably Bill Farish, general manager of Lane’s End Farm in Versailles and son of William S Farish, a close friend to former Presidents George H.W. Bush and his son, George W. Bush.

Williams met with the board of directors of the influential Kentucky Thoroughbred Association and Kentucky Thoroughbred Owners and Breeders, along with representatives of the Kentucky Horsemen’s Benevolent and Protective Association and the Kentucky Thoroughbred Farm Managers Club. David Switzer, executive director of the KTA/KTOB, said the decision was made to keep it a closed meeting from the press and others in order to ensure what he called “free speech.” 

Also attending the meeting was Scott County Republican Sen. Damon Thayer, a Thoroughbred industry consultant and former executive at Breeders’ Cup and Turfway Park whose silence and lack of support for VLT legislation during a special session of the legislature in June  was widely criticized by individuals in the horse industry. Ed Worley (D-Richmond), the minority leader in Kentucky’s Senate, also was on hand.

As one reader pointed out in a comment, it’s curious why the Kentucky Equine Education Project was not invited to the meeting, which the KTA’s Switzer said Williams had requested two months ago.

WILLIAMS, THAYER TO INTRODUCE CONSTITUTIONAL AMENDMENTS
Following the meeting that lasted nearly two hours the dynamic duo of Williams and Thayer  (pictured, left) emerged first, telling reporters about their plans to introduce two constitutional amendments involving gambling in the 2010 legislative session. Williams spoke first, saying he was going to introduce a bill calling for a constitutional amendment to ban the expansion of gambling in Kentucky without what he called "the vote of the people". 

Thayer then said he will sponsor legislation giving voters a chance to decide whether to permit VLTs in seven counties where racetracks are located. If passed, both amendments would go before voters in November 2010. If approved by a majority of Kentuckians, Thayer’s proposed constitutional amendment would then require enabling legislation and a local option vote in all seven counties, followed by a licensing approval process. He did not give a concrete date for when that entire process, which would include a bidding process and licensing of VLT facilities, could be completed.

Click here to see an outline of Thayer’s proposed constitutional amendment. 

If the measure passed and VLT facilities were fully operational (they aren’t necessarily tied to racetracks in the seven counties, based on the proposal), Thayer said Kentucky owners and breeders would get $100 million annually or 25% of net revenue , whichever is higher.

Williams said he would personally oppose the constitutional amendment permitting VLTs but would not attempt to stop it from going through the Senate chamber. Both constitutional amendments would require super majority votes in the Senate (23 of 38 votes) and House (60 of 100 votes). Currently, the House is controlled by Democrats, while Williams and his fellow Republicans hold a 20-17 edge over Democrats in the Senate, with one member independent.

Legislation permitting VLTs passed the House during the special session of the legislature in June, but it was killed in a Republican controlled Senate committee, preventing the measure from getting a full vote on the Senate floor. Since the bill was killed, the Republicans lost one seat in a special election and could conceivably lose another if Republican Sen. Dan Kelly is offered and accepts a judgeship from Democratic Gov. Steve Beshear. Republicans currently control the Senate by a 20-17 edge over Democrats, with one independent.

Williams said if the VLT legislation had been passed by the Senate, "we’d be tied up in litigation" over the constitutionality of the bill. Besides, Williams said, Gov. Beshear ran on a platform that would permit Kentuckians to vote on whether to allow racetracks to offer expanded gaming. "The governor has some opportunity to show some leadership on this situation," Williams said. "It was his campaign promise that he wanted the people to decide. These two amendments, if the governor will support them, will allow the people to decide. In the intervening time, we can try to do some things to supplement the (horse racing) purses."

According to the Lexington Herald-Leader, Beshear issued a statement calling the proposed constitutional amendments "cynical" and "political."

When asked about the reaction of horse industry representatives to the proposals, Williams said the discussions were "spirited". Thayer added, "They were courteous."

Williams seemed defensive when asked by one reporter if he would "allow" Thayer’s amendment to be voted upon by the full Senate. "What do you mean ‘allow’?" he responded. He then said it was wrong to blame the failure of the VLT bill on one person (presumably Williams was referring to himself) and said the measure passed the House by a "skinny majority." He chided VLT supporters for calling the opponents of the measure "disingenuous, dishonest and corrupt." 

Thayer said he has not heard much criticism over his lack of support for the VLT bill from his constituents in Scott County but admitted he has been criticized by members of the horse industry. He said he has been consistent in his support of a constitional amendment but said legislators have been too busy on other issues to introduce a bill calling for a constitutional amendment over the last 10 years.

"This is a horse industry protection bill," insisted Thayer. "We will have the most desirable year-round racing circuit in the country."
 
DEMOCRATIC LEADERSHIP, HORSE INDUSTRY OPPOSES
Democratic Senate Floor Leader Ed Worley (pictured, left), who also attended the meeting, dismissed chances of members of his party supporting the legislation. "It ain’t gonna happen," Worley said, adding that Thayer’s constitutional amendment would be "dead on arrival." He was highly critical of Thayer for not contacting him "as a courtesy" to outline his plans for the legislation before going public with it. Worley said he had canvassed all but one member of the Democratic caucus  and said none of them would support the constitutional amendments.

"What this is about is politics," Worley said. "This buys (the Republicans) time and divides the industry, and that’s what it is intended to do"–calling it a "wedge issue." Meanwhile, "the multi-billion-dollar industry" is suffering, Worley said. "The rank and file of the industry aren’t sheikhs. They don’t all have million-dollar horses."

Bill Farish said the lengthy time line for the constitutional amendment, statewide referendum, enabling legislation, local option votes and licensing process was not acceptable to a horse industry that needs more immediate help. A statewide referendum and local-option elections "give out-of-state casinos two shots to oppose" the measure, he added, saying they would spend millions in advertising in an effort to sway public opinion against VLTs at racetracks.

"We have our position and he (Williams) has his position," Farish said, though he added the horse industry will continue to seek common ground with legislators. In the meantime, he said, the industry will work to elect senators and House members who understand and support the horse industry’s position.  "As an industry we are united." 

It was startling to hear Farish, whose family has such longstanding, close ties to Republican Party politics, using the word "we" while discussing the horse industry’s support of Democratic candidates for state Senate and House seats. And if it’s startling to me, imagine how high-ranking Republicans like U.S. Sen. Mitch McConnell feel about the manner in which Williams has alienated so many Republican Party supporters.

Don Robinson (pictured, left, with Bill Farish), the president of the KTA/KTOB, said one of the horsemen in the meeting called the presentation by Williams and Thayer "smoke and mirrors". 

"By acclamation, (KTA/KTOB) supports  the Senate having a full hearing of the House bill," Robinson added,  He said the horse industry would have supported a constitutional amendment several years ago, but "it’s a different timetable now. We are in trouble. Mares are leaving the state. It’s too little, too late."

Thayer disagreed, saying, "It’s never too late to let the people decide."

If the VLT amendment passed and got local-option approval, the KTA’s Switzer said, it would be late 2013 or early 2014 before any revenue would find it’s way to the horse industry and state coffers. "Our backs are to the wall," he said. 

WILLIAMS DENIES ANY GAMBLING TIES
A final note: I asked Williams about his cease and desist demand in the wake of recent published comments from Lebanon, Ky., attorney James Avritt Sr., which suggested Williams’ opposition to racetrack VLTs might trace to out-of-state casino companies. "Who are  you?" Williams wanted to know after I said some people were interested in any personal experience with gambling he might have at out-of-state casinos.  When I said I wrote for the Paulick Report, he replied, "You’re the only who’s been saying anything about that." I also asked the Senate president if his law firm has represented any casino interests. "Absolutely not," he replied.

After that exchange, I got the feeling Williams probably would not invite me to Frankfort for a tour of the state capitol or a lunch at his favorite hangout (or, for that matter, on a road trip to Indiana’s Horseshoe Casino, located  just 20 minutes from downtown Louisville, Ky.).  But, on the other hand, he was in hostile territory and didn’t seem to be in the best of moods when I asked about any personal interest he has in gambling.

"We’re not his friends," said KTA/KTOB president Robinson. 

That might have been the understatement of the day.

Copyright © 2009, The Paulick Report

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KEEP just released an editorial in response to KY State Senator David Williams’ criticism of the Thoroughbred industry’s desire for alternative gaming in Kentucky. Are you moved by this editorial? Where do you stand on the slots issue and have any of the recent editorials changed your mind one way or the other? The Paulick Report wants to know. - Bradford Cummings

In a recent response to an editorial by Bill Farish entitled, “Gambling, Not a Partisan Issue,” Sen. David Williams continued to attack Kentucky’s horse industry in a misguided attempt to divide and conquer horsemen.
 
What Sen. Williams doesn’t understand is that his attacks only further cement the unity among our industry to seek alternative gaming at racetracks. The horse industry is more united today than at any time in our history because we understand the enormity of the threat posed to our competitiveness. We live it every day as we watch our racing dates eliminated, our purse money decline and owners and trainers ship horses to states where purses and breeder incentives are enriched by gaming revenue.  
 
Sen. Williams began his editorial by saying expanded gaming is “bad economic policy for the state and for the horse industry.”  I firmly disagree. Isn’t it bad economic policy for the state to stand by while its signature horse industry declines because we lack the competitive tools other states are using to capture what Kentucky already has? Kentucky has a horse industry that is world-renowned for its product. It generates a $4 billion economic impact. It supports 100,000 jobs statewide. But in the end, Kentucky’s bond with the horse cannot be measured by mere economics. It is that intangible that makes Kentucky unique.  
 
Let’s take Sen. Williams’ points one by one.
 
Sen. Williams says, “expanded gambling will flood Kentucky with funds that will skew our body politic.”
In his response, Sen. Williams calls into question the Farish family’s affiliations and makes mention of political corruption in other states where gaming is allowed. This personal attack on the Farish family is an all-time low point in the gaming debate and will not go unanswered.
 
The Farish family has a long history of public service and staunch support of the Republican Party.  William S. Farish served as United States Ambassador to the Court of St. James under President George W. Bush. His son, Bill, served as a personal aide to President George H.W. Bush. Both father and son are lifelong horsemen who are actively involved in all aspects of Thoroughbred racing and breeding. From their development of Lane’s End Farm into one of the world’s premier breeding operations, to their service with the American Horse Council, the Breeders’ Cup, The Jockey Club, the Kentucky Thoroughbred Association, the National Thoroughbred Racing Association and Thoroughbred Owners & Breeders, their commitment to the horse industry cannot be questioned.  
 
Sen. Williams says that once slots arrive, horse owners and trainers will get the short end of the stick.
If alternative gaming is not growing purse money at racetracks in those states where it is allowed, then why are Kentucky horsemen shipping to Pennsylvania, Indiana, West Virginia and Louisiana, among others?  
 
Total purses in Kentucky have been stagnant or have declined since 2001. In contrast, Thoroughbred and Standardbred purses in Pennsylvania jumped nearly 40 percent from 2007 to 2008, the first full year of gaming operations. Indiana’s Hoosier Park just announced its second purse increase of the current meet. Louisiana racetracks such as Evangeline Downs and Fair Grounds are enjoying resurgence. Gaming revenues are up 5.5 percent at Florida’s Gulfstream Park compared to 2008; while Calder Race Course will open its gaming operation in 2010.
 
The horse industry’s plan to authorize video lottery terminals (VLTs) at Kentucky racetracks was the most comprehensive show of support for the entire horse industry—both racing and non-racing breeds—ever to be introduced in the United States. Though purse supplements for Standardbreds, Quarter Horses and Thoroughbreds are the most visible allocation, revenue would be broadly distributed to enhance many Kentucky equine breeds and related programs.
 
Gaming funds would expand the Kentucky Breeders’ Incentive Program (KBIF), which offers economic incentives to encourage ownership of all Kentucky-bred horses, even non-racing breeds. As an example, since it’s inception in 2005 the KBIF has fueled dramatic growth in Kentucky’s Quarter Horse industry, attracting 600 new Quarter Horse stallions, more than 2,000 mares and an influx of new Quarter Horse farms.
 
Our proposal also dedicates revenue to promote the health and welfare of horses by funding new equine facilities and riding trails; it will enable improvements to the backside and stable areas at racetracks; properly fund the Kentucky Horse Racing Commission and repeal a sales tax on feed and equipment for horses—an exemption already bestowed on other Kentucky livestock.
 
Though he would like to convince you otherwise, Sen. Williams’ plan is not a “horse industry” proposal. Under it, he addresses only purse money; contributing nothing to the KBIF or non-racing breeds. His proposal would redirect to the horse industry $19 million in existing tax revenues that currently go to the General Fund, which is already suffering a shortfall. He would place a 10-cent tax on lottery tickets, so your $1 lottery ticket would cost $1.10. The Kentucky Lottery Commission estimates this tax would result in significant lost lottery sales, which would adversely affect our children since all the funds go to funding the Kentucky Educational Excellence Scholarship (KEES) program.
 
Sen. Williams says slots will not “save” Kentucky’s budget.
Kentucky’s horse industry has never made the claim that expanded gaming would be the silver bullet to Kentucky’s budget shortfall. However, what our proposal would do is generate at least $700 million in new revenue, including more than $200 million in new tax dollars for the state, and be a source of new jobs and new capital construction.
 
Sen. Williams says the horse industry is beset with problems endemic to the industry itself.
The horse industry competes with an explosion of casino gaming nationwide. Today, 36 states in the continental United States permit commercial, Indian and/or racetrack casinos.
 
Kentucky racing is battered by casino gaming forces on two fronts. First, we directly compete with six Indiana riverboats on our border, where $1.44 billion was wagered in 2008. Casinos also line Kentucky’s border with Illinois, Missouri and soon Ohio. These casinos, which include the nation’s largest riverboat, the Hollywood Casino near Lawrenceburg, are situated to take advantage of Kentucky’s major population centers.
 
Even more damaging to our competitiveness, each of the 12 racing states nearest to Kentucky—Arkansas, Illinois, Indiana, West Virginia, Louisiana, Florida, Maryland, Delaware, Pennsylvania, New Jersey, New York and Ohio—are using expanded gaming to strengthen their horse industries.  
 
We don’t view alternative gaming as a long-term fix for Kentucky’s horse industry. Instead it will provide us with a short-term infusion of revenue we can use to spark economic development in our industry. These funds will help us compete, in the immediate future, by allowing us to raise purses and preserve Kentucky’s year-round racing circuit, renovate infrastructure, explore new marketing ventures and employ new technologies in an effort to attract new fans.
 
Alternative gaming at Kentucky’s racetracks will not change the behavior of Kentuckians. They already spend more than $670 million at riverboat casinos in Illinois and Indiana alone.
 
Sen. Williams, however, continues to stir the pot by stating that Kentuckians will have to “gamble” $11 billion to produce the $1 billion net win the horse industry proposal projects. As Sen. Williams knows, this is absolutely not true. He conveniently misuses this figure to confuse and concern. In reality, “churn”—whereby players repeatedly use their winnings to continue play—will account for most of that $11 billion gross wager. We are not asking any Kentuckian to gamble a single dollar that they are not already gambling. We are, however, asking that if they choose to gamble, they do it in Kentucky to help our own people. We don’t want a government subsidy!  What we want is a level playing field. If we get this we will out-work and out-produce our competition and remain the “Horse Capital of the World”!