KEEP URGES COLLABORATION ON VLTS
Friday, February 12th, 2010The 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.