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
New to the Paulick Report? Click here to sign up for our daily email newsletter to keep up on this and other stories happening in the Thoroughbred industry.
Copyright © 2017 Paulick Report.