Can Historical Horse Racing Spur Action On Kentucky Sports Betting Bill?

Posted on January 12, 2021

If only one gaming bill passes in Kentucky this year, it will be legislation to protect historical horse racing (HHR).

But that doesn’t mean the legislative focus on historical horse racing will take away from the chances of a sports betting bill passing as well.

Rep. Adam Koenig tells PlayIndiana that an HHR bill passing could actually open up a lane for his sports betting legislation to reach the end zone.

This is because both issues have the same opponent. A lobbying campaign by the Family Foundation of Kentucky derailed last year’s sports betting effort. The Family Foundation also filed the civil suit that resulted in a state Supreme Court ruling that put HHR in question.

HHR machines resemble slots and can be found in off-track betting sites and racetracks in multiple states. Last year, the Kentucky Supreme ruled certain machines did not meet the definition of pari-mutuel wagering and were therefore not permitted after the Family Foundation filed suit.

“I’m hopeful that if we can pass HHR, that might result in some folks who voted for that bill in the face of opposition seeing that they can do so for sports betting and everything is going to be OK,”  Koenig said.

Religious org hellbent on stopping legal KY gambling

Koenig thought his bill, which also legalizes online poker, would have an easy path through the House last year.

But after he moved the bill through his committee, the Family Foundation began contacting members of the Republican caucus. Some members pulled their support as a result, and the bill didn’t have enough support from the majority party to call it for a vote.

“As an urban Catholic, I don’t understand what the problem is. It could just be that that Family Foundation of Kentucky is exceedingly good at whipping up the Baptist preachers and their congregations.”

The Family Foundation also is litigious, as the horse racing industry found out.

“It doesn’t matter what we do,” Koenig said. “The Family Foundation is going to sue us.”

Kentucky HHR bill will be priority over sports betting

The Supreme Court didn’t say Kentucky couldn’t do historical horse racing, just that it can’t be done through regulations. It needs to be statutory. So Kentucky lawmakers have made it a priority to codify HHR in 2021.

Historical horse racing machines took in $2.2 billion in wagers in the last fiscal year, creating $190 million in revenue for the horse racing industry and $33.8 million in taxes for the state.

Currently, the legal ruling only applies to one brand of HHR machines. But the Family Foundation is trying to get the ruling expanded to all HHR terminals. If it is successful, that would be a huge blow to a state that many see as the horse racing capital of the world.

According to Koenig,

“It’s easier to say, look, this has been going on, and point not only to the tracks but the agricultural aspect and the people in every part of the state who work in the horse racing industry in some way who are affected by the HHR ruling, whether they know it or not. There’s people who provide straw or hay or timber that goes to support and further the industry that will lose revenue and/or jobs if we don’t fix HHR.”

Short session makes it difficult to pass gaming bills

In odd-numbered years, the Kentucky legislature only meets for 30 days. The session ends March 30.

Issues related to the coronavirus pandemic will take up much of that short session, making it difficult to pass any gaming bill. Also because of the odd-numbered year, legislation must pass by a three-fifths vote rather than a simple majority.

Koenig recently refiled his sports betting bill that also legalizes online poker and daily fantasy sports. The bill will start this year in the Committee on Committees, which Koenig says is just procedural for bills during the pandemic.

He said that the HHR bill likely will start in the Senate, with him and Rep. Matthew Koch leading the way in the House. Koch runs a horse farm, so he can explain the impacts of HHR on the broader state industry.

The higher vote total might not be the impediment it seems. Koenig believes both bills can hit that mark if they get support from a majority of the 75-member Republican caucus.

“If I can get 38 of our members, I believe I have enough Democratic members,” said Koenig, a Republican.

Changing legislative landscape is the wildcard

Koenig noted that there’s 20 new members in the House, which changes the landscape for the sports betting legislation.

“Some of the biggest opponents of expanding gambling retired, so I think that will help the cause. We lost some members who were adamantly against it and another who was for it. Some new members are for it, one is against it, and several don’t know where they’re at yet.”

There are some legislators who believe gambling is wrong and will not support either bill no matter what. But not enough to stop the bills from passing.

Koenig says the key is how many of the other lawmakers can withstand the pressure from the Family Foundation and their religious constituents.

Kentucky governor strong proponent for gaming bills

Gov. Andy Beshear pushed for the legalization of sports betting in his State of the Commonwealth address.

He did so again last week, saying it was time to “pass sports betting and save historical horse racing.”

He took it even further in a Kentucky Educational Television program, saying:

“I believe the time was right years and years and years ago when virtually every state around us, all Republican states, already have it. The fact that we haven’t done it at this point is not only silly but puts us at a competitive disadvantage.”

Many Kentuckians are going across the border to legally place bets in other states. Koenig is one of them.

The lawmaker said he went into Indiana earlier this season and placed a bet at the Barstool Sportsbook at Hollywood Casino in Lawrenceburg.

As his girlfriend is an Ohio State graduate, he put $20 on the Buckeyes to win the NCAA college football title at 5-1 odds. The bet lost Monday when Ohio State fell 52-24 to Alabama in the College Football Playoff National Championship game.

Koenig says his constituents are heavily in favor of legalizing sports betting. Only once does he recall hearing from a constituent opposed to legalization.

Photo by Associated Press
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Matthew Kredell

Matthew has covered efforts to legalize and regulate online gambling since 2007. His reporting on the legalization of sports betting began in 2010 with an article for Playboy Magazine on how the NFL was pushing US money overseas by fighting the expansion of regulated sports betting. A USC journalism alum, Matt started his career as a sportswriter at the Los Angeles Daily News and has written on a variety of topics for Playboy, Men’s Journal, Los Angeles magazine, LA Weekly and ESPN.com.

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