Kentucky racing industry suffers setback in gambling ruling, Beshear says state will act

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FRANKFORT, Ky. (AP) — Kentucky’s horse racing industry suffered a potentially huge setback Thursday when the state’s highest court ruled at least some historical racing games being offered in betting parlors aren’t legal.

Historical racing — featuring slots-style machines allowing people to bet on randomly generated, past horse races — has become a lucrative venture for racetracks. Bettors in Kentucky wagered more than $2 billion on historical racing machines in the previous fiscal year ending June 30.

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Kentucky’s Supreme Court ruled that a form of historical race wagering offered by some tracks does not meet the standard for pari-mutuel wagering. Writing for the court, Justice Laurance B. VanMeter said the historical racing system under review “does not create a wagering pool among patrons such that they are wagering among themselves as required for pari-mutuel wagering.”

The ruling stems from a long-running dispute between racing interests and The Family Foundation, a conservative group that opposes expanded gambling. The foundation has long argued that historical horse racing machines do not meet pari-mutuel wagering standards under Kentucky law.

Attorneys for the racing interests have insisted that historical horse racing is a valid form of wagering. The high court heard oral arguments in the high-stakes case last month.

After the court’s ruling, the foundation said “the time for flouting the law is over.” The group called on race tracks to cease operating their historical racing parlors “until it can be demonstratively shown that their activities are legal.”

“This decision reaffirms that words have meaning and that even the state’s most powerful industry can’t turn the plain language of the law upside-down for its own economic benefit,” said Martin Cothran, a spokesman for the foundation.

The Kentucky Horse Racing Commission did not immediately comment on the ruling’s effect on historical racing gambling parlors.

But Gov. Andy Beshear said the potential impact is huge and he already is beginning discussions with the industry and state lawmakers on potential legislation to overcome a potential court ruling against the industry in the future.

“I believe the ruling is potentially devastating for so many Kentucky jobs, the horse industry and the state budget,” Beshear said, noting the machines generate millions of dollars in revenue for the state each year.

“We have not seen the widespread ills everyone predicted from the use of these machines…we have widespread gambling in almost every state around us…Indiana is buildings its roads with the money Kentuckians gamble there, Missouri is paying for health care,” he continued, noting the gambling industry is key “if we are to remain competitive, if we are to be more competitive.”

Keeneland vice president Vince Gabbert told the Lexington Herald-Leader the track was still evaluating the opinion “but nothing seems to change course on their previous ruling that the commission acted appropriately in promulgating the regulations.”

VanMeter acknowledged the “economic pressures” riding on the issue for the horse racing industry.

For years, Kentucky horse tracks pushed to legalize casino-style gambling, but those proposals died in the state legislature.

The tracks instead ventured into historical horse racing, which pumped money into race purses and bred development funds to put them on more solid ground in competing with tracks and horse breeding operations in other states. The historical racing games typically show video of condensed horse races.

The Supreme Court ruled Thursday that the historical wagering system under review doesn’t meet the pari-mutuel standard because bettors aren’t wagering on the same race and aren’t betting into the same pool to set odds.

“The (Horse Racing) Commission is charged with regulating pari-mutuel wagering,” VanMeter wrote. “But without positive legislative action and sanction, it has no authority to create from whole cloth and to approve a wagering pool in which each patron is wagering on a different event or set of events. Such a wagering pool by no means can be considered a pari-mutuel wagering pool in which patrons, as among themselves, are setting the betting odds and payout.”

VanMeter flatly said it would be wrong to suggest “that the random generation of multiple historical horse races with patrons placing wagers on different races qualifies as pari-mutuel wagering.”

“To be clear, pari-mutuel wagering requires that patrons generate the pools based on wagering on the same discrete, finite events,” he added.

The ruling reversed a lower court ruling that the form of historical wagering constituted a pari-mutuel system of wagering. Five of the Supreme Court justices concurred with the opinion while Justice Michelle M. Keller wrote a separate concurring opinion.

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Tom Kenny joined ABC 36 News in June of 2001 as a General Assignment Reporter. A native of Peoria, Illinois, he graduated cum laude with a Bachelor of Arts in Mass Communications from Western Illinois University. He currently anchors ABC 36 News at 5pm, 6pm and 11pm. Tom has more than three decades of experience in broadcast journalism. He is the only broadcast journalist in Lexington television history to be honored with a national Edward R. Murrow Award. Tom was recognized for reporting on a story that gave a rare glimpse inside the secretive world of the Federal Witness Protection Program. He has won an Emmy Award for anchoring and another for investigative reporting, exposing the deceit and potential danger of online diploma mills. Tom has ten other Emmy nominations to his credit for investigative and feature reporting. He has won Associated Press Awards for reporting and anchoring. He has won two Addy Awards for excellence in promotional writing. Tom was the first broadcast journalist in Lexington TV history to be awarded the Silver Circle Award by the National Academy of Television Arts and Sciences. It is one of the highest honors given by NATAS. It recognizes television professionals who have performed distinguished service within the television industry for 25-years or more. Tom was honored for more than his longevity, he was recognized for making an enduring contribution to the vitality of the television industry and for setting high standards of achievement. He was also recognized for giving back to the community as a mentor, educator and volunteer. Tom also has network broadcast experience in radio and television having worked as a sports reporter for ESPN, Sportschannel, NBC Sports and the Breeders’ Cup. He was also the studio host and halftime producer for CBS Radio Sports’ College Football Game of the Week and covered the NFL for One-On-One Radio Sports. Prior to joining WTVQ-TV, Tom was Vice-President of the Houston Astros Minor League baseball team in Lexington. He was part of the original management team that brought professional baseball back to the Bluegrass after a nearly 50-year absence. Tom has lived in Lexington since 1984. In that time, he has been heavily involved with dozens of charity and civic groups, with a special emphasis on helping Veterans. He can be reached at tkenny@wtvq.com. You can also follow Tom on Facebook www.facebook.com/TomKennyABC and Twitter @TomKennyNews. Just click on the links at the top of the page.