Ky. commission asks for legal opinion

Updated: July 20, 2010, 5:08 PM ET
By Matt Hegarty | Daily Racing Form



LEXINGTON, Ky. - The Kentucky Horse Racing Commission on Tuesday approved regulations paving the way for the installation of slot-machine-like devices at racetracks while simultaneously agreeing to ask a state judge to issue an opinion on the legality of the machines.

The new rules would allow Kentucky tracks and one offtrack betting parlor to operate so-called "Instant Racing" machines, which use races that have already been run to generate number sequences that determine payoffs. Though Kentucky's attorney general, Jack Conway, has issued an opinion saying that he believes the machines can be authorized under rules promulgated by the regulatory body, the commission also said that it would submit a request to the Franklin County Circuit Court to issue a declaratory judgment on the devices' legal standing. (Conway's father is on the racing commission.)

Robert Beck, the commission's chairman, said the devices would give Kentucky tracks and horsemen a tool with which to compete with racetrack casinos in neighboring states.

"This product is not a panacea," Beck said. "There's still a lot of work for racing to do. But it is a tool tracks and horsemen can use to generate additional purse money."

If the rules are declared legal and survive a legislative review process, they could be formally adopted in perhaps six months, Beck said. However, Beck also said that "it would not surprise me" if groups opposed to expanded gambling challenged the legality.

Officials of Kentucky tracks said that they supported the commission's decision to promulgate the rules, but they also said that they did not believe the devices would perform as well as slot machines or video-lottery terminals, which racetracks have been seeking unsuccessfully through the legislature for several years.

"I agree with the chairman," said Ron Geary, who owns Ellis Park. "This is not a panacea, and I'm not certain how much revenue these will generate. So the gap in the competitive playing field is still there, but it's been narrowed a little bit."

Both Geary and Ron Elliston, president of Turfway Park in northern Kentucky, said that they had not yet considered how many machines their tracks might install. The regulations do not set a limit on the machines. Geary and Elliston also said that they had not yet had any discussions with horsemen on the agreements that would need to be struck on a division of the revenue from the machines.

Under the rules, only licensed racetracks would be allowed to operate the machines, with one exception: the Sports Spectrum, a training facility and offtrack betting parlor owned by Churchill Downs. Kentucky also has three other offtrack betting parlors and several licensed training centers, but those locations will not be eligible to apply for a license to operate the devices, commissioners said.

Lisa Underwood, executive director of the commission, said that an exemption was made for the Sports Spectrum because of its proximity to Churchill Downs. Under the regulations, Churchill will be able to install devices at both locations.

The decision to ask a judge to issue a ruling on the devices that could wipe out the commission's efforts in one stroke would seem to be an unusual tactic, but Beck said the commission decided to promulgate the rules prior to seeking the legal opinion as a way to fast-track the process.

"By doing this on two separate tracks, we hope to reach a conclusion to the process as quickly as possible," Beck said.

Instant Racing machines were developed by officials at Oaklawn Park and the bet-processing company Amtote, and they have been operating at Oaklawn Park for a decade. The machines allow bettors to make selections on the results of races that have already been run, with all identifying characteristics of the horses or the location of the race obscured. In many cases, the machines use only the numerical results of the races to determine payouts, without showing the races.

Kentucky Gov. Steve Beshear asked the commission to consider rules legalizing the machines after efforts to pass legislation authorizing casinos at racetracks failed again this year. The authorization of casinos in the legislative session next year is considered a longshot because it is an election year.