Derby City Gaming machine

Churchill Downs' Derby City Gaming has 900 slot-like historical horse racing machines.

LOUISVILLE, Ky. (WDRB) – A technical flaw at Churchill Downs’ Derby City Gaming has been corrected after the company paid the state horse racing commission nearly $200,000 in fines.

The Kentucky Horse Racing Commission on March 26 stopped assessing fines of $1,000 per day after confirming that the 900 slot-like “historical horse racing” machines at Derby City Gaming were finally in compliance with the regulator’s rules, according to a letter obtained under the Kentucky Open Records Act.

Derby City Gaming is a casino-like off-track betting facility where customers play games that look like slots, but actually offer wagering on previously run horse races. Churchill Downs opened the $62 million facility at 4520 Poplar Level Rd. on Sept. 10, 2018.

The commission said last October that it discovered the wagering system at Derby City Gaming had included races in which a horse was scratched from the field, which is against the commission’s rules for historical horse racing.

Churchill Downs has said no patron was ever put at a disadvantage because of the flaw.

“A couple of our games had races in which horses were scratched, but those horses were not able to be bet on, so you could only bet on the horses that actually ran in the race, so it didn’t impact the integrity of the game,” Churchill Downs Racetrack senior vice president Kevin Flanery told WDRB in January.

The commission said in letters to Churchill Downs in October and January that it was reviewing the issue to be sure there was no harm to betting customers.

On March 26, the commission wrote to Churchill Downs to confirm that it had tested the machines at Derby City Gaming and found they now comply with the rules, but the letter does not disclose the results of the commission’s review into whether customers were at a disadvantage.

Commission officials did not respond to requests for comment on Monday. Churchill Downs declined to comment.

In all, Churchill Downs racked up $196,000 in fines because of the issue.

But that’s a drop in the bucket compared to the $18.4 million in revenue Derby City Gaming contributed to Churchill Downs during the first three months of the year, the company told investors last month. Derby City Gaming generated $7.6 million of adjusted earnings during the quarter, or a 41 percent profit margin, the company said.

The company plans to add 100 machines, bringing the total to 1,000, at Derby City Gaming by mid-May.

Reach reporter Chris Otts at 502-585-0822, cotts@wdrb.com, on Twitter or on Facebook. Copyright 2019 WDRB News. All rights reserved.

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Chris Otts reports for WDRB.com about business and economic topics, higher education and local / state government. He joined WDRB News in 2013 after seven years with The Courier-Journal. Got a tip? Chris is at 502-585-0822 and cotts@wdrb.com.