Newport Gaming and Racing CDI photo

Newport Gaming and Racing offers 500 "Vegas-style" historical horse racing machines. The Churchill Downs-owned venue opened Oct. 2, 2020.

LOUISVILLE, Ky. (WDRB) – When the Kentucky Supreme Court slapped down the state’s $2 billion gaming industry in a surprise ruling in September, the high court also seemed to leave clear instructions:

Only legislators, not judges, can formally legalize the state’s roughly 3,500 “historical horse racing” machines.

The machines, which look and act like casino slots but claim to offer a form of horse betting, have been around for a decade without any legislative action directly endorsing them.

In their ruling, the justices said historical horse racing isn't a form of pari-mutuel wagering, the type of betting that takes place during live horse races and is legal in Kentucky.

The language of the opinion effectively “issued an engraved invitation to the General Assembly to address the issue,” said Bill Lear, a Lexington attorney and a trustee of Keeneland Association, one of the racetracks that own the gaming venues.

Now, the question is, will the Republican-dominated legislature take up the invitation? 

“It can be done. It will not be easy,” said state Rep. Jerry Miller, a Republican from eastern Jefferson County, who supports the gaming fix.

Even as proponents say Kentucky’s “signature” horse industry will be crippled without the hundreds of millions of dollars generated by the gaming machines, many social conservatives remain reluctant to endorse any expansion of gambling, Miller said.

“This will be the biggest vote on gaming since the 1988 lottery amendment,” said state Rep. Adam Koenig, a northern Kentucky Republican who supports historical racing and is a chief proponent of sports betting.

Koenig was referring to the constitutional amendment lawmakers advanced in 1988 to create the Kentucky Lottery.

Since then, efforts to legalize casinos have fallen short, and Kentucky hasn’t joined states like Tennessee and Indiana in allowing sports betting.

“There is a reason why this hasn’t been happening, and it’s because of certain religious folks throughout the state who believe it’s bad policy,” Koenig said.

Yet, the slot-like gaming industry has ballooned in the last decade with the support of governors, the Kentucky Horse Racing Commission and, until September, court rulings.

The state’s racetracks have opened six gaming facilities, each containing hundreds or thousands of machines, with casino terms like “jackpots” and "Vegas-style" in their marketing. Consumers put more than $2 billion into the slot-mimicking machines in the most recent fiscal year.

Made with Flourish

Influential groups like the Kentucky Chamber of Commerce are calling on lawmakers to pass a bill in the truncated legislative session that starts in early January to undo the court’s decision.

The issue is urgent, as the gaming venues could be required to close once the court’s ruling is finalized, though that is uncertain. A Frankfort judge who has previously sided with the industry would be charged with implementing the high court’s order.

“It’s absolutely incumbent on us to fix the bad decision made by the Supreme Court,” said state Sen. Damon Thayer, the No. 2 Republican in the Senate and an ardent proponent of historical horse racing, during a Chamber legislative preview event on Wednesday.

But Senate President Robert Stivers and House Speaker David Osborne were noncommittal when asked during Wednesday’s chamber event about the prospects for addressing the gaming issue.

“It’s a conversation we will have to have going forward,” said Osborne, who noted that his House GOP caucus has 21 new lawmakers after Republicans’ blowout in the November elections.

Stivers said the tax revenue generated by the gaming machines is “really kind of small,” but they are part of the reason Kentucky’s horse industry has hung on amid national decline. He did not comment on whether the Senate will advance a bill.

The legislative fix would be “very simple,” Thayer said at the Wednesday event. Lawmakers would formally define “pari-mutuel wagering” – the type of betting in live horse racing – to include the gaming machines.

But even if the legislature approves the change, the legal battle over the gaming is unlikely to be resolved.

Some say the Kentucky constitution would still prohibit the machines. Changing the constitution requires a higher threshold of support in the legislature. It also requires voters to approve the change directly on the ballot, which could not happen until the 2022 general election.

"The problem with making this thing, that the Supreme Court has said is illegal, legal is that you're going to have to change the constitution," said Martin Cothran of the the Kentucky Family Foundation, which has battled the horse tracks in court over the gaming for a decade.

But Lear, the attorney and Keeneland Association trustee, said the legislature can “absolutely” legalize historical horse racing without amending the state constitution.

Rep. Al Gentry, a Louisville Democrat, said during a legislative hearing on Monday that Democrats support historical horse racing; whether it survives is up to Republicans. The GOP now has 75 of the 100 House seats and 30 of the 38 in the Senate.

“I think we’re going to have to get a lot of leadership from people on the other side (Republicans) to help get us through here,” Gentry said, “because that’s where the barriers are.”

Reach reporter Chris Otts at 502-585-0822, cotts@wdrb.com, on Twitter or on Facebook. Copyright 2020 WDRB Media. All rights reserved.