Derby City Gaming machine

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

LOUISVILLE, Ky. (WDRB) – Consumers wagered more than $2 billion in Kentucky’s slot-like historical racing machines in the state fiscal year that ended June 30, nearly double the amount wagered in the previous year.

The big difference was the September 2018 addition of Churchill Downs’ Derby City Gaming facility in Louisville – the state’s fourth historical racing venue -- where players bet $670 million in the terminals through the facility’s first 10 months in operation.

But the industry also saw healthy organic growth. Wagering was up 29% at Kentucky Downs, 20% at Ellis Park and 14% at Keeneland-Red Mile, according to year-end figures published this month by Kentucky Horse Racing Commission.

The industry’s impressive growth comes as it still faces a legal challenge over whether the slot-like machines, which technically offer bets on old horse races, are actually pari-mutuel wagering and not casino gambling, which is illegal in Kentucky.

Here are a few takeaways from the latest batch of public data:

1. Historical horse racing has grown by a factor of five since 2015, with another venue (in Oak Grove, Ky., near the Tennessee border) set to open in 2020.

2. Kentucky Downs, which became the first Kentucky racetrack to add historical racing in 2011, is still the biggest player in the industry, with $931 million in wagers in fiscal year 2019. But these figures reflect only 10 months of operations for Derby City Gaming.

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3. There’s a pretty big range in the betting activity at the four facilities. Kentucky Downs, the leader, generates more than three times the daily wagering (handle) for each machine under its roof than the Keeneland-Red Mile facility in Lexington, which is the laggard here. The success of Kentucky Downs, on Tennessee border in Franklin, might explain why Churchill Downs and Keeneland are eager to get into the orbit of Nashville with their joint-venture Oak Grove venue opening next year.

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4. Historical horse racing is a growing source of tax revenue for Kentucky, but it’s a paltry amount compared to the state’s $11 billion annual budget, and most of the taxes are dedicated to horse industry causes (such as supplementing live-racing purses), rather than being available for pensions, education or other general government needs. Should Kentucky be taking a bigger bite of the industry? That was the focus of my Sunday Edition story on June 2.

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5. Speaking of that story about historical horse racing and taxes, now is a good time to re-up my analysis showing how, even on a proportional basis, Kentucky doesn’t tax historical horse racing at the same level as border states tax actual slot machines. (As I reported at the time, some say this is an unfair comparison of two distinct industries.)

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