A bill that standardizes tax rates for all pari-mutuel betting placed in Kentucky as well as makes claim races eligible to receive Kentucky wallet supplements and benefits for horsemen through the removal of the break approved by the Kentucky House of Representatives committee March 16.
Representative Adam Koenig said House Bill 607, which he is sponsoring, will significantly increase revenue for Kentucky’s general fund while allowing horse racing to flourish. Koenig temporarily transferred the duties of chairman of the House Standing Committee on Licensing, Profession and Administrative Regulation to Representative Matt Koch while discussing his bills.
“In a couple of years, we’re looking at an increase of $27 million, maybe a minimum,” Koenig told the committee, noting that is in addition to the $62 million expected to flow in. state from the pari-mutuel tax in 2022. “…So the money is coming from the industry. I think I’ve found some creative ways to generate more money without hurting the product. .”
The bill is the result of last year’s legislative interim task force on pari-mutuel bets chaired by Koenig and Kentucky Senate Majority Leader Damon Thayer. The task force—created after the 2021 General Assembly passed legislation protecting historic Horse racing in the state—has sought to identify ways to increase revenue for the state treasury without negatively impacting the state. cost-effective or prevent racetracks from investing in HHR activities and related capital projects.
Also easily passed the “L&O” committee on Wednesday were bills that would legalize betting on sports in Kentucky and provide gambling funding. All three of these bills are sponsored by Koenig, a jockey and racing fan with nearby Northern Kentucky county. Lawn Park.
HB 607 calls for taxing pari-mutuel bets as high as 1.5%. That’s the same ratio currently rated for the HHR game. However, the bill increases the current rate for bets placed via online platforms (or advance bets, commonly known as ADW) from 0.5%. Tax rate on simulcast bets placed on the Kentucky track in out-of-state racing will be reduced from 3%. The vast majority of bets are now placed through ADW, while the simulation feature has been significantly curtailed by horse riders for the convenience of online betting.
Koenig says that when the ADW rate was initially set by the Kentucky legislature “it was a nascent industry. Well, it’s not a nascent industry now.”
Koenig has received national attention and praise from equestrian advocates for being a champion in eliminating virtual breakage. The breakout is when tracking the winning bonus rounds down to the nearest coin based on a $1 bet. Breaking under HB 607 requires tracks to pay to the nearest coin, resulting in more coins being returned to the horsemen. Koenig cites the example of a Triple Crown winner in 2018 Evenly pays $7.80 on a $2 Kentucky winning bet presented by Woodford Reserve (G1), possible payout of $7.92 if there’s no crash.
“It’s the bettors’ money,” Koenig said. “I’ve been very concerned since last year’s HHR debate about making sure bettors are taken care of. We’ve taken care of everyone else. Everyone’s been getting sane about this except for the people. Place bets and this is how we’re going to help bettors. They’ll be paid for every penny instead of 20. In addition to taking care of the bettors, that will make Kentucky the place to bet in North America. If you’re a big bet, why would you bet anywhere else?”
Kentucky Representative Adam Koenig
The HB 607 also opens the door for Kentucky-bred wallet supplements to be used for claim races — a policy change promoted by the Kentucky Riders’ Benevolence and Protection Association. powerfully intended to increase the budget for the lower level races in which many riders compete. Currently, funds from the Kentucky Thoroughbred Development Fund are restricted to races that do not require ownership.
Congressman Al Gentry, a member of the pari-mutuel betting task force, called jobs for races qualifying for the KTDF supplement “very, very important and one of the parts.” grand of the bill.”
HHR has enabled Kentucky to offer some of the highest wallets in the world, with revenue expected to grow significantly with the expansion of satellite facilities. With that in mind, HB 607 stipulates that after KTDF funds reach $40 million and the Kentucky Standardbred Development Fund reaches $20 million in one year, the rate of going to wallets will decrease, with the difference being rolled in. state general fund.
“We believe in two or three years, as the historic Racecourse facilities are more complete, that we are looking at adding $20 million to the general fund,” Koenig told the committee. “Increasing the ADW tax from 1/2% to 1/2% will immediately generate $4 million per year. It’s a growth area, so it will continue to grow over time.”
The bill also requires that the Kentucky Equestrian Commission be self-sustaining, rather than out of pocket. Koenig calls it a savings of about $3 million per year.
“We have enough HHR machines now that they can put a fee on it and be self-sufficient,” he said of the commission, adding to the general fund “…In a couple of years, we’re looking at the rate. $27 an increase of a million, maybe a minimum. This $27 million is on top of additional money being generated.Even if we did nothing, that amount has increased quite a bit: five 2021 is $41 million (generated to the state from the pari-petrol tax), more than two years ago combined.This year’s estimate is $62.7 million.
“So the money is coming in from this industry. I think I’ve found some creative ways to generate more money without hurting the product. I know there’s been a lot of discussion on the floor in the coming days. last year about the HHR tax hike, and Representative Koch and I stood up and promised we’d look into it, and we did.”
Koenig emphasized that HHR (and other pari-mutuel bets in the state) are taxed on gross. “Meanwhile, when you have casinos and slot machines, they usually tax their profits,” he said.
Invoices also include:
Provides funding for equine programs at the University of Kentucky and Bluegrass Community and Technical College. The University of Louisville business school’s Equatorial Industry Program received funding from pari-mutuel staking.
Eliminate the 15% per-person admission tax that tracks now pay even if they don’t charge entry (that’s every track except Churchill Downs and Keeneland).
Require racetracks to maintain “self-exclusion” lists — where individuals such as problem gamblers can state that they do not wish to be allowed access to a track or HHR facility for a period of time certain — to be shared with the racing committee and other tracks and HHR properties.
Bills still have to be passed by the full House of Representatives before they are sent to the Senate.
