Recently, Kentucky Downs began to allow wagering on historic
races at electronic gaming machines. The Kentucky horse industry
has long considered itself at a competitive disadvantage with
neighboring racing states that allow other forms of wagering. The
disadvantage may continue to grow as other states, such as
Kentucky's northern neighbor, Ohio, have authorized expanded
gambling (including authorizing slots at race tracks). With
Kentucky lawmakers unable to agree on proposals which would
authorize slot machines at race tracks, Kentucky Downs has sought
to rely on existing laws to offer new wagering opportunities for
patrons. So-called "instant racing" devices allow players
to place wagers on games where the outcome, at least in part,
relies on the results of historic horse races. The legal issue
turns on whether the instant races are "gambling" or
wagering on horse races under Kentucky law. Bill Flesher, Vice
President for Development at Kentucky Downs, said that instant
racing has generated nearly $2 million for purses and breeders'
awards. Kentucky Downs asserts that wagering on historical racing
complies with the laws and regulations set out by the Kentucky
Horse Racing Commission.
The state disagreed, and a trial occurred in December 2010
before Franklin Circuit Court Judge Thomas Wingate. At the
trial's conclusion, Judge Wingate upheld a proposal allowing
tracks to accept parimutuel bets on old races. A group entitled The
Family Foundation intervened in the lawsuit, seeking to clarify the
issue, and the ruling of Judge Wingate was appealed.
On Friday, June 15, the Kentucky Court of Appeals sent the case
back to the trial judge. The 2-1 decision from the appellate court
does not expressly prohibit instant racing at Kentucky Downs.
Instead, the appellate court sent the case back to the trial judge
to allow The Family Foundation of Kentucky and the state to explore
issues surrounding the instant race game.
In December 2010, Judge Wingate refused to allow the state and
The Family Foundation of Kentucky to exchange evidence and further
develop issues surrounding the wagering. The appellate court ruled
it was impossible to tell what the trial judge relied on to justify
upholding instant racing, Senior Judge Joseph E. Lambert wrote.
Judge Lambert concluded as follows:
We agree that the parties had a right to develop proof and
present evidence to establish that the wagers made by patrons at
electronic gaming machines do or do not meet the definition of
pari-mutuel wagering on a horse race.
Following the decision, Mr. Flesher confirmed that Kentucky
Downs will not stop offering instant racing games. Kentucky Downs
continues to take the position that such wagering activity complies
with the laws and regulations in Kentucky.
The future of wagering by patrons at electronic gaming machines
on historical racing remains up in the air. It is unclear whether
its survival is, at this point, a safe bet. Stuart Scott is a
member in Dickinson Wright's Nashville office.
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