FRANKFORT, Ky. — The horse racing industry suffered during the pandemic, except for historical horse racing.

What You Need To Know

  • Kentucky lawmakers reworked the state’s gambling laws to make historical horse racing legal again earlier this year

  • The debate spurred the creation of a new task force to look into how HHR machines are taxed

  • The Pari-Mutuel Wagering Taxation Task Force met for the first time Friday

  • Kentucky made $27.4 million in tax revenue off of $356.6 million the horse racing industry got on those machines

People put more than $4 billion into the slot machines this past fiscal year, and that’s only 11 months of data from the Kentucky Horse Racing Commission because June’s receipts have not yet been recorded.

“It is going to drive growth in purses, which will drive growth in horses running at Kentucky track, which will mean more of them are going to be bred here, more of them will live here, and that’s jobs,” state Rep. Adam Koenig (R-Erlanger) said.

The Kentucky Supreme Court ruled historical horse racing machines, which are slot machines where the game itself is based off of horse races that were run in the past, didn’t fit with the state’s strict gambling laws last September, so legislators reworked them.

A task force created during that debate to look into how historical horse racing machines are taxed met for the first time Friday. Koenig is a co-chair.

“Today’s meeting was really to get everybody on the same page, understanding what the tax rates are,” he said. “They’re different for basically every different type of wagering.”

Out of the $4.1 billion bet on historical horse racing machines last year, 91% went back to bettors.  

The horse racing industry got $356.6 million, and Kentucky only got $27.4 million in tax revenue.

Some lawmakers, including House Minority Floor Leader Joni Jenkins (D-Shively), question whether that’s enough.

“I think we need to look at it all. My first glance at this — and I’m very willing to listen to the conversation from all sides, from the horse industry, from other legislators — but my first glance is yes, we do need to make an increase in it,” she said. “But it does need to make sense in whole with all the other kinds of racing taxes that we have.”

Kentucky currently places a 1.5% excise tax on how much the machines bring in for operators.

“It makes no sense that Historical Horse Racing is taxed at a lower rate than actual horse racing,” Senate Minority Floor Leader Morgan McGarvey (D-Louisville) said.

But the task force is going to look at every facet of horse betting, and some members, including Senator Majority Floor Leader Damon Thayer (R-Georgetown), aren’t convinced anything needs to change.  

“It may be complicated but I will say this: it’s working pretty well, and I don’t think it’s a foregone conclusion that we make changes,” he said.

Koenig said any potential increase on historical horse racing could lead to lower payouts.

“The operators are going to make their money on these machines, and if we increase the taxes, that’s going to come out of the players," he said.

But he’s still open to raising taxes on the machines, and talks will continue leading up to the next legislative session in January.

Other areas the task force will look into, Koenig said, include putting tax revenue into a fund for services to help gambling addicts.