- Associated Press - Thursday, February 20, 2014

LOUISVILLE, Ky. (AP) - Kentucky can license and regulate Instant Racing, a slot-machine type of game where people bet on the outcome of an old horse race without knowing which contest they are betting on, the Kentucky Supreme Court ruled Thursday.

Justice Daniel Venters said there wasn’t enough information for the justices to determine whether Instant Racing qualifies as a horse race or is illegal gambling. The justices sent the case back to Franklin Circuit Court for more arguments and evidence on that question.

Gov. Steve Beshear’s administration, along with horse track executives, sought the ruling on Instant Racing, which was adopted by the Kentucky Horse Racing Commission. The Family Foundation of Kentucky argued that Instant Racing does not meet the state’s legal definition of pari-mutuel wagering on horse races. The group also challenged how wagers are pooled, odds calculated and whether the state could collect taxes from the games.

Kentucky defines pari-mutuel racing as customers betting among themselves and not against an association, with the net wagering pool returned to the winning bettors. Kentuckians are allowed to bet on horse racing, bingo, pull-tabs and lotteries, but lawmakers have resisted other forms of gambling.

Venters concluded that, simply because the recordings of the races run at different times and places than live races doesn’t place them outside the boundaries of “legitimate racing” and beyond the Kentucky Horse Racing Commission’s jurisdiction.

“We cannot say that, conceptually, watching a video-taped (or digitally recorded) image of a horse races makes the event any less of a horse race than watching a re-run of a basketball game makes it something other than a basketball game,” Venters wrote for the court.

The justices ruled that the Kentucky Department of Revenue lacks the authority to collect excise taxes on wagers placed on the old horse races. Venters concluded that, because lawmakers specified that the Revenue Department could collect taxes on “live” races, the legislature didn’t intend for the state to collect taxes from pre-recorded races shown in Instant Racing.

“We simply cannot bend and stretch the English language far enough to refer to a machine that displays video recordings of thoroughbred horse races that occurred in the distant past as live racing,” Venters wrote.

Beshear, who backs Instant Racing, applauded the decision.

“I’m pleased that overall the Supreme Court has confirmed our belief that it was legal for the Racing Commission to take the actions that it did,” Beshear said.

Stan Cave, an attorney for the Lexington-based Family Foundation, said the decision to return the question of whether Instant Racing is pari-mutuel betting or gambling is a “victory for transparency” because the group will now be able to ask questions and seek evidence in the case.

“The Court saw through the secrecy and concealment of the Instant Racing proponents and now is going to allow light to be shed on what these devices really are,” Cave said.

Kentucky Downs in Franklin has 390 machines that take in about $18 million to $20 million in wagers per month. The track will feature live racing on five days in September. Ellis Park in Henderson has about 200 machines takes in about $2 million a month on those machines. That track will open live racing in July with a season running through Labor Day.


Follow Associated Press reporter Brett Barrouquere on Twitter: https://twitter.com/BBarrouquereAP

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