Proponents of expanding gambling in Kentucky claim slot machines at race tracks will save the horse industry by increasing i purses for horse races by $60 Million. How Does HB 158 HCS (2009) Allocate Money for Purse Supplements?
Net Terminal Revenue $700,000,000 State Share $196,000,000 Horse Share $504,000,000 Sect. 33(2) provisions 0.15% to Quarter Horse Purse Program $756,000 Remainder $503,244,000 000 14.5% to equine interests* $73,080,000 Remainder $430,164,000 1% to Equine Breed Authority $5,040,000 Remainder to be retained by tracks $425,124,000 Sect. 40 requires 0.5% to be allocated to capital improvements $2,125,620 Total unrestricted to Tracks $422,998,380 * Of the 14.5% to Equine Interests Initial amount $73,080,000 81.33% designated for purses and purse supplements $59,435,964 18% to Breeders Incentive Fund $13,154,400 Remainder split between: Horsemen's Benevolent and Protective Associationand and $244,818 Thoroughbred Owners and Breeders Association $244,818
How Much Handle is Required to Produce $700 Million in Net Terminal Revenue at 85% payback? $4.6 Billion
How Much Handle is Required to Produce $700 Million in Net Terminal Revenue at 94%? $11.6 Billion
$4.6 Billion in Context About $470 Million is bet on horse racing at the tracks in Kentucky. About $489 Million is wagered on all forms charitable gaming. About $778 Million in tickets are sold by the Kentucky Lottery. About $500 Million is wagered by Kentuckians at Casinos in Indiana AND Illinois.
Wagering almost nine times more than Kentuckians are wagering at casinos in Indiana AND Illinois. i $4.6 Billion of Wagering in Kentucky? Kentuckians over the age of 21 would need to put over $1,600 into slot machines eachand and every year. Wagering almost three times more than the amount bet on horse racing, charitable gamming and the Lottery COMBINED.
$700 Million Produces How Much for Horses? Unrestricted Profit for Tracks Mandated Track Improvements Taxes Collected by the State Purse Supplements Other Equine Interests $423 Million $2 Million $196 Million $60 Million $19 Million
60% Profit for KY Tracks? State % of Revenue Retained by Tracks New York 20.2% West Virginia 42.4% Pennsylvania 45% Delaware 48% Florida 50% Indiana 51% Maine 51.8% New Mexico 54.75% Oklahoma 59% Kentucky (HB158 2009) 60% Louisiana 63.6% Iowa 76.3% Percentages adjusted gross receipts minus wagering taxes payments to the horse industry and other amounts Percentages adjusted gross receipts minus wagering taxes, payments to the horse industry and other amounts subtracted by the state. In Delaware and West Virginia the lottery commission owns the gaming machines and pays a distribution to the track.
2008 Thoroughbred Purses State # of Races Purses Ave Purse Ave Field VLT Supplement California 5,076 $198,311,069 $39,068 7.9 New York 3,724 $145,473,050 $39,064 7.9 $84,444,007 Kentucky 2,603 $76,112,194 $29,240 8.6 Pennsylvania 4,427 $ 110,225,334 $24,898 8 $155,094,483 Louisiana 3,404 $86,306,399 $25,354 9.3 $61,026,939 Florida 3,443 $78,404,970 $22,772 8.4 Not mandated by law West Virginia 4,101 $70,369,850 $17,159 8.6 $58,297,819 Illinois 2,409 $61,227,246 $25,416 8.3 New Jersey 1,327 $46,921,346 $35,359 7.3 Maryland 1,578 $34,994,500 $22,176 7.8 Delaware 1,084 $32,912,635, $30,362 6.9 $65,183,200, New Mexico 1,678 $31,867,919 $18,992 8.2 $49,175,682 Oklahoma 1,263 $24,059,492 $19,049 9.4 $10,378,299 Indiana 1,028 $13,972,300 $13,591 8.9 VLT s online in mid-2008
Advance Deposit Wagering (ADW) and Out-of-State Wagering Growing in Importance 2006 2007 On-Track Out-of-State On-Track Out-of-State Churchill Downs $123,113,753 $669,516,158 $99,667,014 $595,116,971 Keeneland $42,805,813 $219,312,412 $41,710,527 $232,785,106 Turfway Park $15,558,289, $309,378,001, $15,501,247, $260,476,685, Ellis Park $7,269,900 $79,272,508 $8,731,459 $77,776,904 Internet twagering sites, also called ADW s, do not pay any Kentucky pari mutuel taxes.
Guaranteed Purse Supplements, Without Slots Description Surcharge on Lottery Tickets Dedicate sales tax on horse feed, hay, grooming supplies, and bedding Dedicate pari mutuel tax collected by the Commonwealth Dedicate sales tax on horse sales Amount $46.6 Million $9.4 Million $6.2 Million $3 Million Dedicate Race Track License fee $245,000 Dedicate Race Track Admission tax $220,000 1.5% on Out of State Wagering $17.4 Million Total Guaranteed Supplements $83,065,000 Supplements for prizes at horse shows $500,000 Breeders Incentive Fund $13 Million Purse supplements for Thoroughbred, Standardbred and Quarter Horse races $69,565,000
Can Slots in Kentucky Compete? Proponents of slot machines say horse racing needs money from slots to increases purses at race tracks to compete with tracks in other states. Can purse supplements based on gambling revenue in KY ever compete with larger population states like NY or PA? HB 158 establishes a pay out rate of 85%, while Indiana slots payout over 90%.