Bill taxing Internet wagers passes Ky. Senate

FRANKFORT, Ky. (AP) - A bill putting a tax on phone and online
horse racing bets placed by Kentuckians cleared the state Senate on
Friday amid a partisan debate on whether lawmakers are doing enough
to rein in setbacks in the state's world-renowned equine sector.
Under the proposal, money collected from the 1½ percent tax on
so-called advance deposit wagers would flow into a fund that boosts
purses for Kentucky-bred horses at Kentucky tracks.
The measure passed on a party-line 21-17 vote, with the Senate's
lone Independent siding with majority Republicans. Democrats were
united against the proposal.
The bill goes back to the Democratic-led House, which passed a
version a month ago that would place a 0.5 percent tax on Internet
and phone wagers.
Supporters of the Senate proposal didn't know how much money the
tax would generate, but noted that advance deposit wagering is the
fastest-growing segment of wagering on horse races.
"This bill will provide some relief," said Senate President
David Williams, R-Burkesville. "It won't provide as much as some
people want. ... But it will provide at least three times as much
relief as it would have provided when it came out of the House."
Sen. Julian Carroll, D-Frankfort, said the bill amounted to
tossing "a bone without that much meat on it" to the racing
"We're not helping the racing industry with something when we
can't even tell them the dollars that they're going to have,"
Carroll said during a committee hearing on the bill.
The debate comes at a time when industry advocates worry that
Kentucky horse racing is falling behind tracks in other states that
have boosted purses through alternative gaming.
Carroll said a friend in the racing industry told him he can
make twice as much in prize money finishing third at a race in West
Virginia than winning at some Kentucky tracks.
Senate Minority Leader Ed Worley, D-Richmond, said lawmakers
have assisted other ailing sectors of the state's economy, but the
approach to the horse industry was unique.
"This is the first time we identify an industry in crisis, we
say that we want to help them, and our approach to help them is to
tax them," Worley said.
Worley said the proposal would "whack" Louisville-based
Churchill Downs Inc., which operates an Internet- and phone-based
wagering system. The company's stable of race tracks includes
Churchill Downs, home of the Kentucky Derby.
Sen. Damon Thayer said the proposal would boost live racing by
taking money wagered on Kentucky races and putting it into purses
for Kentucky-bred horses at the state's tracks.
"This is an all-Kentucky bill," said Thayer, R-Georgetown.
Supporters said the measure would close a loophole, since bets
made at Kentucky tracks are taxed, generating money for the fund
designed to boost race purses.
Also under the bill, some money from taxing online wagers could
go to boost purses for claiming races at Ellis Park and Turfway
Park in Kentucky.
The measure also would do away with the state's two-tiered
pari-mutuel taxing system for wagering at the tracks. Instead, it
would set a flat rate of 1.5 percent.
Worley said lawmakers had missed opportunities to help the
industry during the 60-day legislative session, which reached its
56th day Friday.
The debate came a day after Thayer said he couldn't muster
sufficient support for his proposal to let Kentucky tracks offer a
form of wagering based on old horse races.
Thayer saw the Instant Racing electronic game as a way to boost
live racing by taxing those wagers, but the proposal has been
thwarted by anti-gambling forces.
Carroll challenged Senate Republican leaders to come up with a
meaningful plan to assist the horse racing industry.
Republicans and Democrats bickered over another facet of the
industry debate - whether to allow video slot machines at Kentucky
tracks as a way to boost horse racing.
Thayer noted that Republicans backed a proposed ballot issue
this year to allowed Kentucky voters to decide any expanded
gambling proposal. The measure was blocked by Senate Democrats.
Sen. David Boswell, D-Owensboro, said that Republicans for years
blocked his proposed referendums on expanded gambling.
The legislation is House Bill 368.

(Copyright 2010 by The Associated Press. All Rights Reserved.)

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