Mar 27, 2010 Bill Taxing Internet (Horse) Wagers Passes Ky. Senate
A bill putting a tax on phone and online horse racing bets placed by Kentuckians cleared the state Senate on Friday.
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 industry.
"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.
