Kentucky Supreme Court Rejects HHR Appeal, Lawmakers Up Next?

In the latest salvo fired in the ongoing debate about historical horse racing (HHR) machines in Kentucky, that state’s Supreme Court denied an appeal from the Kentucky Horse Racing Commission requesting a second opinion on the legality of those machines.

Historical Horse Racing (HHR) machines resemble slot machines, which are banned in Kentucky. Based on results of previous races, they provided $2.2 billion to Kentucky’s economy in 2019 and are a major economic engine for the state’s key Thoroughbred industry. (Image: Canadian Thoroughbred Magazine)

The Kentucky Supreme Court refused to reconsider its Sept. 24 decision that determined one brand of HHR machines was not a pari-mutuel form of wagering. The decision imperils a $2.2 billion revenue stream that contributes millions of dollars to the state’s racing purses and millions more to the state’s foundational equine industry.

The appeal came from the KHRC and several tracks across Kentucky. It wanted the Court to reconsider its definition of pari-mutuel. When the Court denied that, it kicked the matter back to the Franklin Circuit Court to decide in a manner “consistent with this opinion.”

That original 7-0 opinion ruled that a specific brand of HHR machine, the Encore Racing Based Games’ System, does not meet the definition of pari-mutuel wagering. While this technically applies only to the Encore machines, other HHR machine manufacturers – along with the tracks – want the matter defined once and for all.

What is Pari-Mutuel Wagering? Legislators Will Decide

That’s why defining what is pari-mutuel wagering likely ends up with the state’s legislators. This is likely the equine industry’s best option to keep HHR machines pinging and chiming away.

“The Kentucky Supreme Court clearly told the industry to work with the General Assembly on achieving a legislative solution,” Churchill Downs Inc. Vice President of Communications Tonya Abeln told the Louisville Courier-Journal. “Our top priority for the 2021 legislative session is maintaining the status quo to ensure historical horse racing can continue operating in Kentucky as it has for the past decade.”

No legislation is currently in the pipeline, but in his State of the Commonwealth and Budget Address earlier this month, Kentucky Gov. Andy Beshear called on state lawmakers to protect HHR.

HHR Isn’t a Red or Blue Issue — It’s Green

“Speaking of laws that unduly restrict us from growth and innovation, it is time to legalize medical marijuana, pass sports betting, and save historic horse racing,” Beshear said from the Governor’s Mansion in Frankfort.

Beshear is a Democratic governor, but HHR enjoys bipartisan support in red-state Kentucky. The state’s General Assembly is Republican-dominated and starting with Senate Majority Leader Damon Thayer, many of that chamber’s majority members support HHR. That’s not surprising, given the importance of the Thoroughbred industry on the state’s economy. According to the Kentucky Equine Education Project (KEEP), the equine industry pumps $3.2 billion into Kentucky’s economy. Along with that comes approximately 80,000 jobs.

The HHR machines nearly doubled racing purses in the state since their 2011 launch. In 2019, tracks offered $113.6 million in purses, up from $65.3 million in 2011. At an average of $64,250, Kentucky purses are the highest average purses in the country.

The state’s Thoroughbred industry found itself here courtesy of the Family Trust Foundation, an anti-gaming, socially conservative organization. The group’s single-minded focus on banning HHR machines resulted in a 10-year legal crusade culminating in the Sept. 24 opinion. On the group’s website, four of the six posted press releases pertained to HHR machines.

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