Kentucky moves closer to regulating online betting

A proposed regulation approved by the Kentucky Horse Racing Commission calls for state licensing of so-called advance deposit wagering operations that have Kentucky customers. The proposal now heads for a review by state lawmakers. Operators would face a us$ 1,000 annual licensing fee plus costs for reviewing the application, including background checks.

The commission action is the result of a measure approved by Kentucky lawmakers this year. It requires state licensing of ADW operators and quarterly reports by those companies on all ADW wagers made on Kentucky races. Senator Damon Thayer, who pushed for the law, called the commission's action "a positive step in the right direction on getting a clearer picture on ADW bets on Kentucky races."

The state oversight likely will result in follow-up legislation next year, Thayer said. That measure may seek to funnel a portion of those online and phone bets into a fund that boosts purses for Kentucky-bred horses at Kentucky racetracks, he said.

Currently, a portion of many wagers made on Kentucky horse races go into the fund, but the levy doesn't apply to ADW bets - the only growth segment in pari-mutuel horse wagering, Thayer added.

By knowing how much is wagered through ADW providers, and where the bets come from, lawmakers can consider transferring "a rightful portion" of those wagers to the fund to strengthen racing and breeding operations in the state known as a horse capital, he said.
Thayer assured that he plans to meet with House Speaker Pro Tem Larry Clark this summer to discuss possible legislation dealing with Kentucky's horse racing industry.

Churchill Downs, whose properties include its namesake Louisville track that's home to the Kentucky Derby, has emerged as a key player in the online betting business through its TwinSpires.com account-wagering site. Churchill strengthened its position by acquiring online rival Youbet.com.

The online business has grown so much that it's now seen as one of Churchill's three primary business segments, along with racing and gaming, said company spokeswoman Julie Koenig-Loignon. She sidestepped questions about how Churchill would respond to attempts to place the levy on ADW bets.

"It is difficult to predict whether there could be taxing of ADW wagering in the future," she said. "Absent that information, we can't really speculate on what future taxes - should they materialize - would mean for our ADW business."

Thayer said he hoped Churchill would see a levy on ADW bets as a way to strengthen horse racing in Kentucky. "This is a way for the horse racing industry to help itself," he said in a phone interview.

In recent years, state lawmakers have grappled with responding to concerns from industry advocates that Kentucky horse racing is falling behind tracks in other states that have boosted purses, largely through alternative gaming.