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Kentucky Plans to Introduce New Bill on Tax Rates for Prepaid Horse Racing Betting
The state of Kentucky is planning a tax rate hike on advance deposit wagering or prepaid online betting and historical slot-like horse racing machines if a bill filed by a Kentucky representative passes. According to republican lawmaker Kim King, two forms of gambling are flourishing around a politically backed horse racing industry, and the state only gets less than half of what other states make in revenue. The Harrodsburg representative filed House bill 156 aiming to raise tax rates as after poring through data coming into his office, he decided that something didn’t add up.
Advance Wagering, Historical Horse Racing Ruffle State’s Feathers
In the last decade, old fashioned simulcasting and live race betting failed to boom, the podium going to advanced deposit wagering and historical slot-like racing machines. These new forms of racetrack gambling have been invested in heavily by industry leaders based out of Louisville, KY.
Historical horse racing hit a total handle of $2.2 billion by Kentucky punters last year, up 11% from the previous year. According to the Kentucky Horse Racing Commission, advance deposit wagering took in $282 million, which was a 10% rise from 2019. The state of Kentucky receives very little tax revenues from the large sums cited.
In 2020, Kentucky collected $33.8 million from historical horse racing and only $15.1 million went to the state’s General Fund which pays for state government operations. $1.4 million was the tax collected from advance deposit wagering and the General Fund got just $212,093.
Such a low tax rate reflected on these two forms of racetrack gambling because the state had lowered rates for these forms of gambling as opposed to the ones in place for simulcasting and live race betting.
What Might King’s Bill Spell for the Racetracks?
Historical horse racing machines in particular faced lighter taxes than traditional casino slot machines in many other states. The general assembly in 2014 decided that revenues from these forms of gambling would go to development programs or purses beneficial to the horse sector instead of government operations.
The bill by representative King seeks to raise the tax rate on advanced deposit wagering and historical horse racing machines. While historical racing rates would rise from 1.5% of the average daily handle to 3%, the rate on advanced online betting will hike from the current 0.5% to 3%. These rates match those for simulcast betting in the state of Kentucky, which is 3%, and of live betting which is also three percent unless the average daily handle is greater than $1.2 million, then it's 3.%.
Representative Kings Efforts to Reign Powerful KY Racetracks
If this new proposal goes through, it will yield the state an additional $40 million in revenues, money that could pay for public needs such as healthcare or education. It’s a big if; as the bill might arrive dead at the general assembly, seeing as the state's racetracks spent more than $550,000 on lobbyists in the past two years.
Last year, King filed a similar bill, one that stalled in the Occupational and Administrative Regulations of the House Committee on Licensing. The Republican chairman of the committee, Adam Koenig revealed last week that he's not in support of King's bill or efforts in general.