Boom! You know, like a sunny day on the beach when you haven’t even heard the F‑16 coming and then, literally, “out of a clear blue sky” comes the sonic boom.
It’s day 50 of the first Session in several years that hasn’t included a major piece of legislation impacting Kentucky’s signature horse industry. Historical horse racing – done. Grey machines legislation – done. Sports betting – done. To be sure, a few bills are in the mill and a few other ideas bouncing around, but nothing that would move the needle in a big way.
Then, Senate Majority Leader Damon Thayer drops a floor amendment on SB 3, an act that in its original form would have attached the Fish and Wildlife Commission to the Commissioner of Agriculture instead of the Public Protection Cabinet. Thayer’s amendment would have done the same thing with the Racing Commission. The full Senate passes the bill, with the Thayer amendment attached, but it never makes it anywhere in the House. It turns out, though, that this is just a preview of coming attractions.
On day 52 of the Session, the word gets out that Speaker Osborne has a different idea of what should happen with the Racing Commission, as well as all legal forms of wagering (i.e., sports wagering, charitable gaming) in Kentucky other than the state lottery. And his model is the state lottery itself – specifically the Kentucky Lottery Corporation. Over the next few days, the bill is crafted, drafted, revised, attached on Day 55 of the Session to SB 229 (a shell bill filed 13 days earlier by none other than Senator Thayer), heard in an almost-unprecedented Joint House and Senate Committee meeting, and passed by both Chambers.
Governor Beshear vetoes it, as expected. The Republican super majorities in both Houses override the veto as, expected. And just like that, barring litigation and the entry of an injunction, on July 1, 2024: the Board of the Kentucky Racing Commission will become the governing Board of the Kentucky Horse Racing and Gaming Corporation; the Executive Director of the Racing Commission will become the President of the corporation; and all powers and duties formerly exercised by the Commission will fall under the purview of the Corporation.
Charitable gaming will be folded in under the Corporation a year later – July 1, 2025. Current Racing Commission members will remain in place as corporate Board members, and the Executive Director will continue as corporate President, for two years. After that, new Board members will be chosen by the Governor to fill designated slots (e.g., Thoroughbred representative, Standardbred representative, charitable gaming representative, gaming expert).
Now what? The scramble is on. Two and a half months is not much time to cut the umbilical cord between Public Protection and the Racing Commission. And it is beginning to appear that there are more things the Cabinet was doing for the Commission, and therefore a lot more to transition, than was anticipated.
The good news is that for the first year of its existence, the Corporation will essentially be the Racing Commission in a different form: largely run by the same people, doing the same jobs, regulating the same licensees who will be conducting the same operations under the same statutes as before. It will have more autonomy than before, especially regarding hiring and compensation of employees, but to the public and the regulated entities should look much the same.
Except . . . early indications are that it could cost more. If existing statutes are not modified, the added costs will be divvied up and allocated to the tracks on top of significantly increased Racing Commission assessments and new HISA fees in recent years. There is also close to a 100% probability there will be unintended consequences flowing from the new Act. Anything this complex, done this quickly, in the crucible at the end of a legislative session virtually guarantees it.
This brings us to the final bit of good news. There is a scant six months between the effective date of the “new order” and the next legislative session. Plus, the biggest changes won’t occur until charitable gaming comes over a year later and the new Board takes over two years later. There will be plenty of opportunity early on for the General Assembly to address issues that arise and, at least at this point, there seems to be plenty of legislative will to make it all work.