Sunday, November 1, 2015

Expanded gambling fades as an issue, but lingers as a potential source of revenue; Conway eyes it for pensions

By Jerry Seale
University of Kentucky School of Journalism and Telecommunications

The long-running issue of expanded gambling is not in the primary focus of the candidates in the Nov. 3 gubernatorial election, but it could play a role in the next governor’s administration.

Republican Matt Bevin once went as far as to dismiss the issue as “almost irrelevant,” and has made it clear he has no intention of making a push to bring in casinos if he is elected.

“I don’t think it’s the solution to what ails us financially in this state,” Bevin said during the October 6 gubernatorial debate.

Democrat Jack Conway has pointed to expanded gambling as a likely source of revenue that bond-rating agencies want dedicated to Kentucky’s pension system, which has been described by many as being in a state of “crisis” because it is so underfunded, causing the state’s bond rating to drop.

“If we’re looking for new revenue, I think gaming is the most obvious place to look,” Conway said on Louisville’s WFPL Radio Oct. 9.

Independent candidate Drew Curtis is not much more enthusiastic about the idea of casinos in Kentucky than Bevin is, but is not ruling it out either. “Our pension system is in dire shape, so we must consider all options,” he told WFPL.

The expansion of gambling and the creation of casinos in Kentucky was a major part of Gov. Steve Beshear’s platform when he first ran for the office in 2007, but it has not materialized.

Many who share Conway’s stance have looked to Illinois, Indiana and Ohio as evidence that Kentucky should expand gambling. A PricewaterhouseCoopers LLP study showed more than $1 billion a year is spent by Kentuckians in casinos of other states. Some believe bringing casinos would keep a large portion of that money in the state, but the Family Foundation of Kentucky says gambling targets families, hurts businesses, corrupts government and hurts vulnerable citizens.

The horse industry in Kentucky declined during the Great Recession. The numbers of races and horses dropped, as did participation and betting at the races. Revenue from expanded gambling, if put into race purses, could help the industry prosper again.

House Speaker Greg Stumbo, D-Prestonsburg, has said he will propose a bill to amend the state constitution to allow seven casinos to operate in Kentucky. If approved, tax revenue from the casinos would be given to schools, the pension system and the racing industry.

If approved by three-fifths of legislators in both houses, the amendment would go on the November 2016 ballot for voters to decide.

Despite their differing stances on expanded gambling, Conway and Bevin have both said they would like to see voters decide the issue.

However, several factors stand as obstacles to the legalization of casino gambling in Kentucky. Gene Clabes, executive editor of KyForward.com, said Ohio and Indiana have “leapt ahead” of Kentucky on the casino front, as can be seen by looking at the transformation of the Belterra race track in Indiana near Cincinnati.

“Kentucky is years behind,” Clabes said. “One factor to keep in mind is that the horse industry is divided on casino gambling versus instant racing. It seems this division doesn’t bode well for a favorable outcome for casino gambling without unity from the industry.”

Instant racing, recently introduced to Kentucky, uses devices that greatly resemble slot machines to base betting on the outcome of past horse races. It might cause support for casino gambling legalization to wane, if bettors and tracks are content with it and feel no need to try to push for more.

Instant racing is lucrative. A report to the Kentucky Horse Racing Commission said terminals at the Red Mile track in Lexington took in just over $5 million in wagers.

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