Instant Racing Court Case: Still waiting . . . !

July/August 2018

In April, the Judge said he would decide “in a few weeks”; It’s now September, the machines are still operating, and no decision.

It’s more than a little frustrating . . . We’ve labored for just over eight years in the court case to determine whether these historical racing gambling devices are legal. Our attorney, Stan Cave, has absorbed unfounded, sometimes bruising criticism from the gambling industry’s attorneys (at times 14 of them at once) and the machines are still operating even though they have never been declared legal.

The Family Foundation fully believes, based on Cave’s arguments in court, his research of over 100,000 documents, his selection of expert witnesses and his own insightful analysis, that these machines DO NOT depict pari-mutual wagering on horse racing as Kentucky law requires. If the court rules according to our understanding, these machines will be judged unlawful.

Yet, the machines keep taking money from Kentuckians (particularly the poor), and the proprietors of these devices pay almost no taxes compared to what other states assess “slot machine-type” games. States that allow casinos with slot machines that operate much like these “historical racing” machines, must pay 25 percent, 35 percent and sometimes 50 percent taxes on what they take from patrons.

Because these machines are supposed to be a “horse race,” and because the horse industry receives significant tax breaks from the Commonwealth, they are currently paying only 1.5 percent tax on the “handle” (monies wagered). But more than half of the tax is given back to the horse industry.

According to the Kentucky Horse Racing Commission’s bookkeeping, during this fiscal year, the operators have taken in over $50 million at the three tracks that currently offer “historical racing.” Yet only $3.3 million has been received by the state treasury.

Some are suggesting that the horse industry has let its will be known that it wants to operate these machines as long as they can, making as much as they can, in order to have money to lobby the General Assembly TO CHANGE THE LAW after the machines are found illegal in this court case later this Fall.

Whether that’s true or not, only a few would know.

But track commissions are $4.2 million per month and with a pittance of taxes on it. Any unscrupulous businessmen would jump at such an opportunity.

Gambling’s Four Policy Truths

Truth #1: The Family is targeted.

Clearly, gambling doesn’t create new wealth. It only makes wealth change hands. What hasn’t happened is an honest discussion that tells us from where all the gambling money comes: corporations can’t gamble, nor can businesses, institutions, schools, churches, nonprofits, clubs, nor civic groups – only Moms and Dads, and a few single people. In other words, all the BILLIONS of dollars that is gambled is just a shift of assets FROM the hands of the family INTO the hands of the gambling industry.

Truth #2: Businesses will lose.

As families lose, businesses will lose. Think about it – after all the losses, parents can’t afford to take the family out to eat, buy their children new clothes for school, purchase a new refrigerator or finance a new addition to the house. Other businesses will suffer because money is TAKEN OUT of the economy. Remember, Las Vegas was built by losers – not winners. Expanded gambling will simply drain millions of dollars of wealth from Kentucky’s communities, and local economies will pay dearly.

Truth #3: Government will be corrupted.

With millions going into the hands of the gambling industry, who will become the greatest contributor and most influential group in the political process? If our legislature is “gambling friendly” today, how much more “ friendly” will it be in ten years when many of its members have received sizeable contributions from the gambling interests? Now, imagine that there’s a policy debate, like “Should we legalize prostitution?” (as was the case in Nevada). Nevada’s legislature, made up of Moms and Dads like Kentucky’s decided to legalize prostitution in order to embellish the gamblers’ “good times.” (Clearly, it wasn’t for “good jobs for women.”) If gambling interests want it, what will the legislature do? The answer: They will do the will of the gambling interests.

Truth #4: The Vulnerable will be destroyed.

Though families are targeted (see #1 above), finances aren’t the worst of the costs to families. Financial loss is just the beginning of a tragedy that all the family members experience. There will be some people whose lives will be totally destroyed – marriage-damaging financial stress, alcoholism, drug use, child neglect and abuse, spouse neglect and abuse, divorce, depression, suicide, embezzlement, imprisonment and crime (both victim and perpetrator). And even worse, their children will lose their childhoods and be affected for a lifetime. Doctors have a policy regarding their treatment of any patient: First, do no harm. Policymakers in Frankfort would do well to apply this wisdom to the gambling expansion decision because vulnerable families will be destroyed.

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