Lawmakers Discuss Stumbo's VLT Bill

by Rick Howlett on January 21, 2009

From Kentucky Public Radio’s Tony McVeigh

The pros and cons of a bill that would allow video slot machines at Kentucky horse tracks were aired at a legislative hearing in Frankfort Wednesday.

Two weeks ago, newly-elected House Speaker Greg Stumbo introduced legislation allowing video lottery terminals, or VLT’s, at horse tracks. While the 2009 legislative session is in recess, the House Licensing and Occupations committee is hearing testimony on the bill. Speaking for the horse industry, Keeneland President Nick Nicholson warns Kentucky is rapidly losing ground. He says other states are already subsidizing race purses with revenue from video slot machines.

“They’re outspending us. They’re out-building us. Their purses are higher and they’re creating new jobs for their citizens,” Nicholson said.

Speaker Stumbo says Kentucky must compete or lose its signature horse industry. Stumbo claims video slots at Kentucky horse tracks could generate $700 million in taxable revenue the first year and $1.2 billion per year, within five years.

Among those backing up the numbers is Kentucky Lottery President Arch Gleason.

“We assumed about 12-thousand machines in the model we were looking at, at the time, spread among seven or eight locations, which obviously averaged around 15-hundred machines per location. We had an average machine income assumption that was consistent with other states’ experience, and was in the neighborhood of around 260-dollars per machine per day,” Gleason said.

Under Stumbo’s bill, the Kentucky Lottery would administer the slot machines. And since people already gamble at the tracks, Stumbo sees no need for a constitutional amendment on expanded gambling.

“I would wager my law license that I’m correct about this,” Stumbo said.

And the reason he’s so confident is because of an opinion issued by his office when Stumbo was attorney general. The opinion is based on an interpretation of the original intent of the authors of the state constitution. “They did not intend in any way, form, or fashion, to limit or exclude other forms or types of gambling – only state run lotteries,” he said.

Stumbo says video slot machines at horse tracks fall under that interpretation: “To me it’s no different than if the lottery chooses to put a new game out and they’re selling lottery tickets at the SuperAmerica or wherever they’re selling them. It’s not really an expansion of gaming. It’s simply a new form or gaming.”

But opponents beg to differ. They note that former attorneys general Chris Gorman and Ben Chandler issued opinions contradicting the opinion cited by Stumbo. And when Kentucky voters OK’d a state lottery in 1988, Martin Cothran of Say No To Casinos says the constitutional amendment’s intent was clear.

“Voters were told in reports like the report of the Lottery Commission, released October 31st, 1988, that lottery games included only what are called instant and online games, designations that exclude VLT’s,” Cothran told lawmakers.

Cothran says slot machines at horse tracks also fly in the face of another constitutional protection.

“If we allow VLT’s, but restrict them to tracks under this measure, we’ll run straight into the provision of the constitution that disallows special treatment for particular industries. Which means that a vote for this bill, could be a vote for VLT’s not only at horse tracks, but ultimately anywhere,” he said.

Senate Republican leaders are also signaling resistance to the measure, which Stumbo has offered before, only to see it die in the House. But that was before he became speaker. And with the state facing a $456 million budget shortfall, Stumbo believes this year could be different.

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