A report from the Kentucky Center for Economic Policy released Tuesday states that the commonwealth is missing out on $40 million in tax dollars because it does not tax instant racing machines the same way it does for simulcast or live races.
Instant racing machines like those that will be installed inside Oak Grove Racing and Gaming are projected to take in almost $2 billion in total bets in 2019. If forecasts for 2019 are accurate, the total money bet via instant racing machines could exceed that of other types of wagers — live races, simulcast and advanced deposit wagering — combined.
The state taxes these "instant" bets at a rate of 1.5%. Betting at a larger track in Kentucky would impost a 3.5% tax, while simulcast facilities are taxed at 3%. Wagers through advanced deposit wagering are taxed at 0.5% of average daily handle, the report states.
Center Senior Policy Fellow Pam Thomas writes that the state could bring in more than $40 million a year by taxing instant racing at the same 3.5% rate as live races, while also bumping up advanced deposit wages to the 3% in simulcast facilities.
Instant racing and advanced deposit wagering (which "allows bettors to establish accounts that they can use to bet on horse races anywhere in the world, from any electronic device") betting are expected to continue to grow, while live track and simulcast wagering are down slightly. The growth in instant racing betting has already seen a sharp rise. According to the report, it took in about $400M in total bets in 2015. It accounted for just over $1 billion in 2018. With a projected $1.3 billion already bet for Fiscal Year 2019, "reflecting growth of 74% year over year for the same period."
Thomas also proposes that the state deposit these new tax dollars in the General Fund. Currently, depending on the type of wager, between two-thirds and 85% of tax money goes back to the horse industry, which uses it to support breed development, a backside improvement fund and support for horse-industry related higher education.
"Under the proposal described above, the horse industry will continue to benefit from the base increases caused by the growth in instant racing in the future. At the same time, all forms of betting will be taxed at comparable rates, and the people of the commonwealth will benefit from increased revenues for the General Fund," Thomas writes.
Jesse Jones is the editor of The Eagle Post. Reach him at email@example.com.