Kentucky Governor Beshear Unveils Details Of Proposed Video Lottery Terminal Legislation

Measure would limit VLTs to horseracing tracks to save signature industry in crisis

June 09, 2009 -- FRANKFORT, Ky. -- Citing the crisis confronting the horse industry, Kentucky Governor Steve Beshear today released details of his proposal to authorize the limited use of Video Lottery Terminals (VLTs) at Kentucky horseracing tracks.

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Kentucky’s racetracks, Gov. Beshear said, are experiencing increased competition from other states offering enhanced race purses and breeders incentives made possible from expanded gaming proceeds.

“Kentucky’s signature horseracing industry is in a state of crisis,” Gov. Beshear said. “I believe my proposal will help level the playing field for Kentucky’s horse industry and help retain the 100,000 jobs and $4 billion economic impact that Kentucky enjoys as a result of horseracing. It will also, ultimately, help generate some much-needed funds for the state during these difficult economic times.”

A significant portion of the revenue generated by VLTs would go to support equine interests, including 14.5 percent of net terminal revenue, which would be used for the enhancement of thoroughbred, standardbred and quarter horse equine interests through purse supplements and other incentives. One percent of net terminal revenue would go to the Equine Breed Authority, which would be established to promote non-racing breeds and economic development opportunities within the equine industry.

Under Gov. Beshear’s proposal, each track facility would pay an initial application fee of $25,000, plus additional license fees that would generate $360 million for the state’s General Fund. Licensing would be for 10 years, with subsequent five year renewals.

In addition to the relief that VLTs would provide to the horse industry, Kentuckians would see some of their tax liabilities lessened beginning in January 2010 through the implementation of this proposal.

* Beginning Jan. 1, 2010, taxpayers would save an estimated $30 million through a nonrefundable individual income tax credit equal to 50 percent of the state property tax paid on registered motor vehicles, not to exceed $500 per tax year.
* Beginning Jan. 1, 2011, all active duty military pay would be exempt from individual income tax, an estimated savings of $18 million for eligible taxpayers. Currently the active duty military pay exemption applies only to active duty military pay for military personnel serving in a combat zone.
* Additional sales tax relief would be provided for various purchases related to the breeding, raising, training or transporting of horses, including machinery, feed, farm chemicals and on-farm equine facilities. The exemption does not include barns or automobiles, truck and truck-trailer combinations.

Revenues generated from VLTs would cover the tax reductions associated with the income tax credit for state property taxes on cars, the active duty military pay income tax exemption, and the sales tax exemptions for the equine industry.

Under Gov. Beshear’s proposal, VLTs would be administered and regulated by the Kentucky Lottery Corporation at approved tracks licensed by the Kentucky Horse Racing Authority. The number of VLT locations would be limited to communities with approved tracks and would require local government approval for the license application. VLTs would be located and operated only on or contiguous to approved track premises. Access to VLT facilities would be limited to those 21 years of age or older.

This proposal would require the Kentucky Lottery Corporation to include in their ongoing financial reporting information on gross terminal revenue, net terminal revenue, distribution of VLT funds and lottery expenses relating to the administration and oversight of VLTs. The Lottery Corporation would be required to establish a central communication system for monitoring, auditing and regulating all VLTs under this proposal. After initial implementation costs, the Lottery Corporation will be allocated up to $2 million annually for the administration and oversight of VLTs.

Source: Kentucky Governor