(A HHR machine at Derby City Gaming / Photo by Gene McLean)
Don’t you find it interesting – or, at the very least, a bit ironic – that in the midst and middle of a very intense debate over the future of the Kentucky horse industry that some people have put the cart before the horse.
Think about it, for just a second.
Every time the current debate over the issue of Historical Horse Racing and the machines that provide that entertainment option for friends, family and fans, there is someone in the crowd that raises the question about taxes.
Every single time the conversation turns to whether or not the 138 members of this General Assembly are going to vote and approve the operation of this form of pari-mutuel wagering at Kentucky’s licensed racetracks – which, by the way, was just recently suggested by the members of the Kentucky Supreme Court after they have been legally operating here for the past 10 years – someone veers from the track and strays into a discussion about how much revenue the Commonwealth can make, and where it should spend the new found riches.
Every chance we start to have a mature and adult conversation about the merits of assisting an industry that has been domiciled in this Commonwealth long before we were even considered to be a Commonwealth on our own and even contemplated a Constitution, someone wants to identify programs and people that need the money; wants to delegate where the money should go; designate where the money should be spent; dictate who gets their hands on the money.
Every time we wish to resolve one issue and solve one problem, someone wants to create another huge one by fussing and fighting over money that may not even be there to split.
I guess that is the way of the world these days. Guess there is no way around it. But where I come from, you had to get the job first. Then, you had to earn the money second. Then, and only then, after you got paid, you got the opportunity to spend the money.
We are trying to get the job. And, we are all out to get the job done right because it is so vitally important – critically import – to this entire Commonwealth and every single person that lives within the boundaries and border of it.
Sure it is important to the horse industry. Our signature industry. What Kentucky is known for. World-wide acclaim for. We have to have additional revenue to generate purses that spur more horses in each and every race; which, in turn, spurs money, interest and more investment. Sure it is vital to the horse industry of this Commonwealth.
But let’s be honest, folks.
There is not one profession in this Commonwealth that is not impacted by this industry or this pending legislative discussion.
The Kentucky horse industry not only provides thousands of jobs, but each one of those jobs is a person. A person who earns money. A person who spends money. A person who buys goods and services. A person who pays taxes. A person who creates the need for other persons and professions. And, as a result, those persons, too earn money; spend money; buy goods and services; and pay taxes. And, so it goes. On. And. On.
If this legislation – to ultimately decide the legislative intent to allow for Historical Horse Racing at Kentucky’s licensed horse tracks – does not pass? God help us all.
All of those monies, my friends, could go away. Quickly.
And, if they do?
It will be devastating.
To you, even if you deplore the idea of gaming; even if you detest those that are simply exercising their own free will and utilizing their own self discretion and hard-earned money; even if you want to tell me and everyone else not only how we should live our lives, but how we will live our lives.
Every time a person in this Commonwealth loses a job? It impacts someone else. Someone else loses a job. And, that person impacts someone else. And, someone else loses a job. Simply put, there is absolutely no way on God’s green Earth – which many of the Kentucky horse farms have kept greener by simply being farms – that the leaking stops.
Kentucky could never recover. Kentucky will never recover. I lose. You lose. The Commonwealth loses.
And, how do you possibly think the loss of those wages and revenues will be recovered. How do you plan to make up for the loss of that revenue? How do you think the Commonwealth will be able to sustain the programs that is currently funding right now?
There is only one possible way. My taxes will have to go up. Your taxes will have to go up. Still, we probably would not be able to recover enough to just get back to even.
Right now, the idea that we may jeopardize the passage of SB 120 so that we can discuss how we spend the money we can make from it?
Cart. Way, way, way, way. Before. The Horse. And, our horse industry.
Let’s get the legislation passed. Let’s answer the Kentucky Supreme Court’s mandate and request. Let’s get the job and the job done.
Then, let’s go back to work. Let’s reopen the facility in Lexington. Let’s earn the money.
Third, let’s develop a budget and a plan on how best to spend the money. By all interested parties. All.
As soon as the Governor signs the legislation, we can create a blue ribbon panel to begin serious discussions about how to spend the revenue generated from this critical form of pari-mutuel wagering.
Then, we can study, review, measure twice and cut once before developing a taxing mechanism that is fair to the customer and fan playing the game of free choice; that is fair to the tracks that are purchasing the machines that not only meet the requirements of being pari-mutuel in nature, but also fun to play; and fair to the tracks, again, who are building the facilities to attract the tourist and the customer; to the horse industry which is “putting on the show” with the horses we breed, we raise, we sell, we race, and, without question, we love; they are our state’s greatest tourist attraction.
Hate to tell you this, West Kentucky legislator, but more people come to our state to see the horse than the damn Jefferson Davis Monument in Elkton.
And, of course, we need to develop a tax system that is fair to the Commonwealth, as well. Only right. Only fair.
I will caution you, and implore you, to look at the tax mechanism on HHR in a more in-depth, comprehensive, and studied way than the brilliant economical analysis that has previously been done by the editorial boards at our state’s two largest newspapers.
If you want to know how little they do know on this subject and matter? Ask them to define how the tax is currently being paid, collected, and remitted. Then ask them to come up with a methodology that is fair, equitable and does not kill off the game that will create the new revenue.
They have a hard enough time figuring out where to put a period at the end of a sentence.
It must be a tax that is sensitive to the wager itself.
The average “takeout” on a live horse race averages out to be something like 20%. From there, the horsemen get a share and the tracks get a share. In addition, the Commonwealth gets a share, too.
But over the years, the respective members of the Kentucky General Assembly have agreed to rebate some of those tax dollars back to the industry itself.
It was not a subsidy, that you hear some argue and yell. It was and is, still today, an investment. A reinvestment. The members of the General Assembly in the past recognized and valued the horse industry and its’ massive contributions to our overall economy and knew, damn well, that it wanted it to continue. And, prosper. And, it was willing to use some of those tax dollars to help the industry do just that.
Over the years, some tax revenues generated from pari-mutuel wagering was returned to the small tracks to help improve backside living conditions. Great idea.
Over the years, the legislature returned some tax revenues to help fund the University of Louisville Equine School – which has become one of the best in the entire scholastic community and has produced many top racetrack executives today. Great idea.
Over the years, the legislature has returned some dollars to help fund more research into drug research and better veterinarian care. Great idea.
Over the years, the legislature has built a “Breeders’ Awards Fund.” Pride and joy of horse lover and legislator Sen. Damon Thayer. It has done much to help the Standardbred industry in this Commonwealth. Great idea.
And, over the years, the legislature has returned a large sum of dollars to help fund the Kentucky Thoroughbred Development Fund. This innovative concept and idea was the first of its’ kind in the entire country, and encouraged people to breed and buy more Kentucky-bred horses than any other. The father of which was the late, great Charles Nuckols. Oh, how I miss that guy. Great idea.
All of these “reinvestments” have merit and have been highly successful in helping Kentucky’s biggest industry churn on through the years. General Assemblies in the past recognized that. Let’s hope that future ones do, too.
But HHR wagers, while pari-mutuel in nature, are different, too. The average “takeout” on these bets is around 10% or less. The percentage of money to be split between all the vested interests and parties is one-half.
So, when you begin to structure a fair and equitable tax policy for these wagers? Do so with eyes wide open; with research well done; with a plan to help promote and not constrain. One percent of a 20% takeout is much different than 1% of a 10% takeout.
And, to be honest, do some meticulous calculations. Calculations that cannot be done in the next 24 hours. Or the next 24 days.
The fact is this. I have never known a single occupation, good, or service that doesn’t get a tax review every so often. Not in this state. Not in most states.
How many times has the General Assembly raised the taxes on alcohol? It seems about every other year, to be honest. And, we are now left one of the most punitive and highest tax rates in the entire world.
How many times has the General Assembly raised the taxes on tobacco products? It seems about every year, and it is never enough to satisfy the appetites of some of the righteous.
How many times has the General Assembly raised the taxes on gasoline; or anything else, for that matter.
It is in their power and best interest to review and modify, and these same legislators will be back in session in 2022 with a full budget to pass.
The issue of taxes can and should be raised at that time. After full and fair analysis; discussion; debate; and consideration.
To quote a great musician and vocalist, Kenny Rogers:
“You never count your money while you are sittin’ at the table; there will be time enough for countin’ when the dealin’s done.”
My good friend, the late Rep. Jim Wayne, used to stand on the floor of the General Assembly each and every year that it was in session. The Democrat from Louisville never met a tax he didn’t like. Or, for that matter, support.
But to his credit, the learned mental health professional would risk his own personal health by arguing with vehement splendor about the desperate need for comprehensive tax reform. He begged his colleagues to quit doing tax reform on a whim and with baling wire (for those of us that know how to cut and bale hay).
He had one simple ask:
Study long and study hard. Put in the time. And…and only then…develop a long-term, self-sustaining, comprehensive tax system that was fair to one and fair to all.
It was sound logic. And, it is logic that should be extended to this very debate.
Let’s do Job 1: Pass the Legislation.
Let’s do Job 2: Let’s earn the Money.
Let’s do Job 3: Let’s develop a tax mechanism that recognizes that all tracks are not created equal; some need more or less than others; that recognizes the need of the horse industry to create revenue for purses; that recognizes the need of the consumer and customer; and recognizes the fairness to the state, as a whole.
If the horse comes first?
The cart – loaded for the Commonwealth, too — is sure to come following.