LRC’s Capitol Notes: Expanded gaming
again getting attention, raising questions

From Kentucky Legislative Research commission

Last week in Frankfort

First, some quick background on legal gambling in Kentucky.

The Commonwealth’s 1891 Constitution forbids what it calls “lotteries and gift enterprises,” a polite way to say “gambling.” In 1931, the Court of Appeals ruled that parimutuel wagering on horse races (requiring, as it theoretically does, skill instead of chance) did not violate that prohibition. And so the Court explicitly legalized a nebulous area of the law, which was being routinely skirted anyway.

In 1987, a longshot candidate for governor won on a promise to bring a state lottery to Kentucky. After the long shot came in, in very short order the Legislature approved a constitutional amendment to allow it. The voters said yes in November ’88.

Since then, despite many proposals, endless discussion and several attempts, no general expansion of gambling has occurred here (charitable gaming aside). Meanwhile, six full-blown casinos have opened across the state’s northern border, along or on the river, drawing money and crowds and profits and tax revenues, and calls by some for Kentucky to get its share of that lucrative pot. Many Unbridled Spirit license plates are in those cross-river parking lots, gambling proponents say.

In 2007, a candidate for governor ran and won on a platform that specifically featured expanded gaming. In his first term, he took it to the Legislature and it failed. Now, in his second term, he’s trying again, and a new bill to that effect – delayed till nearly-midsession because of the Legislature’s protracted redistricting uncertainty — was served up to lawmakers and the public last week.

It takes the form of a constitutional amendment that would allow for seven casinos in Kentucky, five at state racetracks and two others freestanding. Which of the state’s eight racetracks would get casino licenses isn’t specified; nor are locations for the two non-track facilities. There is, though, a sort of “no-compete” clause in the bill that says a freestanding casino can’t be within 60 miles of a track.

The amendment would have to be passed by the Legislature in bill form, then worded as a constitutional amendment for voter yay or nay on the November ballot.

For now, though, questions have been raised. Specifically tethering casino licenses to racetracks has in itself generated resistance to the proposal, with some saying special treatment for one industry shouldn’t be written into the constitution. The 60-mile restriction has also proven problematic with some, creating as it apparently does market monopolies and eliminating great swaths of the state from consideration for a freestanding facility. 

The proposal contains a list of supposed beneficiaries from casino tax revenue, including job creation, education, human services, health care, veterans programs, local governments, and the state’s troubled horse industry. However, it was quickly pointed out that there’s no real specificity in that broad, encompassing list, and no divvying up by percentage, so it can be read as fairly empty language. One leader said it might as well just say any tax revenue “goes into the General Fund.”

Gov. Steve Beshear said last week he was “welcoming all of the suggestions,” and said he may bring a revised and simplified bill.

It should be noted that any constitutional amendment, let alone one fraught with as many political landmines and powerful opposition as this one, faces steep challenges in becoming law. Amendment proposals require a supermajority three-fifths approval in both chambers (60 House members and 23 senators).

Assuming it clears that hurdle – no casual assumption by any means – the amendment would then be loose for months in an inevitable blizzard of TV, radio and print ads from both sides that would bury voters with conflicting takes on such a controversial issue.

Especially in a presidential election year, voter turnout Nov. 6 might be enormous.

Recent history may not be predictive here, but it’s surely instructive. Expanded-gambling bills have gone basically nowhere in nine legislative sessions over the last 11 years. House committees have passed out a few, but only one — a video lottery terminal bill during a 2009 special session (called “video slots”) actually passed the full House. That bill didn’t even get out of committee in the Senate.

In his budget address in January, the governor contended that casinos at the state’s racetracks alone would dump one-time license fees of $266 million into the treasury, and thereafter pump $377 million yearly into the General Fund. Those numbers were, at best, estimates.

He mentioned this at the tail-end of a speech in which he sent to the Legislature a budget that — even using one time money from the Rainy Day Fund, a tax-amnesty plan and other fund transfers — comes up $286 million short, and so envisions new cuts of 8.4 percent across much of state government. The Legislature is working on its version of that budget now.

The argument for casino gambling is basically fiscal and economic. The argument against is largely moral and philosophical, though there are also economic arguments against gambling’s impact on communities. As one key lawmaker said, each side has good arguments, which need to be well aired before the Legislature acts, if it does.

But polls have shown that most Kentuckians, whether they support or oppose expanded gaming, would like a chance to vote on the issue and settle it themselves, once and for all. The question before legislators is whether the current proposal is the right vessel for that public expression.

The General Assembly and its administrative arm the Legislative Research Commission encourage citizen involvement in the workings of their branch of government, and maintain several means for them to do so.

The Legislature’s website — www.lrc.ky.gov – includes comprehensive information about legislators, the legislative process, and the progress of work during the session. Contact numbers, daily meeting schedules, bill summaries and full texts, bill status information, and other information to get you involved are all posted there.

To leave a message for any legislator: 800-372-7181.

To check the status of a bill: 866-840-2835

To check meeting schedules: 800-633-9650

For further information, contact scott.payton@lrc.ky.gov

The Kentucky Legislative Research Commission (LRC) was created in 1948 as a nonpartisan, fact-finding service agency. The commission operates as the administrative and research arm of the General Assembly. LRC provides these regular news updates during the annual Kentucky legislative sessions.