Last year, the Kentucky horse racing lobby was one of the state’s largest and most powerful. The various interests within the horse racing industry spent almost $800,000 lobbying legislation in 2022.
According to reports from the Louisville Courier-Journal, Churchill Downs, Keeneland and the Kentucky Equine Education Alliance combined to spend $300,000.
Their efforts last year went into banning gambling machines in Kentucky convenience stores, which cut into gambling profits at gambling parlors owned by some of the state’s horse racing companies. The industry also lobbied to adjust the excise tax rate on live wagering, simulcast wagering and advance deposit wagers.
However, the industry’s largest victory of recent history came last month when the lobbyists successfully gained control of the Kentucky sports betting market.
When Gov. Andy Beshear signed House Bill 551 into law, it gave Kentucky’s nine horse racetracks the right to operate a retail sportsbook. Additionally, the tracks can secure up to three online licenses per track.
In other words, Kentucky’s horse racing industry assured that it would have control of the most popular new gambling method. With its long history of wealth and influence, it’s no wonder the horse racing industry had the resources to make this move — and to claim power over the sports betting scene that few other state horse racing industries have.
A vital head start
Kentucky had a horse racing industry during the 1800s, but it wasn’t the only one. Northeastern states had the largest horse racing industries. Kentucky’s limited success in horse breeding made it an unremarkable horse racing market.
That changed when progressives campaigned against moral issues such as drinking and gambling. The large northeastern markets outlawed gambling as part of the crusade.
Kentucky didn’t. Consequently, racetrack owners, horse breeders and other wealthy gambling interests moved to Kentucky. With no competing markets, Kentucky not only became the premier US horse racing industry. Horse racing became the heart of Kentucky’s gambling industry.
The layers of Kentucky horse racing
The horse racing industry is a complex layering of interconnected industries and interests.
The racetracks include pari-mutuel betting. They’re also entertainment venues that offer food, drink and cultural centers that attract major horse racing festivals each year. The most iconic festival is the Kentucky Derby, which lasts a month and culminates in a televised race.
A crucial part of the racing industry is the lucrative horse breeding industry. Thoroughbred horses bred to win events like the Kentucky Derby can cost tens of thousands of dollars at the beginning of their careers. Justify, the 2018 Triple Crown winner, cost $500,000 as a yearling and was worth $75 million after his Triple Crown victory.
Horse training, simulcast fees and other ancillary sources of revenue further spread the horse racing industry’s influence through Kentucky’s economy. With that economic dominance comes the ability to organize politically and lobby effectively.
Kentucky horse racing industry’s lobbying power
In 2022, horse racing comprised 75% of Kentucky’s gross gambling revenue. Charitable gambling and state lottery funds didn’t come close to horse racing’s $8 billion in revenue.
Many of its recent moves have protected its control of the gambling industry. Gambling parlors pay license fees to simulcast past horse races on slots-like machines. Horse owners who get paid out of a race’s purse don’t want their winnings diluted by forms of gambling that cut into horse racing’s market share.
Every industry interest demands a powerful lobbying force, and the horse racing industry has the economic influence to cultivate state lawmakers. The industry’s largest companies will protect the corners of their economic ecosystem.
