>> Renee: GOOD EVENING.

WELCOME TO "KENTUCKY TONIGHT."

I'M RENEE SHAW.

THANK YOU SO VERY MUCH FOR JOINING US.

OUR TOPIC TONIGHT: HISTORICAL HORSE RACING.

LAST WEEK CHURCHILL DOWNS OWNERS ANNOUNCED PLANS TO HAVE A CASINO STYLE VENUE IN DOWNTOWN LOUISVILLE WITH 500 HISTORICAL RACING MACHINES.

THE SLOT STYLE MACHINES ALLOW PEOPLE TO BET TO RANDOMLY SELECTED PAST HORSE RACES.

SUPPORTERS SAY HISTORICAL HORSE RACING IS A TYPE OF WAGERING THAT'S A GOOD SOURCE OF REVENUE FOR KENTUCKY THAT IS RESCUING THE HORSE INDUSTRY, BUT SOME WHO HAVE CHALLENGED ITS LEGAL AT IN REPEAT YEARS WORRY HHR IS A GAIT TO OTHER KINDS OF GAMBLING.

SOME ARE CALLING ON THE HRR OPERATIONS TO PAY MORE IN TAXES.

WELL, TO DISCUSS ALL OF THIS, WE ARE JOINED IN OUR LEXINGTON STUDIO BY STATE REPRESENTATIVE ADAM KOENIG, A REPUBLICAN FROM ERLANGER AND CO-CHAIR OF THE PARI-MUTUEL WAGERING TAXATION TASS FORCE.

CHAINS MORRIS, EXECUTIVE DIRECTOR OF KENTUCKY OTHERY OH BRED.

STATE SENATOR DAMON THAYER, A REPUBLICAN FROM GEORGE OPPORTUNITY TO, SENATE MAJORITIES FLOW LEADER AND COSCHARE OF THE PARI-MUTUEL WAGER TASK FORCE.

AND MARTIN COTHRAN, SPOKESPERSON FOR THE FAMILY FOUNDATION.

IN OUR LOUISVILLE STUDIO WE'RE JOINED BY STATE REPRESENTATIVE AL GENTRY, A DEMOCRAT FROM LOUISVILLE AND A MEMBER OF THAT TASK FORCE.

AND LIVE BY SKYPE, PAM THOMAS, SENIOR FELLOW WITH THE KENTUCKY CENTER FOR ECONOMIC POLICY.

AND WE HAVE JOINING US IN THE LOUISVILLE STUDIO STATE SENATOR MORGAN McGARVEY, A DEMOCRAT FROM LOUISVILLE AND SENATE MINORITY FLOOR LEADER.

THANK YOU ALL FOR BEING WITH US.

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IN LOUISVILLE, LEXINGTON AND BY SKYPE.

GOT A FULL HOUSE TONIGHT.

SO LET'S JUST START OFF WITH THE NEWS OF A COUPLE OF WEEK AS CHURCHILL DOWNS MADE THAT ANNOUNCEMENT.

CHAUNCEY MORRIS, JUST TO REMIND OUR VIEWERS WHO ARE MAYBE NOT AS PLUGGED INTO THIS ISSUE OF HISTORICAL HORSE RACING MACHINES AND WHAT THESE VENUES ARE, WHAT IS IT EXACTLY AND HOW -- HOW MANY OF THEM ARE ACROSS THE STATE OF KENTUCKY?

>> SO HISTORICAL HORSE RACING WAS CREATED BY OAK LAWN PARK MANY YEARS AGO.

THEY'VE BEEN IN OPERATION HERE IN THE COMMONWEALTH OF KENTUCKY SINCE AROUND 2012.

THE PIONEER WAS KENTUCKY DOWNS.

CURRENTLY, AS OF TODAY, THERE ARE 4,965 LICENSED HHR MACHINES HERE IN THE COMMONWEALTH.

>> AND WHERE ARE THEY?

ALL OVER, CHURCHILL DOWNS?

THERE'S SOME BORDER, FRANKLIN, KENTUCKY.

>> YES, MA'AM.

IN THE LAST FEW YEARS, SPECIFICALLY SINCE PASSAGE OF SENATE BILL 120, THERE HAVE BEEN MORE OPERATIONS THAT HAVE BEEN ANNOUNCED.

AS OF RIGHT NOW, THEY ARE CURRENTLY -- THE CURRENT FOOTPRINT IS EACH OF THE FIVE FLAT OR THOROUGHBRED RACETRACKS HERE IN THE COMMONWEALTH AND THEN ALSO THE RED MILE HERE IN LENGTH, IT'S A JOINT VENTURE BETWEEN KEENELAND ASSOCIATION AND RED MILE.

DOWN IN OAK GROVE, KENTUCKY.

AND ALSO, ARE -- WHICH IS ALSO A STANDARDBRED TAKE.

AND THEN A THIRD PLANNED STANDARDBRED COURSE IN THE CORBIN AREA.

>> OH A CAM KOENIG, STATE REPRESENTATIVE.

I UPGRADED YOU OR DOWNGRADED YOU, NOT SURE WHEN WHICH WAY THAT GOES.

YOU WERE A BIG PART OF THIS BILL.

IT WENT THROUGH YOUR COMMITTEE BACK IN THE LEGISLATIVE SESSION WHICH FEELS LIKE SO, SO LONG AGO BUT HA WAS JUST FEBRUARY, ONE OF THE FIRST OF BUMS THAT PASSED AND GOT THE GOVERNOR'S SIGNATURE IF I'M NOT MISTAKEN, HHR WAS.

>> IT MAY HAVE BEEN.

>> TELL US ABOUT, BECAUSE ALL OF THAT THAT STEMMED FROM THE SUPREME COURT DECISION AND THIS REALLY DEFINED DEHISTORICAL HORSE RACING WAS.

>> THE LONG AND SHORT FOR THE VIEWERS IS THAT A 2020 RULING OF -- I'M SORRY, 2019.

I FORGET ALREADY.

>> 2020.

>> 2020 RULING OF THE STATE SUPREME COURT BASICALLY SAID THAT THE HORSE RACING COMMISSION DO NOT MY REGULATION CHANGE -- COULD NOT IN THEIR VIEW CHANGE THE DEF MISSION OF MURAL WAGERING AND THAT WAS UNDER THE PURVIEW OF THE LEGISLATURE.

SO WHAT I VIEWED IT AS AND WHAT IT MORE OR LESS DID WAS UP ERR MODERNIZE AND UPDATE PARI-MUTUEL WAGER STATUTE SO IT THAT IT REFLECTED TODAY'S UNIVERSE.

S AS I SAID ON THE HOUSE FLOOR I THINK THAT IS 1995 THAT THEY RAGED PARI-MUTUEL WAS LEGAL.

I SAID BACK THEN IF YOU WENT TO THE HORSE TRACK, YOU COULD BET A HORSE TO WIN AND THAT WAS IT.

NOW YOU HAVE ALL THESE OTHER WAGES ARE AVAILABLE, AND NOW WE HAVE HISTORICAL HORSE RACING AND WE NEED TODAY MODERNIZE THAT DEFINITION FOR TODAY'S UNIVERSE, AND THAT'S WHAT WE DID.

AND THESE HISTORICAL HORSE RACING MACHINES ARE DOING SO MUCH FOR THE INDUSTRY.

WE ARE QUICKLY BECOMING THE ENVY OF AMERICAN RACING WITH OUR PURSES AND OUR FIELD SIZES, IF YOU PAY ATTENTION, ESPECIALLY THIS PAST WEEKEND AT KEENELAND, THERE WAS VERY FULL FIELDS, AND WE HAVE RECORD SALES AT KEENELAND IN SEPTEMBER.

SO THERE'S A LOT GOING ON.

>> MARTIN COTHRAN, THANK YOU FOR BEING HERE WITH US.

YOU'VE BEEN ON THIS PROGRAM BEFORE TALKING ABOUT THIS VERY ISSUE AND THIS IS SOMETHING, OF COURSE, THAT THE FAMILY FOUNDATION HAS CHALLENGED.

NOW THAT THE GENERAL ASSEMBLY HAS DEFINED HISTORICAL HORSE RACING, ARE THE LEGAL CHALLENGES BY YOUR GROUP OVER?

>> WELL, THAT STILL REMAINS TO BE SEEN.

IT'S A VERY EXPENSIVE PROPOSITION TO GO UP AGAINST AN STRAYS WEALTHY AND POWERFUL AS THIS ONE IS.

BUT, YOU KNOW, YOU TALK ABOUT DEFINING.

IT'S REALLY BEEN A REDEFINITION.

IT WASN'T MODERNIZED AND UPDATED.

IT WAS ALMOST COMPLETELY CHANGED TO SOMETHING THAT IS NOT REALLY PREPARE WAGERING AS EVERYBODY DEFINES IT 1 IN A WAY THAT WAGERS ARE ALLOWED AT OUR HORSE TRACKS, WHERE THEY'RE WAGERING IN A POOL AGAINST ONE ANOTHER.

THIS IS NOT WHAT THIS IS.

I THINK THE BILL THAT WAS PASSED IS VERY VULNERABLE TO CONSTITUTIONAL CHALLENGE BECAUSE IT'S CREATING BASICALLY A PLACE FOR CASINO GAMLING BLING.

THESE ARE SLOT MACHINES WITH HORSE PICTURES ON THEM.

IF THIS IS EVER CHALLENGED AND IT GOES TO THE SPEAKER WE'RE FAIRLY CONFIDENT THESE WOULD NOT AB JUDGED CONSTITUTIONAL BECAUSE THERE'S THERE'S ONLY THREE KINDS GAMBLING THAT'SAL ALLOWED, IT'S CHARITABLE GAMING, THE KENTUCKY LOTTERY AND PARI-MUTUEL HORSE RACING.

>> SO IS THE FAMILY FOUNDATION READY TO LUNCH SUCH A CHALLENGE OR WHERE DO YOU SNAPPED.

>> IT'S SOMETHING WE'RE THINKING ABOUT.

>> I WANT TO GO TO YOU, SENATOR THAYER.

WE DON'T TO HAVE REHASH THE WHOLE SESSION ON THIS.

PRESIDENTS IT'S TIME TO MOVE FORWARD AND WE SEE WHAT CHURCHILL DOWNS HAS.

MR.

HE LAID OUT HOW THIS IS MORE WIDESPREAD AND IF KENTUCKY ECONOMIC SAID IT WILL BE 10,000 OF THESE MACHINES OVER THE COURSE OF THE NEXT FEW YEARS.

WHY IS THIS SUCH A BIG BOON FOR THE HORSE INDUSTRY?

AND WHY ARE YOU SUCH A BIG PRO POE POINT OF IT?

>> ACTUALLY, I GOT IT STARTED BACK IN 2009 WITH A LETTER I WROTE TO THEN ATTORNEY GENERAL JACK CONWAY QUESTIONING THE PARI-MUTUEL LEGAL AFT HISTORICAL WHOEVER WHOEVER MACHINES.

HIS OPINION AT THAT TIME WAS THAT THEY WERE PARI-MUTUEL BUT NEEDED TO BE REGULATED BY THE RACING COMMISSION SO THAT GOT THINGS STARTED AT KENTUCKY DOWNS AND IT'S GROWN TO DIVINITY TRACKS AND FACILITIES AROUND THE STATE.

WE HAD SEVERAL ADVANTAGEOUS COURT OPINIONS INCLUDING A SUPREME COURT OPINION FROM 2014 THAT SAID THEY WERE LEGAL, AND THEN IT IS BACKTRACKED, AND SIX YEARS LATER IT REVERSED ITSELF WHICH LED TO GENERAL ASSEMBLY ACTING.

THESE MACHINES ARE NOT SLOT MACHINES.

THEY LOOK LIKE SLOT MACHINES BUT THEY ARE -- >> HOW ARE THEY DIFFERENT FROM SLOT MACHINES?

>> BECAUSE OF THE WAY THEY'RE PROGRAMMED.

AND PARI-MUTUEL IS A FRENCH TERM FOR BETTING AMONGST OURSELVES.

THE MACHINES AT EACH FACILITY ARE CONNECTED AND YOU'RE ACTUALLY MAKING A PARI-MUTUEL WAGER AGAINST OTHER PEOPLE WHO ARE MAKING WAGERS ON A DATABASE OF 30,000 HISTORICAL HORSE RACINGS THAT HAVE BEEN RUN AT THE TRACKS ACROSS THE COUNTRY OVER THE PAST X NUMBER OF DECADES, AND THEY GENERATE A HUGE AMOUNT OF MONEY NOR PURSES SUCH THAT WITHIN TWO YEARS KENTUCKY, I BELIEVE, WILL PASS MUCH LARGER STATES LIKE NEW YORK, CALIFORNIA AND FLORIDA, STATES THAT HAVE DOUBLE, TRIPLE AND EVEN MORE OF THE POPULATION OF KENTUCKY, TO BECOME THE NUMBER ONE HORSE RACING CIRCUIT IN AMERICA.

FOR YEARS WE'VE HAD A YEAR-ROUND CIRCUIT BUT IT WAS -- THE ELITES REALLY RACED IN APRIL AND OCTOBER AT KEENELAND AND THEN DERBY WEEK A CHURCHILL DOWNS, AND THEN THE REST OF THE YEAR THEY'D GO TO NEW YORK OR FLORIDA OR CALIFORNIA.

BUT NOW THOSE OTHER STATES ARE NOW GETTING SWAMPED IN DAILY AVERAGE PURSES WHICH IS THE AMOUNT OF MONEY THAT HORSES COMPETE FOR EVERY DAY AT RACETRACKS IN AMERICA.

PURSES ARE THE MOTHER'S MILK HORSE RACING.

THEY MAKE EVERYTHING WORK.

AND WHEN HORSES WIN MONEY IN RACES, IT HAS HAD A HUGE TRICKLE-DOWN EFFECT WHERE EVERY HORSE REALLY IS A FACTORY GENERATING JOBS EVERYWHERE IN THE INDUSTRY FOR ACCOUNT ANTZ AND WAR INJURES AND EQUINE DENTISTS AND GROOMS AND.

JOCKEYS AND EXERCISE RIDERS AND FEED MER CANTS CHANTS AND EQUINE DENTISTS AND EQUINE CHIROPRACTORS AND.

THOSE ARE THE JOBS THAT MAKE UP 80,000 JOBS HERE IN THE COMMONWEALTH OF KENTUCKY, AND I'M A SUPPORTIVE OF IT BECAUSE WE ONLY HAVE TWO SIGNATURES SIGNATURES.

CHAIRMAN KOENIG HAS SAID THIS MULTIPLES TIMES.

IT'S BOURBON AND IT'S HORSES.

AND, QUITE FRANKLY, WITHOUT BOURBON AND HORSES, WE'RE WEST VIRGINIA OR MISSISSIPPI, AND THOSE ARE FINE STATES.

I HAVE FRIENDS WHO LIVE THERE.

BUT THEY'RE NOT KENTUCKY, AND WHAT MAKES KENTUCKY SPECIAL, BOURBON AND HORSES.

AND I SPENT MOST OF MY LEGISLATIVE CAREER NOT ONLY SUPPORTING BUSINESSES AS A WHOLE BUT STANDING UP FOR OUR SIGNATURE INDUSTRIES AND THE ECONOMIC BENEFITS THEY BRING TO FAMILIES ACROSS THE COMMONWEALTH.

>> PAM THOMAS, YOUR COLLEAGUE JASON BAILEY RECENTLY TESTIFIED ON BEHALF OF THE KENTUCKY CENTER FOR ECONOMIC POLICY ABOUT THE HANDLE THAT HAS INCREASED $373 MILLION IN 2015 TO $4.6 BILLION IN THE YEAR THAT JUST ENDED.

WHAT DOES THIS GROWTH SIGNAL TO YOUR GROUP ABOUT WHAT KENTUCKY IS REAPING?

IS KENTUCKY BENEFITING AS MUCH AS IT SHOULD FROM THIS ENHANCED BENEFIT, THESE HISTORICAL HORSE RACING MACHINES?

>> FIRST THING I WANT TO SAY, RENEE, IS THAT I DON'T THINK THAT KENTUCKY -- THE GENERAL FUND OF KENTUCKY IS REAPING THE BENEFIT THAT IT SHOULD FROM THESE MACHINES, AND I DO THINK THAT WE CAN COLLECT MORE IN STATE TAXES AND STILL HAVE THE ALL WONDERFUL BENEFITS FOSTER INDUSTRY THAT SENATOR THAYER INDIVIDUAL.

THEY ARE NOT MUTUALLY EXCLUSIVE THINGS.

ONE OF THE THINGS RIGHT NOW IN KENTUCKY IS WHEN YOU COMPARE OUR TAX RATE TO THE TAX RATE THAT IS IMPOSED BY OTHER JURISDICTIONS THAT HAVE SIMILAR MACHINES -- NOW, IT DOESN'T REALLY MATTER ABOUT THE BACK END WHEN IT COMES TO FINANCE AND IT COMES TO TAXES BECAUSE THE WAY THAT IT WORKS IN KENTUCKY IS THAT WE PAY OUT ABOUT 9090, 91 PERCENT OF AMOUNT, THE TRACKS PAY THAT OUT TO THE BETTERS AND THE REMAINING AMOUNT THEY GET TO KEEP.

THAT'S VERY COME BRABBLE TO WHAT THE OTHER STATES THAT HAVE SLOT MACHINES DO AND PAY OUT.

SO WE'RE VERY COMPARABLE IN THAT REGARD WHERE IF YOU LOOK AT LIVE RACING WELL PAY OUT ABOUT 80%.

SO OUR MACHINES ARE COMETABLE PRACTICAL WHEN IT COMES TO THE FINANCING.

AND SO WE BELIEVE THAT THE TAXES-GATE PAID BY THE FOLKS THAT ARE OPERATING THE MACHINES SHOULD ALSO BE COMPARABLE TO WHAT OTHER STATES PAY, AND THAT THE STATE OF KENTUCKY AND THE PEOPLE OF KENTUCKY SHOULD BENEFIT FROM THE TAXES IN THAT WAY.

>> SO WHAT ARE THEY CURRENTLY PAYING IN TAXES AT THIS PARTICULAR POINT, WHAT PERCENTAGE?

>> THEY PAY 1% OF THE HANDLE, WHICH IS THE TOTAL AMOUNT.

THAT'S A LITTLE BIT UNUSUAL WHEN YOU COMPARE IT TO WHAT OTHER CASINO OPERATORS DO.

>> 1.5%, PAM THOMAS, IS WHAT IS BEING SAID HERE.

1.5%.

>> OF THE HANDLE.

>> AND THAT'S 1% OF GROSS.

1.5% OF GROSS.

>> OF THE TOTAL AMOUNT BET.

OF THE AMOUNT THAT'S BET.

SO IT'S ON THE WHOLE AMOUNT BET.

SO WHEN YOU WERE TALKING ABOUT EARLIER THE $4.6 MILLION, IT'S 1.5% THAT OF, BUT IN ORDER TO COMPARE KENTUCKY OTHER STATES, WE HAVE TO DO A LITTLE BIT OF AN ADJUSTMENTS BECAUSE OTHER STATES TAX THE AMOUNT THAT THE OPERATOR ACTUALLY KEEPS, SO THAT'S THE NET AFTER YOU MAY THE BETTERS.

AND SO THAT INFORMATION IS ACTUALLY AVAILABLE ON KENTUCKY HORSE RACING COMMISSION WEBSITE, AND SO THAT CAL CALLS OR EFFECTIVE OR COMPARABLE TAX RATE IS 17.4%.

AND OF THAT AMOUNT, THAT 9.6% OF THAT GOES BACK TO THE INDUSTRY IN VARIOUS FUNDS.

THE BIGGEST FUND THAT GETS CONSTITUENT THOROUGHBRED DEVELOPMENT FUND, STANDARDBRED DEVELOPMENT FUND, AND THEN THERE ARE A COUPLE OF OTHER SMALLER FUNDS.

SO THE AMOUNT THAT ACTUALLY COMES INTO OUR GENERAL FUND IS ROUNDING IT UP ABOUT 8%.

NOW, IF WE LOOK AT THAT IN COMPARISON TO WHAT SOME OF OUR SURROUNDING STATES TAX, THE SAME KIND OF REVENUE ON AND THE SAME KIND BASE, WEST VIRGINIA SAT 53.5%, PENNSYLVANIA IS AT 55%, HO HAS A RATE OF 33% ON ELECTRONIC GAMING AND 33.5% ON RACINOS.

INDIAN HAS RIGHTS DEPENDING ON THE HANDLE -- I'M SORRY -- THE PROFITS ARE BETWEEN 15 AND 40 PERCENT?

AND THAT MONEY, PAM THOMAS, IS GOING TO THEIR GENERAL FUND, CORRECT?

Y.

>> TO THEIR GENERAL FUND.

>> I WANT TO BRING IN SENATOR MORGAN McGARVEY AND REPRESENTATIVE AL JENN FRIDAY.

SENATOR MCGARVEY, JUST LISTENING TO THIS PART OF THE CONVERSATION, WHAT ARE YOUR THOUGHTS ABOUT THE TAXATION ISSUE?

>> YEAH, THIS IS PRETTY SIMPLE, RIGHT?

WE NEED TO MAKE SURE THAT WE ARE MAXIMIZING THE REVENUE FROM HISTORICAL HORSE RACING, AND WE'VE ACTUALLY WORKED WITH THE HORSE RACING INDUSTRY ON THIS.

LAST YEAR THEY HAD TO COME IN AND PASS THIS BILL BECAUSE OF AIR COURT DECISION THAT I THINK WAS ACTUALLY A REVERSAL.

THE COURT REVERSED COURSE AND SAID THEY WOULDN'T ALLOW HISTORICAL HORSE RACING ANYMORE.

THE LEGISLATURE HAD TO COME IN AND ACT TO PRESERVE SOMETHING THAT DOES BEEN GOING ON FOR THE BETTER PART OF A DECADE.

BECAUSE IT WAS A ODD SITUATION WE WERE IN YOU A YEAR WHICH WAS A NON-BUDGET YEAR, ALL THAT MEANS IT TAKES A LOT MORE VOTES TO PASS A REVENUE MEASURE.

WE PASSED THE BILL THROUGH THE SENATE AND THEN THOUSANDS THEY ARE E. WHERE THEY COULD HAVE ADDED NEW REVENUE TO IT.

THEY DIDN'T THINK THEY HAD THE VOTES NECESSARY TO GET THE THIGH I HERE THRESHOLD REQUIRED TO PASS THE BILL.

AND SO THE HORSE RACING INDUSTRY ACTUALLY WROTE A LETTER SAYING THEY WILL WORK WITH US TO INCREASE THE TAX RATE ON HISTORICAL HORSE RACING SO WE CAN KEEP GREAT PURSES FOR HORSE RACING INDUSTRY BUT WE CAN ALSO GET MORE MONEY FOR KENTUCKY BECAUSE WE TALKED ABOUT HORSE RACING AND BOURBON AND THEY ARE SIGNATURE ITS INDUSTRIES, BUT -- YOU KNOW WHAT?

-- THE MOST VALUABLE THING WE HAVE IS OUR FUTURE.

OUR MOST VALUABLE RESOURCES ARE OUR PEOPLE AND OUR KIDS AND WE CAN USE A LOT MORE MONEY TO INVEST IN THAT.

>> REPRESENTATIVE AL GENTRY SITTING BESIDE MORGAN McGARVEY IN THE LOUISVILLE STUDIO THEREAT KET, YOU'RE ON THE PARI-MUTUEL WAGERING TAXATION TASK FORCE.

I WANT TO HEAR YOUR THOUGHTS ABOUT SHOULD THOSE TAX RATES BE INCREASED?

AND WHERE DO YOU STAND ON THIS?

>> WELL, WE HAVE SPENT THE WHOLE SUMMER, AND CHAIRMAN KOENIG AND VICE CHAIRMAN, CO-CHAIRMAN THAYER HAS DONE A GOOD JOB BRINGING A LOT OF DIFFERENT INFORMATION TO THE TABLE SO THAT WE COULD ALL REVIEW.

WE HAVE ONE MORE MEETING LEFT.

SO I'M NOT GOING TO PRECISELY SAY WHAT I THINK THAT TAX RATE SHOULD BE, BUT WE ARE CURRENTLY STUDYING ALL THE INFORMATION THAT'S BEEN PROVIDED US.

WE ALSO HAVE A WORK STUDY GROUP IN THE HOUSE DEMOCRATIC CAUCUSES WHICH I AM LEADING AS WELL.

I WANT THE OPTIMUM RATE.

I WOULD LIKE TO MODERNIZE AND SIMPLIFY THE WHOLE PARI-MUTUEL TAX CODE.

82 I DON'T UNDERSTAND WHY WE HAVE SO MANY DIFFERENT PLATFORMS AND THEY'RE ALL TAXED A LITTLE BIT DIFFERENTLY.

IT SEEMS LIKE WE COULD SIMPLIFY THIS PROCESS A LITTLE BIT.

IF THERE DOES NEED TO BE SOME SORT OF SMALL SURTAX ON HHR IN ORDER TO GET THE RIGHT ALLOCATION RECIPIENTS THAT WE NEED TO HAVE, WHICH I THINK IS A PROBLEM AS WELL -- I PROBABLY WENT GET INTO IT RIGHT NOW BUT I'D LIKE TO BE ABLE TO TALK ABOUT THAT BEFORE THE SHOW IS OVER WITH BECAUSE I THINK THERE ARE TWO GLARING OMISSIONS IN THE STATE OF KENTUCKY THAT I WOULD LIKE TO SEE FIXED.

>> WHAT ARE THOSE, REPRESENTATIVE GENTRY?

GO AHEAD WITH THOSE.

>> OKAY.

SURE, I WILL.

AND I'VE DONE A LOT OF WORK WITH GAMING, GAMING BILLS ALL ACROSS THE COUNTRY, AND WHETHER YOU CALL THISHHR, PARI-MUTUEL WAGERING OR SLOT MACHINES IT'S NOT REALLY EXACTLY THE SAME AS SLOT MACHINES.

I LIKE TO REFER TO THEM AS SLOT MACHINE LIGHT.

THEY'RE A LITTLE BIT DIFFERENT.

BUT THEY ARE GAMING MACHINES.

THEY'RE CASINO STYLE GAMING MACHINES, AND THEY GENERATE A TREMENDOUS AMOUNT OF REVENUE.

OVER 80% OF THE ENTIRE PARI-MUTUEL REVENUE IS HHR, SO IF PURSES IS THE MOTHER'S MILK OF HORSE RACING, HHR IS IF MOTHER'S MILK OF PARI-MUTUEL WAGERING REVENUES.

SO IT'S VERY, VERY IMPORTANT.

BUT WHAT YOU SEE IN A LOT OF OTHER GAMING STATES, INCLUDING THE OTHER HHR ACTIVE STATES RIGHT NOW IN WYOMING AND VIRGINIA, IS THERE ARE ALLOCATIONS SET ASIDE FOR, NUMBER ONE, PROBLEM GAMBLING.

IT IS AN ISSUE WHEN YOU DEAL WITH THESE TYPES OF ACTIVITIES, THESE TYPES OF CASINOS OR FACILITIES.

AND WE CAN ARGUE WHETHER THAT'S 1 OR 2 PERSONS OR 5 OR 6 PERCENT OR WHATEVER.

THAT'S DEBATABLE.

BUT IT EXISTS.

AND I THINK WE SHOULD HAVE SOME FUNDS SET ASIDE TO HELP THOSE THAT HAVE ADDICTION PROBLEMS.

A LOT OF THE STATES DO THAT.

AND THE OTHER GLARING OMISSION TO ME IS WHERE THESE FACILITIES OR CASINO FACILITIES ARE LOCATED, THE LOCAL GOVERNMENTS USUALLY GET A PIECE OF THE PIE.

IT HAPPENS IN WYOMING.

IT HAPPENS IN VIRGINIA IT.

HAPPENS IN MOST OF THE GAMBLING STATES.

THERE IS A COMMUNE COST INVOLVED WITH THIS TYPE OF ACTIVITY -- COMMUNITY COST INVOLVED WITH THIS TYPE OF ACTIVITY.

I AM FOR THIS TYPE OF ACTIVITY, AS YOU KNOW, AND I WOULD JUST AS SOON HAVE FULL CASINO GAMING WITH TABLES AND SLOT MACHINES AND THE WHOLE THING, BUT WE'RE NOT THERE, AND IF WE EVER MOVE IN THAT DIRECTION, IT WILL PROBABLY BE IN A RACINO MODEL.

I UNDERSTAND THAT.

BUT WE NEED SOME ALLOCATIONS FOR LOCAL GOVERNMENT.

SO -- BECAUSE THAT IS VERY, VERY COMMON.

>> SENATOR THAYER, LET'S COME TO YOU AND LET'S ASK WHAT DO YOU THINK ABOUT HAVING MONEY SET ASIDE FOR GAMBLING AND ACHES DICTION AND LOCAL GOVERNMENTS INVOLVED IN THE PROCESS?

>> CHAIRMAN KOENIG AND I HAVE DISCUSSED THIS.

I HAVE NO PROBLEM FUNDING THE COUNCIL ON PROBLEM GAMING.

I THINK THAT'S HAVING SENATOR SEIB EMBRY HAS PUSHED FOR A LONG TIME.

SOMETHING WE NEED TO LOOK AT WHEN WE MAKE OUR RECOMMENDATION.

BUT I THINK WE NEED TO BE VERY CAREFUL WHEN WE TALK ABOUT INCREASING TAXES.

I'M A REPUBLICAN AND ESPECIALLY REAGAN REPUBLICANS LIKE ME, WE DON'T REALLY FAVOR INCREASING TAXES.

WE WANT TO CREATE ECONOMIC GROWTH WHICH CREATES JOBS WHICH IN AND OF ITSELF THEN CREATES MORE TAX REVENUE.

PEOPLE NEED TO UNDERSTAND THAT THE HORSE INDUSTRY IS ALREADY HEAVILY TAXED.

IT PAYS PAYROLL TAXES, SALES TAXES, OCCUPATIONAL TAXES, PROPERTY TAXES.

WHAT ABOUT THESE 80,000 PEOPLE WHO ARE NEW YORKNET INDUSTRY?

THEY'RE ALL MAY GO A WIDE VARIETY OF TAXES INTO LOCAL GOVERNMENT FUNDS AS WELL AS THE STATE GOVERNMENT GENERAL FUND==.

THIS IS A SIGNATURE INDUSTRY.

WE ONLY HAVE TWO OF THEM.

I'M GOING TO ARGUE A LITTLE BIT ABOUT THE SUPPOSITION THAT THE HAVE I ON THE HHH GAMES ISN'T TAXED ENOUGH ALREADY.

I THINK IT IS TAXED ENOUGH ALREADY.

I HELP SET THE RATE BACK IN 2014, HELPED WRITE THE LANGUAGE IN THE REVENUE BILL THAT SET THE RIGHT AT 1.5% OF GROSS.

BUT WHAT I WANT YOUR VIEWERS TO UNDERSTAND IS 1.5% OF GROSS EQUATES TO A MUCH LARGER NUMBER OF NET.

NOW, AS WAS SAID EARLIER, $91 OF EACH $100 BET IS RETURNED TO THE BETTORS.

SO WHEN PEOPLE SEE THESE BIG NUMBERS WAGERED AND THEY SORT OF GET ALL GOOGLELY-EYED AT THE AMOUNT, YOU'VE GOT REMEMBER 91% OF THAT IS GOING BACK TO PAY WINNING WAGERS AND THAT'S A LOT HIGHER RETURN THAN IF YOU GO ACROSS THE RIVER TO HARD ROCK CASINO IN CINCINNATI OR CAESARS IN SOUTHERN INDIANA.

THEY PAY OUT A LOT LESS AND THE HOUSE KEEPS A LOT MORE, AND THOSE CASINOS ALSO DON'T HAVE THE HIGH BRICK AND MORTAR COSTS AND THE HIGH LABOR COSTS THAT OUR HORSE TRACKS HAVE.

SO THEN YOU'RE LEFT WITH $8.66 AS THE TAKE-OUT.

THE TRACKS HAVE TO USE FREE PLAY AS A MARKETING TOOL TO COMPETE WITH THE INDIANA AND OHIO CASINOS, SO THAT IS EFFECTIVELY A TAX, AND THEN AFTER THE PAY-OUT AND THE FREE PLAY AND THE EXCISE TAX, THAT LEAVES ABOUT $5.86 REMAINING.

THAT TAKES THE EFFECTIVE NET RATE TO 20%, AND THEN THE TRACKS ARE REQUIRED BY LAW TO PAY PURSES TO THE HORSEMEN TO COMPETE FOR EVERY DAY.

THAT'S ANOTHER 11.9%, WHICH IS EFFECTIVELY A TAX.

THAT TAKES THE TAX ON NET ON THESE HISTORICAL HORSE RACING GAMES TO 32.3%, WHICH IS -- WHICH IS THE SAME OR IN SOME CASES MORE THAN WHAT OUR SURROUNDING STATES PAY IN A CASINO TAX.

I THINK THE HORSE INDUSTRY IS TAXED ENOUGH ALREADY AND I THINK WE NEED TO BE VERY CAREFUL WHEN WE'RE AT THE INTRODUCTORY STAGE OF HISTORICAL HORSE RACING.

EVERY BUSINESS GOES THROUGH FOUR STAGES.

INTRODUCTION, GROWTH, PLATEAU AND DECLINE.

CEOS TRY TO MAKE SURE THAT THEY DON'T EVER REACH A PLATEAU, AND IF THEY DO THAT THEY DON'T HEAD INTO DECLINE.

THIS IS A AN INDUSTRY AS FAR AS THE HHR PORTION THAT IS STILL IN A GROWTH STAGE.

WE'RE GOING TO GET MORE REVENUE BECAUSE MORE MACHINES ARE COMING ONLINE, WHICH IS GOING TO LEAD TO MORE WAGERING, MORE TAX REVENUE.

IT'S A SIMPLE TRICKLE-DOWN ECONOMIC SUPPLY SIDE ECONOMICS, AND I SAY THAT AS A PROUD REAGAN KID FROM THE 1980S.

>> PAM THOMAS -- >> SIMPLE ECONOMICS, AND I DON'T UNDERSTAND HOW SOME PEOPLE HAVE A HARD TIME UNDERSTANDING IT.

>> PAM THOMAS, I WANT TO COME TO YOU BECAUSE WE HAVE HEARD TESTIMONY AND LEADER THAYER JUST MENTIONED THAT REALLY THE EFFECTIVE TAX RATE, GIVEN ALL THE CONSIDERATIONS THAT WERE JUST MENTIONED, IS 32.3% OF REVENUE OR THE CASH TAKE-OUT.

WHY ISN'T THAT SUFFICIENT, PARTICULARLY WHEN COMPARED TO NEIGHBORING STATES THAT HAVE FULL BLOWN CASINOS?

WHAT WOULD YOU LIKE IT TO BE?

>> WELL, THERE'S A COUPLE OF THINGS, THERE ARE ACTUALLY THREE THINGS I WOULD LIKE TO RESPOND TO JUST VERY BRIEFLY.

FIRST OF ALL, SAYING THAT PURSES ARE PART OF TAXES IS LIKE SAYING THAT WHAT I MOVIE THEATER BUYS A MOVIE THAT THEY SHOW TO PEOPLE THAT THAT SHOULD SOMEHOW BE A TAX.

LIVE RACING CAN'T OCCUR WITHOUT PURSES.

IT IS A BUSINESS EXPENSE AND THE STATUTES SIMPLY SAY THERE HAS TO BE AN AGREEMENT WITH THE HORSEMEN.

STATUTE SAYS NOTHING ABOUT WHAT THAT AGREEMENT HAS TO BE.

IT'S TRUE YOU CAN'T RUN LIVE RACES WITHOUT PURSES BUT THAT ISN'T A TAX BECAUSE THEN RUNNING A MOVIE WOULD BE A TAX.

FREE POLICE SAY MARKETING EXPENSE THAT CASINOS USE IN ORDER TO ENTICE PEOPLE TO COME IN.

THEY SWITCHED FROM GIVING PEOPLE FREE DIFFERENCE AND FREE DINNER TO FREE PLAY, AND FREE PLAY IS INTERESTING BECAUSE WE'RE IN A STATE OF CONTROVERSY RIGHT NOW IN CASINOS.

THERE ARE 25 STATES THAT HAVE SLOTT MACHINES, 11 OF THEM TULLY TAX FREE PLAY.

DEEP ALL OF THAT MONEY AND THEY TAX IT.

EIGHT OF THEM HAVE A CAP.

AND ONLY SIX OF THEM ALLOW DEDUCTIONS OR ALLOW IT ALL TO BE DEDUCTED, AND THREE OF THOSE SIX ARE NOW RECONSIDERING THAT BECAUSE SO MUCH REVENUE IS BEING TAKEN AS FREE PLAY.

SO SAYING THAT EITHER OF THOSE SHOULD BE COONTZ PARTS OF AN EFFECTIVE TAX RATE I THINK, YOU KNOW, WHEN YOU THINK ABOUT TAX AND TAX POLICY AND THE WAY TAXES WORK, WE ALL KNOW HOW TAXES WORK, RIGHT?

WE ALL PAY INCOME TAXES.

WE ALL PAY SALES TAXES AND WE KNOW HOW THAT WORKS.

AND WE WOULDN'T THINK OUR CAR PAYMENTS OR OTHER SORTS OF THINGS THAT WE MAKE THAT DON'T RELATE IN ANY WAY TO TAXES AS BEING PART OF OUR EFFECTIVE TAX RATE.

>> ONE OF THE THINGS THAT WAS MENTIONED DURING A RECENT HEARING OF PARI-MUTUEL WAGERING TASK FORCE IS WHY WOULD HHR BE ANY DIFFERENT FROM ANY OTHER BUSINESSES THAT PAY A CORPORATE TAX RATE OF 5, 6 PERCENT?

WHY HIGH ORE THIS INDUSTRY?

CAN YOU GIVE US AN ANSWER TO THAT, PAM THOMAS?

>> WELL, I MEAN, THIS INDUSTRY IS AN INDUSTRY THAT -- AND IF YOU LOOK AT THE WAY THAT GAMING IS TAXED ACROSS THE UNITED STATES WITH EVERYBODY SINGLE JURISDICTION THAT ALLOWS GAMING CHARGES AN ADDITIONAL EXCISE TAX ON THE REVENUES FROM THAT GAMING BECAUSE THOSE -- THE ACTUAL ACTIVITY HAS ADDITIONAL EXPENSES ASSOCIATED WITH IT AND IT IS PART OF THE PREMIUM THAT GETS PAID IN ORDER FOR THOSE ACTIVITIES TO OCCUR.

THERE ARE NO STATES IN THE ENTIRE UNITED STATES THAT ALLOW THESE KIND OF GAMING MACHINES THAT DO NOT ALSO IMPOSE AN ADDITIONAL TAX IN ADDITION TO THE TAX THAT EVERYONE ELSE PAYS BECAUSE THIS IS AN ACTIVITY THAT NO ONE ELSE IS AUTHORIZED TO DO IN THE STATE.

ONLY THE RACETRACKS DO THIS.

>> CHAINS MORRIS AND THEN I WANT TO BRING IN MARTIN COTHRAN.

MR. MORRIS.

>> A COUPLE THINGS.

MS. THOMAS ACTUALLY SAID THAT THE BACK END OF THESE MACHINES REALLY DOESN'T MATTER.

IT DOES MATTER.

WE HAVE FOUR STATES THAT WE ARE CONTIGUOUS IN OUR NORTHERN BORDER THAT HAVE MORE COMPETITIVE MACHINES.

THEY HAVE TAX REGIMES THAT THE COUNCIL FOR -- CENTER FOR ECONOMIC POLICY EVEN SAID IN ITS TESTIMONY IN SEPTEMBER 13th THAT ARE TAXING THINGS LIKE FREE PLAY ON A NET AMOUNT, MEANING THAT THE BUSINESSES ARE ABLE TO REMOVE THAT AREA OF PLAY FROM THEIR RECORDS, AND THEY'RE NOT TAXED ON IT.

BUT THERE'S A COUPLE OF OTHER THINGS I'D LIKE TO SAY.

YES, ABSOLUTELY, LIVE RACING CAN OCCUR WITHOUT PURSE MONEY, BUT IT'S NOT GOING TO.

THE REASON THAT WE ATTRACT HORSES TO 38 STATES ACROSS THE UNITED STATES AND 69 COUNTRIES THAT HAVE THOROUGHBRED RACING AROUND THEM IS THE PRIZE MONEY.

THAT IS THAT ECONOMIC MULTIPLIER, THAT NEXUS EVENT THAT ATTRACTS AND HOLDS THIS INDUSTRY TOGETHER.

NOW, I WOULD ALSO SAY THAT ON ADDITIONAL EXCISE TAXES, WHAT THE LEADER SAID WHEN THE HORSE INDUSTRY GROWS, WE ARE RAISING AN ANIMAL, RACING AN ANIMAL THAT HAS A HEARTBEAT.

WE ARE A MEMBER OF THE FARM ECONOMY.

WE ARE NOT TAXED LIKE THE FARM ECONOMY.

ALL YOU NEED TO DO IS LOOK AT ANY ADDITION OF THE TAXI E. EXPENDITURE ANALYSIS REPORT AND YOU WILL FIND THAT WE ARE PAYING TAXES ON FEED AND EQUIPMENT, OTHER PARTS OF THE FARM SECTOR DO NOT PAY.

WHEN PEOPLE ARE PURSE PURCHASING YEARLINGS AT PUBLIC AUCTION HERE FROM TIPTON AND KEENELAND ASSOCIATION -- >> I WANT YOU TO COME BACK TO ME.

>> WHEN FOLKS ARE BUYING YEARLINGS HERE, IF IT'S A KENTUCKY LLC, THEY ARE PAYING TAXES HERE, AND WE WANT THEM TO DO THAT BECAUSE MORE PEOPLE, BECAUSE OF THIS PRIZE MONEY THAT WE HAVE ON OFFER, ARE STAYING HERE YEAR ROUND.

WE ARE NO LONGER THAT BACKWATER, SAY, FOR APRIL,, OKAY, AND DERBY WEEK.

>> PANTHER COTHRAN, DOES THE FAMILY FOUNDATION HAVE A DOG IN THE FIGHT WHEN IT COMES TO TAXATION?

>> WELL, I THINK WE THINK IT SHOULD BE FAIR.

>> IS IT FAIR NOW?

>> WELL, IT DOESN'T LOOK LIKE IT IF YOU CONSIDER WHAT OHIO'S TAXING ON ITS RACING, WHAT INDIANA IS TAXING ON ITS RACING, WHAT LIVE HORSE RACING.

IT IS SUPPOSED TO BE HORSE RACING, HISTORIC HORSE RACING SO IT'S NOT TAXED AT THE RATE OF WHAT LIVE HORSE RACING IS TAXED.

BUT, YOU KNOW, I WANTED TO COMMENT ON THIS ISSUE OF TRICKLE-DOWN ECONOMICS.

SUPPLY SIDE ECONOMISTS DENY THAT WHAT THEY WERE DOING WAS TRICKLEDOWN ECONOMICS, BUT HERE WE DO HAVE TRICKLE-DOWN ECONOMICS.

WE'VE GOT AN INDUSTRY WHERE THE MEDIAN SALARY, THE MEDIAN WAGE IS $11 AN HOUR.

IT'S AN INDUSTRY WHERE THE MONEY GOES TO PEOPLE WHO ARE VERY WEALTHY.

AND IT TRICKLES DOWN TO PEOPLE WHO DON'T MAKE NEARLY THAT MUCH MONEY.

THE MONEY IS GOING, PARTICULARLY WITH THE RATES WE'RE CHARGING IN TAXES NOW, IT'S GOING TO A VERY WEALTHY -- GOING TO VERY WEALTHY CORPORATIONS LIKE CHURCHILL DOWNS WHERE THE CEO MAKES $10 MILLION A YEAR.

I THINK IT'S A FAIR QUESTION TO ASK DO WE NEED TO CHARGE A LITTLE MORE THANK ON THIS INDUSTRY TO AT LEAST BRITT INTO LINE WITH SURROUNDING STATES.

>> LADDER MORGAN McGARVEY, I'LL HAVE YOU CHIME IN CONSIDERING THAT THE CEO OF CHURCHILL DOWNS IS MAKING $10 MILLION AND IS THAT TRICKLING DOWN TO THE WORKERS ON THE BACK SIDE AND ELSE WHERE?

WHAT WOULD YOU STAY TO THAT.

>> WE NEED TO PAY THE WORKERS ON THE BACK SIDE MORE.

IF YOU WANT TO HAVE A PROGRAM ON RAISING THE MINIMUM WAGE I'M ALL FOR IT.

ANYTHING WE DO IN TERMS OF THE WHO ARE WHO INDUSTRY, THAT'S IT.

I WANT A STRONG HORSE RACING INDUSTRY IN DE KENTUCKY.

BUT AS A SAID EARLIER OUR MOST VALUABLE RESOURCE HAPPENS TO BE THE PEOPLE OF KENTUCKY, AND THAT'S WHO WE NEED TO BE INVESTING IN.

THAT'S WHAT A HIGHER TAX RATE OOH HISTORICAL HORSE RACING WILL DO.

THAT'S WHY LAST YEAR EVEN THE HORSE RACING INDUSTRY ITSELF SAID, YES, WE WILL AGREE TO WORK WITH YOU ON RAISING THE TAX RATE.

BUT YOU KNOW WHAT?

WE'RE HAVING ALL THESE FANCY CONVERSATIONS RIGHT NOW ABOUT HISTORICAL HORSE RACING WHEN WE SHOULD BE HAVING THEM WITH CASINOS BECAUSE NO MATTER WHAT WE'RE TALKING ABOUT WITH HISTORICAL HORSE RACING, WEAR LEAVING MONEY ON THE TABLE BY JUST HAVING THESE THINGS THAT LOOK LIKE SLOTS AND PLAY LIKE SLOTS THAT ARE COMING UP OVER KENTUCKY WHEN WE COULD BE HAVING A FULL-ON CASINO CONVERSATION, WHERE WE COULD BE INTERNET WHO ARE INDUSTRY, MAKING SURE KENTUCKY REMAINS THE HORSE RACING CAPITAL OF THE WORLD WHILE ALSO DOING SOMETHING LIKE FUNDING PUBLIC PRESCHOOL SO ALL ALL OF OUR KIDS HAVE A FREE EDUCATION WITH THE MONEY.

>> HAS THE SHIP SAILED ON, LEADER McGARVEY?

IS IT TOO LATE TO GET IN ON THAT GAME FOR KENTUCKY?

>> NO.

YOU LOOK AT SURROUNDING STATES, HO, WEST VIRGINIA, INDIANA, MISSOURI, ILLINOIS, THEY ALL HAVE CASINOS RIGHT NOW.

ALL OF THEM ARE HERE.

WE ARE WATCHING CARLOADS OF CASH DRIVE ACROSS THE BRIDGES ON A DAILY BASIS.

GO TO THE PARKING LOT OF THOSE CASINOS RIGHT NOW AND YOU'LL SEE A BUNCH OF KENTUCKY LICENSE PLATES.

SO, NO, THE SHIP HAS NOT SAILED.

IT JUST HASN'T PULLED UP TO OUR HARBORS YET.

>> LEADER THAYER.

>> I'M GLAD MY GOOD FRIEND MORNING McGARVEY GOT THE DEMOCRATIC TALKING POINTS IN TONIGHT.

SENATOR McGARVEY BELIEVES WHAT HE IS SAYING AND I RESPECTS HIM FOR THAT.

IF THERE ARE ANY KENTUCKY PLATES IN INDIANA PARKING LOTS IT'S BECAUSE THEY HAVE SPORTS BETTING AND WE DON'T, BUT THE FACT OF MATTER IS THESE HISTORICAL HORSE RACING MACHINES ARE KEEPING KENTUCKY DOLLARS IN KENTUCKY, ESPECIALLY IN PLACES LIKE HENDERSON, LOUISVILLE, AND NORTHERN KENTUCKY.

THEY'RE WIDELY POPULAR AND RECEIVED VERY WELL.

THERE'S A LOT OF DISINGENUOUS INFORMATION OUT HERE TONIGHT.

YOU'VE GOT PEOPLE IN TWO CAMPS HERE THAT I CALL ANTIHHR AND THEY'RE BOTH BEING REPRESENTED ON YOUR SHOW TONIGHT.

THERE ARE PEOPLE WHO JUST WANT AS MUCH MONEY FOR GOVERNMENT TO HAVE TO SPEND ON GOVERNMENT PROGRAMS, AND, YOU KNOW, THAT'S NOT REALLY MY JIBE, AND YOU'VE ALSO GOT PEOPLE WHO WANT TO DESTROY THE HORSE INDUSTRY BECAUSE THEY DON'T BELIEVE IN IT.

AND BOTH OF THEM WANT TO RAISE THE TAX RATE, ONE, TO REALLY END HORSE RACING.

LET'S CALL A SPADE A SPADE.

AND THEY LOST.

THEY LOST WHEN SENATE BILL 120 PASSED, AND NOW THEIR EFFORTS ARE GOING TO BE POINTED AT TRYING TO HARM THE HORSE INDUSTRY AND PUSH IT OUT OF KENTUCKY BY RAISING THE RATE.

BUT LET'S JUST BE STRAIGHT UP HONEST ABOUT THAT.

MAYBE THEY WON'T BUT I WILL BE ON THEIR BEHALF.

AND THEN YOU'VE GOT FOLKS WHO ARE REPRESENTED HERE TONIGHT WHO WANT MORE MONEY FOR THE GENERAL FUND WHILE IGNORING THE FACT THAT THE HORSE INDUSTRY IS ALREADY HEAVILY TAXED, AS I MENTIONED EARLIER, AND MAKING A SIGNIFICANT CONTRIBUTION THROUGH ALL SORTS OF DIFFERENT TAX RATES AND WAYS OF COLLECTING TAXES OAT 80U.E.80000 PEOPLE WHO WORK IN THE INDUSTRY WHO ARE WORKING AND PAYING FOR PENSIONS AND PAYING FOR PUBLIC EDUCATION AND PAYING FOR CORRECTIONS AND PAYING FOR MEDICAID.

SO I GET A LITTLE CHAPPED WHEN PEEL SUGGEST THAT THE HORSE INDUSTRY ISN'T PAYING YOU ITS SHARE.

WE JUST FELL ALL OVER OURSELVES TO OFFER A $390 BILLION TAX INCENTIVE FOR FORD TO EXPAND ITS 100-YEAR RELATIONSHIP WITH THE COMMONWEALTH OF KENTUCKY TO CREATE 5,000 NEW JOBS.

AND I WAS FOR THAT.

IR COSPONSOR THE BILL WITH SENATOR JULIE RAQUE ADAMS.

ALSO THE BOURBON INDUSTRY, OUR OTHER SIGNATURE INDUSTRY, IS GOING IS TO COME TO THE GENERAL ASSEMBLY ANDFOR TAX RELIEF, AND WE ARE HERE TONIGHT ON YOUR SHOW ADDING A MORE PUNITIVE TAX TO ONE OF OUR TWO SIGNATURE INDUSTRIES.

WE'VE ALREADY BASICALLY HOSS LOST COAL AND WE'VE LOST TOBACCO.

THEY ARE JUST A SMALL PERCENTAGE OF WHAT THEY USED TO BE.

BUT WE'VE GOT HORSES AND BOURBON.

BUT FOR SOME REASON THERE ARE PEOPLE WHO WANT TO DESTROY THOSE SIGNATURE INDUSTRIES AND NEGATIVELY HARM THE 80,000 FAMILIES WHO WORK IN THIS BUSINESS, AND I'M GOING TO STAND IN STRONG OPPOSITION TO WHAT THEY'RE TRYING TO DO.

>> I WANT TO GET TO WHO FALLS IN THOSE CAMPS IN A MINUTE BUT REPRESENTATIVE KOENIG I WANT TO COME TO YOU BECAUSE AS I UNDERSTOOD IT, THE PARI-MUTUEL WAGER THATTATION TASK FORCE WAS KIND OF THE COMPROMISE THAT IF WE'RE GOING DO PASS THIS HHR BILL LET'S AT LEAST LOOK AT THE TAXATION OF THIS INDUSTRY, ABOUT IT SEEMS LIKE THE TASK FORCE ALREADY HAS ITS MIND MADE UP THAT THEY'RE NOT FOR INCREASED TAX RATES ON THESE OPERATIONS.

SO -- BUT YOU DO HAVE A COLLEAGUE OF YOUR OWN, REPRESENTATIVE KIM KING, WHO HAS FILED A BILL TO RAISE THE TAX RATE.

SO THIS IS NOT AN R OR A D ISSUE NECESSARILY.

WHERE DO YOU STAND ON WHERE THOSE RATES ARE?

AND DO YOU BELIEVE THAT DOING THE WORK OF THE TASK FORCE, AS YOU WERE CHARGED TO DO, SHOULD COME UP WITH SOMETHING OR DO NOTHING?

>> WE WILL COME UP WITH SOMETHING, AND WE -- I DON'T KNOW THAT WE HAVE OUR MINDS MADE UP ENTIRELY.

OBVIOUSLY, WE'VE HEARD TWO DIFFERENT OPINIONS FROM SENATOR THAYER AND SENATOR McGARVEY AND REPRESENTATIVE GENTRY, AND THAT'S OKAY.

I MAY BE IN THE MIDDLE GROUND ON THAT.

BUT ONE OF THE BEST THINGS ABOUT THIS IS IT'S NOT AN HHR TAXATION TASK FORCE POP ICE PARI-MUTUEL WAGER TASK FORCE.

AND THEN ONE OF THE THINGS I WAS AWARE OF BUT DIDN'T FULLY UNDERSTAND THAT WE TALKED IN OUR FIRST MEETING WAS THE TAXES ON THE DIFFERENT TYPES OF WAGERING OUTSIDE OF HHR.

YOU GO TO THE TRACK AND WAGER AT THE HAND, IT'S ONE TAX.

IF YOU ARE AT THE TRACK AND THEY'RE NOT RUNNING AND YOU BET ON SIMULCAST RACES AT ANOTHER TRACK, IT'S AUSTIN DIFFERENT TAX RATE.

AND THEN THE ADW, WHICH IS YOUR APP OR ON YOUR PHONE OR ON YOUR COMPUTER, WHICH ALLOWS YOU TO WAGER IS AT ANOTHER RATE, AND IT'S THE LOWEST RATE AND IT'S THE BIGGEST GROWTH AREA, AND I THINK THAT'S SOMETHING THAT WE COULD -- >> STANDARDIZATION OF THOSE RATES ACROSS THE BOARD?

>> STANDARDIZATION I THINK IS VERY MUCH ON THE TABLE.

>> WHICH OF THOSE HAS THE LOOSENESS.

>> THE ADW.

HAS THE LOWEST?

>> THERE'S A LOT OF FRANKLY MONEY BEING LEFT ON THE TABLE THAT WAY.

THAT'S THE GROWTH AREA, AND IT DOESN'T MAKE SENSE THAT THEY'RE NOT TAXED THE SAME TO START WITH, AND AS FAR AS I'M CONCERNED, AND I SHOULDN'T SAY THAT BECAUSE ADW, WHEN THOSE TAXES WERE FIRST PUT IN, WAS A FLEDGLING, AND NOW IT'S BEEN INTRODUCED, AND NOW IT'S GROWN, AND IT'S THE WAY IT'S GOING TO BE PRIMARILY PROBABLY GOING FORWARD OVER TIME.

SO DID IT MAKE SENSE.

I'M NOT SURE IT MAKES SENSE ANYMORE.

AND JUST LIKE I'VE TRIED TO DO IN THE ALCOHOL INDUSTRY IN MY COMMITTEE, WHICH IS TREAT EVERYONE THE SAME, I THINK THAT MAKES SENSE HERE, AND I THINK THERE'S PROBABLY A FAIR AMOUNT OF AGREEMENT ON THAT AND AN OPPORTUNITY TO RAISE REVENUE THERE.

YES, THERE WAS THIS LETTER THAT CAME AT THE LAST MINUTE BEFORE THE HOUSE VOTE THAT -- FROM THE TRACKS THAT APPARENTLY SAID THAT THEY WERE INTERESTED IN WORKING ON THE TAX RATE OR WILLING TO TALK ABOUT IT.

I STILL HAVEN'T SEEN THAT LETTER.

I'M SURE IT EXISTS.

TOO MANY PEOPLE I.

SAID IT EXISTS.

IT SAYS ON THE INTERNET IT EXISTS SO IT MUST BE TRUE.

BUT, YOU KNOW, I LOOK FORWARD TO SEEING THAT LETTER, AND I CAN TELL YOU FROM MY PERSONAL PERSPECTIVE MYSELF AND REPRESENTATIVE COOK WHO IS ALSO ON THE TASK FORCE AND WAS A VERY IMPORTANT PART OF GETTING IT PASSED THROUGH THE HOUSE, WE SIT UP ON THE HOUSE FLOOR AND SAID THAT WE WERE GOING TO LOOK INTO AND IT TAKE THAT VERY SERIOUSLY AND DO WHAT WE FELT WAS RIGHT AND WE NEEDED TO DO, AND WE ARE GOING TO MAINTAIN OUR WORD ON THAT.

>> REAL QUICKLY, LEADER THAYER.

>> YOU KNOW, THERE'S ANOTHER ECONOMIC THEORY, AND I WAS A COMMUNICATIONS MAJOR BUT I FEEL LIKE I'M ALWAYS TRYING TO TEACH PEOPLE BASIC ECONOMICS HERE.

IT'S CALLED ELASTICITY.

RAISING A RATE DOESN'T MEAN YOU'RE GOING TO GET MORE REVENE.

IT ACTUALLY IN SOME CASES -- THERE'S A UofL STUDY THAT SHOWS IT COULD END IN LESS REVENUE BECAUSE AS RONALD REAGAN ONCE SAID, IF YOU WANT LESS OF SOMETHING, TAIT MORE.

YOU WANT TO SLIGHT DOWN, TAX IT MORE.

AND I JUST -- SLOW IT DOWN, TRAITOR MORE.

AND I JUST DON'T UNDERSTAND WHY PEOPLE DON'T LIKE THE HORSE INDUSTRY IT.

PRESERVES GREEN SPACE THROUGHOUT THIS COMMONWEALTH, PARTICULARLY IN THE GOLDEN TRIANGLE AREAS OUTSIDE OF FAYETTE COUNTY, JEFFERSON COUNTY.

IT PROVIDES 80,000 WELL-PAYING JOBS.

AND THE INFORMATION EARLIER ABOUT THE MINIMUM WAGE IS FALSE.

MY FRIEND CORRECT BROGDON WHO RUNS A FARM WITH HIS WIFE CARRIE JUST TEXTED ME AND SAID THAT THEIR MINIMUM WAGE ON THEIR FARM IS $12.50 AN HOUR, QUICKLY GOING TO $15 IN THIS CURRENT INFLATIONARY ENVIRONMENT THAT WE ARE IN, AND THAT INCLUDES HOUSING AND UTILITIES FOR I HAVE THE A LOT OF THE PEOPLE WHO WORK ON THE FARM.

SO I JUST WISH PEOPLE WOULD BE HONEST AND HONEST BROKER.

MAYBE PEOPLE DON'T LIKE THE TRUTH THAT I'M TELLING, BUT IT'S THE TRUTH.

AND THIS INDUSTRY IS HEAVILY TAXED AND PAYING ITS FAIR SHARE.

>> MARTIN COTHRAN, WHICH CAMP DO YOU FALL INTO?

LEADER DAMON THAYER IS TALKING ABOUT THOSE WHO ARE IN THIS CONVERSATION THAT DESPISE THE HORSE INDUSTRY AND WANT TO SEE ITS DEMISE OR THEY JUST WANT TITE TO FLUFF UP GOVERNMENT PROGRAMS.

>> MY CAMP IS DIFFERENT.

MY DAMP CAMP IS THE ONE THAT GOT ECONOMICS DEGREES FROM THE UNIVERSITY OF CALVIN TO UNDERSTAND ELASTICITY, AND THE GENTLEMAN THAT TESTIFIED IN TASK FORCE MEETING SAID THAT THE ADDITIONAL REVENUE GAIN FROM INCREASED TAX RATES NOT BE PROPORTIONAL.

THAT DOESN'T MEAN WE'RE ITS NO GOING TO GET ANY REVENUE FROM IT.

IN SOME PLACES YOU TAX 100%, YOU'RE NOT GOING TO GET ANY REVENUE.

THAT'S A FAR CRY OF WHAT'S POSSIBLE IN TERMS OF KEEPING MONEY IN THE STATE BECAUSE IF YOU HAVE PROFITS COMING FROM THESE THINGS AND THEY'RE GOING TO ENTITIES LIKE CHURCHILL DOWNS, WHICH IS A PUBLICALLY TRADED COMPANY -- OKAY?

PEOPLE FROM ALL OVER THE COUNTRY OWN STOCK IN CHURCHILL DOWNS.

THEY'RE THE ONES WHO MAKE THE PROFIT.

NOW NOT ONLY IS THE MONEY GOING TO GO ACROSS THE -- RIVER, IT'S GOING TO GO EVERY OTHER DIRECTION, TOO, BECAUSE THE OWNERS OF CHURCHILL DOWNS, WHICH IS MAKING THE MONEY FROM THIS, ARE ALL OVER THE COUNTRY.

>> CHAUNCEY MORRIS.

>> THERE ARE FAMILIES THAT ARE BREEDING RACING THOROUGHBREDS AND STANDARDBREDS NEAR THE COMMONWEALTH THAT ARE MAKING MONEY FROM THIS ACTIVITY, FULL STOP.

THAT IS THE LESSON LEARNED FROM HISTORICAL HORSE RACING SINCE ITS INTRODUCTION BECAUSE IT RENDERED THE BEST BREEDING SPLIT WORLD WITH A SUPERLATIVE RACING PRODUCT.

AND WE TALK ABOUT, GOING BACK TO EITHER THIS COMMENT OR MS. THOMAS' PREVIOUS COMMENT ON YOU CAN REALLY HAVE LIVE RACING WITHOUT PURSES, OF COURSE, YOU CAN BUT NO HORSES WILL COME.

THE REASON THAT THE FIELD SIZE IS SUPERIOR HERE IN KENTUCKY LAST YEAR TO ALL OTHER STATES AND CANADA, OBVIOUSLY, IS BECAUSE OF THE PRIZE MONEY ON OFFER.

WE ARE ATTRACTING BETTER HORSES.

WE ARE EMPLOYING MORE INDIVIDUALS.

WE, MY ASSOCIATION, HAS A HEALTH INSURANCE TRUST THAT INSURES 3300 INDIVIDUALS, MOSTLY IN CENTRAL KENTUCKY BUT ACTUALLY ACROSS THE STATE, AND, YES, WHAT THE LEADER SAID IS ABSOLUTELY TRUE.

EVERYBODY -- EVERY INDUSTRY RIGHT NOW, EVERY SECTOR IS HAVING -- IS FINDING IT HARD TO FILL JOBS.

WE ARE PAYING $15 AN HOUR.

SENATE OF, I'VE NEVER SEEN ANY -- SENATE OF, I'VE NEVER SEEN ANY ECONOMIC ANALYSIS THAT HAS SHOWN WHAT THE AVERAGE PRICE PAID IN THE THOROUGHBRED OR THE HORSE INDUSTRY IS.

THE ONLY ONES THAT WE SHOWED IS SOMETHING THAT WE SHARED BEFORE IN THE PAST WITH THE FAMILY FOUNDATION THAT SHOWS THAT THE LEVEL OF JOBS ARE HUGE THAT GO FROM $100,000 ON DOWN ANNUALLY A YEAR, AND THOSE ARE THE KIND OF JOBS THAT SENATOR THAYER AND ADAM WERE SPEAKING ABOUT.

>> PAM THOMAS WITH THE KENTUCKY CENTER FOR ECONOMIC POLICY, I THINK YOU WANT TO WEIGH IN HERE.

>> I DO THINK IT'S REALLY UNFAIR TO INDUSTRY PEOPLE, LIKE ME AND LIKE THE POLICY AS AN ORGANIZATION THAT ARE ADVOCATING THAT THE TRACKS PAY A FAIR TAX RATE AS BEING NOT LIKING THE HORSE INDUSTRY OR NOT APPRECIATING THE HORSE INDUSTRY.

MY FIRST JOB OUT OF LAW SCHOOL WAS AT A LAW FIRM WHERE I DID EQUINE SYNDICATIONS.

I LIVED IN WOODFORD COUNTY WHICH IS PRIMARILY HORSE FARMS.

I HAVE A LOT OF FRIENDS AND NEIGHBORS WHO ARE IN THE INDUSTRY.

I HIGHLY RESPECT AND VALUE THE OTHERS INDUSTRY, AND THE FACT THAT I'M ADVOCATING FOR TRACTIONS TO PAY HIGHER TAXES DOESN'T MEAN THAT I DON'T APPRECIATE AND RECOGNIZED THE IMPORTANCE THAT THE HORSE INDUSTRY PLAYS IN OUR COMMONWEALTH.

ASKING TRACK TOSSS TO PAY MORE ALSO IS NOT IN ANY WAY GOING TO IMPACT ALL OF THE FOLKS THEY BALKED TALKED ABOUT BE THE THE WORKERS, THE PEOPLE ON THE FARMS, ALL OF THAT.

THERE ARE WAYS TO CONTINUE TO ALLOW THE INDUSTRY TO BENEFIT SIGNIFICANTLY AND SUBSTANTIALLY THE WAY THAT IT IS RIGHT NOW AND ALSO FOR THE PEOPLE OF KENTUCKY TO BENEFIT MORE IN THE GENERAL FUND BY HIGHER TAXES PAID BY THE TRACKS.

WITH REGARD TO ELASTICITY, IT DEPENDS ON HOW THE TRACKS DETERMINE TO GO AHEAD AND PAY THE EXTRA TAXES AND YOU CAN TAKE OUT OF YOUR PROFITS, YOU CAN TAKE IT OUT OF YOU OF HAVE UNFUNDED YOUR PAY-OUT.

I MEAN, THERE ARE A LOT OF WAYS.

IT'S AN ECONOMIC THEORY, BUT IT KIND OF DEPENDS ON IN PRACTICE WHAT HAPPENS.

BUT I REALLY WANT TO EMPHASIZE THAT THESE THINGS ARE NOT MUTUALLY EXCLUSIVE.

ASKING THE TRACK TOSS PAY MORE IN TAXES IS NOT GOING TO KILL THE INDUSTRY.

IT IS NOT GOING TO STOP HISTORIC HORSE RACING.

NOT GOING TO PREVENT THE 10,000 MACHINES THAT HAVE BEEN APPROVED FROM BEING INSTALLED.

THE TRAJECTORY CAN CONTINUE AS IT IS FOR THE INDUSTRY, AND IT HOPE THAT IT DOES.

I MEAN, IT IS PART OF KENTUCKY, AS EVERYONE HAS SAID.

>> PAM, DID YOU MENTION A PARTICULAR MAGIC NUMBER THAT YOU THINK THE TAX RATE SHOULD REST WITH THE HORSE INDUSTRY?

IS THERE A MAGIC NUMBER?

>> NO, I DON'T THINK THERE IS.

THERE HAVE BEEN SEVERAL DIFFERENT LEGISLATIVE PROPOSALS THAT IMPOSE TAXES AT A DIFFERENT RATE, AND I THINK THAT IT'S UP TO THE LEGISLATORS TO DECIDE WHAT THAT WILL BE.

I MEAN, I DO THINK THAT WITHOUT HURTING THE INDUSTRY AT ALL AND LETTING THEM CONTINUE TO RECEIVE THE BENEFITS THEY RECEIVE RIGHT NOW WITH REGARD TO THE PURSE FUNDS AND OTHER THINGS, THAT EVEN IF YOU BROUGHT THE RIGHT UP TO WHAT IT WOULD BE FOR LIVE RACING WITH A HANDLE AT THE LEVEL THAT THE HANDLE ON THE CASINOS ARE AT THIS POINT OR THE HHR MACHINES, THAT YOU COULD RACE RIGHT NOW WITH THE -- BETTING THE WAY THAT IT IS, YOU COULD RACE OVER $100 MILLION, KEEPING THE THINGS AS THEY ARE NOW WITH THE INDUSTRY.

BUT AGAIN, THOSE ARE IDEAS THAT THE LEGISLATURE HAS TO CONSIDER AND DECIDE WITH REGARD TO HOW TO DO THE RATES AND WHETHER THEY KEEP ON IT WHOLE HANDLE OR TO BRING IT BACK TO SOMETHING THAT'S MORE ON THE NET.

>> I WANT TO GO BACK TO LEADER MORGAN McGARVEY AND BRING UP A POINT THAT YOU MENTIONED A FEW MOMENTS AGO, AND WE'RE HAVING THE WRONG CONVERSATION IN YOUR VIEW.

WHY ARE WE TALKING ABOUT HHR WHEN WE SHOULD BE TALKING ABOUT EXPAND GAMBLING, CASINO STYLE GAMBLING, BUT THE POLITICAL REALITY OF THAT, LEADER McGARVEY IS DIM, IT'S SLIM, THAT THAT'S NOT WHERE THE LEGISLATURE IS RIGHT NOW.

IS THAT ANELACE EARNED TO MAKE THAT KIND OF PROPOSITION?

-- IS THAT A FOOL'SER AND TO MAKE THAT KIND OF PROPOSITION?

>> I THINK IT'S HAVE WE HAVE ALLOWED KENTUCKY TO HAVE SLOT MACHINES AND NOT CASINOS WITH HORSE RACING BUT THERE IS A CHANCE TO GET SPORTS GAMING IN KENTUCKY.

THIS IS A NO-BRAINER.

WE ARE THE HORSE CAPITOL OF THE WORLD.

WE WANT TO STAY THE HORSE CAPITAL OF THE WORLD AS A SEE AGREEMENT BETWEEN PEOPLE LIKE PAM THOMAS AND LEADER THAYER.

WE LIKE THE HORSE INDUSTRY.

LET'S GET SOME SPORTS GAMING IN HERE.

LET'S GET CASINOS IN HERE.

LET'S WORK WITH THE HORSE INDUSTRY AS THEY PLEDGED TO DO LAST YEAR TO INCREASE THE TAX RATE ON HISTORICAL HORSE RACING.

NOT THE HORSE INDUSTRY, ON HISTORICAL HORSE RACING.

SO THAT THE HORSE INDUSTRY CAN CONTINUE TO THRIVE AND THATTE CAN CONTINUE TO GENERATE 2 RIGHT OF NEEDS TO INVEST IN ITS PEOPLE AND ITS FUTURE.

>> SO WHAT DO YOU THINK ABOUT THAT, MARTIN COTHRAN?

I MEAN, WE KNOW WHERE YOU ARE ON HHR.

I CAN ONLY IMAGINE YOUR SENT OINTMENTS EXPANDING SPORTS BETTING.

>> OUR VIEW HAS BEEN VOICED FOR 25 YEARS ON THIS ISSUE, AND WE'VE FOUGHT CASINO GAMBLING JUST ABOUT EVERY YEAR AND WON UNTIL THIS YEAR WHEN WE GOT BASICALLY SLOT MACHINES.

I DO THINK THAT IF WE'RE GOING TO HAVE THE DEBATE ON CASINO GAMBLING, THAT IT NEEDS TO BE A DEBATE OVER AMENDING THE CONSTITUTION.

>> SO A CONSTITUTIONAL AMOUNTED WOULD BE REQUIRED.

>> THAT'S WHAT BURTON JONES ALWAYS SAID, IF WE'RE GOING TO CHANGE THIS, WE NEED TO DO IT THROUGH THE CONSTITUTION BECAUSE THE CONSTITUTION DOES NOT LOWELL FOR CASINO GAMBLING.

>> AND YOU THOUGHT THE SAME THING ABOUT LARRY LARRY, CORRECT?

>> IT IS CASINO GAMBLING.

HHR.

>> YOUR THOUGHTS ABOUT CASINO GAMING, FULL CASINO STYLE, AL GENTRY.

>> OBVIOUSLY I'M FOR THAT.

BUT I THINK IT'S INTERESTING -- I MEAN, WHAT WE NEED TO SAY IS THIS.

LOOK, HHR IS OUR EXPANDED GAMING IN KENTUCKY RIGHT NOW.

IT IS.

AND LET ME MAKE THIS CLEAR TOO.

IF PEOPLE THAT AREY AGAINST EXPAND DOLLARS GAMING AND AGAINST THE HORSE RACING INDUSTRY OR HHR ARE NOT IN MY CAUCUS.

THEY'RE THE REPUBLICANS THAT DON'T LIKE GAMBLING WHATSOEVER, AND ALL YOU HAVE TO DO IS LOOK AT THE CONVERSATIONS ON THE FLOOR WHEN SENATE BILL 120 WAS GOING THROUGH.

THE ISSUES IN MY CAUCUS IS WHAT IS THE OPTIMUM RATE FOR HHR.

AND THAT VARIES FROM THROUGHOUT -- THROUGHOUT MY CAUCUS.

SOME THINK IT SHOULD BE MORE THAN OTHERS.

I THINK THE IMPORTANT THING HERE IS LET'S MAKE SURE THAT WE COME TO THE OPTIMAL RATE, WHATEVER THAT IS, BUT LET'S ALSO LOOK AT THE ALLOCATIONS.

HOW ARE WE REINVESTING THAT TAX REVENUE THAT WE ARE COLLECTING?

AND IF WE LOOK AT HHR RIGHT NOW, THE TWO ACTIVE STATES ARE WYOMING AND VIRGINIA, AND IN WYOMING AND VIRGINIA, IN WYOMING THEY ALSO HAVE A 1.5% OF THE HANDLE TAX.

AND 1% OF THAT GOES TO LOCAL GOVERNMENT.

IN VIRGINIA THEY ACTUALLY HAVE A 1.25% OF THE HANDLE, WHICH .75% GOES TO THE STATE AND .5% GOES TO LOCAL GOVERNMENT.

SO AGAIN, BOTH OF THESE STATES, WHICH ARE THE TWO ACTIVITY HHR STATES IN THE UNITED STATES RIGHT NOW, HAVE LOCAL GOVERNMENT ALLOCATIONS.

AND THERE'S A REASON FOR THAT.

AND FOR THE LOCAL GOVERNMENT TO GET THAT ALLOCATION, THEY HAVE TO HAVE A FACILITY WITHIN THEIR DISTRICT.

ALSO IN NEW HAMPSHIRE HHR HAS JUST BEEN LEGALIZED BUT THEY'RE IN A VERY INFANCY STAGES OF HHR IN THOSE STATES, SO LET'S NOT FORGET HOW WE'RE ALLOCATING THE MONEY AS WELL.

SO IF WE DO, I WILL SAY THIS AS WELL, AND I AGREE WITH SENATOR McGARVEY ON THIS ISSUE AND SENATOR THAYER AS WELL WHEN WE'RE TALKING ABOUT SPORTS WAGERING, IF THERE IS GOING TO BE A SMALL SURTAX ON HHR, THEN WHAT NOT A BETTER TIME TO PROVIDE ANOTHER REVENUE OPPORTUNITY IN SPORTS BOOKS, IN SPORTS WAGERING?

IT'S A VERY GOOD TIME TO DO THAT.

AND IF WE MODERNIZE AND SIMPLIFY OUR PARI-MUTUEL TAX CODE AND COME UP WITH A TAX FOR PARI-MUTUEL WAGER, PERIOD, WE'RE PROBABLY GOING TO SEE SOME DECREASES IN SIMULCAST WAGERING AND WE'LL PROBABLY SEE INCREASES IN ADVANCED DEPOSIT WAGERING.

THAT SHOULD BE THE FIRST STEP OF RAISING ADVANCED DEPOSIT RANGER WAGERING IF WE ARE GOING TO SIMPLIFY AND GET TO SOME FLAT RATE FOR PARI-MUTUEL.

WE TRIED TO DO THAT AND WAS TART PART OF THE STEAL ON SB 120 WHICH I HELPED NEGOTIATE.

WHAT HAPPENED WAS WE GOT THE TASK FORCE, BUT THE FIRST MOVE OF THE INCREASE ON ABDW WAS RENEGED, QUITE FRANKLY, WHEN IT WENT OVER TO THE SENATE.

ADW.

THERE WERE SOME OF MY COLLEAGUES THAT WERE NOT REALLY HAPPY ABOUT THAT.

BUT WE HAVE THE TASK FORCE NOW.

WE HAVE HAD A LOT OF GOOD INFORMATION THROUGH THE TASK FORCE.

WE HAVE ONE MORE MEETING, AND I WOULD LIKE TO ASK MY COLLEAGUES FROM THE OTHER SIDE WHO ARE SHARING THIS TASK FORCE TO, PLEASE, WILL YOU COMMIT HAD TO ALLOWING LEAGUE OF CITIES OR KAKO OR METRO LOUISVILLE GOVERNMENT TESTIFY IN THAT MEETING AND TALK ABOUT A POTENTIAL LOCAL GOVERNMENT ALLOCATION, REGARDLESS OF WHAT THE RATE IS, IF WE CAN WORK THAT OUT.

I CERTAINLY DON'T WANT TO TAKE MONEY AWAY FROM OTHER SECTORS THAT HAVE BEEN RECEIVING MONEY AND HAVE BEEN VERY, VERY SUCCESSFUL AT BUILDING THE INDUSTRY TO WHERE IT IS TODAY BECAUSE HHR WAS A TRUE GAME CHANGER.

WE'RE ALL FOR HHR.

IT'S THE OTHER SIDE THAT HAD THE COLLECTION OF STATE REPS THAT WERE NOT FOR IT.

SO I JUST WANT TO CLEAR THAT UP.

>> CHAIRMAN KOENIG, I WANT TO GO TO A COUPLE PLACES.

THEN LEADER THAYER.

FIRST OF ALL, THE RISEN RESISTANCE IS FROM THE REPUBLICAN SIDE OF THE HOUSE IS ONE OF THE POINTS THAT REPRESENTATIVE GENTRY WAS MAKING THERE.

ALSO, I MEAN, WILL YOU ENTERTAIN THE MOTION THAT BRINGING IN CAKE OH WEEKS, KENTUCKY ASSOCIATION OF COUNTIES, KENTUCKY LEAGUE OF CITIES OR LOUISVILLE METRO GOVERNMENT, TO TALK ABOUT HOW THEY COULD BENEFIT?

>> FIRST, WHEN IT COMES TO MY SPORTS BETTING BILL, I THINK, YES, WE HAVE EVERY DEMOCRAT ONBOARD, AND THE RESISTANCE IS IN MY OWN PARTY.

I THOUGHT WE WERE THE PARTY OF LIBERTY, AND LIBERTY MEANS, YOU KNOW, BEING FOR THINGS THAT OTHERS -- >> YOU GOT HHR ACROSS THE LINE.

>> I DID.

I DO RECALL THERE BEING A LOT OF SURPRISING NO VOTES FROM HOUSE DEMOCRATS.

BUT THAT'S OKAY.

I DON'T WANT TO LOOK IN THE BACK BACK, AND ARGUE OVER A LOT OF THINGS THAT HAVE HAD HAPPENED AND WE NEED TO LOOK FORWARD ON WHAT'S NEXT.

THE THE WHOLE GOVERNMENT THING, THIS IS THE FIRST I'VE HEARD OF IT.

I HAVE NOT HEARD FROM KAKO OR KLC OR ANYBODY.

REPRESENTATIVE GENTRY AND I HAVE WORKED A LOT ON THIS ISSUE AND HE IS MY MAIN GUY ON THE OTHER SIDE ON SPORTS WAGERING AND WE CAN TALK ABOUT IT WHEN WE LEAVE HERE.

>> WHEN'S YOUR NEXT MEETING?

>> NOVEMBER SOMETHING, 17th, 19th, 21st OR SOMETHING.

I CAN TELL YOU THAT WE ALREADY HAD -- WE'RE WE'LL HAVE PROBLEM GAMING AND WE'RE GOING TO TALK ABOUT DOING SOMETHING FOR THE BETTORS.

WE'RE TALKING ABOUT RAISING THESE RATES.

THAT'S GOING TO COME AWAY FROM THE PEOPLE THAT ARE PLAYING THE MACHINES.

AND THE PEOPLE THAT GO AND MAKE THE SHOW GO ARE -- YES, YOU'VE GOT TO HAVE PURSES BUT YOU'VE ALSO GOT TO HAVE PEOPLE SHOWING UP TO WAGER ON THESE, AND WE NEED TO DO SOMETHING FOR THE BETTORS.

I'M GOING TO TALK ABOUT THAT.

>> ARE YOU GOING TO SUSTAINED INVITATION TO KAKO AND KLS ON THAT MEETING.

>> I DON'T KNOW.

AGAIN, THEY HAVEN'T ASKED ME FOR ANYTHING.

>> LEADER THAYER?

>> FIRST OF ALL, RENEE, LET ME SAY THAT REPRESENTATIVE AL GENTRY IS ONE OF MY FAVORITE DEMOCRATS.

HE'S A REALLY GREAT GUY.

>> YOU SAY THAT ABOUT SENATOR MAC McGARVEY.

>> WELL, SENATOR McGARVEY IS ALSO ONE OF MY FAVORITE DEMOCRATS.

I RESPECT HIM AND AGREE WITH A LOT OF WHAT HE SAID.

I'M FOR SPORTS BETTING P. THIS IT'S A NATURAL EXTENSION OF OUR HISTORY AND TRADITION AND HERITAGE DOING PARI-MUTUEL RACING AND HORSE RACING.

I THINK WE'RE WAY ATING OUR TIME TALKING ABOUT CASINO GAMBLING.

I'M THE ONLY REPUBLICAN TO EVER BRING THAT CONSTITUTION AMENDMENT TO THE FERRARO AND I'M NOT GOING TO DO IT AGAIN AND I SUGGEST WE DON'T WASTE TIME TALKING ABOUT IT.

AS TO THE SUCCESS TO LOCAL GOVERNMENTS I DON'T LIKE TO NEGOTIATE LIVE ON TV ABOUT WHAT GOING TO BE ON OUR NEXT TASK FORCE MEETING BUT I CAN TELL YOU I'M NOT GOING TO AGREE TO THAT.

THEY HAVEN'T TALKED NEE ABOUT IT AND I DON'T THINK IT'S AN ISSUE.

I EPT HAVE APPRECIATE REPRESENTATIVE GENTRY BEFORE A STATEWIDE AUDIENCE TO GET US TO AGREE TO THAT BUT I'M NOT.

>> EVEN IF YOU HEAR FROM KAKO OR KLS, VINCE E. SINCE WE HEARD OF IT, LET'S GIVE IT A SHOT.

>> I TALK TO THEM ALL THE TIME AND I HAVEN'T HEARD ANYTHING ABOUT THIS FOR THE FIRST TIME.

FINALLY WHAT I WANT TO SAY IS I THINK OUR TASK FORCE HAS DONE AN EXCELLENT JOB LAYING OUT THE FACTS ON THIS, AND I DON'T THINK THE CASE HAS BEEN MADE TO RAISE TAX RATES ON HISTORICAL HORSE RACING.

THIS IS A HIGH I TAXED INDUSTRY.

ONE OF OUR TWO SIGNATURES INDUSTRIES.

WE MUD BE APPLAUDING ITS GROWTH AND SUPPORTING -- SHOULD BE PLONGD ITS GROWTH AND SUPPORTING THE JOBS IT PROVIDES FOR 80,000 PLUS FAMILIES IN THE COMMONWEALTH OF KENTUCKY.

THAT'S A FAMILY FOUNDATION I CAN GET BEHIND.

>> WE'LL HAVE TO LEAVE IT THERE.

THANK YOU ALL FOR BEING HERE.

I THANK YOU, PAM THOMAS, FOR JOINING US BY SKYPE.

ALERT MORNING GIVING MOTHER, REPRESENTATIVE GENTRY.

YOU CAN JOIN US NEXT MONDAY.

WE HAVE A SPECIAL KET FORUM ON MATERNAL HEALTH AT 8 EASTERN, 7:00 CENTRAL ON KET.

BILL BRYANT WILL BE HERE THIS FRIDAY NIGHT AT 8s EASTERN, 7 CENTRAL TO TALK ABOUT THE NEWS OF THE WOK ON "COMMENT ON KENTUCKY."

UNTIL I SEE YOU NEXT TIME TAKE GOOD CARE.