House OKs bill sets flat tax rate for mutual betting

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The Kentucky House on Monday passed a law that would set a flat tax rate for every pari-mutuel bet placed in a state known as the horse capital of the world.

The measure, sent to the Senate on a vote of 66 to 29, would keep the tax rate unchanged for historic horse racing slot machines. Critics called it a bad deal for the state, with Democratic Rep. Lisa Willner saying the tax rate is “outrageously low” on the rapidly proliferating machines.

The bill would set a 1.5% tax rate on all pari-mutuel bets – including bets on live races at the Kentucky track, simulcast bets on races at other tracks and bets with advance deposit. The state currently has different tax rates for various forms of betting.

Republican Representative Adam Koenig said the bill positions the horse racing industry for more growth

“We’re going to make Kentucky the most desirable place if you want to bet on horses in North America,” said Koenig, the bill’s lead sponsor. “And that’s going to create more revenue, that’s going to create more opportunities for our leads.”

The provision maintaining the 1.5% tax rate on historical horse racing betting has sparked opposition.

Slot machine-style machines generate “huge industry profits for the powerful few” while contributing “a tiny fraction of what a reasonable proposition would raise” to state coffers, Willner said. She likened the current tax rate to “leaving a $15 tip on a $1,000 banquet.”

Historical racing machines allow people to bet on randomly generated past horse races. Games usually show condensed horse racing videos. The tracks reinvested a portion of the revenue to make the Kentucky horse racing circuit more competitive with casino-backed tracks in other states.

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