Kentucky Instant Racing Revenue Nearly Doubles Year Over Year

• Kentucky’s instant racing industry generated $2.05 billion in handle during FY 2018.
• Instant racing machines, a.k.a historical horse racing machines, use the pari-mutuel wagering model.
• The legality of instant racing is being challenged at the Kentucky Supreme Court.

LOUISVILLE, Ky. – Though heavily criticized by anti-gambling advocates, Kentucky’s instant racing machines are completely non-controversial in one major aspect: their popularity is skyrocketing.

There are four instant racing venues in Kentucky, and their most recent combined annual handle – $2.03 billion – was roughly 85% higher than the previous fiscal year’s $1.09 billion.

While great for operators and gamblers, it’s also a positive boon for Kentucky’s tax coffers. In FY 2017, instant racing generated $16.4 million in tax revenue for the state. Last year, that number nearly doubled to $30.4 million.

Given how long instant racing has been around in Kentucky, this growth is staggering.

The pastime has been available in Kentucky since the first instant racing machines were installed at Kentucky Downs in 2011. However, the seemingly sudden uptick in interest is due to two main factors.

First, the famed Churchill Downs launched its Derby City Gaming venue in Louisville in September 2018. Between its ribbon-cutting and the end of the fiscal year, Derby City Gaming’s 995 instant racing machines turned a handle of over $670 million.

Second, the new national excitement around legal sports betting seems to have propelled the instant racing concept to new heights. Gambling – in all its guises – is more socially acceptable than ever before, and betting of all types have lost much of the stigma associated with the activity.

The FY 2018 handle for Kentucky instant racing breaks down among the state’s four venues as follows:

• Kentucky Downs Gaming, Franklin – 753 machines, 931 million (28.9% gain)
• Ellis Park Racing and Gaming, Henderson – 179 machines, $98 million (19.8% gain)
• The Red Mile, Lexington – 902 machines, $328.7 million (14.3% gain)
• Derby City Gaming, Louisville – 995 machines, $670 million (N/A)

A fifth instant racing venue will be joining the fold in the coming months. The Louisville Thoroughbred Society is slated to open its doors in early 2020.

Still, there are those who claim that instant racing machines should be illegal in the state.

Kentucky does not allow casino gaming, and anti-gambling advocates say that instant racing machines qualify as that legally barred form of entertainment.

For those who might be unfamiliar with instant racing machines, these systems are designed to look and feel like traditional casino slot machines, with all the literal bells and whistles.

However, they are able to be installed and enjoyed legally in some states that otherwise disallow gambling machines or casino gaming. Kentucky is one such state.

Generally speaking, instant racing machines are not legally considered to be gambling machines because they aren’t based on random outcomes and are not house-banked.

Instead, all instant racing betting is pari-mutuel in nature and is based on historical horse race results. This is why instant racing machines are also known as historical horse racing, or HHR, machines.

In Kentucky’s case, HHR machines have been determined to be legal at the circuit court level. However, The Family Foundation of Kentucky has appealed its challenge back to the Kentucky Supreme Court, which previously upheld the circuit court’s ruling.

Unless the state’s highest court reverses its original decision, you can expect the Kentucky HHR renaissance to continue galloping full speed ahead.

News tags: Churchill Downs | Derby City Gaming | Ellis Park Racing and Gaming | HHR | historical horse racing | instant racing | Kentucky | Kentucky Downs Gaming | Louisville | Louisville Thoroughbred Society | The Family Foundation of Kentucky | The Red Mile