Kentucky Tracks See Big Jump as Wagering on Historical Racing Machines Tops $2 Billion in FY19

Posted on: July 20, 2019, 09:05h. 

Last updated on: July 20, 2019, 09:05h.

Thanks in large part to the addition of a Churchill Downs-owned parlor, the total handle for instant racing in Kentucky jumped by more than 85 percent in the 2019 fiscal year, which ended on June 30.

Cars fill the parking lot at Kentucky Downs, one of four locations to offer betting on historical racing machines. The Franklin, Ky., venue, located on the Tennessee border, generates the most revenue of all the state’s parlors. (Image: Kentucky Downs)

Instant racing machines, also known as historical racing (HHR) machines, have the look and feel of a slot machine. However, the result is determined by the outcome of a previously run race. Bettors can either select an entry or have the machine play the horse with the best odds.

Patrons at the four venues in the state bet nearly $2.03 billion last year, up from the $1.09 million wagered the year prior. Similarly, the tax revenue went from $16.4 million for fiscal year 2018 to $30.4 million last year. Of that total, $13.5 million went to the state’s general fund, while the remainder went to thoroughbred development and other equine-related funds.

The big boost came from the opening of Derby City Gaming in Louisville. Churchill Downs Inc. opened the venue on the grounds of the old Louisville Downs harness track in mid-September. Despite the late start to the year, Derby City Gaming and its 995 machines still generated nearly $670.3 million in wagers.

Handles Increase Elsewhere

The state’s three other parlors enjoyed banner years as each saw their handles increase from 2018.

Ellis Park in Henderson saw a 19.8 percent handle increase as its 179 machines generated bets nearing $98 million last year. The track was recently sold to New Mexico-based Laguna Development Corp. (LDC), which plans to invest more than $50 million in the track over the next year. A portion of that will be to expand the HHR facility and potentially add up to 900 machines.

There’s no secret that really the gaming is where the opportunity is for this property because that will also sustain the racing,” said Skip Sayer, LDC’s sales and marketing chief during at a Friday news conference at the track.

In Lexington, the Red Mile, the local harness track that runs a parlor in partnership with Keeneland, saw its 902 machines generate more than $328.7 million in bets last year. That represented a 14.3 percent increase from fiscal year 2018.

Kentucky Downs retained its position as the state’s top parlor. Last year, the Franklin track’s 753 machines generated more than $931 million in wagers. That’s a 28.9 percent increase from fiscal year 2018 for the venue on the Tennessee state line, less than an hour away from Nashville.

More Growth Taking Place

HHR revenue should continue to grow in Kentucky in 2020 and beyond. Not only is Ellis Park looking to drastically expand its facility, but Churchill Downs and Keeneland broke ground earlier this year on Oak Grove Racing and Gaming. The $150 million venue, under construction on the Tennessee border in western Kentucky, is scheduled to open next June and hold up to 1,500 machines.

However, the Kentucky Supreme Court has announced it will take arguments on whether the slot machine-like games are legal in the state. The Family Foundation of Kentucky has challenged whether the machines truly meet the definition of pari-mutuel betting. Casino gaming is illegal in the state.