By: Tommy Staffieri

In September 2019, Churchill Downs, Inc. (“Churchill Downs”) announced a $200 million proposal to develop a thoroughbred racetrack, training ground, and gambling facility in Northern Kentucky.[i] Churchill Downs, in its application to (“KHRC”), targeted the winter of 2020 for traditional horseracing to take place at the proposed New Latonia Racing and Gaming Facility (“New Latonia”).[ii] Traditionally, however, the KHRC allocated the requested race days to Turfway Park, a racetrack located in Florence, Kentucky.[iii] The KHRC has an important decision to make by November 1, 2019, to determine the subsequent year’s racing calendar. [iv] The Commission must decide whether to go with tradition and award Turfway park those race days, as it has in the past, or grant the race days to Churchill Downs’ proposed New Latonia facility.

Kentucky Legislation delegates its power to regulate the standards and conduct of horse racing and pari-mutuel wagering to the KHRC.[v] The KHRC grants the privilege of horse racing to licensed entities and is responsible for maintaining high-quality racing throughout the Commonwealth.[vi] When determining the Commonwealth’s racing calendar, the KHRC “shall consider and seek to preserve the track’s usual and customary dates.”[vii] A traditional race schedule allows licensed racetracks to capitalize expended funds based on this consistent schedule.[viii] As commented by the Kentucky Attorney General, “the state cannot, without strong justification, deprive the track of its property interest in those dates.”[ix] Nevertheless, the discretionary power of the KHRC does not forbid rewarding concurrent race dates to two or more licensees if such an action would promote or improve the thoroughbred industry in the Commonwealth.[x]

Kentucky courts have granted the KHRC leeway when approving potential licenses, so long as “the proposed project would be in the best interest of the immediate community as well as the Commonwealth.”[xi] If a licensee abides by Kentucky statutory requirements,[xii] the KHRC is not required, but “merely authorized,” to grant the license.[xiii] The KHRC must not act arbitrarily. Instead, the commission must fairly consider the applicant’s evidence and adequately weigh the economic impact of the new license.[xiv]

Churchill Downs’ proposal for New Latonia specifically aims to galvanize economic development in the region and revitalize the Kentucky thoroughbred racing circuit.[xv] By stimulating $200 million of construction and creating over 1,000 job opportunities for the region, the project aims to spur economic development while also enhancing the Kentucky racing experience through live racing, year-round training, and historical horseracing betting machines.[xvi] Turfway has failed to install historical horserace betting machines on their grounds, despite KHRC’s previous requests.[xvii] The Kentucky Circuit’s revenue streams and purse sizes increased dramatically after racetracks installed the historical betting machines throughout the Commonwealth.[xviii] However, Turfway’s new ownership, Hard Rock International, pledges that $100 million in improvements and historical race wagering is part of a proposed improvement.[xix]

Turfway’s alleged promises for expansion, however, are unlikely to persuade the KHRC from rewarding Churchill Downs’ proposal for New Latonia. While Turfway’s plea against concurrent dates is valid, the KHRC, legislators, and much of the horseracing community view Turfway Park as “the weak link” in the Kentucky Circuit.[xx] Kentucky State Senator Damon Thayer, whose district includes Turfway Park, noted that Turfway is “decrepit” and an overall “embarrassment to Kentucky racing.”[xxi] Churchill Downs’ pledge to “protect and grow Kentucky’s thoroughbred racing circuit” in Northern Kentucky is specifically the type of economic development that the KHRC has the discretion to permit.[xxii]

While the Kentucky Legislation delegated its administrative power to regulate and maintain horseracing standards in the Commonwealth to the KHRC, [xxiii] the Committee is granted significant leeway when determining the appropriate licensure and race day calendar. [xxiv] Despite concurring dates, Churchill Downs’s proposal for New Latonia in the Northern Kentucky region will likely be approved by the KHRC due to Churchill Downs’ $200 million economic development and enhanced race day experience. [xxv] As Senator Thayor alluded, the Northern Kentucky region is in need of an additional “jewel on the crown of Kentucky horseracing.”[xxvi] The KHRC must determine if Hard Rock International, a hotel and casino conglomerate, or Churchill Downs, a gaming and racing corporation, can revitalize the Northern Kentucky racing community. Based on Churchill Downs’ tradition in the state of Kentucky and its ability to improve the Kentucky Horse Circuit through historical horse wagering, the KHRC should make a compelling wager to favor Churchill Downs in this race for Northern Kentucky.

[i] Mark Hansel, Churchill Downs Applies to Bring $200M New Latonia Racing & Gaming Thoroughbred Facility to NKY, NKY Tribune (Sept. 6, 2019), https://www.nkytribune.com/2019/09/churchill-downs-applies-to-bring-new-200m-latonia-racing-gaming-thoroughbred-facility-to-nky [https://perma.cc/NBX8-4NYY].

[ii] Id.

[iii] Id.

[iv] Ky. Rev. State. Ann. § 230.300(5) (LexisNexis 2019).

[v] Ky. Rev. State. Ann. § 230.215(2) (LexisNexis 2019).

[vi] Id.

[vii] § 230.300(5).

[viii] Hansel, supra note 1.

[ix] § 230.215 (See statute annotations for summary of OAG 82-436).

[x] Id.

[xi] S. Bluegrass Racing, LLC v. Ky. Horse Racing Auth., 136 S.W.3d 49, 54 (KY. Ct. App. 2004).

[xii] Ky. Rev. State. Ann. § 230.300(2) (LexisNexis 2019).

[xiii] Id.

[xiv] Id.

[xv] Sarah Ladd, Churchill Downs Will Apply to Hold Winter Races, Build New Facility in Northern Kentucky (Sept. 6, 2019, 2:59 PM), https://www.courier-journal.com/story/sports/horses/horse-racing/2019/09/05/churchill-downs-build-new-racing-facility-northern-kentucky/2226186001 [https://perma.cc/8SG4-YRYQ].

[xvi] Hansel, supra note 1.

[xvii] Id.

[xviii] Id.

[xix] Steve Watkins, Turfway Owner Fights Back in Horse Racing Battle, Cincinnati Business Courier (Sept. 11, 2019, 10:03 AM), https://www.bizjournals.com/cincinnati/news/2019/09/09/turfway-owner-fires-back-in-nky-horse-racetrack.html [https://perma.cc/K8R3-WXSD].

[xx] Victor Ryan, Amid Dates Debate with Churchill, Turfway termed a ‘Weak Link’, Horse Racing Nation (Sept. 11, 2019, 9:39 AM), https://www.horseracingnation.com/news/Amid_dates_debate_with_Churchill_Turfway_termed

_a_weak_link_123# [https://perma.cc/GZJ5-QP6B].

[xxi] Id.

[xxii] Hansel, supra note 1.

[xxiii] Ky. Rev. State. Ann. § 230.215(2) (LexisNexis 2019).

[xxiv] S. Bluegrass Racing, LLC v. KY. Horse Racing Auth., 136 S.W.3d 49, 54 (KY. Ct. App. 2004).

[xxv] Hansel, supra note 1.

[xxvi] Ryan, supra note 20.