If British racing’s senior leadership needed inspiration on how to engage effectively with politicians and lawmakers while rallying against a proposed betting tax rate hike, they might like to look at what’s happened in Kentucky over the past few years.
Granted, the US system is very different to the UK – each state has its own rules and regulations on gambling – yet the message about different groups working together to achieve meaningful change is one that should be heeded.
In 2021, a bill was passed on gaming terminals known as Historical Horse Racing (HHR), which are designed to resemble traditional slot machines – the most popular form of casino-type betting in North America – but are not considered as such.
Explicit casino gambling is illegal in Kentucky, but HHR wagering, which takes place in gaming halls and is based on the results of old horse races, falls into the pari-mutuel category.
The take on these machines, which are owned by the major racecourses, is huge – Kentucky’s HHR business generated more than $9.6 billion in handle during the 2024 fiscal year – with each track allowed one extension (an additional facility/gaming hall) within 60 miles of the racecourse.
A proportion of the revenue generated is directed towards raceday purses, with the result that Kentucky offers some of the best prize-money in the USA, attracting elite runners from around the world.
Damon Thayer was pivotal to Senate Bill 120 getting the green light during his time as Majority Leader in the Kentucky State Senate. He explains how the industry united to support the legislation.
“HHR had operated in Kentucky since 2011,” explains Thayer, a lifelong racing fan who has horses in training with Harry Eustace in Newmarket. “It started to grow, and we saw some purse increases, but then in 2020 a Kentucky Supreme Court reversed its decision on the legality Damon Thayer, pictured with Mystik Dan, pushed hard for legislative change in Kentucky of HHR and opined that for it to continue, it required an act of the legislature to put it permanently in the statutes.
in a moment of crisis, they all came together
“I knew it would be difficult, but not impossible, to rally the troops in a short period of time and pass that legislation. In the short term we got a stay, so the machines didn’t have to shut down.
“In America, as in Britain, we often have disparate goals with different groups and sometimes they work against each other or don’t work together. But in a moment of crisis, they all came together – breeders, owners, horsemen, jockeys, tracks – to form a massive, grassroots lobbying campaign, where we had citizens contact their legislators and tell them how important the horse industry is to Kentucky.
“It’s nearly 100,000 jobs, $3-4 billion in annual economic impact, and is central to tourism and farmland preservation. People know that Kentucky is famous for horseracing and bourbon – it used to be fried chicken! – which are part of our history, tradition, and brand.
“The bill passed narrowly in the Senate, and it passed the House of Representatives with a little bit more of a comfortable margin before it was signed into law by the Governor.
“Subsequently I chaired a task force on pari-mutuel wagering; we adopted the recommendations which set a 1.5 per cent tax rate on all pari-mutuel bets – live, simulcast, historical and advanced- deposit wagering [online]. We set in statute amounts that would go to the Kentucky Thoroughbred Development Fund (KTDF).
“The base purse is what everyone runs for, then on top of that you have the KTDF supplement, which is basically an incentive for people to buy Kentucky breds and race them in Kentucky.
“The certainty of knowing HHR is now in statute has precipitated a huge boon.”
In 2022, Churchill Downs Inc. purchased Ellis Park having previously bought Turfway Park in 2019, boosting purses at both tracks as well as investing heavily in its Louisville property, home of the Kentucky Derby.
we’re seeing big-name trainers like Brad Cox, Mike Maker and Steve Asmussen
With Keeneland and Kentucky Downs – an all-turf venue that races over seven days in August and September – also hosting top-class action, Kentucky’s star continues to climb.
Thayer continues: “One of the things I predicted within a few months of the bill passing is that in just a couple of years, Kentucky would have the best year round circuit in North America. That prediction has come true. Oaklawn may have better purses during the winter, but they don’t race year-round.
“Now we’re seeing big-name trainers like Brad Cox, Mike Maker and Steve Asmussen leaving a significant number of their horses at Turfway for the winter instead of taking their horses to New Orleans, Hot Springs, Miami or Tampa.
“Part of the argument I made to my fellow legislators is that we would create a year-round ecosystem for horseracing in Kentucky that would grow the economy. We’ve done that. We see people staying in Kentucky all year.
Kentucky Downs offers the kind of riches rarely seen on this side of the Atlantic
“In the past, Keeneland and Churchill Downs hosted the elite meets, then the sort of bastard children were the winter meets at Turfway and summer meets at Ellis Park. Now we see big-name horsemen leaving a string of horses at Turfway in the winter and instead of taking everything to Saratoga in the summer, they leave a big string in Kentucky to race at Ellis Park.”
For European horsemen, Kentucky Downs offers the kind of riches rarely seen on this side of the Atlantic. The turning, undulating turf course has been attracting a growing number of British and Irish raiders over the past few years, with some notable success stories.
In 2023, Jim and Fitri Hay’s Ancient Rome (right) pocketed $1,176,600 when taking the Grade 3 Mint Millions Stakes, while last year, the Andrew Balding-trained Bellum Justum, owned by King Power Racing, earned over $1 million with his victory in the Grade 3 Nashville Derby. By contrast, the son of Sea The Stars took home £70,000 following his success in the Group 2 Jockey Club Stakes at Newmarket in May. Do the math, as they say in America.
The international nature of racing was highlighted at Royal Ascot in June, with Churchill Downs CEO Bill Carstanjen and Executive Director Gary Palmisano Jnr in attendance, along with Keeneland CEO Shannon Arvin and Kentucky Downs Ancient Rome: collected over $1 million at Kentucky Downs, an all-turf venue in Franklin owner Ron Winchell.
“They have a presence there because they want more horses to come over and race in Kentucky,” says Thayer, who has now stepped away from life in the Senate after 22 years. “It’s a global sport and betting is important. “It all comes down to field size. Every track wants to average nine to ten runners per race because American bettors love larger fields. We do have a problem with field sizes in America right now. There are 33 state racing commissions and multiple ownership entities –and we have some states with self-inflicted wounds.”
While the horseracing industry in Kentucky is yet to achieve its true potential according to Thayer – “believe it or not we’re still in the introduction phase with HHR and our operators are all seeing growth” – plenty of other states are not doing so well. Could Kentucky’s success act as a blueprint for others?
your parliament risks making horseracing non-competitive for its operators
“We have presented the rest of the US with a model which can be replicated,” says Thayer, who is currently working with a handful of other states, including Florida and Iowa. “I want Kentucky to be number one but it’s also important for other racing and breeding programmes to thrive.
“My message is clear – over the next five to ten years, the states that have a good relationship with their state legislators will do well. Those that don’t have less of a chance of doing well. ”
As for British racing and its current struggles, Thayer has some words of advice.
“If you raise the tax rate, your parliament risks making horseracing non-competitive for its operators,” he says. “That affects the entire ecosystem, including all the jobs and economic activity and the taxes it generates.
“I’ve been a fan of British racing since I read my first Dick Francis book as a teenager. I spent ten weeks of overseas study in London in 1986 and went racing every week – I saw Dancing Brave’s 2,000 Guineas victory and West Tip and Richard Dunwoody win the Grand National. I also met Steve Cauthen – now we’re good friends in Kentucky.
“The two biggest things in Britain right now are affordability checks – they’re not sustainable for the industry – and the proposal on raising the tax rate, which is a terrible idea.
“Every government official who thinks they need more revenue, the first thing they look at are the sins – gambling, alcohol, and smoking. Raising taxes on gambling, which is a high-volume, low-margin business, is a bad idea. If you tax something more, you’re going to create less of it. They risk putting some racecourses out of business and some bookmakers too.
“The margins are going to shrink and it’s going to become more expensive for people to [go racing], whether it’s a Thursday afternoon at Royal Ascot, Monday night at Windsor, or Sunday at Pontefract. All of these courses are part of the economic ecosystem that drives British racing and breeding; the government should hopefully understand that taxing it more is going to create less
of it instead of creating more revenue, harming something that is integral to the country’s history and tradition.”
Thayer adds: “As I keep telling legislators in other states, there has to be legislative certainty for commerce – in this case the horseracing business – to thrive. Hopefully your members of parliament would be open to the same message.”
