Proposal to make big changes to Horse Racing Commission advances

This story has been updated to include a response from the Public Protection Cabinet.

FRANKFORT — Powerful GOP legislators are pushing to make big changes to the Kentucky Horse Racing Commission.

The Senate Tuesday passed Senate Bill 299, a bill that would make the Horse Racing Commission an independent organization like the Kentucky Lottery Corporation or the Public Service Commission.

Currently, the Horse Racing Commission is an independent agency attached to the Public Protection Cabinet for administrative purposes.

If the bill passes, the new organization would be called the Kentucky Horse Racing and Gaming Corporation.

The added independence would allow the newly formed corporation to spend funds without needing to get Public Protection Cabinet approval, said bill sponsor and Senate Majority Floor leader Damon Thayer, R-Georgetown.

Commission members would be appointed by the governor, as they are now, but the Senate would confirm members. That would introduce a higher degree of scrutiny for the commission’s members, Thayer said.

“It is a higher level of scrutiny that I think it's time the Racing Commission has because of the amount of money going through that agency,” Thayer said during a Tuesday morning committee hearing.

The legalization of historical horse racing and sports betting has increased the amount of money being regulated by the commission, Thayer added.

Current commissioners would become members of the board of the newly formed corporation until 2026, when the governor will appoint new members, who would then need Senate confirmation.

The bill would require the 15 board members to come from a variety of racing- and betting-related professions. They would remain unpaid, just as commissioners currently are.

Most provisions of the bill would take effect July 1, 2024.

Charitable gaming changes

Charitable gaming is currently regulated through a separate department within the Public Protection Cabinet but, if the bill passes, would be moved under the purview of the new racing corporation starting July 1, 2025.

The plan to move charitable gaming under the purview of the horse racing corporation drew criticism from lawmakers and a member of the public.

Mike Mulrooney is founder of Shirley’s Way Inc., a Louisville nonprofit that uses charitable gaming to raise money to help people with cancer. He said that electronic pull tab machines have helped groups that formerly relied more heavily on in-person events like bingo nights and festivals.

“The people who operate electronic pull tab machines … more than likely will be affected because you’re moving us under an industry that probably doesn’t care too much for what we’re doing and looks at us as a competitor,” Mulrooney told Senators during the Tuesday committee hearing.

Louisville Democrats Sen. Karen Berg and Sen. David Yates both said they received messages expressing concern over the potential charitable gaming move from church groups and nonprofits.

Transparency concerns

The bill’s rapid course through the legislature drew criticism from Democratic lawmakers and even one Republican.

The bill started its journey as a “shell bill” introduced by Thayer in late February. A shell bill is a short, placeholder bill that lawmakers later fill in with the real version.

That shell version got two of its three required readings in the Senate in March, before the real version of the bill was introduced.

The actual version of the bill got its first airing Tuesday morning during a joint meeting of the House and Senate economic development committees. It is around 280 pages long.

The Senate committee unanimously approved the bill. Despite voting for the bill, Sen. Reggie Thomas, D-Lexington, criticized the lack of transparency surrounding it.

“We shouldn't do anything under cover at night or with alacrity that prevents the public from having input in what we say and do,” Thomas said.

As of the time of writing, the bill had still not been posted on the Legislative Research Commission website for the public to view.

Thayer rejected concerns about transparency.

“I do feel like the topic has been in the public domain now for a couple of weeks," Thayer said, pointing to news stories, pointing to an earlier, different version of the proposal that had been attached to a different bill that is now stalled. "So the concept — it has started its transparent journey a while back."

“You'll just have to decide whether the process is more important to you or the product,” Thayer said.

The transparency issue came up again in the afternoon when proceedings were briefly paused in response to a comment from Sen. Adrienne Southworth, R-Lawrenceburg.

Southworth said that the online bill system legislators use did not include a copy of the bill, which would have prevented senators from reading it prior to voting.

After a delay, the technical glitch causing the problem was resolved so that legislators could view the bill and debate resumed.

What's next for Senate Bill 299?

SB 299 passed on a 26-11 vote on Tuesday afternoon. Five Republicans, including Southworth, joined most of the Senate Democrats in voting against the bill.

The bill now moves to the House for consideration. It must get House approval by Thursday to preserve the opportunity for legislators to override a potential veto by Gov. Andy Beshear.

It’s not clear what Beshear’s position on the bill is.

Besehar opposed Thayer's earlier version of the proposal, which would have attached the commission to the Department of Agriculture, but representatives from his office did not provide a comment on SB 299.

"The bill ... is yet another power grab from some lawmakers who wish to diminish the Governor’s ability to execute the laws of the state," said Kristin Voskuhl, a spokesperson for the Public Protection Cabinet.

Voskuhl said her agency is concerned the administrative services currently provided by the cabinet to the horse racing commission would be destabilized and employees of both the charitable gaming department and commission would lose their status as merit employees.

Thayer, who has a long history in the horse-racing industry, said it's unlikely he would ever want to be appointed to the newly formed racing corporation if his proposal succeeds. He does not plan to run for re-election and, on Tuesday afternoon, told reporters that he is much more likely to pursue the governorship, an idea he has floated before, than try to join the racing corporation.

Reach Rebecca Grapevine at [email protected] or follow her on X, formerly known as Twitter, at @RebGrapevine.

This article originally appeared on Louisville Courier Journal: SB 299 would make Kentucky Horse Racing Commission an independent corp