by Sara Gordon and Katie Petrunyak
Many of the nearly 250 people attending the Kentucky Thoroughbred Farm Managers Club's (KTFMC) monthly meeting, held Tuesday evening at the Keeneland sales pavilion, were unfamiliar with the unregulated and untaxed gaming machines known as “gray machines.”
The risk these gray machines pose to historical horse racing (HHR) gaming and the state's horse racing industry as a whole were the main topic of the meeting that included a discussion and Q and A session of Central Kentucky legislators. In a panel moderated by the Kentucky Equine Education Project (KEEP)'s executive director Will Glasscock, Senator Amanda Mays Bledsoe (Republican, Lexington), Representative Matt Koch (Republican, Paris), Senator Damon Thayer (Republican, Georgetown) and Senator Reginald Thomas (Democrat, Lexington, minority caucus chair) shared their opposition toward the expansion of gray machines in Kentucky.
“We have not forgotten what the legislature did for us in 2021,” Keeneland President and CEO Shannon Arvin recalled of the passing of SB 120, which continued the operation of HHR gaming, in her opening comments for the meeting. “We have to pay attention to what goes on in Frankfort. We can't just live in our own little world.”
The lawmakers on the panel introduced the growing issue of gray machines, which resemble slot machines but do not qualify as a legalized form of gaming in Kentucky as there is no oversight to their use. These machines, which are marketed as games of skill, are typically located in establishments such as gas stations, convenience stores and bars.
“They are illegal casino games,” explained Sen. Thayer, the Senate Majority Floor Leader. “The proprietors have a business model where they come into a state where there's a gray area in the law, they pay a lawyer to get a friendly opinion that says, 'Yeah, they're really legal.' And then they come in and try to get integrated in local communities.”
The meeting's legislators noted how there is currently no exact count of how many machines are in Kentucky because the machines are not required to be registered or tracked, but it is believed that there are already thousands in use and that their numbers are growing in every county across the Commonwealth.
Rep. Koch explained how the expansion of gray machines poses a major threat to the horse racing industry. While the majority of the revenue from these machines go to out-of-state gaming companies, revenue from HHR goes to support the state's signature industry: horse racing. He said that if gray machines remain, they could cripple the industry and decimate the jobs within it.
“It's going to end HHR. I don't think that's the type of gambling that Kentucky wants to see,” said Rep. Koch.
The panelists explained how these gray machines could also affect the communities they reside in, particularly when it comes to their impact on youth. Since the machines are unregulated, the lack of supervision creates the opportunity for minors to participate.
“You don't want to introduce [teenagers] to gaming at that age. That invites other sorts of bad actions. Keep them away from gaming and illegal activities, because one illegal activity begets another,” said Sen. Thomas.
Thayer said that other states are also working to confront the issues of gray machines. In Virginia, they have been the focus of 150 lawsuits, and in Pennsylvania, they were initially legalized but are now facing issues concerning a legal and regulatory gray area.
During the Q and A, attendees asked for further details regarding where gray machines come from and the entities behind them.
Legislators described how Pace-O-Matic and Prominent Technologies first brought the machines to Kentucky in 2021. The issue of their existence in the state was brought to the floor last year, where the legislature nearly outlawed them, but the House and Senate ultimately could not agree on the bill, so the effort fell short.
Representative Killian Timoney, the sponsor of last year's bill, was present at Tuesday's meeting and said that he will be filing similar legislation this week. Once submitted, it could take up to two to three weeks for a decision to be made as it moves through the legislative system.
The panel emphasized that now is the time for industry participants to reach out to their senators and representatives to help sway votes towards banning the use of gray machines in Kentucky.
“If you want to preserve this industry and see it continue to grow, you need to be ready to reach out,” said Rep. Thayer. “If it doesn't happen now, it will be harder next year as [gray machines] continue to expand like a bad virus.”
Glasscock shared details about the upcoming KEEP Day at the Capitol, set for this Thursday, Feb. 23, which provides members of Kentucky's equine industry and community an opportunity to share with legislators in Frankfort the importance of horses to their districts and to the state's economy. (Click here for more).
“We are on the ropes with this one,” said Rep. Timoney. “I don't know if you all can afford to not send someone to KEEP Day. The horse industry needs to be well-represented on Thursday. It's a signature industry and we need to protect it.
Koch further encouraged industry members to keep the conversation going with their representatives and senators–not only in their districts but across the entire state–concerning the importance of HHR, its impact on racing, breeding and sales and its overall significance to the state's economy.
“We need to spread a positive message of HHR. We're two years into this and it's doing great things for Kentucky. [We need to] reinforce to legislators not to strip that away.”
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