Horse Racing Bill Filed in Kansas House
If passed, the bill would make it easier for horse and greyhound racing to return to the state.
January 30, 2017
A bill that would make it easier for The Woodlands Racetrack in Kansas City to reopen was introduced on January 26 in the Kansas House.
The bill, House Bill 2173, has been referred to the House Committee on Federal and State Affairs, which introduced it.
Some of the bill’s provisions are similar to one that was sponsored by Sen. Steve Fitzgerald last year, but there are differences in the bill. The bill would apply to pari-mutuel tracks in Kansas, including three owned by Las Vegas casino owner Phil Ruffin, who was originally from Wichita.
The bill creates a privilege fee repayment fund and an escrow account repayment fund, which are both part of the state treasury to be administered by the Kansas Lottery. During discussion of Sen. Fitzgerald’s bill and in local meetings last year, a representative of the Hollywood Casino stated that an agreement for slots with The Woodlands could be a breach of contract by the state of Kansas. Kansas made exclusive gaming agreements with casinos in regions of the state.
One new provision of the proposed bill addresses the privilege fees that were paid by casinos in each gaming zone. For example, if The Woodlands receives a contract for slots machines, the Kansas Lottery would notify the Hollywood Casino facility manager that it would have 60 days from the effective date of the racetrack gaming contract to file or become a party to a court action asking for a judgment that the racetrack contract violates the provisions of the law and their agreement with the Kansas Lottery, or that the racetrack gaming contract creates a breach of the casino’s contract with the state.
At stake would be the casino’s privilege fee of $25 million, plus 10 percent annual interest. If a lawsuit is filed, the racetrack gaming manager would place the privilege fee amount, plus interest, into an escrow cash or surety bond, according to the proposed HB 2173. If the racetracks did not place this money in escrow, it would be a breach of their racetrack gaming contract, the proposed bill stated.
The bill also calls for $5 million to be placed into escrow with the Kansas Lottery by the casino managers if they commence legal action. If a court determines there is no breach of the casino contract, the $25 million would be released back to the racetrack manager.
If a court determines that the racetrack gaming contract violates the state law or creates a breach of an existing casino contract, the funds from the casino that are in escrow would be returned, and the racetrack surety bond being held in escrow would be used to repay any privilege fees or interest to the casino if it wins its case, according to the bill.
Another provision of the proposed bill would allow Wichita area voters to vote again on allowing slots at Wichita Greyhound Park.
The Woodlands closed in 2008 although slots had been approved at the horse and dog racetracks by the state. Owners of the tracks said at the time that they did not get to keep enough of the gaming revenues under the law that was passed.
The bill says 22 percent of the net electronic gaming machine income would be paid to the state of Kansas. The law passed several years ago called for 40 percent to go to the state.
The bill drops the amount the Unified Government would receive from gambling proceeds from the racetrack. The current law says the UG would receive 3 percent; this bill says 2 percent of the net electronic gaming machine income would be paid to the UG.
Ten percent of the net electronic gaming machine income at tracks where there is horse racing would go to a live horse racing purse supplement fund, under the bill. Seven percent of the net electronic gaming machine income at tracks where there is greyhound racing would go to the live greyhound racing purse supplement fund.
The bill also calls for .5 percent of the net electronic gaming machine income to go to the problem gambling and addictions grant fund; and 1 percent of the net electronic gaming machine income to go to the Kansas horse fair racing benefit fund.
The bill also creates the Kansas horse council fund with .1 percent of net electronic gaming machine income from the south central gaming zone.
House Bill 2173 says each racetrack facility would have a minimum of 400 electronic gaming machines at each facility, with the total maximum of 2,500 machines at all the racetrack facilities. The racetracks will pay $2,500 per machine to the state in a privilege fee.
The bill specifies at least 60 days of live horse racing, and at least 10 live races conducted each program at The Woodlands. It says the track must make an effort to conduct at least three live races for quarter horses each day and seven live thoroughbred races each day. There is no requirement for greyhound races.
The bill also outlines rules for simulcasting at the tracks.
A member of the Kansas Thoroughbred Association in Wyandotte County is optimistic about the bill’s chances of passing this year.
A legislative statement about the financial effect of the proposed bill was not yet available.
Last year, UG officials softened their stance on The Woodlands, and said one of their biggest concerns was for high quality development.
House Bill 2173 can be found on the state legislative website at www.kslegislature.org.
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