by Tom LaMarra, USTA Web Newsroom Correspondent

Lexington, KY — The Kentucky Supreme Court ruled on Thursday (Feb. 20) that the Kentucky Horse Racing Commission has the authority to promulgate rules for historical race wagering — also called Instant Racing — but also reversed a lower court ruling that said the Kentucky Department of Revenue can tax the form of wagering.

The case will return to Franklin County Circuit Court for further legal action.

Kentucky statute repeatedly refers to “live” racing when it comes to the pari-mutuel tax. The Supreme Court referenced that in its unanimous ruling.

“The legislature has imposed a tax upon wagering at live racing,” the opinion reads. “The same law bases the amount of the tax upon the money ‘wagered on live races at the track.’ We simply cannot bend and stretch the English language far enough to refer to a machine that displays video recordings of Thoroughbred horse races that occurred in the distant past as live racing. Nothing in the statutes indicates that the legislature intended for us to do so.”

Instant Racing machines, currently in place at Ellis Park and Kentucky Downs in Kentucky, resemble video lottery terminals but, according to an opinion from the state Attorney General’s office and the KHRC regulations, are pari-mutuel in nature. The results of on-screen video games are triggered by the outcome of previously run horse races.

Other tracks in the state, including The Red Mile in Lexington, have held off installing the devices pending clarity from the courts. It remains to be seen how the latest ruling will impact tracks currently using the machines.