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Churchill Downs and Keeneland announced a partnership to expand gambling into eastern and western Kentucky and promised they'll "create hundreds of new jobs, stimulate economic growth and generate funds to increase purses and breeder incentives." But if the deal ends up like so many communities lured by casino interests' pie in the sky promises, the economic gains are a bad bet.

To be clear, the main attraction isn't actual horse racing, but rather instant racing machines which are merely slot machines with names like Seven Sevens and Yukon Willie's Gold Rush. They include a tiny screen in an upper corner featuring the last seconds of a past horse race.

Track representatives put on their best poker face when they say "its just a horse race" that's being wagered upon. Which begs the question, "why would anyone bet on a horse race already run?"

The machines are more like Vegas than Keeneland.

In fact, a Kentucky Downs Google ad says "Vegas is closer than you think! Visit Kentucky Downs Gaming, just 30 minutes north of Nashville, for exciting Vegas-style gaming, dining, and more."

Interestingly, the tracks are doubling down on a previous bet that instant racing is legal. There's a pending legal case in Franklin Circuit Court to answer the dubious claim asserted by Kentucky Downs in 2011 when it began operating video slots without legislative approval.  Even though the legislature voted down various gambling expansion proposals over the last two decades, the Racing Commission magically determined in 2010 that instant racing was really pari-mutual gambling all along.

The kind of nonstop casino-style gambling proposed for Corbin and Oak Grove, acts as a drain on local economies.  They should look at how businesses were immediately impacted in Cripple Creek, Colorado and Natchez, MS.  When these communities banked on gambling, they paid the price in the long run.

Look closer to home in Metropolis, IL to see what happens to tax revenue in small communities dominated by outsized influences. In 1994, Harrah's promised to be an economic boon that would bring in a new revenue stream to the local government. Last year the county proposed to increase sales taxes in order to fix its rundown courthouse.

Something so obvious and brazenly problematic is that the success of instant racing expansion is based on a monopoly. Kentucky Downs President Corey Johnsen implied as much when he objected to the proposal because it "provide[s] undue competition to Kentucky Downs’ already-established and successful historical horse racing,…" In other words, Johnsen didn't want the proposed Oak Grove casino to cut in on "his" customer base.

Existing businesses forced to compete with casino style gambling end up paying a price. This is because casinos cannibalize discretionary dollars from the local economy. When they lure customers to play their games, eat at their restaurants and stay at their hotels, businesses without gambling are hurt.

Atlantic City is a textbook example of this. Within four years of opening in 1978, one-third of all retail businesses closed. Restaurants declined from 243 to 146 within ten years. By 1997, only 66 independent restaurants and taverns remained.

While businesses were hurt, crime surged in Atlantic City. Between 1977 and 1990, crime increased by 230 percent. Within three years of casinos, it was ranked number one in per capita crime in the nation.

Local officials and economic development professionals ought to resist promises of a new and easy revenue pipeline and ask the tough questions about what casino-style gambling does to local communities.  We all want economic growth and businesses to move in, but when some of the new players come in with a loaded deck, its time to put the brakes on.

This column appeared in the Sept. 25, 2017 edition of the News-Enterprise and the Sept. 29, 2017 edition of the Lexington Herald-Leader.



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Director, Commonwealth Policy Center