Sneak Attack With Equilottery

By Richard Nelson

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February 17, 2015

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Yet another devious means of increasing gambling is in the works here in Kentucky.  The Lottery has proposed a new game called EquiLottery which although opposed by The Family Foundation, sailed through Committee to the floor of the Senate where it passed on a 20-10 vote.  The Senate is usually the last bulwark against gambling expansion, but this time they were sucked in.

EquiLottery would be run by the Kentucky Lottery.  It would be a $2 bet where the computer automatically selects your three numbers.  The three numbers feed into a selected track for a selected race over which you have no control.  If the horses wearing the selected numbers finish in the same order the numbers were selected you win.  All other tickets are losers.  On a two dollar bet one dollar goes to the Lottery into a special bonus pool where the bonus is based on the number of winning lottery tickets on the race.  The track receives the other dollar which goes into the pari-mutuel pool for that race.  The track holds its 14% (or 17%-20% if this is considered an exotic bet) and the payout is the same as picking the top three finishers in order.  The pool is larger than normal and the payout higher, so the bettors think it is a good deal, even though the odds are long.

The vendor claims EquiLottery exposes horseracing to a new millennial audience, that it has a social party element, and that it will capture 3.4% of the Lottery sales, or $27.2 million, half of which would go into pari-mutuel pools. ( http://www.equilottery.com/media-kit.html )  The vendor also claims that horseplayers will increase their betting on the selected pools because of the increased size of the pools.  One race per day from a Kentucky track would be selected on most days without a special race.  The vendor also claims that Lottery sales will increase from horse players drawn to the Lottery.  So, supposedly everyone wins.  The only way this could work is if everyone increases their betting and new gamblers are drawn to the Lottery.

Senate Bill 74 still has to pass the House.  While the House is generally more supportive of gambling, they are also opposed to anything coming from the Senate.  Since this bill will supposedly generate revenue, it is supposed to originate in the House.  Some House members may regard this as a usurpation of their role and defeat it on principle.  One Senator raised the issue that since revenue would go to horse racing and not education, the bill was a further erosion of the purpose of the Lottery.

I have not presented all the projections for growth and benefits to the tracks since the projections are almost always inflated.  The vendors also project a 50% to 70% increase in horse racing revenue, which is highly unlikely.  A survey conducted in 2012 indicated that 29% of non-lottery players would be more likely to buy tickets to benefit the tracks.  This also seems unlikely.  However, if passed you would be able to bet on a horse race from any convenience store in the state, without handicapping, of course.  No other state has accepted this innovation.

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Director, Commonwealth Policy Center