As Kentucky looks to fill an estimated $200m budget hole and shore up its ailing public pension systems, could casino gambling offer a solution?
Lawmakers in the Bluegrass State are studying proposals to amend the state’s constitution to allow for four casinos and expanded gaming at racetracks in order to offset the impact of budget cuts proposed by Republican governor Matt Bevin.
At the beginning of January, state representatives Rick Rand and Dennis Keene filed legislation that would allow voters to decide whether to legalise casinos by constitutional amendment.
Meanwhile state senator Morgan McGarvey has announced that he plans to file a casino bill with state representative Jerry Miller, aiming to “recapture some of the money that’s leaving the state”.
Under Rand and Keene’s bill, BR-197, the state lottery would handle the licensing process for the casinos, with the cost of a licence coming in at $50m for a 10- year concession. Following this, each licensee would pay an annual renewal fee of $6m.
Kentucky already allows parimutuel gambling – a form of betting in which all winning bets share the total pool – at specific horse racing venues.
“The atmosphere is more receptive right now,” Keene stated. “The historical racing revenue has brought in about $3.5bn since 2011, with $11m going to the state.
“That shows you how much revenue potential is out there.
“Kentucky’s lottery gambling is highly successful and by expanding existing gaming venues to allow for casino-type games, we will grow a new revenue source to help us catch up on the pension shortfall.”
The process for applying for a casino licence would be similar to that of Massachusetts with potential casino operators bidding for casino licenses in a tender, overseen by the lottery.
Prior to this, local municipalities would have to approve each casino proposal via a voter referendum.
“Initial licence fees for casinos would generate a one-time $325m, followed by $236m annually. That would be a great step in the right direction toward decreasing our pension shortfall,” Rand stated.
Kentucky’s public pension systems are currently more than $40bn short following years of underinvestment.
“Do voters want to allow the new revenue from expanding gaming to build the pension fund or would they rather have cuts made on the backs of the state’s over 100,000 retirees?
“It’s time to put the gaming issue on the ballot so the public can have their say on this issue,” he added.
Despite the need for additional revenue streams, governor Bevin has come out strongly against casino gambling, arguing that it “is not proven to work for states that have done it.”
“So a lot of toked-up people gambling, that’s the solution for Kentucky?” he asked, speaking to WHAS radio, referring to proposals to legalise marijuana and expand gambling in the state.
“I would say no and no. Not while I’m governor. Those are sucker’s bets.”
At present, five out of the seven states bordering Kentucky offer casino gambling.
“We’re losing revenue across those borders,” said James Hibbitts, one of the partners in a proposed new casino development in Eastern Kentucky.
Raven Rock Lodge and Resort would be situated on Pine Mountain, above the city of Jenkins, and includes a 150,000 sq ft casino and 300-room hotel, along with an adventure park.
“I do believe it’s got a chance because of the time we’re in,” Hibbitts added.
Meanwhile, the town’s mayor, Todd DePriest and other supporters of the proposal believe a casino would attract tourists from other areas and could create hundreds of jobs.
“We’ve got to make a play on getting people to come to the mountains,” he said.