The Kentucky Senate passed House Bill 607 on Tuesday which, once signed by Governor Andy Beshear (D), would shift the rounding of winning pari-mutuel dividends from the dime to the penny. The House passed the measure on March 21 and concurred with the Senate's amended version.
The penny breakage provision would be the first of its kind in North American horse racing history.
“For more than a century, horseplayers have never received a full winning dividend and today the General Assembly in Kentucky affirmed that it is beyond time to change that and respect horseplayers anywhere betting on races from Kentucky,” said Patrick Cummings, Executive Director of the Thoroughbred Idea Foundation (TIF).
With few exceptions, pari-mutuel winning dividends are rounded to the nearest $0.10 for every $1 wager. A $2 bet that might return $5.78, for example, is rounded down to $5.60.
“Across just the last two decades or so, approximately $1 billion has been retained from winning bets across America. The passage of HB 607 will put some of this money back in the pockets and accounts of winning bettors in future bets.
“We are thankful for the leadership of bill’s House sponsors, Representatives Adam Koenig and Al Gentry, and Senator Damon Thayer in guiding its passage,” said Cummings.
Paying all customers to the penny has been an area of focus for TIF since its inception and was the first topic covered by a TIF white paper.
“This is a tremendous accomplishment and it’s particularly meaningful that Kentucky is going first when it comes to penny breakage,” said TIF’s founder and Glen Hill Farm CEO Craig Bernick.
The bill includes a standardization of taxation rates across pari-mutuel wagering, introduces the use of funds from the Kentucky Thoroughbred Development Fund for claiming races, and funds the Kentucky Horse Racing Commission through revenues generated by racing wagering and not the state’s general fund.
The tax standardization means ADW bets from Kentucky residents will be taxed at 1.5%, up from 0.5%.
“Horse racing must relentlessly pursue every method to make its product as competitive as possible,” said Bernick. “The market pressure on racing is stronger than ever with the rapid legalization of sports betting across the country. We hope that operators realize the importance of retaining all customers and driving their participation through the presentation of competitive racing with competitive pricing.”
The provisions of the bill, once signed, are due to take effect in August.