A bill which would yield the first substantial reform of how tracks in Kentucky are required to round payments on winning pari-mutuel bets was introduced in the Kentucky House of Representatives on Monday.

House Bill 607, sponsored by Representative Adam Koenig (R – Erlanger) and Representative Al Gentry (D – Louisville), introduces a series of tax reforms across all pari-mutuel wagering in Kentucky. The bill is the result of months of work and five hearings of the Pari-Mutuel Wagering Taxation Task Force, which Koenig co-chaired and was created in 2021 following calls to modernize tax rates for pari-mutuel betting after the Kentucky General Assembly formalized its support for historical horse racing (HHR) machines.

The bill includes a provision whereby dividends on winning racing wagers would be rounded to the nearest $0.01, instead of the nearest $0.10.

“As I’ve said during the debates in the task force, we’ve taken care of the trainers, the jockeys, the tracks, the breeders, the owners. The only people we have not taken care of with HHR are the bettors,” Koenig said on Friday during an appearance on Kentucky Racing Spotlight.

“Not only will it take care of the bettors, but I think it will be another step forward in making Kentucky [racing] the most interesting, most desirable product to wager on in North America.”

The quest to adopt penny breakage, returning the rightful winnings of horseplayers instead of unnecessarily rounding them down, was the central topic of the Thoroughbred Idea Foundation’s (TIF) first white paper, published in September 2018, and an area of ongoing advocacy. Issues related to improving pricing, transparency and rules harmonization, product development and access to information have been central to TIF’s mission to improve racing for its voluntary financial participants – horse owners and horseplayers.

TIF Executive Director Patrick Cummings testified in a November 2021 hearing of Kentucky’s Pari-Mutuel Wagering Taxation Task Force supporting a shift to penny breakage. The video of that hearing is below.

“This is an exciting step for horseplayers, not only in Kentucky but really anyone in America or around the world who bets into the pools offered on Kentucky racing,” Cummings said after the bill was introduced.

“We are hopeful for its favorable passage and, in the end, provide horseplayers with the most substantive reform of breakage provisions in American history. It is a great sign that Kentucky is leading the way and offer our great thanks for the support of Chairman Koenig.”


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