Legislation on Kentucky VLTs most likely is dead for this year, offering a chance to ponder Iowa

Unless a 50-to-1 longshot comes in when the Kentucky Legislature reconvenes for its one-day veto session on April 15, video lottery terminals will not be authorized for Kentucky's racetracks this year.

The rush to forge VLT legislation left little opportunity to consider the consequences of having slot machines at racetracks. The tracks wanted them, and they were willing to deal with the fallout after they had them. But the example of Iowa in particular provides some valuable lessons in what happens when government and racing interact over slot machines.

First, the horse industries in Kentucky and elsewhere must realize that the state is not authorizing the slots or VLTs for the benefit of the breeding industry or for the horsemen or for the tracks. States authorize gambling to benefit the state. Period. To quote from "Cabaret," "Money makes the world go 'round," and states need money to avoid raising taxes on the general population. Slots are an entertainment tax.

Sure, the industry may get some collateral benefit from the slots, and it may save an industry, as has occurred in Delaware, a shining beacon of the good results from slots at the track. Slots came to Delaware in late 1995 and made Delaware Park's purses the best in the Mid-Atlantic region.

But the principal beneficiary will be government. If Delaware is an example of the benefits from slots, Iowa is an example of how slots at the track can breed acrimony and how government can take an ever-bigger share of the revenue-and lust for more.

Slot machines at Prairie Meadows Racetrack transformed an operation at the brink of extinction into one paying average purses above the national average. Last year, the average pot at Prairie Meadows was $19,426, which was roughly $500 more than the national average of $18,936.

But the pie keeps getting smaller in Iowa, and next year the horsemen's share will shrink while the state's share will grow larger. This year, the state will take up to 32% of the gross win from Prairie Meadows' machines, and that will rise to a maximum rate of 36% in 2004.

The Racing Association of Iowa, which operates the track and casino, recently reached a tentative agreement with Polk County, the facility's owner, on a five-year, $100-million lease. So, who is the loser in this arrangement? The horsemen, of course. Purses at Prairie Meadows this year will decline 25%, from $20-million total to $15-million.

Before too many rocks are thrown at Iowa, though, it should be noted that Kentucky's rulers insisted upon 35% of the slots revenue. Previous drafts had money for community projects and 0.5% for the prevention and treatment of compulsive gambling. But the community money was stripped out and the allocation to prevent gambling disorders cut to a razor-thin 0.05%-all to feed the state's voracious appetite for money.

Similarly, New York is demanding such a big bite of the VLT revenue that New York Racing Association Chairman Barry Schwartz is unsure the machines could be installed at Aqueduct with an adequate financial return to NYRA and its horsemen.

A fair shake for horsemen is one issue and the voice of the people is another important consideration. This fall in Polk County, voters will decide whether to extend the mandate for slots at Prairie Meadows. While annoying to racing interests, the referendum provides the people with a voice in what occurs in their community.

Kentucky legislators tried to fashion the VLT legislation to avoid a public vote-despite a Bluegrass poll showing that 56% of voters approve slots. The commonwealth's attorney general, Ben Chandler, provided an advisory opinion in 1999 that the state lottery, which would administer the VLTs, cannot extend its games to machines. Without a constitutional amendment, lawsuits certainly would have kept VLTs out of tracks for years.

When the next opportunity occurs, Kentucky supporters of VLTs at the track should do it the right way, by backing a constitutional amendment and statewide referendum. Enabling legislation then must guarantee a fair share to horsemen and to the prevention of gambling disorders. Otherwise, in its dealings with the state, the Thoroughbred industry is making a deal with a powerful, voracious, and often fickle partner.