“Kentucky’s Gaming Boom: How Explosive Revenue Is Powering Bold Marketing Strategies”

The equestrian capital of the globe was never the wagering capital of the United States.

Kentucky remains so, but to quote former Turfway Park commentator Mike Battaglia, it’s “gaining traction.”

From 2007 to 2023, Kentucky consistently ranked at the bottom among the leading four states in American Thoroughbred racing concerning total handle. This dramatically shifted last year as Kentucky surpassed both California in total handle and Florida, securing second place overall behind New York.

It’s important to note that this transformation did not occur overnight. Kentucky is the only state among the big four that recorded less than $1 billion in handle during a calendar year this century, and this happened seven times in the eight-year period between 2010 and 2017.

Transitioning from a mere $890,338,434 in 2014 to last year’s unprecedented $1,769,565,470 marks a significant shift. The total in 2014 was so low that Kentucky’s handle was much closer to Louisiana and Pennsylvania, which ranked fifth and sixth, respectively, rather than to Florida in third.

The most substantial alteration came with the introduction of historical horse racing machines, initially through an executive order and later as legislation in February 2021. Penny breakage was introduced the following year.

The dual benefit of creating both a revenue source for industry stakeholders and a bettor-centric initiative is a major factor drawing horseplayers to the commonwealth.

Following the Covid-19 year of 2020, where Kentucky’s handle reached $1,000,921,104, the handle increased by 29.3 percent in 2021 and by 16.7 percent in 2022, before stabilizing somewhat with a 6.3 percent rise in 2023 and 10.1 percent in 2024. This marks a 98.7 percent upswing from the low of 2014. During the same period, New York experienced a decrease of 3.3 percent, Florida saw a rise of 6.8 percent, while California dropped by 28.8 percent.

“With the approval of the historical horse racing bill in 2021, I was optimistic that we’d establish the finest year-round circuit in North America,” stated Damon Thayer, Kentucky’s senate majority leader at the time, who concluded his legislative term last year. “I’m thrilled to witness that forecast coming to reality. The model we have here is exemplary for other states. The bill includes safeguards to guarantee protections for purses and horses.”

Kentucky racing statistics, 2014-24

“Unity is what we have in Kentucky,” Thayer concluded.

That unity extends beyond lawmakers to the personnel on the ground at racetracks, stables, breeding organizations, horsemen associations, and everything in between.

“All of Kentucky’s stakeholders, from the racetracks to the horsemen associations to the legislative officials, have diligently collaborated to establish Kentucky as a year-round racing hub,” said Gary Palmisano Jr., vice president of racing at Churchill Downs. “Consequently, the wagering product has significantly enhanced, and horseplayers have certainly taken notice.”

“There is no singular entity that oversees everything,” remarked Chauncey Morris, executive director of the Kentucky Thoroughbred Association, which aids in managing the Kentucky Thoroughbred Development Fund. “Great governance translates to great accountability, and the racetracks, horsemen, and government are all accountable to one another.”

“Kentucky is an extremely competitive environment,” he added. “We are the center of the breeding industry and Churchill Downs (Inc.), we have the country’s top horsemen and women, and all these elements function effectively together. The people here aspire to be the best, and while there is competition, we collaborate to make this the premier location for breeding and racing.”

There is undoubtedly ample competition at the entry box. The average field size was 8.1 during that low-point season in 2014 and peaked at a record 8.8 in 2023, then climbed again to 8.9 last year.

“You present full fields and promote the product, and people respond positively,” stated Jim Goodman, a former state worker now serving as the director of simulcast operations for Keeneland Association. “We’re excited to see other tracks in Kentucky thriving. It undeniably aids Keeneland, which has both racing and sales. The distribution of (historical horse racing) funds is beneficial for everyone. Every stakeholder recognizes the significance of one another in the business and to the state. When we succeed, so do those around us.”

Kentucky is performing so well that some express concerns about whether it might be excelling too much. While pari-mutuel handle isn’t precisely a zero-sum game, there exists a limit to the amount of money available for wagering.

“Kentucky stands out because everyone acknowledges the critical nature of Thoroughbred racing to this state, and I mean everyone—the government, the racetracks, etc.,” Goodman noted. “The closest resemblance I can think of is Arkansas with Oaklawn, where there is full support, which is invaluable, but it’s natural to ponder if this is occurring at the cost of other states. Our product is currently the best, and it’s continuously improving.”

Thayer has openly stated on social media and in this article that Kentucky will not engage in aiding other states, apart from breeding premier horses to race anywhere.

“It would be unlawful to allocate this money to any other state,” Thayer emphasized. “Look at the situations unfolding in California and Florida, and you just wonder what is happening. I’m weary of people claiming, ‘Things are too great in Kentucky; it should share its wealth.’ Then you observe these self-inflicted challenges in other places, and it’s baffling. You can analyze what we’ve accomplished and apply it elsewhere, but you cannot take from us.”

Regarding the available funds in Kentucky, the KTDF is partially financed by historical horse racing, providing incentives for breeders and owners, and allocating resources for racetracks to market their product effectively and enhance public relations.

For the fiscal year concluding on July 31, 2024, Kentucky racetracks and their satellite venues reported $9.6 billion in handle on historical horse racing, achieving a gross win of $872.4 million, with $55.5 million directed to the Thoroughbred fund.

“The KTDF advisory panel enables racetracks to utilize funds to attract horseplayers,” Morris noted. “All stakeholders, including the KTDF advisory committee, understand that optimizing Kentucky’s product is synonymous with increasing handle. It’s a systematic approach. Let’s enhance each racing day and maintain horses in Kentucky, creating the best product for wagering. This isn’t solely focused on purses for horsemen or funds for tracks. We are deploying this money strategically, thoughtfully, and methodically, which has contributed to handle growth.”