BOXING A SUN-TZU EXACTA IN THE KY GUBERNATORIAL ELECTION

Surprising Headlines: Nixon Goes to China, 1972. Williams Accepts Alternative Gaming for Kentucky, 201?

In order not to offend readers of different political persuasions, Horse Racing Business scrupulously endeavors to avoid the subject of politics, except when it squarely impinges on the horse-racing industry. This is one of those times.

The following is not intended to promote any political candidate, but rather, is a dispassionate analysis of  a few possible scenarios for advancing the legalization of racetrack video lottery terminals, aka slots, in the Commonwealth of Kentucky.

________________________________________________

“Keep your friends close, and your enemies closer.” Sun-tzu 

For over a century, the Bluegrass region of Kentucky has been the undisputed center of the Thoroughbred breeding and sales industry in the United States and Louisville is home to America’s most famous race. The “undisputed” claim is imperiled, for two reasons. First, the U. S. foal crop is declining because of economic conditions in general and a precipitous decrease in pari-mutuel handle in particular. A downturn in the foal crop affects Kentucky the most of any state. Second, Kentucky law does not permit alternative gaming. As a result, racing states that offer slots-enriched purses and lucrative breeding incentive programs have increasingly been able to entice owners and breeders to move some of their stock out of Kentucky to greener pastures, so to speak.

The top elected official in Kentucky who is a proponent of alternative gaming is Governor Steven Beshear. In fact, expanded gambling was his principal campaign pledge in 2007 when he was running for office. By contrast, the major elected official in Kentucky who is an opponent of alternative gaming is Senate President David Williams. He has successfully blocked all legislative efforts to advance alternative gaming and, in so doing, has kept Beshear from fulfilling his campaign promise.

The mano-a-mano political fighting between Beshear and Williams has now moved to center ring: They are presently the nominees of the Democratic and Republican parties, respectively, for governor. The election takes place in November 2011.

Of course, the Kentucky racing and breeding industry is obviously behind Beshear and united in opposition to Williams. Not so fast, it is not that cut and dried.

During my recent stay in Saratoga, a Lexington-area horseman from a very well-known farm told me that he and “lots of others” in the racing enterprise are quietly supporting Williams’ candidacy. I replied that I was under the impression Williams was intensely disliked by the Kentucky racing fraternity. He said that is mostly correct but that the prospects for alternative gaming will be better with Kentucky racing’s enemy number 1 as governor than as senate president; in his words, “supporting Williams is just a business decision.”

He explained that if Beshear is re-elected, the slots stalemate will last at least another four years and maybe beyond because Williams (or someone with similar views) will be senate president. Kentucky’s racing industry, in his view, does not have four years to limp along without alternative gaming. Beshear’s win will turn out to be a Pyrrhic victory. On the other hand, if Williams wins, he will desperately need money to operate the cash-strapped state. Therefore, he will say that while he is personally opposed to slots, he will reluctantly accept them in the best interests of Kentucky…or at least agree to put the question to a referendum.

The more I thought about his counterintuitive reasoning, the less outlandish it seemed to be.

Later, back from Saratoga, I contacted a couple of Kentuckians actively engaged in the Thoroughbred business and asked them if they had heard this same contrarian  reasoning. Indeed, they had.

Here is the overriding question: Would the Kentucky breeding and racing industry be better off (or worse off) from 2012-2016 with David Williams as governor or as senate president?

It seems a leap of faith to imagine that a Governor Williams would be receptive to legalizing alternative gaming or putting it to a statewide referendum. Yet, a defeated and perhaps bitter Williams will almost certainly be opposed to alternative gaming if he remains as senate president and he will continue to be Beshear’s nemesis.

Kentucky horse-industry voters and money donors face a conundrum. If they don’t support Williams financially for governor and he loses, he owes no favors at all and may be vindicative. If they support him financially and he wins, he may well dash their hopes on the racino issue but he might not if the state budget is bleeding red ink. If they support Williams financially and he loses, there is at least some chance that he would reciprocate by removing himself as an obstacle to legalizing slots.

Reputable opinion polls predict a decisive Beshear win in November. However, Kentucky racing interests are  in a “choose your poison” position. If Beshear wins, the status quo most likely prevails (no slots) and if he loses Williams is no longer in the state senate but is governor.

Putting emotions and personal feelings about the candidates aside, a prudent hedge would be for slots proponents to box an exacta and generously donate to both campaigns because the most probable scenario is that Beshear and Williams will still be power brokers after the election. If not, Williams will be the new governor and Beshear will be retired.

Corporate executives and political action committees often contribute money to both sides of the political aisle for a very compelling economic reason. Sun-tzu’s sage advice continues to resonate in the 21st century.

Copyright © 2011 Horse Racing Business

Comments

  1. You are right on, we can exact our pound of flesh from Williams or be smarter than that and play both sides of the street. Ordinarily we could choose our candidate and throw our resources behind him. In this case that won’t be intelligent cause the probable loser (Williams) will still be standing and powerful.

  2. Beshear has been one of the worst govs ever in Ky and Williams has been one of the worst senate presidents. Nice job dems and repubs. Penn., NY etc. must be waiting with anticipation as Ky racing moves North.

  3. I can’t say much for williams after what he has done to ky racing but I already held my nose and sent him a check…and made sure to include a note so that he knew it came from a guy that depends on racing for a living. Haven’t heard back yet.

  4. ratherrapid says

    Kansas got slots in 2006 from a primarily republican legislature after republican opposition since the year 1990. this happened because 1. horse racing interests finally figured out it is counter productive to vilify the opposition particularly in view of legitrepublican anti-gambling arguments, and 2. after the anti-republican grousing ceased, the republicans after a few years eventually came to see race track slots as potential revenue. unfortunately our good horse racers lacked the basic smarts to include in the bill state takeout w low enough to permit the woodlands to continue to operate. Woodlands closed because state slot takeout was too high to make racing there profitable.

  5. Bluegrassman says

    Beshear continues to dangle the hope of slots in front of wealthy race horse owners to get their $. In a second term, he will do as he pleases and leave the horse owners high and dry. Beshear can’t get many of the Democrats to support slots much less Republicans. He is a flim-flam man and the horse owners in Ky. are his suckers.

  6. Bill Shanklin says

    According to Standard & Poor’s, Kentucky is one of six states with the poorest credit rating (here is the link for an article in Barron’s http://finance.yahoo.com/banking-budgeting/article/113401/good-bad-ugly-barrons?sec=topStories&pos=8&asset=&ccode=). This means that the state needs all of the revenues it can get its hands on…slots is one source.

Speak Your Mind

*