How We Got Here
The perspective of Kent Ostrander, Executive Director of The Family Foundation
How did Kentucky get into this mess? How do we now have new “casinos”, each with hundreds of these so-called “Historical Racing” devices, springing up all over the state and yet no legislator has ever voted, no legislative committee has ever authorized, no Senate or House Chamber has ever debated, and the people have never had a chance to ratify a constitutional amendment that legitimizes them?
The answer is a 25-year tale of the seductive and corruptive influence of the gambling industry. Gambling is once again being pushed, but before Kentucky puts any new policy in place for expanded gambling, we must first know from where we’ve come, where we are now, and where that policy might lead us. Let’s start at the beginning of this wave of gambling half-truths, which first began to rise in 1994 . . .
1994 - 2000
In 1994, two influential members of the Kentucky horse racing community knocked on my door at The Family Foundation and asked if they could take me to lunch. These are two nice individuals who are still involved with Kentucky horse racing and even more influential in their roles there today. (I have chosen not to identify them because I like them personally and these concerns are not about hurting anyone, rather for the pursuit of good family-friendly policy.)
At that lunch, at a well-known restaurant that caters particularly to the horse community, they proceeded to explain that there were forces at work in Kentucky to bring casinos into the state. They insisted that expanded gambling was NOT a good idea. Further, they said that The Family Foundation would be a helpful force against the drumbeat for casinos and asked that the organization join them.
Recognizing that they were more concerned about the competition for the available “gambling dollars” that the casinos would bring, I listened politely as they expressed their thoughts and concerns.
I explained that the purpose of The Family Foundation was to protect the family and the values that make families strong. It was NOT to forcefully tell people what they should do and what they should not do.
Their response surprised me — “Yes, but look what gambling does to the family.”
With that earnest assertion, I promised them I would look into it and get back to them.
After two weeks and a good bit of research, I got back to them with an affirmative. It was clear that gambling – particularly casino gambling – preys on the family. Businesses can’t gamble, corporations can’t gamble, churches can’t gamble, nonprofits can’t gamble – only individuals, many of them Moms and Dads – can gamble. The industry preys on the family. They were correct!!!
To be clear, horse racing is itself a form of gambling; however, at the same time its wagering cycles are at least 20 to 30 minutes apart – a far cry from the lightning-fast scramble for money in a casino’s rows of slot machines. So, we at The Family Foundation felt that we could join with them to keep that “crack cocaine” of gambling out of the state – without any doubt, casinos and their machines are carefully crafted to separate people from their money as quickly as possible.
I committed to stand together with them against the “casino invasion” and, in essence, we shook hands. Our cooperative work would prove to have a significant impact in the state for a number of years.
At the time I met with the two horse racing envoys, the Governor of the Commonwealth was Brereton Jones. Gov. Jones is a nice, pleasant man – a true Kentucky gentleman. He also was and is a horseman who understands what the casinos would do to the horse racing industry.
As Governor and after his tenure in the Governor’s Mansion, Gov. Jones joined with us in our efforts to stop the expansion of gambling, and particularly those addictive slot machines. He served the Commonwealth as Governor from 1991-95 and, prior to that, as Lt. Governor from 1987-1991. He wrote a personal opinion piece AGAINST expanded gambling in Kentucky that was printed in the Lexington Herald-Leader on June 8, 1999. Here are a few excerpts:
“Let’s get straight to the point. Casino gambling in Kentucky is a bad idea. The very thought of our own government promoting the deception of slot machines and roulette wheels is a sad commentary.
These casino ‘games’ are programmed so that the house cannot lose. Regardless of how much money you have, you are guaranteed to lose it all if you play long enough. This is absolute. We already have an abundance of gambling opportunities with the lottery, bingo and horse racing.”
“We justifiably frown on any person in our society who profits by deceiving others. We have an abundance of laws on the books to protect us from the deception of our fellow citizens.
How then, in the name of decency and common sense, can we justify proposing that our own government should enter into the business of promoting games of chance, where our own citizens have no chance for long-term success?”
“If we legalize casinos, a few managers, lobbyists and politicians will make a lot of money, and tens of thousands of Kentuckians will lose a lot of money. We are told, however, that the state will make $200 million to $300 million and that this can be used to do wonderful things for all of us. You name it and the casino money will pay for it.
Does this sound familiar? I remember a candidate for governor who was proposing a state lottery. His ads said, “What do you want – higher taxes or a lottery?” Kentucky voted for the lottery. We also got the state’s highest tax increase in our state’s history.” (See footnote)
“Please call your legislators today and ask them to vote no on casino gambling. Tell them to dispose of this issue during the first half of the next session of the General Assembly so that they will be free to do the important business of the people before they adjourn.
They must not allow this issue to monopolize their time. We can do better.”
Gov. Jones could not have said it better, from my perspective.
Together, the horse racing industry and The Family Foundation were able to push back the drums beating in the legislature for casinos and the resulting massive rip-off of Kentucky’s families . . . until just after the turn of the century.
Then there was a “turn”. . . in fact, the horse racing industry did a complete U-turn.
2000 - 2007
At some point, someone in the horse racing industry had a “revelation” – not just, “If you can’t beat them, join them.” But even more, it was, “If you can’t beat them, OWN them.” The seeds of that idea took root within Kentucky’s horse racing industry.
In 2004, Gov. Jones initiated the Kentucky Equine Education Project (KEEP) which was touted as a 501(c)3 nonprofit organization whose mission was/is:
“The number one goal of KEEP is to educate the public and key state constituencies about the multi-billion dollar economic impact the entire horse industry provides to all sectors of Kentucky’s economy, including breeding and racing, equine services, farmworkers, show horses and trail riding.”
Its stated mission is wonderful; however, its actual WORK has significantly been to expand gambling in the state, so that the horse racing industry profits . . . BIG TIME!
Yes, even Gov. Jones had a 180-degree change of heart. The former Governor was now FOR casinos.
Do not blame Gov. Jones. The fact is that Churchill Downs is actually a casino company and it was the primary influencer, pushing toward casinos within our state’s horse racing community. (Churchill Downs, for years, has owned six casinos in five different states, yet allows itself to be known in Kentucky primarily as The Host of The Kentucky Derby. Now, with these new “casinos” coming into Kentucky, they will own nine casinos in 6 states – three in Kentucky alone.)
Since the turn of the century, the Kentucky horse racing industry has acted like those of the 1845-1855 California Gold Rush – “There’s gold in them thar hills.” And that gold they seek is found in the saving accounts of Kentucky families. Their rainy-day accounts. Their college savings for their children. The money set-aside for a new addition to the house or for a new or a new-used car. Or even the kids’ lunch money.
Casinos were going to bring in so much money that there were legislative proposals in the General Assembly to have the state sell licenses to the highest bidders – $200 million, $300 million even $500 million for a single key gambling license. The concept was first sold as a “fund-raiser” for government (like The Lottery was first sold). Gov. Paul Patton was all-in.
Later it was sold as the salvation of the horse racing industry, which, according to casino advocates, was “sure to die” in a few years. (Without doubt, the horse racing industry, like other industries, faces challenges as times change, but to ask for a government-approved license to rip-off their neighbors to keep this, and I quote, “multi-billion dollar” industry’s engine revving is over the top!)
But The Family Foundation, along with the help of Nancy Jo Kemper and her work with the Kentucky Council of Churches . . . and with the help of the Kentucky Baptist Convention and its 2,400 churches . . . and with the help of key legislative leaders, including Senate President David Williams, the members of the General Assembly never felt they could REPRESENT their districts by opening the state to the ravages of casino gambling.
Year after year the legislature turned back the efforts – and some of them were MAJOR, TOP PRIORITY legislative efforts – to bring casino gambling into our Commonwealth. All of those efforts failed . . .
But then there was another leader that emerged on the Kentucky scene – Steve Beshear.
2007 - 2010
In the gubernatorial election of 2007, candidate Steve Beshear, like many politicians, chose not to elevate certain things about who he was. He emphasized that he “remembered singing in the choir” of his father’s church, but failed to re-elevate his and his wife’s substantial ties with Planned Parenthood, which had sunk his first run for governor in 1987.
One thing he did make clear was that he was FOR casino gambling and, just as important, that he committed to ultimately “Let the people decide” the issue. It was a brilliant campaign strategy: The Kentucky horse racing industry would support him in significant ways while the average voter would feel empowered because “they” would make the decision that had been so highly debated for seven years.
Unfortunately, he reneged on his promise to “Let the people decide” . . . in a number of ways, at a number of times.
First, examine his promise to “Let the people decide.” Practically, what it meant was that he would run (or have run) a Constitutional Amendment through the General Assembly and the people would be able to ratify it the following Fall election. Thereby, the people would have decided. (Note: Kentucky does not actually have a pure ballot initiative process in order to let people decide.)
If you think carefully, there was a natural pro-casino bias in this process. When Gov. Beshear said “Let the people decide,” what he actually thought was that the money and influence of the gambling industry would ultimately determine the ratification since it had much to win (billions of dollars) and those against casinos had nothing to win and no money to “invest” in a campaign against the Amendment’s passage.
But a Constitutional Amendment was never passed – no amendment could ever reach the required 60 percent threshold of legislators in each Chamber to place an amendment on the ballot – not in 2008, the Governor’s first Legislative Session. Not in 2009, nor in 2010.
Then, there was another twist.
2009 was a year for a “short, 30-day” Session. On the last day of the Session, there were two important bills that Senate President David Williams was waiting to be transferred from the House to the Senate. They never came, but instead, the House adjourned sine die – the 2009 Session was over! Williams was stunned. “These could have been passed!” was Williams's comment.
Shortly thereafter, Gov. Beshear called a Special Session and placed those two bills on the call. (The Governor alone can place legislative topics on a call for a Special Session.) Then, on the next day, the Governor added GAMBLING to the call.
This scheme was never reported, perhaps not even detected by the media. This tricky maneuvering is the Governor’s second violation of the promise to “Let the people decide.” Here is why:
Gov. Beshear, knew that by law no revenue-enhancing legislation can be passed during a “short” Session without a 60 percent threshold of legislators in each Chamber. However, in a Special Session, the legislature can pass revenue enhancing legislation with just a simple majority. And so, forces in the legislature held up those two (non-gambling) bills to give Gov. Beshear a REASON to call a Special Session. Gov. Beshear had a reason and he made the call. But THEN he added the issue of casinos to the call.
During the special session House Speaker Greg Stumbo provided the simple legislation (House Bill 2) and the Special Session was the opportunity . . . but the legislators STILL wouldn’t pass gambling expansion or authorize casinos!
One more betrayal of his campaign promise is coming . . . (But before his next violation, the 2010 General Assembly concluded with another failed effort by the Governor to pass gambling legislation.)
Beyond 2010... The Legal Battle Begins
Footnote: The Kentucky Lottery
Gov. Jones is referring to the fact that Wallace Wilkerson won the gubernatorial election in 1987 by edging out both of the two frontrunners, John Y. Brown and Steve Beshear in the primary. His tactic? He proposed a Kentucky state lottery that would fix all of the state’s financial woes and elevate Kentucky schools to new heights. Once he was elected and his plan implemented, it turned out that, though the money was promised to go to educational needs, it was simply placed in the overall general budget. Then shortly thereafter, adding insult to injury, the Commonwealth suffered the largest tax increase in its history at the hand of the General Assembly, which was trying to remediate the state’s financial problems
Late in the 1990s, after many broken promises, Lottery profits were finally earmarked for education in the form of scholarships for college students going to Kentucky state universities.
Unfortunately, as with all gambling enterprises, there have been grievous side-effects. Clearly, we all know that it is the poorer citizens of Kentucky who disproportionately play The Lottery. People with a 401(K) and who drive Cadillacs or Mercedes are not the people in line buying Lottery tickets at convenience stores.
And, we also know WHO goes to college: It is generally the middle class and upper class of Kentucky. So, what The Lottery has done is institutionalize taking from the poor to send the children of the middle class and upper class to college.
To make matters worse, the extra money for scholarships has enabled Kentucky universities to raise tuition costs without limit much of which has gone to build grand buildings and add high salaried administrative staff because they know The Lottery money will help their students make their newfound higher tuition costs.
Gov. Jones was right to condemn this kind of gambling debacle.