• TheGamblingScam

2008 - 2010 Articles

Updated: Nov 6, 2019

Gambling pushers exaggerate again

Every year they increase how much money they’ll “raise” and how much “good” casinos will do.


Because gambling and casinos have made such a negative impression in the minds of most Americans, proponents must come up with all the “good reasons” to allow them into the state to target the assets of families in order to “sell” the idea of expanded gambling to citizens. The number one reason that is invariably offered is that casinos “raise revenue” for the state. Today, not only are those who are pushing casinos talking about “raising revenue,” they are also raising the amount of revenue they say they can generate in order to be more convincing.


This practice is not new and it’s certainly not new to Kentucky. When the Lottery was first introduced in Gov. Wallace Wilkinson’s gubernatorial campaign of 1987, proceeds were going to be used to fix the K-12 education system and keep us from having to raise taxes to do so. Unfortunately, within one year after the implementation of the Lottery, the General Assembly felt that they had to raise taxes and did so to the tune of the largest tax increase in Kentucky history.


And, of course, the Lottery proceeds were never earmarked for primary or secondary education. They were eventually given as college scholarships to qualified students. Since most “qualified” students come from middle- and upper-class homes, we have tragically created an institution that takes money from the lower socio-economic sector and transfers it to the more-wealthy among us. This is one of the sad, unintended consequences that always accompany high-dollar, get-rich-quick schemes.


In the same way, the Lottery was sold with exaggerated promises, so is the current effort to expand gambling through the introduction of casinos. It’s interesting that just 14 years ago, casino proponents said that they could raise $160.6 million. Today they say the figure will be $500 million – over three times the amount. That projection is particularly questionable given the fact that neither the economy nor the assets of Kentuckians have grown threefold since that time.


“BIG Picture” questions

QUESTION: With Kentucky being one of the nation’s poorest states, do the casino pushers really think Kentucky families can afford to lose $1.429 billion each year so the state can get $500 million (35% of the $1.429 billion)?


QUESTION: If state government really needs to raise revenue, why would it ask a notoriously unscrupulous industry to raise it?


QUESTION: And worse, why would it allow that industry to keep 65% of the “revenue raised” (the money lost by citizens)? The state already has a tax system that, if legislatively directed to raise taxes, would allow the state to keep 100% of the revenue raised. (Then citizens would only be out $500 million, not $1.429 billion.)


QUESTION: If Kentucky families must lose $1.429 billion dollars every year in order to generate $500 million for the state’s programs, how is the state going to assist all the people who lost the $1.429 billion when it receives only $500 million? And in particular when that $500 is already promised to one program or another?


QUESTION: Given Kentucky’s current strengths and weaknesses, if 1000 consultants were brought to our state so each could offer his/her best suggestion for a new plan to move us forward, would ANY of them say: “Kentucky needs a casino ‘entertainment system’ that will have its citizens losing $1.429 billion each year”?


QUESTION: If the role of government is to create an environment where its citizens can prosper, why is the government getting involved in promoting a gambling system that will encourage its citizens to lose their wealth? (And then rely on government for even more assistance?)


History should not be repeated

Because our forefathers already paid the heavy cost of unrestricted gambling . . . and they knew we should never go that way again.


In Kentucky, the last four Attorneys General have issued opinions regarding whether a constitutional amendment is required to allow casino gambling in the state. Three said it is required; the current Attorney General, Greg Stumbo, maintains it is not.


But more important than the opinion of an attorney general is the overwhelming evidence of damage that unrestricted gambling brings. It is that evidence – and, in particular, the historical context that had our forefathers ban casinos in our state Constitution – that offers the most convincing argument against the expansion of gambling today.


In the early 1800s as U.S. cities grew, lotteries spread, offering hope, however forlorn, of at least a temporary escape from poverty. By 1832 at least 420 lotteries were drawn in eight states, taking in over $66 million dollars – several times the federal budget. From there, they spread rapidly from state to state, much like the casino movement of today. In less than 30 years, 24 of the 33 states would have conducted a lottery.


However, there was so much corruption that, in 1833, Massachusetts and New York banned all lotteries. Pennsylvania did so in 1834, and by 1844 nine more states followed this lead. The trend of legal restrictions culminated in federal legislation in 1872 that authorized the Postmaster-General, upon collection of sufficient evidence, to deny delivery of registered mail and money orders to “fraudulent” lotteries.


But the seeds of the next major wave of gambling that was to sweep the nation were already planted. On Aug. 11, 1868 Louisiana approved a lottery by means of over $200,000 in documented bribes. Tickets were sold nationwide. At its peak, the lottery took in $28 million per year on the monthly lottery and $22 million more on the daily lottery. The promoters made $5-$6 million a year after expenses and bribes. They used their profits to buy sugar refineries, banks, cotton presses, newspapers and land, which placed hundreds of jobs at their disposal. Bribery was openly practiced. The lottery was more powerful than the legislature and the judiciary in Louisiana. On Sept. 18, 1890 the federal postal legislation of 1872 was extended to all lotteries. The Louisiana Governor vetoed an 1890 bill for a new lottery. An override failed by one vote in the Senate but was approved by the Supreme Court after senate leaders changed the vote after adjournment. In 1892, with destitution rampant, Louisiana voters elected a legislature which closed down the lottery altogether.


In 1891 when Kentucky revised its constitution, it joined the many other states that banned all forms of gambling constitutionally because of the disastrous effects unlimited gambling had on the people. Kentucky made an exception for gambling only on horse races; hence, the reason for the need to amend the Constitution to expand gambling now – in order to go back to what Kentucky has already rejected at its highest level.


Since 1962, with the growth of gambling in 48 of 50 states, the parallel growth of influence peddling is evident as was the case in the1800s. Citizens have frequently seen elections where pro-gambling candidates triumphed using campaign contributions of over 80 times that of their opponents. In a 2006 local Kentucky senate race, $50,000 was given by gambling interests as one block of influence.


Gambling interests have become the largest political donors when there are gambling elections at stake. Examples of corruption and political manipulation came to a head on the national level in the Bureau of Indian Affairs and in lobbying Congress with the Abramoff affair. In Kentucky, there has been the BopTrot bribe scandal, the replacement of an entire Lottery Board, and the total replacement of the racing governance.


With the casino movement making headway across the nation, the peak of a new wave of corruption is approaching that will eventually bring voter revulsion and another revolution concerning gambling. If citizens cannot learn from the history of gambling greed, then Kentucky is headed toward a repetition of the sordid past.


Imagine the whole boat rising

The misappropriation of time and energy for casinos is a waste of the state’s social and economic capitol.


Imagine for a moment if all the time and energy spent in recent years deciding whether to expand gambling in Kentucky had been invested instead in developing sustainable economic strategies for the Commonwealth. This misappropriation of time, this poor investment of social and intellectual capital, might have alternatively been devoted to improving our public education system, developing our workforce, comprehensively reforming our antiquated tax system, or restoring discipline to outlandish “re-election spending.”


Here we are though, and the issue is highly important for all Kentuckians, gamblers and non-gamblers alike. The scholarly data is conclusive when it comes to proximity to gambling: the more venues, the more addicted gamblers. And more addicted gamblers mean higher taxes for non-gamblers as other businesses lose revenue, families go bankrupt, crime increases, and public assistance programs grow.


Our Commonwealth will only ever be as well off as the least among us – the very same demographic group most attracted to the seductive false hope of casinos. When their conditions worsen, the more fortunate of us pick up the tab. As their conditions improve, our whole boat rises. Rather than invest in improving our collective economic condition, some suggest allowing a business that can only worsen the conditions of economically disadvantaged Kentuckians.


Promoters of the Casinocrat agenda are a narrow special interest comprised of prospective casino owners, others who stand to financially benefit, and pro-casino politicians addicted to developing new sources of campaign contributions. These same politicians enjoy governmental spending, whether it’s necessary or not. They love ribbon cuttings on overpriced luxuries, while our schools become more crowded, our bridges creak, and our roads devolve. They suffer from a courage deficit when it comes to increasing spending discipline and catalyzing fundamental change in taxation.


The only other supporters are the “gamers,” those who consider losing money and getting nothing in return to be entertainment. And today they have more opportunities to do that than at any point in history.


Now we hear the casino crowd, wrapped in their perverted view of our state Constitution, wailing “Let the People Decide.” They are in fact suggesting that we undermine the integrity of our representative government. In reality, the Constitution provides the legislative process for the in-depth analysis required by complex public issues, which affords elected officials opportunities to become educated on the issues they consider, a critically important feature of our democratic system.


Few have considered why we have a constitutional prohibition on casinos. Our current Constitution was ratified in 1891 in the wake of numerous cases of governmental corruption by gambling interests throughout the country. Our elected officials and the voters of our state recognized the need for controlling these corruptive influences.


Direct democratic activity like a referendum on casinos requires an educated populace for the common welfare to be served. Casino promoters are familiar with our electorate, and they know many people will vote with false hope for the big windfall, when in fact they are considering a new tax. Our Constitution requires our elected officials to convince the electorate of the need for new taxes. It prohibits them from sidestepping this fundamental obligation by levying shadow taxes like casinos. And casinos are indeed a new tax in Kentucky. Kentuckians put money in, while casinos and government take money out.


Instead of devoting so much energy to repeating the mistakes of our past and expecting different results, imagine what we could accomplish by developing new opportunities for constructive and empowering economic activity, restorative and sustainable development, progress and promotion, growth and giving. Imagine the whole boat rising.


John-Mark Hack

Say No To Casinos


Racinos: Sleight of hand once again!

Now they’re proposing a horse racing millionaires’ bailout with citizens’ money but WITHOUT their vote.


With an incredible reversal, gambling proponents in Frankfort are now pushing a bill to significantly expand gambling in Kentucky without allowing the citizens to have the say in the matter. Newly elected House Speaker Greg Stumbo’s House Bill 158 authorizes video slot machines at the horse race tracks and circumvents the much-touted constitutional amendment, which legally has to be voted upon by the people of Kentucky.


Over the last several years all of the major gambling expansion leaders have promised a constitutional amendment. Leaders of the Kentucky Equine Education Project (KEEP) have consistently maintained the need for a constitutional amendment. Even former Gov. Brereton Jones, as chairman of the KEEP Board, assured the media and observers at his news conference on the Capitol steps on Sept. 26, 2005, and many times after that event, that there would be an amendment process so citizens would have their say if gambling was to be expanded.


More recently, Gov. Steve Beshear has firmly held for an amendment. His comments include his early statements on Jan. 17 and Feb. 20 of 2007 when he was competing with other Democrats for the gubernatorial nomination of his Party, as well as his statements through his election bid against Gov. Ernie Fletcher in the Fall of 2007. His convictions were confirmed in his amendment proposal as Governor during the 2008 General Assembly.


Of all the Attorney General opinions on gambling in Kentucky, legal opinions have always sided with those who believe a constitutional amendment is required to introduce casino-style games. Among these are the articulate opinions of Attorneys General Ben Chandler and Chris Gorman, who, in 1999 and 1993 respectively, both opined for an amendment. Only Stumbo, as Attorney General in 2005 and now the racino bill’s sponsor, has written an opinion that concludes otherwise.


Legal scholars say that Stumbo’s argument is basically a “literalist argument.” In essence, because the Kentucky Constitution of 1892 does not use the word “casino” exactly, he concludes it does not ban casino games and they can just be placed “under the lottery.” There are problems with his argument:


First, there were no such things as casinos in America at that time so that exact word could not have been used.


Second, historically, America had been ravaged by all kinds of games of chance that had taken such a toll on individuals, families and government (through corruption), that all the states were banning all gambling at that time. Only a few states, including Kentucky, kept horse racing legal.


And last, no one can say that when the people voted in 1988 to pass a constitutional amendment authorizing the lottery that they had been informed that they were voting on what could be twisted into authorizing casino-style gambling.




With the one arm gone, they’re still bandits

Electronic video slots are designed to separate you from your money so you can “play until extinction,” as the industry boasts.


In the worst economic recession since the depression, the new racino plan offers existing race tracks unlimited access to a completely unregulated industry. Observers point out that it is nothing more than a feeble attempt to disguise plans to bring full-blown casinos to Kentucky.


“These machines are designed from the ground up to exploit people,” said Les Bernal, Executive Director of the national organization StopPredatoryGambling. “Slot machines have been widely labeled the ‘crack cocaine’ of gambling. They offer no tangible economic value: owners don’t have to pay them wages or benefits, provide meals or breaks, and they work 24 hours/7 days a week.”


Video slot machines have been clearly documented as the most addictive form of gambling. According to research by Dr. Natasha Schull at the Massachusetts Institute of Technology (MIT), the slot machine industry calculates the video, audio and ergonomic design characteristics of their products to get players to “play to extinction.”


That “play to extinction” philosophy, rooted and articulated by individuals within the casino industry, represents the worst of what can happen and is exactly what is behind the current proposal. According to Bernal, government’s promotion of predatory gambling has led to one in every 25 Americans suffering from full-blown gambling addiction or a serious problem with gambling.


The legislation under consideration places no limits on the number of slot machines each race track could have and ensures that they would not be subject to regulation by government agencies. Most astoundingly, the “Slot Barn” plan, so named by opponents, calls for the creation of a new race track in an industry that by its own account is struggling. The new track would only have to offer racing 16 days a year, but could offer 24-hour, year-round access to the gambling industry’s most addictive product.


Establishing such parlors at Kentucky race tracks also paves the way for complete casinos in the Commonwealth. The process is simple, as citizens get addicted to these machines, politicians get addicted to the tax revenue they produce, which comes clearly from middle- and low-income citizens.


“Once the camel’s nose is in the tent, it’s impossible to keep him out,” said Bernal.


Let us reason together

Kentuckians thrive on common sense and wisdom.


As the debate about bringing “casino-style” gambling to Kentucky race tracks heats up in Frankfort, the down-to-earth Kentucky people look for some plumb line truths to hold on to. Here’s a small collection that may help and which will be best implemented with one caveat of wisdom: the state motto – “United We Stand, Divided We Fall.”


“In politics, nothing moves unless it’s pushed.” The idea that Kentucky needs casinos or casino-style gambling clearly didn’t come from the people of Kentucky. Sure, some might desire to gamble, but this issue is and always has been generated by those who will profit the most. Who are these people? Two distinct groups: #1 The would-be owners of the casino or racino establishments (who are already some of the wealthiest citizens in the Commonwealth), and #2 The politicians who believe they can build their own political kingdoms with the contributions that result from their support. According to them, the everyday Kentucky citizen must only do his “small” part: lose.


“The poor beg on the street corner; The rich beg in the halls of power.” This is almost a corollary of the previous wisdom. The powers that be are working in Frankfort to make sure the wealthiest among us have access to the wealth of the least among us. This year, they’re even articulated arguments to keep the everyday citizen from voting on the issue if video slots are indeed coming to Kentucky.


“Government should never profit by encouraging its citizens to lose.” Government should profit only after its policies help the people prosper. Telling Kentuckians we can gamble ourselves into prosperity is literally like telling someone to pull themselves up by their own bootstraps. It is foolish at best and deceptive at its core.


“Many legislators value their job more than your welfare.” Many legislators would rather ask the citizens of Kentucky to lose $700 million every year through the racino gambling scheme in order to get $245 million for state government. Why? (They could simply act to raise taxes $245 million.) Because they’re afraid they will be voted out of office if they raise taxes. Instead, they’d rather tell you that you need to gamble and then give the $455 million to their casino “comrades in arms,” with future assurances.


Should we be bailing out millionaires?

Kentuckians generally support the “Sport of Kings,” but they don’t want it funded by the peasantry.


It has become an annual rite in Kentucky to unveil casino legislation at the beginning of every annual legislative session. Every year, casino advocates stand proudly in front of their shipworks to introduce the newest version of the S. S. Fleece Kentuckians for the Public Good. They christen it with a bottle of champagne (or is it bourbon?) and watch it slide into the water, at which point it promptly hits the iceberg of reality and sinks.


In past sessions, casino legislation has had trouble making it out of the State House of Representatives. Several times, it hasn’t even managed to make it out of committee.


This year is no different. Or perhaps it is.


On the one hand, the captain of this year’s ship is an accomplished legislator whose skills in political navigation are legendary. Newly elected Speaker of the House Greg Stumbo (D-Prestonsburg) is being hailed as the man who can keep casino legislation afloat and get it passed an unfriendly State Senate.


There is certainly something to be said for Stumbo’s political capabilities, but his bill, House Bill 158, poses some intractable problems for casino advocates. The first problem has to do with what the bill would do. The second problem has to do with who it benefits.


HB 158 proposes to turn horse tracks into slot shacks. It would allow tracks to install video lottery terminals, machines with excellent reputations for emptying the pockets of low-end gamblers. They are the crack cocaine of the gambling industry, since they are not only more efficient at taking money, but are the most addictive form of gambling.


The bill’s advocates claim that there are enough Kentuckians willing to be lured into playing these machines to produce $700 million in revenue. There are two problems with this claim.


The first problem is that it is hard to see how, given the economy, any gambling scheme can produce this kind of revenue. The gambling industry has been hit harder than most other industries by the financial crisis, since the discretionary income that is the target of casinos has evaporated. A rising number of casinos are declaring bankruptcy, and their stock values have plummeted. People just aren’t gambling like they used to – because they can’t.


The second problem is that, even if you could produce this kind of revenue from expanded gambling, it would involve a level of increased gambling that is quite simply staggering. If you take a calculator to it, you quickly discover that $4.67 billion will have to be wagered in order to produce the $700 million the bill’s proponents promise. That is over $1,000 wagered for every year for every man, woman, and child in the state.


And where will this money – wagered mostly by those much lower on the economic ladder than those who commonly attend horse meets – go? HB 158 requires some of the money to go to the government. But over 65 percent of the money would be designated for the horse industry.


One of the main arguments for the bill is that it would help the horse industry, perhaps Kentucky’s signature industry. The first problem with this argument is that it’s hard to conceive how bringing in massive mechanized gambling that takes the focus off of horses will help the industry – and the culture based on them.


But even if the bill did help the horse industry, it is hard to understand the logic of taking money from those lower on the economic ladder and giving it to those on a much higher rung. By what argument do you support taking money from the economic class that is having trouble paying its mortgages and giving it to people who pay hundreds of thousands of dollars for a horse without blinking?


HB 158 is quite simply the “Millionaires’ Bailout.” Kentuckians support the “Sport of Kings,” but they don’t want it funded by the peasantry, particularly at a time of economic crisis.


Will the gambling boat make it out to sea this year? Kentuckians will first have to be convinced that they really should support bailing out an industry that includes not only wealthy Kentuckians in its ranks, but Arab Sheiks who, despite the troubled economic times, still have their private 747s.


As for me, I’m betting on the iceberg.


Martin Cothran

The Family Foundation


A Special Session is called. Are slots next?

The battle over expanded gambling has raged for years; now it has shifted to by-passing the people in a Special Session.


After years of strong debate, various proposals of casino legislation, and advertisements about how much good expanded gambling will do for Kentucky, the theme has taken an almost surreal turn. A Special Session has been called during the sleepy summer months and the plan is slots with some in the legislature wanting to bypass the citizens they always claimed to serve.


What is next on this roller coaster ride?


Though Gov. Steve Beshear did not focus on the “slots-at-the-tracks” bill in his call for the Special Session, everyone in Frankfort knows that he can easily raise the stakes and elevate the issue, even after June 15, when the session has begun.


“We can’t take any chances,” said Kent Ostrander, executive director of The Family Foundation. “Once gambling is authorized and gets its roots down, there is no stopping it, or the destruction it brings.”


Foes of gambling expansion are concerned about what legislative games might be played once the Special Session has begun. In times past, testimony against such legislation has been limited or denied altogether.


Martin Cothran, spokesman for Say No To Casinos is upbeat. “I’m optimistic that the people of Kentucky will see it and react to it for what it is: An unconstitutional bailout of some of Kentucky’s wealthiest that will bring harm to the families of this state.”


“The entire concept of this slots-at-the-tracks plan is bad – it’s predatory gambling pushed by government onto its own citizens.


AND, this course of action is bad – it’s a deliberate attempt to by-pass the people,” said Ostrander.


The Special Session could extend for more than two weeks but legislators are hopeful to be done before the Fourth of July weekend. Some simply want to cut the budget like businesses and families are having to do in a time of recession, rather than trying to extract more funds from their constituents via gambling and enlarge government.


Others are committed to expanded gambling as the answer to Kentucky’s economic woes, and this time its slots at the horse tracks.


The ultimate question is whether the people will engage. That will determine all.



Some things to ask about . . .

Why has the Governor not been fully open about his intent to include the “slots-at-the-track” bill in his Special Session?


You would think that with this mammoth expansion of gambling ($676 million to $1.2 billion to be lost annually), we would have had all of the details for weeks before the call for this Special Session.


When those pushing expanded gambling say “We can raise ‘X’ million dollars,” who do they include in the word “We”?


It seems like it’s “We politicians” can get this much money out of the people. Or it’s “We politicians and track owners” can get them to lose this much. It just doesn’t seem that they are including “us” – the ones that have to lose.


Why does Churchill Downs not have the money it needs to boost its purses to a competitive level when it advertised just several years ago of investing $121 million to renovate its facilities?


You would think that they would have better managed their assets. That makes this whole thing feel like a bailout for a mismanaged corporation that is being paid for with losses from everyday Kentucky citizens.


And if Churchill Downs wants to help government so much by “raising revenue” through slots, why did they deed over all of their property to the City of Louisville for 25 years and rent it back for $1 a year to avoid paying property taxes?


Yes. That’s right. Churchill is not currently paying property taxes on the $121 million of improvements AND the previous value of their holdings. Every other business is paying property taxes. Why does Churchill Downs now need more of the citizens’ money?

Why do those pushing gambling always exaggerate their claims as to how much will be “gained”?


The primary bill sponsor, Greg Stumbo, has said $1.2 billion annually. The Legislative Research Commission estimates about half of that – $676 million.

Is it possible that the horse industry has poorly marketed itself and is asking us to fix their poor business strategy?


Maybe if the horse industry marketed “horse racing” rather than just “gambling” they would draw new clientele –- Racing IS the sport of Kings! (And gambling isn’t.)


Why did they say “Let the people decide” last year and now pushing a bill that keeps citizens from having a real say in the decision?


It seems that they’ll say whatever they have to in order to get what they want! The fact is that they failed with the constitutional amendment that is required by law and they’re now settling for something less.


If Kentucky already struggles with addictions to alcohol, substances like meth and oxycontin, tobacco and even food (obesity is rampant), why are we even considering the introduction of slot machines?


Slot machines are regarded as the crack cocaine of gambling. It looks like the drive for money is more important than the care for the people of Kentucky. The whole concept seems to be to place machines around the state that will extract funds from the players at a rapid rate and have a very small staff to keep the machines working.


The Family Foundation pledges legal action

At a May 28 Frankfort news conference, Kent Ostrander pledges court case if the Special Session authorizes slots.


Editor’s Note: Copied below are the prepared remarks offered by Kent Ostrander, executive director of The Family Foundation, at a news conference at the Capitol.


“My purpose today is to speak in an affirmative way to assure Kentuckians that their case will be heard and, more importantly, that their place will not be forgotten. Though we wish no ill to Kentucky’s horse industry, there are those using it who want to rob Kentucky citizens of their assets through slot machines. In pushing to get their way, they are trying to rob those same citizens of their constitutional right to participate in this major decision for the future of the Commonwealth.


The Family Foundation is committed to seeing that the constitution is upheld and will take legal action if the Governor calls a Special Session, adds expanded gambling to the call for the Session and oversees the passage of gambling expansion via the current unconstitutional slot-at-the-tracks plan.


The passage of any law, whether simple statute or constitutional amendment, has both a substance and a process component. We have always opposed the substance of expanded gambling efforts because it has government encouraging its own people to lose so that it (and its close friends) might gain. But with this effort, the process has been commandeered and is in violation of our state’s most important body of law – the constitution.


Allow me to digress into the details of the problem:


Please understand, both the letter of the law and the spirit of the law – of the State Constitution – are being violated by the current slots-at-the-tracks effort.

Regarding the letter of the law, the Constitution, as amended in 1988 by The Lottery Amendment, clearly forbids slot machines:


Section 226 Article 3 explicitly states, ‘Except as provided in this section, lotteries and gift enterprises are forbidden . . .’


The question can then be raised, ‘Does the lottery section authorize slots-at-the-tracks? Here is the actual ballot language of the 1988 Lottery Amendment:


GENERAL ELECTION NOV. 8,1988 CONSTITUTIONAL AMENDMENT

#1: Shall Section 226 of the constitution be amended to provide that the General Assembly may establish a Kentucky State lottery; may establish a state lottery to be conducted in cooperation with other states; and that any lottery so established shall be operated by or on behalf of the Commonwealth of Kentucky?


It clearly never said anything about authorizing slot machines.


If you were to ask any aware Kentucky citizen at the time of that vote in 1988 whether the ballot measure included ‘slots-at-the-tracks,’ not one, whether for the Lottery or against, would say ‘Yes, it included slots-at-the-tracks.’


So much for the letter of the law.


Regarding the spirit of the law, ALL recent governors who have considered expanded gambling have asked for a constitutional amendment process so that the people would have their proper place of ratification or rejection after the members of the General Assembly passed their recommendation by a 3/5 majority in each Chamber. That includes Governors Brereton Jones, Paul Patton, Ernie Fletcher (he was never a proponent) and our current Governor, Steve Beshear. During his gubernatorial campaign, Beshear was quoted as saying,

‘It is time to put this question on the ballot and let the people of Kentucky decide. As Governor of this state, I will make sure that the people have an opportunity to make that choice.’


(We at The Family Foundation would correct his verbiage because the actual process is for the legislature to agree to propose a constitutional amendment with super 3/5 majorities in both the House and Senate and THEN the people have the right and responsibility to ratify or reject the proposal. That requires legislators to be accountable for their recommendation to the people and allows the people to have the last word.)


Similarly, all opinions offered by Kentucky’s Attorneys General, except one, have consistently maintained that a constitutional amendment would be needed to expand gambling in the Commonwealth, and in particular, to bring casino-style slots into the state. That includes opinions by Robert Stephens, Chris Gorman and most recently, Ben Chandler, who concluded in 1999 very pointedly,


‘The Kentucky Constitution does not authorize the General Assembly to permit the Kentucky Lottery Corporation to operate video lottery terminals; therefore, such authority must be established by constitutional amendment.’


The fact that the current slots-at-the-tracks plan violates the constitution is reflected by the fact that even the horse industry has promised that the people would be involved in this issue with their major ‘Let the People Decide’ campaign. Only the opinion of Greg Stumbo, as Attorney General in 2005, suggests that the people of Kentucky can be by-passed in this process. He was the sponsor of the original Lottery Amendment in 1988 and he is the prime mover of this effort.


It is important to point out that during the debate of the 1988 Lottery Amendment, Rep. Bill Donnermeyer, who was advocating for the bill on behalf of Greg Stumbo, emphatically assured Rep. Louis Johnson from Owensboro that the amendment would ‘not allow for slot machines or anything like that.’ Speaker Stumbo, who was presiding as the Majority Leader at that time, did NOT correct Rep. Donnermeyer, which would have been his constitutional duty, given his sworn oath to uphold the constitution that they were attempting to change.

It is as though Greg Stumbo is on his own legal island – and from constitutional perspective, it’s a ‘Fantasy Island.’


In conclusion, I pledge that The Family Foundation will take all legal action necessary to stop this ‘slots’ effort that is attempting to by-pass the people of Kentucky, thus violating both the letter and the spirit of the law as written in our state constitution.”


Will the Constitution become a casualty of the slots-at-the-tracks bill?

An analysis suggests that in an effort to have their way, those pushing expanded gambling are willing to make exaggerated claims as well as now violate the very constitutional principles they once espoused.


Those who have argued against the introduction of casino-style gambling in Kentucky have always pointed to a list of potential casualties that would follow from it. The list includes small businesses operating in areas close to casinos that would suffer lost business, local communities that would have to increase law enforcement to deal with increased crime, as well as problem gamblers who would have their problem made worse.


Critics of the plan say that we can add another potential casualty to the list: the state Constitution.


Last year, proponents of a casino bill talked of “letting the people decide” on the issue, portraying Kentucky’s constitutional ratification process as a ballot referendum, which opponents argue is a completely different thing. This allowed lawmakers, they say, to shirk their constitutional responsibility to vote for a constitutional amendment because they think it’s a good idea the voters should ratify, rather than wash their hands in regard to the issue itself, and asking the people to do what the Constitution expects them to do themselves.


This year, the casino industry is back with a new message, and critics are charging that it is an even more self-serving constitutional fiction: that the Lottery Amendment of 1988 authorized video slot machines. “This will come as news to the Kentuckians who actually voted for the Lottery,” said Martin Cothran, spokesman for Say No To Casinos. “Kentuckians were told they were not voting for other kinds of gambling.”


This wouldn’t be the first time a Lottery promise was broken, Cothran points out.


“For years after the Lottery was passed, many legislators confessed that one of the most frequent questions their constituents asked them was, ‘Whatever happened to the Lottery money?’ When the Lottery was passed, voters were told the money would go to education. Only ten years – and many constituent phone calls – later did the General Assembly attempt to keep the promise.”


Backers of the new plan are promising the same thing: the money will go for education – and a few other things.


“After not doing what they said they were going to do with the Lottery money,” said Cothran, “they are now going to do what they said they were not going to do with the law itself: use it to justify other forms of gambling.”


When asked in 1999 to determine the constitutional status of placing video slot machines at Kentucky’s racetracks, then Attorney General (now Congressman) Ben Chandler said, “. . . the Attorney General concludes that courts will not interpret the Constitution to authorize the General Assembly to permit the Kentucky Lottery Corporation to operate video lottery terminals.”


In fact, Cothran argues, every opinion rendered by a Kentucky attorney general on this or a related issue has found the same thing – except one. And that one was written by the sponsor of the video slots legislation: Speaker of the House Greg Stumbo. Yet in 2002, Stumbo told a reporter that he agreed with Ben Chandler that voters did not intend to include casino-style games in the Lottery.


“More evidence is in a pamphlet issued by the Legislative Research Commission to Kentucky voters in 1988 that said the state would be adopting a ‘modern day’ state lottery,” said Cothran. “A modern-day state lottery in 1988 consisted of instant and online games, not electronic video machines.”


The question of whether the Lottery amendment would include other forms of gambling such as “electronic devices and slot machines” actually came up in the floor debate over the bill when Rep. Louis Johnson introduced an amendment to explicitly prohibit them. But bill sponsor Bill Donnermeyer assured Johnson that the Lottery Amendment “does not provide for slot machines or anything like that.”


“That’s what the voters were told and that’s what the lawmakers who passed the amendment were told. Courts in states where the same bait and switch has been attempted have consistently ruled such laws unconstitutional,” said Cothran, “including courts in South Dakota, South Carolina, Ohio, Florida, West Virginia, Kansas, and California.”


This doesn’t seem to bode well for a piece of legislation that will surely be challenged in court should it pass the General Assembly in a special session. History has not sided with those trying to expand the reach of the Lottery.


The Lottery Corporation tried in 1989 to implement a “Kentucky Sports Lotto.” But the Lottery Corporation backed off when a legal suit was filed arguing that it was unconstitutional.


Cothran pointed out that the group who brought the suit was the Kentucky Thoroughbred Association, a group that is now arguing exactly the opposite.

So are lawmakers going to do with the law itself what they did with the Lottery money? Break their promises? “If they do,” says Cothran, “then they can simply change their now abandoned slogan from last year, ‘Let the people decide,’ to a new one: ‘Let the people be hoodwinked.’”


“Slots” advocates lack credibility

The actual revenue they claim keeps changing, and they’ve left Kentucky citizens out of the decision.


Either the “slots-at-the-tracks” bill, (HB 158 in the last session), was rapidly growing in its ability to help all Kentuckians, OR its sponsor was telling everyone what they want to hear in order to get support for a lemon of an enterprise.


Regarding the plan’s real dollar value, House Speaker Greg Stumbo appeared on Jan. 3 on WKYT-TV Kentucky Newsmakers with Bill Bryant saying that the bill would “generate probably upwards of 500 million new dollars to the state of Kentucky.” A week later, on Jan. 10, he was quoted in an article by Lexington Herald-Leader writer Janet Patton saying it would generate $700 million annually – a $200 million increase in just over a week.


Then, in the Jan. 31 edition of the Herald-Leader, Stumbo was quoted by Patton again, this time estimating that state government would receive $349 million every year, which by virtue in the formula contained in the bill, $1 BILLION would have be the total “raised” every year. (The $349 million would be government’s roughly 35 percent cut, making $1 billion the full take.)


Even worse, also in late January, the New Albany Tribune and the Jeffersonville Evening News (Indiana) reported that Stumbo suggested $1.2 BILLION could be raised. In essence, in less than a month and during a seriously declining economy, the slots plan had more than doubled the financial “good” that it will do.


Many miss the painful fact that what the gambling industry calls “revenue” is actually “losses” by their customers. Detractors, however, understand the system and maintain that the first figure – $500 million – was inflated badly, pointing out Kentucky citizens cannot afford to lose $500 million every year – a half a billion dollars every year. And again, they say with certainty that $700 million could not possibly be lost by Kentuckians annually, and now they regard the $1.2 billion figure as a joke.


Of equally great concern is the way the “revenues” will be divided. Government claims less than 35 percent, according to the plan. The new horse industry/lottery alliance gets more than 65 percent – basically twice as much as government.


Again, detractors point out that legislators, if they really needed money for government, could simply raise taxes a small amount and 100 percent of that money would go to government. Instead, this plan gives two thirds of the money to the operators of the slot establishments/race tracks – folks who already are some of Kentucky’s wealthiest.


One of the biggest concerns for most Kentuckians is that they had always been promised that if casinos were coming to the state, they’d have an opportunity to vote on the issue. This approach bypasses citizens entirely, leaving many to believe it is a deliberate strategy by the pro-casino folks to get what they want without any hassle.


Kentucky Lottery celebrates 20 years

The state boasts of “revenue” while some Kentuckians are simply losing.


The Courier-Journal printed a story on April 7 announcing a celebration surrounding the Kentucky Lottery Corporation’s 20th anniversary. Commentators have suggested these Lottery Commission’s promotional announcements are just poorly veiled attempts at boosting predatory gambling’s image in the quest to bring slot machines to Kentucky.


What may raise eyebrows of gambling opponents and policy makers alike in the article is the poster child for the Lottery that the paper interviewed – Charles Conley.


“Charles Conley had stopped at the store on the way to his construction job. He said he has been playing the lottery ‘since day one.’ He said he usually spends $20 to $25 in the morning on lottery tickets and the same amount in the evening.


“I usually break even,” Conley said, adding that he wishes he didn’t spend so much money on tickets. “I’m trying to cut back, but I keep playing because of the possibility of winning thousands of dollars.”


$50 a day, 5 days a week = $13,000 annually

$13,000 annually for 20 years = $260,000


The sad part is that this Kentucky construction worker is trying to “cut back” but is convinced by the Lottery Board’s ad campaign that he can win thousands.


David Edmunds of The Family Foundation expressed concern of the intent of policy makers. “When legislators arrive in Frankfort for a Special Session this summer, they must consider whether expanding the Lottery Board’s power to addict citizens to slot machines and bankrupt them during a recession is public policy that they can be proud of.”


Why are slot profits just for one industry?

The tracks and their owners are the biggest beneficiary of the slots plan, but they aren’t the only ones who are hurting.


Ever since then Attorney General Greg Stumbo released an opinion in 2005 that expanding gambling does not require a constitutional amendment, gambling advocates have had an in-house discussion as to the wisdom of that approach. Supposing Stumbo’s opinion is valid (and many argue it is not), another question arises: If slots are an expansion of the Lottery, then why should the spoils go exclusively to the horse industry, which is currently unrelated to the Lottery? Why not allow current lottery vendors to participate? After all, their industry is hurting just as badly.


Ted Mason, executive director of the Kentucky Grocers Association & Kentucky Association of Convenience Stores, said the economy has hit convenience stores particularly hard. “Convenience stores had a rough year in 2008, especially with high gas prices,” Mason said. “As a result, you will see many shuttered convenience stores across the state.”


High food prices also hurt grocery store sales in 2008. There are 625 supermarkets and 2700 convenience stores in Kentucky according to Mason. And there are 2860 lottery outlets across the Commonwealth. Isn’t putting food on the table and gas in the car tank just as important to Kentucky’s economy as horses?


Should slots go exclusively to the tracks, it will inevitably hurt Kentucky Lottery distributors. Research shows that casino expansion siphons money from state lotteries. Convenience stores dependent upon lottery sales are sure to lose out in those areas closest to the slots.


At the time of this publication, the Office of Communications for the Kentucky Lottery Corporation refused to comment on the prospects of casino-style slot gambling and how it would affect individual retailers and Lottery revenue overall.


In George Orwell’s classic Animal Farm, the pigs proclaim that “all animals are equal, but some animals are more equal than others.” The pigs, of course, control the government and proclaim “absolute equality,” but the reality is that power and privilege go to their small elite. So how is creating a new exclusive “business” for the benefit of one industry justifiable?

Section 3 of the Bill of Rights in the Kentucky Constitution says, “All men, when they form a social compact, are equal; and no grant of exclusive, separate public emoluments or privileges shall be made to any man or set of men, except in consideration of public services, . . .”


Giving a special privilege to a single industry is constitutionally questionable. It is also a slap in the face to other businesses that have experienced the economic downturn. According to the Kentucky Cabinet for Economic Development, 83 businesses shut down in Kentucky between January 2008 and April 2009. The closures resulted in the loss of 5,423 full-time jobs.


How do track owners justify slots? Track owners “are more equal than others.”


Some “little” things to think about . . .

Those pushing slots only talk about the money they and the state “need.” They seem to forget from where it all has to come.


Slots will be a MINOR source of revenue for the state.


First, the potential revenues are greatly exaggerated. The Legislative Research Commission, whose purpose it is to serve legislators in the General Assembly, estimates a net income of only $189 million to the state, most of that ($109 million, according to the plan) is proposed to go back to auto owners in a tax break. Sixty million dollars are designated for new spending – according to the plan. That leaves only $20 million to help with the alleged billion-dollar deficit; yet even that $20 million is designated to cover the already granted sales tax exemption to the horse farms. Almost no assistance to the deficit! Secondly, though Greg Stumbo has said $1.2 billion in revenue, the LRC estimate of $676 million is more realistic. But even that is more than Kentuckians can scrape together to “donate” to the tracks – remember, what “slots folks” call revenue is actually the amount citizens must lose.


Most casino jobs are LOW paying.

Most are minimum wage service in food and housing or casino floor jobs partially dependent upon tips from people who are losing. To prevent cheating, the casinos abruptly change people to a different one of the three shifts, disrupting child care and other parts of their lives. Floor jobs are high stress. The $30,000-plus “average” salaries frequently cited as the “good jobs” at casinos are inflated by the larger management salaries. Even if a worker did make $30,000 per year that would amount to $14 per hour, which is below the average family income in Kentucky.


Casinos at the horse tracks will MOVE MONEY OUT of state.

Many of their purchases/expenditures are and will be made out of state. A majority of the horse farms are owned by out-of-state interests. Similarly, most horses raced here are owned by out-of-state owners, especially in the biggest races with the highest stakes. Churchill Downs is at least 96 percent owned by out-of-state interests. Turfway Park is half-owned by Harrah’s (an out-of-state corporation). Bluegrass Downs is wholly owned by Players International (another out-of-state corporation).


The money will come from the POOR and MIDDLE CLASS.

The gamblers will not be the “mint julep” crowd of Derby fame -- they don’t like slots! The “slot barns” will be within easy driving distance, according to the plan – just a subsidized bus ride away. Slot venues like this move money from the many to the few, they do not manufacture or produce anything, and they damage the economy further. They will remove revenue from all kinds of businesses, including other current gambling enterprises: from charitable gambling (up to a third); from horse racing itself (attendance has declined as much as 80 percent at tracks with casinos); and the Lottery (up to 20 percent).


Casinos INCREASE POVERTY.

17.2 percent of Kentucky citizens currently live in poverty. This could easily increase to 25 percent.


Casinos INCREASE ADDICTION.

We currently have 35,000 pathological gamblers and 70,000 problem (at risk) gamblers, according to the Kentucky Council on Problem Gambling. These figures conservatively will double, possibly triple, since even the smaller LRC estimate of revenues requires that Kentuckians gamble nearly four times as much as at present on the current “big three” – horse racing, the Lottery and charitable gambling. FOUR TIMES AS MUCH GAMBLING! Remember, slots are the most addictive form of gambling.


This bill is a good deal ONLY for the horse TRACKS.


Kentucky will get less than a third of the revenues where other states get around 40 percent and up to 50 percent. Horsemen (breeders and horse owners) currently receive about half of net revenues on live racing at the track and half of what is received by the originating track for simulcasting. Under the slots plan, horsemen will receive only one dollar of six retained by the track. Yes, they will get more than they do now, but the tracks and their owners get the big haul. This effort is NOT FOR the horse industry of Kentucky, it is FOR the track owners!


Why does the Constitution prohibit gambling? A brief KY history can explain

If we fail to learn from the mistakes of the past, we are doomed to repeat them in spades.


Over a hundred years ago, in 1891, the Commonwealth adopted the first prohibition of lotteries in the Kentucky Constitution. Contrary to what gambling lobbyists say, constitutional framers did not base this decision on some long-held puritanical belief system. The vigorous debate about the public policy implications of gambling had been going on for centuries.


Lotteries had been in use in the early colonies and funded the establishment of many Ivy League colleges. After the Civil War, entities in the South turned to lotteries for reconstruction.


The Louisiana Lottery was notorious among these schemes with offices operating in every major city and widespread corruption. In 1868, the Louisiana Lottery Company was authorized and granted a 25-year charter with a criminal syndicate from New York greasing the skids with bribes and establishing the syndicate as the sole lottery provider. Attempts to repeal the charter were defeated with assistance of more bribes to legislators.


The Louisiana Lottery survived until Congress enacted a prohibition against moving lottery tickets across state lines by any method. By the end of the century, 35 states, including Kentucky, had written prohibitions against lotteries into their constitutions and no state permitted the operation of lotteries.


In Kentucky, the framers adopted Section 226, Article 3 of the Constitution in response to the overwhelming public opposition to lotteries. This strong opposition was articulated by Kentucky Delegate Robert Rodes of Warren County during the Constitutional debate of 1890:


“The newspapers have called lotteries vampires, one of those big Brazilian bats that fans you gently to sleep while it sucks the last drop of blood from you. Some other newspapers call it a political ‘octopus,’ the appellation of the great, large-eyed, huge monster of the deep, with its hundred tentacles reaching out and drawing you in its close embrace with the hug of death. Lotteries are doing those very things, and anything that does it belongs properly and ought to be inserted in the Bill of Rights, the right intention of which is to protect the people and save them from such an unspeakable lot.”


Kentucky’s founding statesmen understood the grave dangers of a statewide system of hoodwinking citizens. In 1891, the lottery was the only public system of gambling, as slot machines were invented four years later and the word “casino” was yet to enter the American lexicon. The drafters did not see a widespread problem with individual citizens betting on a card game, on the speed of a horse, or the width of a river.


In 1897, the U.S. Supreme Court described the motivation of the constitutional framers, stating:

“This court had occasion many years ago to say that the common forms of gambling were comparatively innocuous, when placed in contrast with the widespread pestilence of lotteries; that the former were confined to a few persons and places, while the latter infested the whole community, entered every dwelling, reached every class, preyed upon the hard earnings of the poor, and plundered the ignorant and simple.”


This intent to protect the citizenry has motivated the constitutional prohibition to be historically applied by the courts to include pyramid schemes, slot machines, and casino-style gambling. The constitutional language prohibits all lotteries as well as “gift enterprises,” “privileges granted for such purposes,” the exercise of “such privileges,” and “schemes for similar purposes.” This comprehensive language reflects the framers’ intent to extend the broad prohibition of lotteries to include these similar schemes that subject the citizenry to “such an unspeakable lot.”


If lottery operators had access to the new technology of slot machines in 1891 and attempted to set those up in their offices, the legislative history suggests that the framers would have made those unconstitutional as well. For almost 100 years, the Kentucky Constitution protected citizens from the “pestilence of lotteries” until 1988 when voters approved the Lottery Amendment.


Alms for the rich

In this recession, there must be a better way!


At a time when many Kentuckians are losing their jobs, being put on furlough by their employers, and can’t pay their mortgages, it is hard to envision why some people would want to pass legislation that would fatten the bank accounts of the wealthy horse racing tracks and horse farms, many of which are not even owned by Kentuckians.


It’s even harder to envision how they think they can do it in clear violation of Kentucky’s Constitution.


The legislation, which could be taken up in a special legislative session recently called by Gov. Steve Beshear, proposes to put video slot machines at Kentucky’s horse tracks. Video slot machines are the most predatory form of gambling, and they direct their appeal toward gamblers at the low end of the economic scale. These are people who could never even think of affording the lifestyle of those who would benefit under proposed legislation from the money these low-end gamblers will lose.


The chief impetus for the bill comes from the horse industry, which has come, gold-plated cup in hand, and tried to convince state lawmakers that good public policy demands alms for the rich.


As one former legislator likes to say, “When poor people beg, they do it on the street corners. But when rich people beg, they do it in the halls of power.” If the horse industry is in such financial straits, how can it afford the army of high-priced lobbyists it has sent to the state capitol? And where are they getting all the money that they have dumped into the advertising campaign that has now hit radio stations across the state?

The loudest voice calling for passage of the legislation is Churchill Downs, the state’s largest horse racing track, and one which is almost exclusively owned by out-of-state investors. It argues that low purses threaten to kill horse racing in the state, which cannot compete with horse tracks in other states whose purses are subsidized by the profits from video slots.


If Churchill Downs is concerned about purses, why couldn’t it have used some of the $121 million it recently lavished on remodeling the clubhouse to fund them? In fact, if things are so bad, how could Churchill Downs have afforded the project in the first place?


But even if bailing out a rich industry by expanding gambling in Kentucky served some public purpose, it would run head-on into the state’s Constitution. Up until the last legislative session, expanded gambling advocates were pushing for a constitutional amendment because they believed – like everyone else – that the voters in 1988 approved only a state lottery, not other forms of gambling.


KEEP, the horse industry’s largest lobbying group, pledged it would only support legislation that guaranteed the money would go to education. They did so in order to avoid a replay of anger over the Lottery proceeds not going to education, as voters were promised, until ten years later. And Gov. Steve Beshear said the following in his campaign for governor, a statement that is still on his campaign’s web page: “It is time to put this question on the ballot and let the people of Kentucky decide. As Governor of this state, I will make sure that the people have an opportunity to make that choice.”


But now all the rhetoric about “letting the people decide” has been discarded, the victim of political expediency. Now the message is that, without knowing it, voters actually approved slot machines in 1988.

Someone’s going to get hoodwinked. It might as well be you.


There is nothing in the ballot language of the Lottery Amendment even hinting that voters were voting for anything remotely resembling video slots. In fact, not only did the Legislative Research Commission limit its discussion to instant and online games in its explanation to voters in 1988, but when the amendment was debated on the floor of the House, bill sponsor Bill Donnermeyer assured his fellow lawmakers that the Lottery Amendment did “not provide for slot machines or anything like that.”


After playing fast and loose with the Lottery money in the 1990s that was supposed to go to education, are lawmakers now going to tell Kentuckians that it was all part of a bait-and-switch strategy to get them to vote for something they had no intention of voting for?

The proponents of expanded gambling are again making big promises to the people of Kentucky. They would be a lot more believable if their record on keeping past promises wasn’t so bad.


© 2019 by The Family Trust Foundation of Kentucky