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Stephenie Steitzer has the scoop.

Stephenie Steitzer reports:

Versions of a proposed constitutional amendment on expanded gambling that would’ve guaranteed some of the casino licenses to horse tracks appear to have died in the House.

Instead, a proposal backed by Speaker Jody Richards, which would allow nine casinos with no guarantees the horse tracks would get any, appears to be the bill with the best shot of making it out of a House committee at this point.

I recommended the following in October:

If [Beshear is] serious about serving taxpayers, Beshear will insist on the following conditions for expanded gambling:

1. A strict limit on the number of casino licenses to be awarded.
2. A time limit on the validity of each license. Two years, for example.
3. Every hopeful licensee must bid for licenses at auction with no special treatment for any bidder or industry.

In essence, the winning bidder will pay rent for the privilege of owning a casino license. The value of the licenses will largely be a function of their scarcity and the revenues that the casinos can generate.

Unfortunately, Mr. Beshear’s commitment to do right by Kentucky taxpayers in pushing for expanded gambling is in question.

In August, Mr. Beshear told the Lane Report, “It would be a licensed approach where the state would create so many licenses and then, for instance, some of the racetracks would be able to have a license and there would be competition for licenses for any free-standing locations.”

Mr. Beshear appears to understand the value of creating an auction process for handing out casino licenses, but he’s less clear on whether racetracks will have to pay the same price when auction time arrives. Mr. Beshear needs to clarify sooner rather than later that expanded gambling will not result in a massive giveaway to Churchill Downs or other racetracks.

It seems clear that Beshear’s bill was crafted with the profits of racetracks in mind. The one offered by Jody Richards, while I think nine is perhaps too many licenses to maximize revenue, at least recognizes that the purpose of casino gambling is to get revenue in the door rather than to bail out a small subset of Kentucky’s “signature industry.”

Sadly, any added revenue provided by gambling won’t be used to execute the “best case scenario”: retire state debt, ease the pain of the inevitable privatization of state pensions or reduce taxes for Kentuckians. Like a credit card in the hands of an irresponsible teenager, that added revenue might put Kentucky’s finances in worse shape.

He’s right. If more conservatives were willing to lose a few battles to win the war for limited government, we might not have had eight years of massive spending increases and other nastiness under George W. Bush. An upcoming Cato Institute book forum might shed some light on the issue. [via Club for Growth]

The Courier Journal reports that the proceeds from casinos under the governor’s proposal:

…would be divided with 50 percent for education; 20 percent to healthcare; up to $2 million for treatment of compulsive gambling; 3 percent to host jurisdictions and 5 percent each to support city and county programs, with 17 percent divided among other programs ranging from substance abuse to wildlife.

Separate accounts would be established to support the state’s horse industry.

By my math, that adds up to 95 percent of the proceeds listed. Maybe the “horse industry” gets the other five?

Of course at this point it is important to differentiate the horse industry from the horse track industry. The horse industry raises, breeds and trains horses of all kinds in Kentucky — not just thoroughbreds. The horse track industry provides a stage on which for thoroughbreds to perform and pays purses out of a portion of gambling revenues. They also run simulcast operations and sell food, beverages and t-shirts.

Bottom line? One involves getting up really early every morning and mud on your shoes. The other does not. Guess which one is highly profitable?

According to Plunkett Research, Churchill Downs, Inc. made almost $30 million on more than $376 in sales in 2006. Their profit to earnings ratio is a healthy 33.59, and they rank third in sales and second in profits among their major competitors. Their top executive salary was $500,580 with an equal amount in a bonus. The company is worth about $556 million.

For comparison, the purse for winning the Kentucky Derby is $2 million.

Here is the financial information and an interesting chart of Churchill Downs stock price over the last five years.

There are a lot of benefits to being Governor of Kentucky. You get tickets to the Derby. You get to go to all the UK-UofL games. And you get to appoint lots of friends to powerful positions on state boards.

For years one of the most sought after and lucrative appointments was to the state fair board. Now that is about to be overshadowed in a big, big way:

The plan calls for: Creation of a seven-member Gaming Commission with four-year terms. The members would be appointed by the governor and approved by the Senate. The commission would hire an executive director to oversee day-to-day operations.

Personally, I would like to see the kind of treatment a Gaming Commission member would get upon walking into a casino. Emperor’s Suite at Caesar’s Palace, anyone?

Creating new jobs, indeed.

Maybe newly elected Steve Beshear’s first State of the State address wasn’t one for the ages… but I don’t think it deserved this kind of treatment from the Lexington Herald-Leader tonight:

What’s so wrong with the chicken dance, anyway?

Steve Beshear’s first State of the Commonwealth address lacked substance. Quite a yawner. Surprisingly, he made no mention of expanding gambling in the speech. Read the whole thing for yourself here.

STATE OF THE COMMONWEALTH
House Chambers
January 14, 2008
7 p.m.
Governor Steve Beshear

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