Kentucky Not Authorized to Tax Betting on Historical Horse Racing

Tuesday, February 25th, 2014


The Kentucky Supreme Court recently ruled that the Department of Revenue ("Department") could not apply tax to bets on "historical horse racing."

Members of Kentucky's horse racing industry wanted to provide devices, similar to slot machines, for betting on historical horse races. Historical horse races are races that have already been run at approved racing facilities. The devices present the races on video displays, and people place bets at those devices. These devices identify horses only by number and give no information by which bettors can identify the time or place the real race occurred. The devices do provide some statistical data on the horses.

Kentucky taxes bets on live horse races at certain tracks. The Department had amended its regulations to extend the application of this tax to bets on historical horse racing. The Department argued that historical horse races were "live" because the bettor did not know their outcome at the time he or she placed the bet.

The Court ruled that the Department could not tax bets on historical horse racing. The law that imposed tax on bets specifically applied to bets on live races. The fact that the bettor did not know the outcome of a historical race when he or she placed the bet did not make a historical race "live." The common use of the term "live" did not include recorded events. Because historical races were not live races, the Department could not tax bets on these races.

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