Churchill Downs Accepts Kentucky Online Gambling Tax

A new tax suggested for online gambling deposits made by Kentucky residents will not be fought by Churchill Downs, which already somehow is fortunate enough to accept Internet wagers despite federal and state prosecutions of competitors.

Bob Evans, president of Churchill Downs, Incorporated, said this week that his company won't resist a tax by the state of Kentucky on online gambling plays. Churchill Downs accepts Internet wagers through its TwinSpires website, even though both Kentucky and the US government are actively prosecuting Internet gambling operators and claim online betting is illegal.

Kentucky House Speaker Pro Tem Larry Clark has introduced a bill which would impose a 0.5 percent tax on deposits by Kentucky residents to accounts funding either online or telephone gambling. The tax would operate to support the state's struggling horse racing industry, with a third of revenue going to whichever track is running, a third to purses, and a third to the Kentucky Horse Racing Commission.

The bill has passed the House and is currently in the Senate. Clark says the measure, if enacted, may raise as much as $400,000 annually.

Evans stated that, while Churchill Downs doesn't like the idea of being taxed on revenue and then again on profit, it can live with this law.

“Most businesses don’t usually face both front-end and back-end taxes, but in this particular case, given that the amount is pretty small, 0.5 percent, and how those funds are then distributed, we think we can live with this one,” Evans said.

While live track handles continue to decline, online gambling sites show growth as patrons appreciate the ease and comfort of placing wagers through the Internet. Even the tangled and contorted legal thinking of the federal government and Kentucky cannot prevent the rising popularity of Internet gaming.