They lost money at Lexington’s gambling parlors. Court says they can sue to get it back.

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A judge in Lexington will allow a group of gamblers to sue Keeneland and the Red Mile over losses on slots-like historical horseracing machines that Kentucky Supreme Court found were illegal.

Fayette Circuit Court Judge Thomas Travis on Tuesday overruled a motion by the Lexington racetracks to dismiss the lawsuit, filed in February.

Instead, Travis ordered attorneys for the tracks and for the gamblers to begin preparing for trial. A pretrial conference is scheduled July 7.

According to the suit, the dozen plaintiffs “sustained thousands of dollars of losses” which are documented by the loyalty program that the gambling parlor used.

The Kentucky Supreme Court in September 2020 held that the machines were not parimutuel, so the plaintiffs want to use existing Kentucky statute on illegal gambling to recover their losses. In February the General Assembly made a legislative fix allowing the historical machines to resume play.

A lot of money could be at stake. In addition to the dozen plaintiffs, there could be many more if the lawsuit becomes a class action, as the filings indicate attorney Andre Regard is seeking.

Regard did not return calls for comment.

The gamblers are seeking to recover losses “by persons gambling on Historical Horse Racing machines (“HHR”) within the last 5 years,” operated jointly by Keeneland and the Red Mile at the Red Mile, according to the lawsuit.

The lawsuit also seeks punitive damages under the Kentucky Consumer Protection Act.

Similar lawsuits have been filed in at least two other Kentucky counties but this is the first one to get a ruling on whether it should be dismissed.

What the racetracks say

“The judge declined to dismiss the case at this time. He’s set up a status conference, we will of course attend the status conference and we’ll know more at that time. Other than that we don’t comment on pending litigation,” said Steven Loy, attorney for the KRM Wagering.

In court filings, the tracks argue the machines were considered legal at the time because the Franklin Circuit Court had ruled they were parimutuel.

“Indeed, until the Kentucky Supreme Court’s decision in Family Trust Foundation, all court orders held that HHR wagering constituted parimutuel wagering,” the tracks argued in their motion to dismiss.

The tracks also argued that Franklin Circuit Court Judge Thomas Wingate, in entering his final judgment and order on March 17, 2021, after the Kentucky Supreme Court decision, held that the decision “shall not have retroactive application because the racing associations were operating systems of wagering duly authorized and permitted by the (Kentucky Horse Racing Commission) and the racing associations were not operating the systems of wagering in contradiction of any court order.”

The racetracks also argued that legislation passed by the General Assembly in February to redefine pari-mutuel wagering explicitly legalized machines “previously or hereafter approved.”

Judge Travis found those arguments insufficient for dismissal, setting up a potential trial that could have big implications for the horse industry, which has operated the machines for a decade.

Historical horseracing court battle

The tracks, which lobbied for years for expanded gambling, began to add the machines, then referred to as “Instant Racing” after state Sen. Damon Thayer, R-Georgetown, requested a ruling from then-Kentucky Attorney General Jack Conway on whether they would be considered parimutuel.

In July 2010, the racing commission unanimously approved allowing tracks to begin putting them in. The tracks and the state simultaneously filed a “petition for declaration of rights” in Franklin Circuit Court, asking the court to rule whether or not the games were legal.

The Family Foundation, a conservative activist group that opposes expanded gambling, petitioned to join the suit, kicking off the legal battle that led to the 2020 Kentucky Supreme Court decision that they were not legal.

As of May 2021, according to the Kentucky Horse Racing Commission, more than $12 billion has been gambled on the machines, which are now at six locations around the state. More than 4,200 machines are in operation, with an average handle each day at each one of more than $4,000.

Ironically, Thayer and Regard, the attorney representing the gamblers, are business partners in a bourbon brand, Kentucky Senator.

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