By Bruce Schreiner
The Associated Press

FRANKFORT - House Majority Leader Greg Stumbo made a forceful case Tuesday for legalizing slot machines at Kentucky horse tracks and dangled a $400 million offer from the racing industry.

Stumbo, D-Prestonsburg, said the industry was willing to provide $400 million up front to the state if slot machines opened at the tracks. The tracks would follow with payments of at least $200 million in each of the next four years - for a five-year total of $1.2 billion, he said.

The payments would solve most of the state's budgetary needs, not only in the current two-year cycle but for several years to come, Stumbo said.

In a speech to the House, Stumbo said Indiana and Illinois are making $400 million a year on Kentuckians who cross the Ohio River to gamble on casino boats. If the General Assembly's members were a corporate board of directors, their shareholders would vote them out and sue for malfeasance, Stumbo said.

Stumbo's comments coincided with the introduction of legislation to legalize and regulate slot machines at the state's horse tracks and to specify how the proceeds would be distributed.

Ohio, too, struggling with an immense budget deficit, has been discussing placing slots at racetracks, including River Downs in Cincinnati. But Gov. Bob Taft has said repeatedly that he would veto any such bill passed. In Kentucky, Gov. Paul Patton is known to support the idea of expanded gambling.

Rep. Stan Lee, R-Lexington, predicted the offer of upfront money from the racing industry wouldn't sway enough lawmakers.

"I don't think there are many citizens in the commonwealth of Kentucky that are willing to pay a $400 million ransom just so there can be gambling at the horse tracks," Lee said. I don't think it has a snowball's chance."

Bob Elliston, president of Turfway Park in Florence, called it a "plausible concept at this time," and said the money would come from the tracks' accelerating their tax payments to the state to provide the money at once. Stumbo broached the subject as the House was preparing to vote on a lean budget.

"It is not a moral issue. It is strictly a business issue," Stumbo said. Referring to the budget bill, he added: "Think of all the people who didn't get what they should have because of our refusal to put a store up on this side of the river."

Stumbo said he didn't want to delve into the gambling issue until the House had completed work on a budget.

Stumbo said the timing probably isn't right for lawmakers to deal with expanded gambling in the 30-day session, but he said the issue needs to be discussed.

Under the legislation offered Tuesday by Democratic Rep. Tom Burch of Louisville, slots would be allowed only at licensed race tracks, which would reap more than half the money raised from the expanded gambling.

Turfway has said that if gambling is expanded to include slots at racetracks it will build a multi-million dollar gaming pavilion on its site, about 12 miles from downtown Cincinnati by Interstate 71/75.

The state Chamber of Commerce is also a strong supporter of the expanded gambling. The Northern Kentucky Chamber of Commerce also strongly supports the effort.

Under the proposal, the state would tax proceeds from slot machines at a graduated rate. The first $50 million would be taxed at 28 percent, and the rate would reach a maximum 41 percent for amounts over $200 million.

Just over a third of proceeds from slots would go to the state. Another 12.5 percent would go to horsemen in the form of higher purses, and the rest would be kept by the race tracks. The tracks say the higher purses are needed to attract top-caliber horses that, in some cases, are now being lured to race in other states.

The slots would be regulated by the Kentucky Lottery Corp.