ENVIRONMENTAL AND PUBLIC PROTECTION CABINET

Department of Public Protection

Kentucky Horse Racing Authority

(Amendment)

      810 KAR 1:015. Claiming races.

      RELATES TO: KRS 230.215(2), [230.225(1),] 230.260(3)

      STATUTORY AUTHORITY: KRS 230.215(2), [230.225(1),] 230.260(3)[, (6)]

      NECESSITY, FUNCTION, AND CONFORMITY: KRS 230.215(2), and [230.225(1),] 230.260(3) authorize the Authority to [requires that the commission] promulgate administrative regulations prescribing the conditions governing horse racing. This administrative regulation prescribes the conditions for the conduct of claiming races.

      Section 1. (1) In a claiming race [races] a horse shall be subject to claim for its entered price by a licensed owner in good standing, or by the holder of a certificate of eligibility to claim. The procedure for obtaining a certificate of eligibility to claim shall be as follows:

      (a) An applicant shall, five (5) [fifteen (15)] days prior to entering a claim, submit:

      1. An application for an owner's [owners' original] license;

      2. A financial statement;

      3. Written consent permitting the Authority to conduct a criminal background check [A finger print card];

      4. The name of a licensed trainer, or person eligible to be licensed as a trainer, who will assume care and responsibility for the horse claimed; and

      5. The requisite fee for an owner's [owners] license.

      (b) The certificate of eligibility shall be valid for the remainder of the calendar year.

      (2)(a) A claim may be made by an authorized agent.

      (b) An agent may claim only for the account of those for whom the agent [he] is licensed as agent.

      (c) The name of the authorized agent[;] and the name of the owner for whom the claim is being made shall appear on the claim slip.

      (3)(a) A person shall not claim his own horse or cause his own horse to be claimed, directly or indirectly, for his own account.

      (b) A claimed horse shall not remain in the same stable or under the care or management of the owner or trainer from whom it is claimed.

      (4)(a) A person shall not claim more than three (3) horses from a race.

      (b) Multiple claims submitted by the same owner, authorized agent [and/]or trainer for a single horse shall not be permitted and shall be void.

      (5)(a) A claimed horse shall not run for thirty (30) days after being claimed in a race in which the determining eligibility price is less than twenty-five (25) percent more than the price for which the horse was claimed.

      (b) The day following the day the horse is claimed shall count as [be] the first day.[;]

      (c) The claimed horse shall be entitled to enter whenever necessary to permit it to start on the 31st calendar day following the claim.

      (d) This subsection shall not apply to starter handicaps in which the weight to be carried is assigned by the handicapper, or to [and] starter allowance races.

      (6)(a) A horse claimed in a claiming race shall not be sold or transferred, wholly or in part, within thirty (30) days after the day it was claimed, except in another claiming race.

      (b) A claimed horse shall not race at a horse race meeting in another racing jurisdiction outside Kentucky until the earlier of:

(a) Sixty (60) days from the date on which the horse was claimed; or

(b) Thirty (30) days from the end of the meet. With the permission of the stewards, a claimed horse may [Unless the stewards grant permission for a claimed horse to] enter and start at an overlapping or conflicting meeting in Kentucky, if the stewards determine that permitting the horse to do so will not be detrimental to the meeting from which the horse is [a horse shall not race elsewhere until the close of entries of the meeting at which it was] claimed.

      (7)(a) A claim shall be:

      1. Made on the form [Commission] "Claim Blank";

      2. Sealed in an envelope supplied by the Authority [Commission]; and

      3. Deposited in the association's claim box.

      (b) The "Claim Blank" form and envelope shall be filled out completely and accurately.

      (8)(a) Claims shall be deposited in the claim box at least fifteen (15) minutes before post time of the race from which the claim is being made.

      (b) Money or its equivalent shall not be put in the claim box.

      (c) A claim shall be valid if the claimant at the time of filing the claim has a credit balance in his account with the horseman's bookkeeper of not less than the amount of the claim, plus the Kentucky sales tax.

      (9) The stewards, or their designated representative, shall:

      (a) Open the claim envelopes for each race as soon as the horses leave the paddock en route to the post; and

      (b) Check with the horseman's bookkeeper to ascertain whether the proper credit balance has been established with the association; and

(c) Verify that the claimant has a valid owner's license or certificate of eligibility to claim.

      (10) If more than one (1) valid claim is filed for the same horse, title to the horse shall be determined by lot under the supervision of the stewards or their designated representative.

      (11)(a) After the race has been run a horse that has been claimed shall be delivered to the claimant.

      (b) The claimant shall present written authorization for the claim from the racing secretary.

      (c) After written authorization has been presented, horses that are sent to the detention area for post race testing shall be delivered.

      (d) Other horses shall be delivered in the paddock.

      (e) A person shall not refuse to deliver a horse claimed out of a claiming race to the person legally entitled to the horse.

      (f) If the owner of a horse that has been claimed refuses to deliver the horse to the claimant, the horse shall be disqualified from further racing until delivery is made.

      (12)(a) A claim shall be irrevocable.

      (b) Title to a claimed horse shall be vested in the successful claimant from the time the horse is a starter,[;] and the funds transferred to the account of the previous owner. The transferred funds shall be[, with said funds] immediately available for future claiming transactions.

      (c) The successful claimant shall become the owner of the horse whether the horse [it] is:

      1. Alive or dead;

      2. Sound or unsound; or

      3. Injured during the race, or after it.

      (d) A claimed horse shall run in the interest of and for the account of the owner from whom it is claimed.

      (13)(a) A person shall not offer to:

      1. Enter, or enter into an agreement to claim, or not to claim; or

      2. Prevent [Attempt], or attempt to prevent, another person from claiming any horse in a claiming race.

      (b) A person shall not attempt by intimidation to prevent anyone from running a horse in a claiming race.

      (c) An owner or trainer shall not make an agreement with another owner or trainer for the protection of each other's horse in a claiming race.

      (14)(a) A claim that does not comply with the provisions of this administrative regulation shall be void.

      (b) The stewards shall be the judges of the validity of a claim.

      (15) A person holding a lien of any kind against a horse entered in a claiming race shall record the lien with the racing secretary or horseman's bookkeeper at least one (1) hour [thirty (30) minutes] before post time for that race. If no lien is [none is so] recorded, it shall be presumed that no lien [none] exists.

      (16) The engagements of a claimed horse pass automatically with the horse to the claimant.

      (17) Notwithstanding any designation of sex or age appearing on the racing program or in any racing publication, the claimant of a horse shall be solely responsible for determining the age or sex of the horse claimed.

      Section 2. Incorporation by Reference. (1) The following material is incorporated by reference:

      (a) "Claim Blank[(Rev 96)]"; and

      (b) Claim Blank envelope.

      (2)(a) This material may be inspected at Kentucky Horse Racing Authority [Commission], 4063 Iron Works Pike, Building B, Lexington Kentucky 40511, Monday through Friday, 8 a.m. to 4:30 p.m.

(b) This material may also be obtained from the KHRA Web site at www.khra.ky.gov.

LISA E. UNDERWOOD, Executive Director

      APPROVED BY AGENCY: January 15, 2008

      FILED WITH LRC: January 15, 2008 at 11 a.m.

      PUBLIC HEARING AND PUBLIC COMMENT PERIOD: A public hearing on this administrative regulation shall be held on February 27th, 2008, at 10 am, at the South Park Theatre at the Visitor’s Information Center, Kentucky Horse Park, 4063 Iron Works Parkway, Lexington, Kentucky 40511. Individuals interested in being heard at this hearing shall notify the Kentucky Horse Racing Authority in writing by February 13, 2008, five (5) working days prior to the hearing, of their intent to attend. If no notification of intent to attend the hearing is received by that date, the hearing may be cancelled. This hearing is open to the public. Any person who wishes to be heard will be given an opportunity to comment on the proposed administrative regulation. A transcript of the public hearing will not be made unless a written request for a transcript is made. If you do not wish to be heard at the public hearing, you may submit written comments on the proposed administrative regulation. Written comments shall be accepted until February 29th, 2008. Please send written notification of intent to be heard at the public hearing or written comments on the proposed administrative regulation to the contact person below.

      CONTACT PERSON: John L. Forgy, Kentucky Horse Racing Authority, 4063 Iron Works Parkway, Building B, Lexington, Kentucky 40511, phone (859) 246-2040, fax (859) 246-2039.

REGULATORY IMPACT ANALYSIS AND TIERING STATEMENT

Contact Person: John L. Forgy

      (1) Provide a brief summary of:

      (a) What this administrative regulation does: This administrative regulation amends 810 KAR 1:015, which governs claiming races. The amendment makes several substantive changes to the regulation outlined below, and also amends the language of the regulation to conform to KRS Chapter 13B drafting requirements.

      (b) The necessity of this administrative regulation: The amendments are necessary to update to industry standards the thoroughbred claiming regulation and to strengthen the horse racing industry in Kentucky.

      (c) How this administrative regulation conforms to the content of the authorizing statutes: This administrative regulation governs thoroughbred claiming races pursuant to KRS 230.215(2) and KRS 230.260(3), which authorize the Authority to promulgate administrative regulations governing the conditions of horse racing.

      (d) How this administrative regulation currently assists or will assist in the effective administration of the statutes: This administrative regulation sets forth the conditions of claiming races, one of several types of races run at Kentucky race tracks. A claiming race is a race in which the horses running in the race can be purchased ("claimed") from the original owner by a buyer willing to pay a pre-determined price set forth in the written conditions of the race.

      (2) If this is an amendment to an existing administrative regulation, provide a brief summary of:

      (a) How the amendment will change this existing administrative regulation: The amendment alters the language of the regulation to conform to KRS Chapter 13B drafting requirements. More importantly, the amendment makes the following substantive changes to the regulation:

      1) Currently, if an owner who desires to participate in a claiming race does not have a Kentucky license, that person may nevertheless participate in the claiming race by obtaining a certificate of eligibility to claim. To apply for a certificate, the person must submit an application for a license, the fee for the license, a financial statement, and the name of the trainer. In the past, the regulation required submission of a fingerprint card, but this requirement is being eliminated; instead the applicant need only provide written consent permitting the Authority to conduct a criminal background check. Also, whereas in the past all of the above documentation had to be provided 15 days in advance of the entry of the claim (usually the day of the race), the regulation is being amended to require it only 5 days in advance. This is less burdensome to the applicant, and modern technology allows the Authority and the race tracks to process this information more quickly.

      2) The most significant change is the extension of the "jail time" provision. Presently, this regulation prohibits a claimed horse from racing at another track until the close of entries of the meeting at which it was claimed. Entries typically close in the last few days of the meet. (As an exception to the prohibition against racing at another track, the regulation allows the stewards to grant permission for the horse to enter and start at an overlapping or conflicting meeting within Kentucky, but this exception is rarely granted). The problem facing the horse racing industry is that claimants from out of state frequently appear during the last few days of a Kentucky meet, claim numerous horses, and then take them out of state to run at other tracks. Kentucky suffers from the loss of these horses, which are no longer available to fill races and increase handle and purses. Many states which have experienced similar problems have enacted more restrictive "jail time" rules, which prohibit a horse claimed at an in-state meet from racing out of state for 30 or 60 days from the end of the meet. This serves as an incentive for the claimant to continue to race the horse at in-state tracks, at least for the required period of time. In-state tracks therefore benefit from the participation of the horses and enhanced field sizes, and the gambling public have more horses upon which to wager. More money is also wagered upon the races as a whole, which can result in larger purses. The Authority therefore desires to amend the regulation to read as follows: "A claimed horse shall not race at a horse race meeting in another jurisdiction until the earlier of (a) sixty (60) days from the date on which the horse was claimed, or (b) thirty (30) days from the end of the meet. With the permission of the stewards, a claimed horse may enter and start at an overlapping or conflicting meeting in Kentucky." This rule will effectively impose a 30-day restriction on racing horses in another state after the end of the meet, encouraging the horses to race in Kentucky for that period of time. This restriction is eased somewhat in the case of horses that are claimed early in a long meeting lasting several months – for example, from January 1st through April 5th, the length of the 2007 Winter/Spring meet at Turfway. In these cases, the rule will allow horses claimed early in the meet to race elsewhere after 60 days, if the 60 days elapse before the 30-day period after the end of the meet. The Authority believes that this amendment will sufficiently protect Kentucky claiming horses without placing an undue burden upon owners and trainers, who will be prohibited from racing their horses outside of Kentucky during the time periods set forth in the regulation.

      3) The regulation is being amended to specifically require the stewards to determine whether the claimant has a valid owner’s license. The stewards usually do this as a matter of routine, but the regulation now makes it explicit.

      4) The regulation is being amended to require a person holding a lien against a horse to record the lien in the racing secretary’s office at least one hour before the race, rather than 30 minutes before as the regulation currently states. This will give the racing secretary more time to investigate the validity of the lien and the ownership issues involved. Since horses can change ownership as a result of a claim, it is very important to ensure that the person who enters a horse into a race has free and clear title to the horse, unclouded by liens.

      (b) The necessity of the amendment to this administrative regulation: The amendment is necessary to allow the regulation to reflect current realities and to strengthen the horse racing industry in Kentucky.

      (c) How the amendment conforms to the content of the authorizing statutes: The amendment alters some of the details of the rules of claiming races. KRS 230.215(2) and KRS 230.260(3) grant the Authority to the power to promulgate administrative regulations governing the conditions of horse racing, including claiming races.

      (d) How the amendment will assist in the effective administration of the statutes: The amendment will clarify the language of this administrative regulation, and will alter the rules of claiming races in some particulars, as described in 2(a) above.

      (3) List the type and number of individuals, businesses, organizations, or state and local governments affected by this administrative regulation: Among the individuals affected by this administrative regulation are the owners and trainers of horses that run in claiming races. During the year 2007, KHRA issued thoroughbred racing licenses to 5,596 owners, 1,154 owner/trainers, and 255 trainers. Kentucky race tracks, the horse industry and the gambling public as a whole will benefit due to the increased number of horses running in Kentucky, and the increased amount of money wagered and purses offered, as a result of the time restrictions on claimed horses racing in other states.

      (4) Provide an analysis of how the entities identified in question (3) will be impacted by either the implementation of this administrative regulation, if new, or by the change, if it is an amendment, including:

      (a) List the actions that each of the regulated entities identified in question (3) will have to take to comply with this administrative regulation or amendment: The regulated entities will be required to comply with the rule changes outlined in (2)(a) above, but no new specific compliance activities are required. Horse owners and trainers will be restricted from racing claimed horses outside the state of Kentucky for certain time periods, but the horse industry as a whole will gain from the restriction due to increased field sizes, increased handle, and increased purses.

      (b) In complying with this administrative regulation or amendment, how much will it cost each of the entities identified in question (3): No compliance costs will be imposed upon the regulated entities.

      (c) As a result of compliance, what benefits will accrue to the entities identified in question (3): The horse racing industry and the race tracks will benefit from increased field sizes, increased handle, and increased purses, as described in 2(a) above, due to more claimed horses running in Kentucky.

      (5) Provide an estimate of how much it will cost the administrative body to implement this administrative regulation:

      (a) Initially: No additional cost. The administrative regulation merely changes some of the rules of claiming races.

      (b) On a continuing basis: No additional cost.

      (6) What is the source of the funding to be used for the implementation and enforcement of this administrative regulation: No funding is necessary.

      (7) Provide an assessment of whether an increase in fees or funding will be necessary to implement this administrative regulation, if new, or by the change if it is an amendment: No additional fees or funding will be necessary.

      (8) State whether or not this administrative regulation established any fees or directly or indirectly increased any fees: No new fees are required by this administrative regulation.

      (9) TIERING: Is tiering applied? Tiering is not applied to this administrative regulation because the regulation simply governs the rules of claiming races. All participants in these races compete on an equal basis.

FISCAL NOTE ON STATE OR LOCAL GOVERNMENT

Contact Person: John L. Forgy

      1. Does this administrative regulation relate to any program, service, or requirements of a state or local government (including cities, counties, fire departments, or school districts)? Yes

      2. What units, parts or divisions of state or local government (including cities, counties, fire departments, or school districts) will be impacted by this administrative regulation? The Kentucky Horse Racing Authority will be impacted by this administrative regulation, in that it administers the rules of horse racing.

      3. Identify each state or federal statute or federal regulation that requires or authorizes the action taken by the administrative regulation. No federal statutes or regulations are involved.

      4. Estimate the effect of this administrative regulation on the expenditures and revenues of a state or local government agency (including cities, counties, fire departments, or school districts) for the first full year the administrative regulation is to be in effect. None.

      (a) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for the first year? None

      (b) How much revenue will this administrative regulation generate for the state or local government (including cities, counties, fire departments, or school districts) for subsequent years? None

      (c) How much will it cost to administer this program for the first year? None.

      (d) How much will it cost to administer this program for subsequent years? None.

      Note: If specific dollar estimates cannot be determined, provide a brief narrative to explain the fiscal impact of the administrative regulation. N/A

      Revenues (+/-):

      Expenditures (+/-):

      Other Explanation: