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Ci, 19-Ci-00016, Kentucky Downs, Llc, Et Al Vs. Cth of Ky, Pub

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Ci, 19-Ci-00016, Kentucky Downs, Llc, Et Al Vs. Cth of Ky, Pub Filed 19-CI-00016 01/04/2019 Amy Feldman, Franklin Circuit Clerk COMMONWEALTH OF KENTUCKY FRANKLIN CIRCUIT COURT DIVISION ___ CIVIL ACTION NO. 19-CI-_______ KENTUCKY DOWNS, LLC; and KENTUCKY RACING ACQUISITION, LLC PETITIONERS/APPELLANTS PETITION FOR REVIEW AND APPEAL OF v. APPROVAL OF WKY DEVELOPMENT, LLC LICENSE APPLICATION AND DENIAL OF KENTUCKY DOWNS, LLC LICENSE APPLICATION COMMONWEALTH OF KENTUCKY, RESPONDENTS/APPELLEES PUBLIC PROTECTION CABINET, KENTUCKY HORSE RACING COMMISSION Serve: Marc Guilfoil, Executive Director Kentucky Horse Racing Commission 4063 Iron Works Parkway, Building B Lexington, KY 40511 Serve: Hon. Andy Beshear Office of the Attorney General 700 Capitol Ave., Capitol Suite 118 Frankfort, KY 40601 and WKY DEVELOPMENT, LLC d/b/a OAK GROVE GAMING AND RACING, LLC Serve: CT Corporation System 306 West Main St., Suite 512 Frankfort, KY 40601 Presiding Judge: HON. THOMAS DAWSON WINGATE (648243) and PLAYERS BLUEGRASS DOWNS, LLC d/b/a BLUEGRASS DOWNS Serve: Corporation Service Company 421 West Main St. Frankfort, KY 40601 000001 of 000039 COM : 000001 of 000039 1 Filed 4848-3562-4068 19-CI-00016 01/04/2019 Amy Feldman, Franklin Circuit Clerk Filed 19-CI-00016 01/04/2019 Amy Feldman, Franklin Circuit Clerk INTRODUCTION Kentucky Downs, LLC and Kentucky Racing Acquisition, LLC (collectively, “Kentucky Downs”), by and through counsel, appeal the vote of the Kentucky Horse Racing Commission to award a license to conduct live racing and pari-mutuel wagering in Christian County, Kentucky to WKY Development, LLC and to deny Kentucky Downs’ application for a license to conduct live racing and pari-mutuel wagering in Christian County, Kentucky, along with the document titled “Final Order” issued by the Commission on December 5, 2018 memorializing that decision. As grounds for this appeal, Kentucky Downs states as follows: PARTIES 1. Kentucky Downs, LLC is a Kentucky limited liability company that offers live, simulcast, and historical horse racing in the Commonwealth of Kentucky. 2. Kentucky Racing Acquisition, LLC is a Delaware limited liability company that has a contractual interest in this action. 3. Respondent Commonwealth of Kentucky, Public Protection Cabinet, Kentucky Horse Racing Commission (“KHRC” or “Commission”) is an administrative agency of the Commonwealth of Kentucky vested with the powers set forth in KRS Chapter 230 to, among other things, act upon applications for licensure as a racing association. Summons is being served on the Honorable Andy Beshear, Attorney General for the Commonwealth of Kentucky, as the agent for service of process for the Commission, pursuant to CR 4.04(6), and also as the legal advisor of all Presiding Judge: HON. THOMAS DAWSON WINGATE (648243) state officers, departments, and agencies pursuant to KRS 15.020. 4. On information and belief, WKY Development, LLC d/b/a Oak Grove Gaming and Racing, LLC (“WKY”) is a Delaware limited liability company with two members, Churchill Downs Incorporated (“Churchill Downs”) and Keeneland Association, Inc. (“Keeneland”). 000002 of 000039 COM : 000002 of 000039 2 Filed 4848-3562-4068 19-CI-00016 01/04/2019 Amy Feldman, Franklin Circuit Clerk Filed 19-CI-00016 01/04/2019 Amy Feldman, Franklin Circuit Clerk 5. On information and belief, Players Bluegrass Downs, LLC d/b/a Bluegrass Downs (“Bluegrass Downs”) is a Kentucky corporation owned by Caesars Entertainment Corporation that offers live and simulcast horse racing in the Commonwealth of Kentucky. JURISDICTION AND VENUE 6. Pursuant to the provisions of KRS 230.330 and KRS Chapter 13B, the Franklin Circuit Court has jurisdiction over this case and venue is proper in this Court. BACKGROUND ON HORSE RACING LICENSURE 7. Under Kentucky law, only nine horse racing tracks may be licensed at any given time. KRS 230.377(3) (the Commission “shall approve no more than nine (9) tracks for participation in horse racing, intertrack wagering, and simulcasting.”) 8. The Commission historically has been conservative in its issuance of racing licenses. On information and belief, it has never had all nine licenses issued since the enactment of KRS 230.277(3). 9. For over 20 years, from approximately 1994 to 2017, eight tracks were licensed by the Commission. 10. During this time, the Commission was asked to license a ninth track but chose not to. 11. For example, in 2002, Southern Bluegrass Racing, LLC (“Southern Bluegrass”) applied for a license for a racetrack in Williamsburg, Kentucky. Presiding Judge: HON. THOMAS DAWSON WINGATE (648243) 12. The Commission denied Southern Bluegrass’s application after hearing objections from other tracks, including Churchill Downs, that a new license would adversely affect existing licensed tracks and off-track betting sites near Williamsburg. S. Bluegrass Racing, LLC v. Kentucky Horse Racing Auth., 136 S.W.3d 49, 51 (Ky. App. 2004). In addition, the Commission 000003 of 000039 COM : 000003 of 000039 3 Filed 4848-3562-4068 19-CI-00016 01/04/2019 Amy Feldman, Franklin Circuit Clerk Filed 19-CI-00016 01/04/2019 Amy Feldman, Franklin Circuit Clerk received a report from an ad hoc committee of the Commission regarding the viability and sustainability of a new track. Id. 13. As explained in more detail below, the Commission also refused to accept or act on applications for new licenses in 2017. 14. In 2017, Appalachian Racing, LLC did not renew its license, leaving only seven licensed tracks in Kentucky. 15. Prior to awarding WKY the license in dispute in this action, seven of the nine licenses had been awarded by the Commission, thus leaving only two available licenses that the Racing Commission could award for the entire Commonwealth. 16. Prior to awarding WKY the license in dispute in this action, the Commission had not awarded a new license in approximately 25 years. 17. Pursuant KRS 230.300(6), and among other statutory and regulatory requirements related to licensure, the Commission should not issue a license unless it finds that “the applicant meets the requirements established in KRS 138.530 and other applicable provisions of [KRS Chapter 230], and if the racing commission finds that the proposed conduct of racing by the association would be in the best interest of the public health, safety, and welfare of the immediate community as well as to the Commonwealth.” FACTS AND PROCEDURAL HISTORY 18. Kentucky Downs owns and operates Kentucky Downs racetrack in Franklin, Presiding Judge: HON. THOMAS DAWSON WINGATE (648243) Kentucky. 19. Kentucky Downs conducts a successful live thoroughbred racing meet each fall at its Franklin, Kentucky facility. It also offers simulcast wagering and wagering on historical horse races year-round at its Franklin, Kentucky facility. 000004 of 000039 COM : 000004 of 000039 4 Filed 4848-3562-4068 19-CI-00016 01/04/2019 Amy Feldman, Franklin Circuit Clerk Filed 19-CI-00016 01/04/2019 Amy Feldman, Franklin Circuit Clerk 20. Beginning in approximately 2014, Kentucky Downs explored the possibility of developing a separate facility in Oak Grove, Kentucky. Based on its discussions with local officials and standardbred horsemen, Kentucky Downs determined that a separate facility offering standardbred racing (also referred to as harness racing) would be appropriate and decided upon the name “Oak Grove Meadows”. The KHRC Refuses to Accept or Consider Applications in 2017 Due to the Lack of a Licensure Process or Criteria. 21. In 2017 and before, Kentucky Downs spent considerable time preparing an application to offer harness racing and wagering on historical horse racing at Oak Grove Meadows in Oak Grove, Kentucky. 22. In 2017, Kentucky Downs completed an application to submit to the KHRC and advised the Commission that it would be submitting its application to offer harness racing and wagering on historical horse racing at Oak Grove Meadows in Oak Grove, Kentucky. 23. On the day Kentucky Downs planned on submitting its application, however, the Commission advised Kentucky Downs that it would not accept new applications. 24. As a result, in reliance on the Commission’s statement, Kentucky Downs did not submit its application. 25. The Commission then advised all current licensed tracks of its position that it would not be accepting applications for licensure of new facilities. 26. Despite the Commission’s announced position, Churchill Downs and Keeneland Presiding Judge: HON. THOMAS DAWSON WINGATE (648243) submitted an application for a license to conduct racing and historical horse racing at new facilities in Corbin, Kentucky and in Oak Grove, Kentucky. 27. In response to Churchill and Keeneland’s submission, Commission Chairman Frank Kling and then Vice-Chairman John Roach issued a statement, which provided in part: 000005 of 000039 COM : 000005 of 000039 5 Filed 4848-3562-4068 19-CI-00016 01/04/2019 Amy Feldman, Franklin Circuit Clerk Filed 19-CI-00016 01/04/2019 Amy Feldman, Franklin Circuit Clerk Over the last several months, we have informed Kentucky’s race tracks that we would not consider any applications for new race track facilities in Kentucky. Despite that communication, Churchill and Keeneland have chosen to submit an application for new race track facilities. At this time, neither of us have any plans to take any action related to this application or any other application for a new race track facility. It is our hope that in the future we will be able to develop a process and criteria to determine whether any new race track facilities are needed in the Commonwealth. September 15, 2017 email from J. Eads, attached as Exhibit 1 (emphasis added). 28. To Kentucky Downs’ knowledge, the Commission did not take any further action related to the 2017 application of Churchill Downs and Keeneland application for a license to conduct racing and historical horse racing at new facilities in Corbin, Kentucky and in Oak Grove, Kentucky. The Racing Commission Did Not Develop a Process or Criteria in 2017 or 2018 to Evaluate and Consider License Applications.
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