The KTDF does alot more than just add money to the purses. It helps horseman who may not be able to fullfil obligations to vets for example.
As for the medication, Bute and Lasix is standard medication for thoroughbreds, accepted at most tracks. It's like putting a ram air turbo-charger on a horse and has to be administered by a vet and filed with the racing secretary before race time at which point the secretary can scratch the horse if deems to.
Bute is an analgesic pain killer with effects similar to ibuprofen. It helps to reduce inflammation and acts as a mild pain reliever for muscle aches and pains. Many trainers give it to help alleviate any slight aches or pains before a race. Lasix is a diuretic, and is used to help reduce blood pressure in horses that bleed. When a horse races, pressure builds up in the lungs, often causing the capillaries to burst, resulting in blood entering the lungs themselves. This results in the horse not being able to get enough air, so he stops running. In order to combat this, trainers will usually give the horse Lasix 4 hours before post
That being said, I don't like the direction racing is taking in KY. The horsemen and the sport are taking big hits as these now conglomerates are getting away from racing and into other gaming and leisure ventures. The dead heads in government should realize they're killing the sport of kings