PA Horsemen Boiling Over At Governor’s Effort To End How Slots Prop Up Race Purses, Breeding

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Pennsylvania Gov. Tom Wolf has the state’s horse racing industry up in arms over a proposal to siphon most of the industry’s share of casino funds and divert them to a new college scholarship program.

Wolf unveiled the proposal last Tuesday as part of his 2020-21 budget address. He wants $204 million a year from casino slots revenue that supports horse racing purses and breeding programs to instead help pay for low-to-moderate-income students to attend state-owned universities.

Reaction from those who race and breed horses was swift, with warnings of dire consequences for the future of the six Pennsylvania tracks if the legislature adopts Wolf’s plan. The Race Horse Development Trust Fund, from which the scholarship funds would be taken, covers nearly 90% of the purse money currently awarded.

“I can’t imagine there’d be racing anymore. I believe racing would be gone,” Pete Peterson, executive director of the Pennsylvania Equine Coalition, told Penn Bets.

Basic disagreement about industry’s benefits

At the heart of the issue is fundamental disagreement over what value horse racing provides to Pennsylvania’s economy and how those connected to it should benefit from the state’s gambling expansion.

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The thoroughbred and harness racing tracks were once the only form of legal gambling in the state. Then along came the Pennsylvania Lottery in the 1970s, followed by 2004 legislation authorizing creation of casinos at a time when horse racing had long fallen from its peak days.

In an attempt to bolster the racing industry, while recognizing the harm that could come to it from the new competition for gambling dollars, the casino legislation included creation of the race horse fund.

A formula applied to slots revenue, which amounts to about $2.4 billion annually in the state, dedicates roughly 10% of it to the horse fund for various purposes, most notably purse money at the tracks. The state’s Racetrack Casino Benchmark Report for 2018 stated purses were boosted $152.6 million by the fund and another $30 million was spent on incentive programs for breeders.

In eyeing the fund as the best means of paying for the proposed Nellie Bly Scholarship Program, Wolf took a dig at those who benefit at present from the racing fund.

“Let’s bet on our kids instead of bankrolling race horse owners,” the governor said, touting the potential to help 25,000 students who have trouble affording college.

Remarks like that rile those in the industry, who contend Wolf is uneducated about whom the purses benefit and what good the industry does overall for the economy and in maintaining what Pennsylvania has left of agrarian character.

Horse industry maintains the money stays local

The Pennsylvania Horsemen’s Benevolent and Protective Association says there are some 23,000 jobs within the horse racing industry and that it generates $1.6 billion in annual economic activity. Nearly 90% of the money owners and trainers receive through the horse fund is reinvested in the local economy around them, the association states.

“I don’t think he fully understands the industry. I also don’t think he fully understands the ramifications” of diverting funds, said Todd Mostoller, a horse owner who is executive director of the association.

He and Peterson observed how purse money filters throughout the industry to not just owners but trainers, jockeys, drivers, grooms, veterinarians, walkers, feed and transportation suppliers, and others.

“There is this misperception that the individuals involved in racing in Pennsylvania are wealthy horse owners. Nothing could be further from the truth,” Mostoller said. “The vast majority of people in it are good, hardworking Pennsylvanians who have a passion for the horse, and they’ve made a choice to make that their livelihood.”

When asked for further clarification on the governor’s remarks, administration spokesman J.J. Abbott commented in an email that the fund has provided more than $2 billion to the industry since inception and many of the beneficiaries are not based in Pennsylvania.

“With some jockeys, owners, and trainers earning millions per year, it is hard to justify taxpayers subsidizing the industry at current levels,” Abbott said. “The government believes a better investment for the people of Pennsylvania is to help thousands of young students to pursue their dream of a college education and graduate with less debt and build rewarding careers here.”

The industry’s advocates will try to rebut such statements when lobbying legislators by stressing that the funds involved are not from tax dollars, but from slots revenue. Also, they emphasize that nearly all of the purse money received circulates around where the horse is based — typically at or near a Pennsylvania racetrack — to cover costs rather than lining the pockets of any out-of-state owner.

“All that matters is where the horse is,” Peterson said. “If the horse is racing in Pennsylvania, it’s boarded here and all the jobs are here.”

Racetracks, casinos mum so far

The racetracks themselves have been quiet publicly about the governor’s proposal, although their future would seem directly impacted.

Penn National Gaming operates both thoroughbred racing at Hollywood Casino and harness racing at The Meadows, but company spokesman Eric Schippers said it is “too speculative and fluid at this point to comment.”

Although they say they are taking nothing for granted with the legislature, the horsemen would certainly seem to have plenty of allies among influential lawmakers to counter the Democratic governor. Both chambers are controlled by Republicans, who tend to represent the state’s more agricultural districts, and horse breeders will cite statistics that the funds they receive have given Pennsylvania one of the more successful breeding programs in recent years.

In addition, the industry will point to language that accompanied the state’s 2017 widespread gaming expansion. It seemed to guarantee the funding source in question, newly renamed that year as the Race Horse Development Trust Fund (with the Trust added for emphasis), could only be used for purposes related to the industry itself, after multiple years in which state officials tapped into it to cover other spending needs.

The racing advocates warn that if Wolf’s proposal comes to fruition during the 2020-21 budget talks that take place this spring, state officials can anticipate a court challenge or mass exodus of those connected to the industry. There are plenty of tracks, after all, in adjacent states.

“As a horse owner, you can leave Penn National and be in Maryland in an hour and a half,” Mostoller said. “It’s real easy to relocate the revenue-producing asset.”

Photo by Cheryl Ann Quigley / Shutterstock.com

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Gary Rotstein

Gary is a longtime journalist, having spent three decades covering gambling, state government, and other issues for the Pittsburgh Post-Gazette, in addition to stints as managing editor of the Bedford (Pa.) Gazette and as a reporter for United Press International and the Middletown (Conn.) Press. Contact Gary at gary@usbets.com.

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