Funding For PA Racing, Breeding Drops

Published: January 8, 2013 02:37 pm EST

The Pennsylvania Equine Coalition reported today that funds generated from slot machine gaming to the Race Horse Development Fund decreased by 4.6 per cent or $6.36 million over the past six months, the most significant decline in the history of the fund.

The Race Horse Development Fund was created by Act 71 of 2004, the Pennsylvania Race Horse Development and Gaming Act, to enhance live horse racing and breeding programs in the Commonwealth by supplementing purses and enhancing race horse breeding incentives.

“Despite an overall increase in slots revenues at Pennsylvania casinos in 2012, the funding from slots to the equine industry is decreasing, which will negatively impact purses at the state’s six race tracks and hurt incentives to promote breeding of horses in Pennsylvania,” said Pete Peterson, spokesperson for the Pennsylvania Equine Coalition, a statewide group representing more than 10,000 owners and trainers of the horse racing industry in Pennsylvania. “The decrease in funding will have effects well beyond the equine community, as many farms and other small businesses are dependent on the racing and breeding industry for work.”

In 2010, the Department of Agriculture released data showing that between 2001 and 2008 the value of the racing industry in Pennsylvania more than quadrupled following the passage of Act 71. According to the Department of Agriculture, the overall value of the equine industry increased by 380 per cent to $3 billion with employment more than tripling from 13,870 to more than 41,100.

The Pennsylvania Equine Coalition noted that for the first six months of the current 2012/2013 fiscal year -- July 2012 through December 2012 -- funding for the Race Horse Development Fund dropped to $131,419,633.08 -- a 4.6 per cent or $6.36 million decrease compared to the same time frame in 2011 when revenues to the fund totaled $137,779,854.81.

With just $131.4 million collected in the first half of the fiscal year, funding for the RHDF is far below projections. In the Governor’s Executive Budget issued last February, the fund was projected to collect $287.8 million in the 2012/2013 fiscal year.

“For the past four years the Equine Racing industry has seen the state divert more than $200 million from the Racehorse Development Fund to augment the General Fund,” said Peterson. “Given the current revenue trends for the Race Horse Development Fund, the Equine Coalition calls on the legislature to allow the current diversion of funds from the fund to terminate as promised when enacted.”

The decrease in funds to the RHDF occurred despite an increase in the gross terminal revenues at Pennsylvania casinos in 2012. This is due to the complex funding formula used to calculate contributions to the Race Horse Development Fund, which is based solely on gross terminal revenues of the state’s Category 1 casinos --- a designation given to casinos which host equine racing. Gross terminal revenues at all of the state’s Category 1 casinos have declined over the past six months compared to the same period last year.

The opening of casinos in adjoining states in Ohio, New York, and Maryland --- as well as an additional casino at Valley Forge --- has resulted in decreasing slots play at casinos which host equine racing. When the second gaming facility opens in Philadelphia and more gaming facilities come online in our surrounding states, the Equine Coalition projects that funds going into the Racehorse Development Fund will be further eroded.

The Pennsylvania Equine Coalition also noted that as a result of decreases in gross terminal revenues at Category 1 casinos and the opening of new casinos in Pennsylvania, the casinos’ contributions to the RHDF as a percentage of GTR have decreased from 12 per cent in June 2010 to 11.4 per cent in December 2012 to 10.7 per cent in December 2012.

The Pennsylvania Equine Coalition also expressed concern about the latest figures for the month of December. In December 2012, the gross terminal revenues at every Category 1 casino decreased compared to December 2011, fueling a $1,819,436.55 or eight per cent drop in revenue to the RHDF for the month compared to the prior December. Particularly hard hit by drops in GTR were Presque Isle Downs and Casino which saw a 22.14 per cent decrease and Mohegan Sun at Pocono Downs which saw an 11.86 per cent decrease. This is likely due to impact the increased competition from casinos in Ohio and New York is having on the industry. These decreases in turn negatively impacts purses at those race tracks, as well as overall funds for the breeding industry in Pennsylvania.

(Pennsylvania Equine Coalition)

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