Pennsylvania racing girds for key legislative fight

by Frank Vespe | Feb 4, 2020 | Breaking, Business, PA Business, Pennsylvania, Top Stories

Racing at Penn National. Photo by The Racing Biz.

With words to send a chill through anyone in the horseracing industry, Pennsylvania Governor Tom Wolf (D) called Tuesday for the state to raid the Race Horse Development for nine figures worth of money to support education.

The call came as part of Wolf’s proposed budget for 2020-21. With Republicans in control of both houses of the state legislature, Wolf’s proposed $36.1 billion general fund budget faces an uncertain future. Pennsylvania’s fiscal year begins July 1.

Ramping up spending on education is among Wolf’s top priorities. One of his proposals, the so-called Nellie Bly Scholarship, seeks to make in-state tuition more affordable for Pennsylvania residents.

The program would make available $204 million in scholarships for “the young Pennsylvanians attending our state system universities,” Wolf said in remarks to the Legislature. The moneys would be a grant if a student remains in Pennsylvania for a period of time following graduation; otherwise they convert to a loan.

Those funds, he said, “will mean 25,000 [Pennsylvania State System of Higher Education] students… can get a degree without crushing debt.”

What would be crushed by the proposal, however, are the purse subsidies the state’s racing industry receives from slot machine play at casinos there.

The money for the scholarship program would come from the state’s Race Horse Development Fund. That fund, which is generated by the racing industry’s share of slot machine revenues, supports purses, state-bred funds, and more.

In 2018, the Fund pumped more than $240 million into the racing industry, including more than $152 million in purses. Without it, the state’s half-dozen racetracks – three flat and three harness – would be forced to reduce purses dramatically, scale back the number of days they race, or a undertake a combination of those steps.

But Wolf professed to be unbothered by that.

“Let’s bet on our kids instead of bankrolling race horse owners and ensure the viability of the Pennsylvania State System of Higher Education,” he told the Legislature.

Racing interests, unsurprisingly, are not upbeat on the plan.

“If approved by the legislature, this raid would result in the end of horseracing in Pennsylvania by eviscerating the primary funding source for the purses and breeder incentives that serve as the lifeblood of the industry,” Pete Peterson, executive director of the umbrella group Pennsylvania Equine Coalition, told the Pittsburgh Post-Gazette.

The fight in some sense is a continuation of one that has dragged on for years – virtually since the RHDF came into being in the early 2000s. In the 2010s, the state repeatedly tapped the Fund for money to shore up various state needs.

Racing industry representatives in 2017 convinced the state to put the Fund in a kind of lockbox, which would have required the state to repay to the Fund any moneys it had previously withdrawn were it to try to tap the Fund once again.

That added some stability to a program that had been bedeviled by the uncertainty of repeated legislative raids. Despite the generosity of incentives available for Pennsylvania’s breeders and stallion owners, the Pennsylvania-bred Thoroughbred foal crop had dropped from a high of more than 1,500 in 2009 and 2010 – when it also topped 5% of the nation’s total Thoroughbred foals – to just 617 in 2018 (2.9% of the national foal crop).

Whether or not industry reps can fight off this latest proposed raid of the Fund – and early money suggests they can – this fight is decidedly one that Pennsylvania’s horse industry would rather avoid.