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Proposed budget would result in less money for Pa Race Horse Development Fund
Wednesday, February 06, 2013 - from the Pennsylvania Equine Coalition

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Harrisburg, PA --- The Pennsylvania Equine Coalition expressed concern that the Corbett Administration’s proposed budget would divert a total of $31,159,000 from the Race Horse Development Fund to the state’s General Fund and other budget line items.

This comes at a time when the industry is experiencing significant declines in revenues going into the Race Horse Development Fund, which will likely result in a $5-15 million decrease in funding available to supplement purses and provide race horse breeding incentives compared to the 2011-2012 fiscal year.

“Rather than seeing a net gain in funding compared to last fiscal year, the Coalition projects we will see a $5-15 million decrease in funding due to a significant decline in revenues going into the Race Horse Development Fund,” said Pete Peterson, spokesperson for the Pennsylvania Equine Coalition. “While less money is being diverted to other budget items, our projections show significant declines in money going into the fund. That’s bad news for the industry, considering that breeders incentives are already down and some tracks were forced to reduce their purses by 10 to 13 percent this year.”

While the proposed diversion of $31,159,000 from the Race Horse Development Fund is less than was diverted in the 2011-2012 fiscal budget ($48.2 million) and the 2012-2013 fiscal year ($54.2 million), it comes at a time when the industry is experiencing significant decline in revenues going into the Race Horse Development Fund.

Funding for the Race Horse Development Fund is based solely on gross terminal slot revenues of the state’s Category 1 casinos -- a designation given to casinos which host equine racing. Funding for the Race Horse Development fund does not come from table games and is not based on slots revenues at non-racetrack casinos.

Each of the Category 1 casinos saw decreases in gross terminal revenues for the month of January that exceeded the state’s average decline of 1.19 percent for all casinos. As a result, the decline to the Race Horse Development fund is more than quadruple the decline in overall gross terminal revenues.

Funds generated from slot machine gaming to the Race Horse Development Fund decreased by 6.19 percent or $1.33 million for the month of January compared to January 2012. The cumulative decline for the first seven months of the fiscal year -- June 2012 through January 2013 -- is $7.69 million or 4.83 percent. These declines are a result of increased competition facing Pennsylvania’s racetrack casinos as a result of the opening of casinos in the neighboring states of Ohio, New York and Maryland -- as well as the opening of an additional casino in Valley Forge, Pa.

“Horse owners, breeders, and business owners made investments in Pennsylvania based on the commitment that funding to the Race Horse Development Fund would be fully restored after this fiscal year,” said Peterson. “Just as other Pennsylvania businesses require a “degree of certainty,” so too does the equine racing industry. For many in our industry, running a breeding operation or owning and racing horses is a break even proposition at best. The declining revenues and diversion of money from the Race Horse Development Fund will negatively impact countless small businesses in Pennsylvania that make up and serve the horse racing industry. We are only asking that policymakers keep their promise that the four-year diversion of funding from the racing and breeding fund would end after this fiscal year.”

Under the Administration’s budget proposal, the Race Horse Development Fund would again see the diversion of millions of dollars to the state’s general fund. The proposed 2013-2014 budget would also divert an additional $15.6 million to programs that were previously supported with General Fund dollars.

According to economic data from the Department of Agriculture released in 2010, between 2001 and 2008, the economic impact of the racing industry in Pennsylvania more than quadrupled thanks to Act 71. In addition, the Department of Agriculture stated that due to the Race Horse Development Fund, the overall economic impact of the equine industry increased by 380 percent to $3 billion with employment more than tripling from 13,870 to more than 41,100.

“As a result of Act 71, many new businesses have relocated to Pennsylvania and the breeding of Pennsylvania horses has increased substantially,” said Peterson. “And we have seen a significant amount of open space and farmland preserved as horse farms, breeding facilities and training centers. But the pace of business investment in Pennsylvania’s equine and horse racing industry faltered in 2009 following the legislature’s passage of a temporary four-year, 17 percent assessment on our industry. If we want to jump start economic investment in Pennsylvania, we need to work to restore full funding for live racing and breeding.

“While we understand the budget challenges facing the Administration, over the course of the past four fiscal years, the equine racing industry has lost approximately $200 million in funding toward the General Fund. The coalition is unaware of any other industry in the state that agreed to such concessions in an effort to help address the budgetary issues facing the state government.”

The coalition believes that the downward revenue trend will continue due to increased out-of-state competition from other casinos in Ohio, Maryland and New York and increased gaming competition within the Commonwealth such as a casino in Valley Forge and the prospect that the Pennsylvania Gaming Control Board may award a license for a new Philadelphia casino. In addition, the enhanced small games of chance law and the potential expansion of lottery gaming to include Keno and other virtual games of chance will further erode slots play at racetrack casinos, which will decrease revenues for the Race Horse Development Fund.

The Pennsylvania Equine Coalition is a statewide group representing more than 10,000 owners and trainers of the horse racing industry in Pennsylvania. Members of the coalition include the Pennsylvania Harness Horsemen’s Association, the Pennsylvania Thoroughbred Horsemen’s Association, the Standardbred Breeders Association of Pennsylvania, the Pennsylvania Horse Breeders Association, the Meadows Standardbred Owners Association and the Pennsylvania Horsemen’s Benevolent & Protective Association.


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