Help Could Be Coming To PA’s Horse Racing Industry

By Andrew Staub | PA Independent

The threat of a shutdown has hovered over Pennsylvania’s struggling horse racing industry for about a month, but the dark clouds have begun to clear as state lawmakers move forward with a plan to prop up the sputtering sport.

Legislation moving through the state House would close a $6.2 million shortfall in the State Racing Fund, which pays for regulatory oversight of the sport. A sharp decline in wagers — and the corresponding tax revenue connected to those bets — has decimated the fund and left horse racing on shaky ground.

Senate Bill 352 would help resolve that problem by drawing from the Race Horse Development Fund to close the shortfall and pay for drug testing expenses currently borne by the State Racing Fund. Lawmakers expect that additional changes to licensing and related fees will eventually help net a surplus.

“The model doesn’t work anymore, to be honest with you. There needs to be changes,” said state Rep. Martin Causer, the Republican chairman of the House Agriculture and Rural Affairs Committee.

The committee passed the legislation with changes Monday. The bill would close the current shortfall with weekly installments of $310,000 from the Race Horse Development Fund not to exceed $6.2 million in total. Though drug testing expenses are capped under the bill, one analysis estimated $11.3 million would be needed.

All that will come from the Race Horse Development Fund, a $250 million subsidy that provides money for track purses, breeder’s awards and benefits for horsemen.

The Commonwealth Foundation, a free-market think tank, has criticized the fund as corporate welfare for wealthy horse owners. It has also questioned whether lawmakers would be wise to raid the fund, derived from slot machine revenue, to help a sport that’s drawing less interest in terms of wagers.

Earlier this month, the think tank identified the Race Horse Development Fund as part of $700 million in corporate welfare the state could slash to fill a budget deficit.

“Pennsylvania workers already pay high enough taxes,” policy analyst Bob Dick wrote in a blog post. “Whether it’s horse racing funds or another form of corporate welfare, government should first cut back where it can before putting greater strain on the budgets of families across the commonwealth.”

Defenders of the bill say it just makes the industry pay for its own regulation. Prominent state officials also want the industry back on stable ground.

Auditor General Eugene DePasquale earlier this fall urged lawmakers to rescue the flagging State Racing Fund, saying a shutdown would harm Pennsylvania’s 500 horse breeders and the 23,000 people the racing industry supports.

The state has drawn from Race Horse Development Fund before to help the sport — and to support fairs across the state — and Causer said it’s “very appropriate to take whatever’s necessary” to pay for drug testing. That provision would sunset after four years.

“This is important for Pennsylvania agriculture,” he said.

At this time last month, DePasquale sounded the alarm of a potential shutdown because of the funding crunch. While Causer said Senate Bill 352 won’t go to a vote in the full House this week, its emergence from his committee could help stop that.

Gov. Tom Wolf’s press secretary, Jeffrey Sheridan, said a shutdown “has not been taken off the table completely,” but it has been delayed as lawmakers move the legislation ahead.

“We still need a solution,” he said.

The administration supported the bill after it came out of the state Senate, but needs to review it now that Causer’s committee has made changes, Sheridan said.