From Education Voters of Pennsylvania (http://www.educationvoterspa.org/):
Executive Summary
Act 71 of 2004 created the Pennsylvania Race Horse Development and Gaming Fund, which legalized casino gambling and allocated taxpayer funds to support the race horse industry.
Since that time, the Commonwealth has spent more than $3 billion supporting the industry. Every aspect is subsidized, including purses paid to owners of winning horses, support for breeders, and health and pension benefits for the horsemen who run the races, as well as drug test testing of horses, and promotional costs of the racetracks.
Education Voters of Pennsylvania examined the Race Horse Development Fund to assess its success and its value to Pennsylvania taxpayers. We address the following questions:
(1) What is the history of Pennsylvania’s subsidy of the racing industry and how are Race Horse Development funds spent? (2) Who benefits from the state’s spending on the racing industry? (3) How does Pennsylvania’s tax subsidy compare to other states’? (4) Has the investment been successful? (5) What kind of oversight is provided to the industry by the State Racing Commission and the Pennsylvania Department of Agriculture? How transparent are operations?
The report finds that the racing industry receives generous tax subsidies but provides very little economic benefit to the state.
- The Race Horse Development Fund is the single largest economic development expenditure in the state.
- Pennsylvania has a very generous subsidy program, among the highest in the nation. Only New York spends more.
- Pennsylvania subsidizes horses three times as much as it subsidizes students attending PASSHE schools.
- PRHDF generates little economic benefit to the state. Horse racing generates less than 10,000 direct jobs, while the tourism industry generates 310,000 direct jobs and receives a fraction of the state taxpayer support.
- Purses are heavily subsidized with tax dollars. In 2003, 94% of purses were paid from wagers; by 2019 that number was down to only 11%. Half of purses are won by non-residents, a total of $80 million.
- The program benefits a small number of breeders and owners. There are 47 standardbred breeders and only 29 thoroughbred stallion farms in the Commonwealth.
- Public interest in horse racing is small and getting smaller. Track attendance is down and the amount wagered by Pennsylvanians on races held in Pennsylvania is small and declining. Daily attendance for the Williamsport Crosscutters minor league baseball team is greater than attendance at any of the state’s six horse tracks.
- In 2019 the PRHDF subsidy of $238 million was more than five times the amount wagered by Pennsylvanians on races run on Pennsylvania tracks.
- Breeder awards are quite lucrative. The top 20 thoroughbred breeders earned $3.4 million in 2018 and the top 10% of stallion breeders took home almost 60% of stallion awards.
- The industry lacks independent accountability. Members of the State Racing Commission are allowed to own horses and collect both purses and breeder funds which are overseen by the Racing Commission. Four of the members are from the industry and a fifth has an economic interest in the state’s oversight activities. In contrast, no members of the Pennsylvania Gaming Control Board can have an economic interest in a casino.
Two other areas of note that require further investigation:
- Performance enhancing drugs are a concern throughout the industry. Every winning horse is tested at taxpayer expense. In March 2020, 27 people were indicted in NY for doping. Eleven of the 27 were licensed in PA although none of the activity was alleged to have taken place in the Commonwealth.
- Since 2010, 1400 hundred racehorses have died in Pennsylvania, including more than 700 at Parx Racing. In 2019, the public became aware of the problem when several dozen horses died in a matter of weeks at California’s Santa Anita race track, but the track that had the most horse deaths that year was Pennsylvania’s Parx Racing with a total of 59 deaths.
There is declining interest in horseracing nationwide, but Pennsylvanian’s racing industry is insulated from those changes by taxpayer subsidy. There is little appetite or activity to adapt to changing market conditions, but there is a great deal of energy spent to protect the lucrative purses. At the Parx racetrack every entrant pays a fee to the horsemen, a part of which goes to the horsemen’s political action committee called the “Purse Protection Fund.”
We recommend eliminating the PHRDF and reallocating these funds to more productive economic purposes — investing in Pennsylvania’s students and Pennsylvania’s future workforce.
Read the report at https://krc-pbpc.org/wp-content/uploads/RHDFrevised_20210526Report.pdf.
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