DN Editorial: HORSE SENSE: Let's rethink how casino taxes go to the racing industry

Posted: September 26, 2013

HORSE RACING is known as the "Sport of Kings." For the past seven years, the state's horse-race industry has been getting a king's ransom in subsidies from the state's casinos.

Casino revenues - otherwise known as the losses of gamblers who frequent the state's 12 casinos - are heavily taxed, to the tune of 55 percent; of that, 12 percent goes to the state's racehorse owners, breeders and operators, a subsidy built into the 2004 gaming act to prop up a faltering industry. Slots have provided a jackpot for this industry, returning $1.5 billion to the Race Horse Development Fund since 2006.

This page has previously questioned the wisdom of this heavy investment, especially given the other pressing needs around the state. And a recent special investigation by Philly.com reveals that it's time for state lawmakers to seriously review this subsidy.

For example, the lion's share of the horse-race subsidy goes to improving purses - prize money for owners of winning horses - but the fact is, little of the billion or so dollars in purse money goes to Pennsylvania-bred horses or their owners. And the breeding funds for thoroughbred and standardbreds ($142 million, from 2008-2011) have borne little fruit; fewer thoroughbreds were bred in 2011 than 2008, and standardbreds have only seen a small increase.

Fortunately, we're not the only ones to question whether this investment should be monitored more closely or even adjusted. (The state has tapped into the fund in recent years, diverting 17 percent to the general fund.) House Agriculture Committee Chairman John Maher (R-Allegheny County) says that he has been trying to change this situation for a while. He points out that the law is the "Race Horse Development Fund," not the "horse-race development fund" . . . that is, the goal should be to raise more horses, to bring economic benefit to farms in the state. He wants to make sure that it's not simply a blank check with little oversight.

Changes he's advocating for: First, direct that the lion's share of the fund money be restricted to Pennsylvania-bred horses.

He also wants more restrictions on how the money can be used; astonishingly, horsemen can use these funds for campaign contributions and lobbying. That should have been a nonstarter out of the gate. Maher also wants a portion of the funds to subsidize the oversight of horse racing. Right now, the state's racing commission is too under-resourced to do the job required.

While we would support a more thorough scrutiny of how effective the subsidy has been, and whether all that money should be poured into a single industry, especially as other critical priorities go begging, Maher's approach is a critical step.

Oddly, the horse-race industry straddles agriculture and gaming. The House Agriculture and the House Gaming Oversight committees don't necessarily see eye-to-eye on this one. The latter's Democratic chairwoman, Philadelphia state Rep. Rosita Youngblood, believes that the fund has been used successfully to improve horse racing.

We're putting our bets on the Ag Committee on this one.

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