Pennsylvania benchmark report outlines impact of gaming funds on purses

By: Tom LaMarra

Posted: April 7, 2018

Purses earned at all six Pennsylvania racetracks in 2017 totaled $196.60 million, an increase of 17% from 2016, while the percentage of purses paid derived from slot machine revenue versus pari-mutuel income increased a few percentage points, according to a benchmark report from the Pennsylvania State Gaming Commission.

Purses earned from wagers on Pennsylvania Thoroughbred and Standardbred racing totaled only $22.17 million last year, the report states. That means 88.7% of the total came from slots, while 11.2% was generated by pari-mutuel revenue. In 2016, those figures were 86.5% ($145.42 from gaming) and 13.4% ($22.64) from race wagering.

The share of purses earned through slots revenue has been above 80% since 2009. In 2007, shortly after the state’s racetracks began operating casinos, pari-mutuel revenue made up $51.93 million of total purses paid versus $99.74 million from gaming machines.

The Race Horse Development Fund Trust accounted for about 10% of gross terminal slots revenue in 2017, according to the annual benchmark report, which says the RHDF Trust is “variable” and capped at 12%.

The highest percentage RHDF “assessments” based on the 10% of slots revenue generated at 12 racetrack and non-track casinos came last year at Parx Racing with $39.89 million, or 16.6% of the total. Two non-track casinos were second and third: Sands Bethlehem in the Lehigh Valley with $30.79 million (12.9% of the total) and Rivers Casino in Pittsburg with $27.50 million (11.5%).

Of the other racetrack casinos, The Meadows Racetrack & Casino was second at $21.90 million (9.1% of the total), followed by Mohegan Sun Pocono ($20.91 million, or 8.7%), Hollywood Casino at Penn National Race Course ($12.37 million, or 8.9%), Harrah’s Philadelphia ($20.25 million, or 8.4%), and Presque Isle Downs & Casino ($11.37 million, or 4.7%).

The PGCB report breaks down RHDF distributions, which totaled $239.20 million last year, as follows: Purses, $170.15 million; Thoroughbred breeding fund, $18.17 million; Standardbred breeding fund and sire stakes purses, $15.84 million; horsemen’s health and pension benefits, $11.26 million; the State Racing Fund, which pays for equine drug testing and other programs, $10.87 million; a restricted receipts account, which supports other agriculture programs, $8.04 million; and the racing promotional expense refund—1% of purse money from slots agreed upon as part of a 2016 racing reform bill—$3.82 million.

Backstretch improvements, required by the 2004 Pennsylvania Race Horse Development and Gaming Act for a 10-year period effective in 2006, have totaled $72.30 million. Parx, which basically replaced its barn area, spent $43.57 million, more than half of the total.

As for handle, on-track betting at the six tracks in 2017 totaled $26.35 million, down 3.8% from 2016 and off 28.8% from 2013, according to the PGCB. Out-of-state export of Pennsylvania signals increased 3.8% to $643.76 million from $620.14 million in 2016, while “electronic wagering” through computers and mobile devices dropped 9.2% from $6.36 million to $5.77 million in 2017.

Total Thoroughbred and Standardbred races in Pennsylvania were down 2.1% to 10,167 in 2017 versus 10,384 in 2016. The highest number of races recorded since 2006 was 11,699 in 2012.

In an executive summary, the PGCB said it is “encouraged” by new initiatives such as creation of the marketing fund—both statewide and track by track—and an option for gaming operators who win licenses for satellite casinos to offer full-card simulcasts. The regulatory agency also said it is important the state legislature “has indicated the people of this Commonwealth have a vital economic interest in the continued success of the gaming industry,” which in turns supports racing and breeding.

(Parx Racing photo by Nicole Sherman)