PA horsemen, breeders oppose plan to raid Race Horse Development Fund

By: Tom LaMarra

Posted: Feb.4, 2020

The Pennsylvania Equine Coalition Feb. 4 said a plan by Gov. Tom Wolf to shift $204 million a year from the Race Horse Development Trust Fund to pay for a college scholarship fund would decimate the state’s horseracing indsutry.

The RHDTF, which is supported by a cut of revenue from slot machines at racetrack casinos and non-track casinos, totals about $240 million a year for Thoroughbred and Standardbred purses, breeding and horsemen’s pension programs. The Pennsylvania legislature over the years has shifted money to other programs, but in a 2017 Horse Racing Reform bill signed by Wolf, the fund was converted to a trust to protect it from being raided.

As part of the Horse Racing Reform legislation, horsemen and breeders agreed to take 1% of slots revenue for purses to create a statewide racing marketing program admininstered by the Pennsylvania Horse Racing Commission. It amounts to roughly $2 million a year.

Wolf proposes to take most of the RHDF share in his fiscal 2020-21 to pay for his scholarship program.

The budget document estimates the RHDTF to total $238.4 million in fiscal 2020-21. Based on fiscal 2019-20 figures, $162 million for purses, $32.5 million for Thoroughbred and Standardbred breeding programs and $10 million for the equine drug-testing program would shift to the Nellie Bly Tuition Program. Only $8.5 million in horsemen’s health and pension benefits, $2.3 million for promotion of the horse and breeding industry and $5 million for a farm show fund would remain, according to the budget document.

The budget suggests the Horse Racing Reform bill provided “temporary funding” from the RHDTF to pay for drug testing by shifting the money to the Racing Fund, which is largely used for regulation of the industry. The document states that a “permanent funding solution must be identified.”

“If approved by the legislature, this raid would result in the end of horse racing in Pennsylvania by eviscerating the primary funding source for the purses and breeder incentives that serve as the lifeblood of the industry,” said Pete Peterson, Executive Director of the PEC, an organization representing the six Thoroughbred and Standardbred horsemen and breeder associations in the state. “This scheme would destroy an industry that provides a $1.6 billion economic impact and supports an estimated 16,000 to 23,000 jobs in the agriculture, manufacturing, construction, retail and hospitality industries here in Pennsylvania.

“Racehorse owners and breeders whose operations preserve 100,000 acres of open space in Pennsylvania would be put out of business. Hundreds of farmers who preserve tens of thousands of additional acres growing crops such as straw for bedding and alfalfa and other feed products for horsemen—their largest and highest-paying customers—would face financial ruin. This anti-agriculture budget could not come at a worse time for many Pennsylvania farmers who are already struggling financially, as evidenced by a 20% increase in farm bankruptcies in 2019.”

Peterson noted that purses and breeder incentives enable owners and breeders to pay a range of individuals in a variety of jobs directly tied to racing, such as jockeys and drivers, trainers, exercise riders, farriers/blacksmiths, veterinarians, exercise riders, grooms, equine dentists, equine therapists, jockey agents, hot walkers, nutritionists and bloodstock agents. In addition, small businesses in the manufacturing, retail and construction industries count horsemen and breeders among their major customers for horse trailers and vehicles, feed equipment, riding tack and other supplies, and capital investments to replace barns and fencing.

The PEC said Wolf’s proposal is “fundamentally flawed as it seeks to raid a trust fund the legislature established in 2017 to block such transfers. Money in the (RHDTF) comes from an assessment paid by casinos on their gross terminal revenues from slot-machine gaming. The legislature noted in the 2017 Race Horse Industry Reform Act that the money is ‘not funds of the Commonwealth’ and that the ‘Commonwealth shall not be rightfully entitled to any money’ in the RHDTF.”

The coalition said the goal of the trust fund language was to spur new long-term investment in Pennsylvania’s racing and breeding industry by providing increased economic certainty for investors. It contended the program has been successful and has spurred millions of dollars in new investment in the state economy by horse owners, breeders, and other businesses in the past two years.

Peterson also said that because the raid “is not legal, it leaves a primary initiative of the governor without a viable funding source.”

The PEC in a release provided comments from many industry stakeholders who oppose Wolf’s proposal:

Pat Chapman, owner of Smarty Jones:  “I cannot believe that our governor would turn his back on the horse breeding and racing industry. This would be absolutely devastating to so many of us in the horse business. I brought Smarty Jones back to Pennsylvania for breeding because of what we were told four years ago and I thought I could trust what we were told. If the governor goes through with this proposal the end is near for my breeding and racing days in the state of Pennsylvania and the end for many others. This is a very devastating possibility.”

Russell Williams, President of Hanover Shoe Farms: “We occupy 3,000 acres in Adams and York counties and we’ve been here for 94 years. Forty families live on that land because one or more family members are employees of our farm, among about 80 employees total. At peak, over 1,000 horses also live on the farm, including more than 100 retired horses that have nowhere else to go. We also care for old forest and wetlands: yesterday I saw a blue heron down by the creek and a bald eagle in a tree on the main farm.

“We buy 1,500 tons of hay and 1,500 tons of straw from our neighbors every year, not to mention feed, farm machinery, fence boards, supplies, and equipment. Because of us, Pennsylvania is home to the number one Standardbred breeding farm in the world. The governor has told me that he knows our farm from commuting between his businesses in York and Littlestown in past years. Last night, as I watched a new foal wobbling around in the foaling barn, I wondered how this governor could bring himself to destroy all that, injure so many people and animals, and shift Pennsylvania from being a mecca for horse breeding and racing to being a non-entity.”

John Servis, Thoroughbred trainer and breeders: “Taking $200 million from Pennsylvania  horse racing would be absolutely devastating for not only the horseman and breeders but the entire agriculture industry. If this passes I will be putting a ‘for sale’ sign on my house right away.”

Ken Churchill, who owns Silver Springs Ranch, a Standardbred training center in Harvey’s Lake: “We have invested more than $5 million into opening our new, state-of-the-art Standardbred training facility that sits on 78 majestic areas and began operations three years ago. We are currently the largest economic development project in Wyoming County and are second only to Walmart with development permits. Taking away money from the horse racing industry would not only put me out of business, it would affect the economy of our entire area.”

Mark Reid, a Thoroughbred trainer and breeder who lives in Pennsylvania and whose racing operation is based at Pimlico Race Course in Maryland: “I strongly oppose the governor taking any of the money from the Race Horse Development Trust Fund, which funds purses and breeder incentives. It will be the end of horse breeding and racing in Pennsylvania. The industry in Pennsylvania will never recover from this.”

PA gaming bill includes protections for Race Horse Development Fund